Will New York workers comp compliance program disadvantage payers?

A payer compliance program launched by the New York State Workers' Compensation Board is getting mixed reviews from experts.

The effort that goes into effect with the start of next year is designed to expedite benefit payments to injured workers by assessing the timeliness of the filing of injury and related reports, with payers assessed noncompliance penalties based on performance goals established by the board (see box, below), the board said in an October bulletin.

Timely payment

The New York State Workers' Compensation Board has launched an effort to expedite benefit payments to injured workers, with payers assessed varying penalties for noncompliance based initially on a 70% compliance rate and rising 5% quarterly under the following metrics:

• Timely filing of injury reports: Penalties assessed starting with January 2016 quarterly reports.

• Timely first payment reporting: Penalties assessed beginning with April 2016 reports.

• Report of timely first payment made: Penalties assessed beginning with April 2016 reports.

• Timely filing of notices of controversy: Penalties assessed starting with July 2016 reports.

• Rates of controversy: No penalties attached at this point to percentage of claims that are “controverted,” or challenged.

For example, the board will begin by measuring the timeliness of filing so-called notices of controversy — or cases in which a claim is disputed — on lost-time claims and has set deadlines of 18 days from the date of the accident, 10 days from the date the employer knew of the injury and 10 days from the initial disability date of disability, whichever is greater, according to a board presentation.

The requirement to file the reports is not new, but adding financial penalties allows the board to penalize payers for not filing in a timely manner and likely will result in increased compliance, said Mitch Neuhaus, St. Louis-based vice president of claims at Safety National Casualty Corp., an excess workers compensation and deductible casualty insurance provider.

Payers will benefit from the phased-in schedule for the performance goals, which will start at 70% compliance in meeting filing deadlines for the first quarter of next year, experts said.

“That gives the payers a little bit of time to get their act together and get policies in place before it's ramped up to 85%,” Mr. Neuhaus said. “I think that's a good, reasonable way to implement it.”

Noncompliance penalties under the new program may vary and can run from $50 to hundreds of dollars apiece.

However, the main concern is that payers would be required to provide benefits without medical evidence or proof of disability — a provision that will likely lead to increased litigation, said John Lastella, Hauppauge, New York-based service center manager at third-party administrator Broadspire.

“That's very concerning because once you start payments, it's very difficult to stop,” he said. “You're putting the onus on the employer to make payment without the proper medical evidence.”

For example, if a doctor ultimately determined the benefits awarded were too much, the payer would have to seek board approval to recoup the payments, Mr. Lastella said.

“It would be almost impossible to get the money back,” he said.

Safety National feels the driving force behind this “tidal wave” of changes — other states such as California and Florida are adopting provisions similar to New York's — is compliance rather than generating revenue, Mr. Neuhaus said.

“I think it's a combination of both,” Mr. Lastella said. “It's going to be part compliance and part revenue.”

The board did not respond to requests for comment.

Employers will have to notify their third-party administrators and insurers of claims as soon as possible to avoid potential penalties, but Mr. Lastella expressed concern that employers will have a knee-jerk reaction and overreport, which would increase legal and reserve costs.

“Until it gets into penalties, we really don't know, but overall it looks like a good thing for injured workers and providers,” Mr. Neuhaus said. “And it does not appear to put an undue burden on payers.”