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Joseph Morales last worked on September 17, 1999, at a Niagara Falls company. He left work with three herniated discs, occupational lung disease, and autoimmune complications. As he fights debilitating disease and pain, he also fights his former employer and an insurance company. And, as Mary Jeffords said, “You never win that fight.”

Morales, his wife, and five children now live on one-third to one-fourth his previous earnings and no benefits.

In 1995, a twenty-eight year old woman, working on a second job, fell as she was carrying a tray of glassware. The fall damaged discs in her back and injured her neck and her knees. She is still fighting to recover, and she is still fighting an insurance company. And as Mary Jeffords said, “You never win that fight.”

Welcome to the hell that is the New York State Workers Compensation System.

Origins of Workers’ Compensation

New York State established its first “workmen’s” compensation system in 1914. Prior to then, when a worker was injured on the job, the only recourse was to sue in courts. The courts routinely ruled that the employer bore no responsibility for a worker’s injury or death. Most infamously, Isaac Harris and Max Blanck, owners of the Triangle Shirtwaist Company, were acquitted of all charges in the 1911 fire that killed 146 in a lower Manhattan tenement factory.

The rationale was often that workers accepted the responsibility for their own safety. If workers felt the job to be unsafe, they could protest or find other employment. Continuing on the job meant acceptance of all of the hazards and, therefore, all of the responsibility.

In 1914, New York State established the Workers’ Compensation Board. According to the board’s website, “The workers' compensation system guarantees workers injured on the job both medical care and weekly cash benefits, usually until they return to work. Returning injured workers to employment without risking their health or welfare is the main goal of the system.”

As we shall see, that is a lie. The system fails those who need it the most – injured workers – and profits those who victimize injured workers – insurance companies and the so-called independent medical examiners.

Profiting from Pain

The one group that does not profit from the workers’ compensation system are the injured workers. The maximum weekly rate, which has not changed since it was set in 1992, is $400. In 1992, the payment represented 66 percent of New York’s average weekly wage, and in 2004, it represents only 44 percent. The weekly minimum rate is $40 or 4.4 percent of the average weekly pay rate for New Yorkers.

A mere three percent of all injured workers on workers’ compensation receive the maximum. According to Denis Hughes, president of the New York State AFL-CIO, “many receive as little as one-sixth of their weekly wage, up to maximum of only $150. So that means that, one week, you could be making $900 a week. Get hurt on the job. And the next week, make $150.”

Some make a profit from the system through fraud. In 2002, the NYS Workers’ Compensation Board recovered $4.6 million in fraud. The board’s budget is roughly $167.6 million. The Business Council of New York asserts that workers compensation costs a little more than three percent of payroll, which would put the insurance premiums in the billions of dollars.

Fraud thus represents a very small fraction of the overall cost of the system. According to the insurance research firm Conning and Company, claimant fraud in 1999 was 1.9 percent of the total premiums paid, or about $480 million.

So who profits? The National Association of Insurance Commissioners estimated that the profit margins of various types of insurance and workers’ compensation carriers proved very profitable indeed. The average profit margin for homeowners insurance was a paltry 5.4 percent, and for auto insurance, it was slightly better at 5.5 percent.

For workers' compensation carriers, however, the profit margin soared to 14.3 percent. The Business Council of New York premiums could soar by 29 percent this year.

How so? The 29 percent increase is based on a recommendation made by the Compensation Insurance Ratings Board. The rating board is a nongovernmental agency assigned the power to recommend premium levels.

By no strange coincidence, the following companies have representatives on the rating board: Employers Insurance Fund of Wausau – A Mutual Company, Firemen’s Fund Insurance Company, Greater New York Mutual Insurance Company, Hartford Accident and Indemnity Company, Royal Indemnity Company, Utica Mutual Insurance Company and the State Insurance Fund. Members of the board essentially recommended a premium increase for themselves.

California employers, on the other hand, received a seven percent cuts in their worker compensation premiums this year. According to the San Jose Mercury News, the California State Insurance Commissioner said that rates could be cut another 5.9 percent. Nothing like this occurred in New York.

The Role of “Professionals”

The insurance company lawyers and claim examiners, of course, do their employers' bidding throughout the process of determining disability under the law. This process can go on for years.

An “Independent” Medical Examination (IME) is an examination that insurance companies can demand after injured workers have been examined by their own physician. It is designed to be a check on the process. The most important check, however, is the one written to the physicians. It comes from the insurance company and typically ranges from $1,000 to $1,500 for each examination.

Insurance companies shop for favorable physicians to conduct IMEs, which injured workers are required to attend. Failure to keep an appointment can be cause for loss of benefits. Jeffords claims that Liberty Mutual Insurance gave her an incorrect address. Jeffords had also been sent to a psychiatrist who had lost his license for “conviction of a crime involving moral turpitude, having false medical credentials, and Medicaid and Medicare fraud.” She has also been required to attend 31 other IMEs.

Another injured worker claimed that his entire examination was the photocopying of his driver’s license.

In addition to the skills as photocopyists, physicians conducting IMEs must also be skilled fiction writers. In 1996, Liberty Mutual argued that Jeffords was only moderately disabled. She requested a copy of the report and ended up receiving two copies. The reports were identical, except for the conclusion on page seven of each. In one report, her disability was labeled "total," and, in the other report, her disability was labeled "moderate.” The physician said that he had adjusted his opinion after a review of his notes.

After an IME, the insurance company can unilaterally reduce benefits according to the physician's report. This reduction does not require a hearing or prior notice. An injured worker can appeal such a reduction at his or her own expense. It can take between six weeks and six months to conduct a hearing and, win or lose, the worker must bear the cost.

The cost by itself can cause workers to accept the reduction, and insurance company claims examiners use that to their advantage. Liberty Mutual reduced Jeffords' home health care assistance and informed her that, if she appealed, the company would further reduce her benefits.

For Jeffords, this could become just one more battle in a seventeen-year contest of judgments and appeals.

Proposed Reforms

The Business Council of New York has high praise indeed for a bill introduced into the New York State Senate by Thomas Libous (R-Binghamton) and Assemblymember Robin Shimminger (D-Kenmore). In fact, the Business Council calls the bill “common-sense reforms supported by New York’s business community.”

The bill does have many remarkable features. The first is the re-definition of the word permanent. The Oxford English Dictionary defines permanent as “continuing or designed to continue indefinitely without change; abiding, lasting, enduring; persistent.”

Under the Libous-Shimminger bill, permanent in New York State would last nine years and seven months, the new maximum length of time a worker could receive compensation for a “permanent” disability.

Rather than a re-definition, the Libous-Shimminger bill portends a major medical breakthrough. The New York State AFL-CIO asks if, perhaps, this isn’t a portent of the future: regeneration of severed limbs or the reconstitution of severely or permanently damaged nerve tissue. Or is this merely throwing injured workers on to the scrap heap?

The bill would further reduce benefits payments by subtracting pension benefits that an injured worker may be receiving and by reducing benefits by 50 cents for each Social Security Disability payment received.

Senator Guy Velella (R-Bronx) and Assemblymember Susan John (D-Monroe) submitted a second reform package. This bill proposes to increase the maximum benefits over the next three years to two-thirds of the average New York weekly wage. The amount would then be adjusted automatically.

The law would also grant workers the right to file personal injury lawsuits, a right that workers forgo in many instances when they file for workers compensation. This right would be limited to cases in which the injury or illness resulted from a serious or willful violation of the law.

To reduce the considerable financial advantage held by insurance companies and employers in the appeals process, the Workers’ Compensation Board could assess attorney fees against an insurer or employer loses an appeal.

This could have saved Jeffords a significant amount of money. She suffered eight separate injuries and Liberty Mutual appealed the determination of the severity of each injury a minimum of three times. Jeffords had to pay for legal representation for each hearing.

The union would be granted the right to protect their members’ interests by exercising a veto over the employer's choice of a workers' compensation insurance company. The union could use a company of its choosing.

In cases where the insurance company unilaterally suspends payment and medical coverage, workers would continue to receive medical treatment until the case is settled.

Finally, for workers who make substantially more than the average weekly wage, insurance companies would offer "earner protection" policies. Such policies would increase compensation payments to higher earning workers to two-thirds of their wage.

The New York State Legislature adjourned last month without acting on either bill. The legislature may act when it reconvenes later this month or in early August. by Alex Blair

Mary Jeffords needed a little more money to make ends meet. She was a registered nurse and could always find work. In 1987, she found work as a weekend supervisor at a psychiatric outpatient center.

One weekend, a patient beat her as she intervened to protect a co-worker. She nearly died. She fought for her life and won. She uses a wheelchair, has four screws and two steel rods in her back, retinal scarring, and nerve damage in her arms.

She is now in her next fight with an insurance company. And, as she said, “You never win that fight.”