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Among the significant reforms to the Workers’ Compensation Law (WCL) enacted as part of New York’s 2017-2018 Executive Budget, effective April 10, 2017, was imposition of a 130-week cap on temporary disability benefits. Specifically, the reform legislation amended WCL § 15(3)(w) to provide carriers and self-insured employers (hereinafter collectively referred to as “carriers”) with a credit against the permanent partial disability (PPD) caps for any periods of temporary partial disability paid beyond 130 weeks (2.5 years) from the date of accident or disablement.
The 130-week cap is applicable to claims with a date of accident or disablement on or after April 11, 2017. 130 weeks from April 11, 2017 is October 8, 2019. Accordingly, for claims with a date of accident or disablement on April 11, 2017, the credit began on October 9, 2019. The amendment has no impact on claims in which the claimant was classified or the indemnity portion of the claim was settled prior to the 130-week mark.
The relevant text of WCL § 15(3)(w) as amended is as follows:
§ 15(5) pertains to temporary partial disability benefits. § 15(2), which pertains to temporary total disability benefits, is not mentioned. The statute is poorly drafted, raising questions as to:
The lack of clarity in the wording of the statute will likely result in litigation regarding its correct interpretation, and definitive answers await future decisions from New York’s appellate courts. However, based on our research into the legislative history, Chartwell’s interpretation is that the credit will start 130 weeks from the date of accident/disablement, and carriers will receive credit for any weeks of temporary partial disability benefits paid after that 130-week mark.
Since carriers will only receive credit for weeks of temporary partial disability benefits – and not temporary total disability benefits – paid after the 130-week mark, we will either have to (1) litigate the issue of ongoing degree of disability rather than compromise on a tentative rate for ongoing benefits where the IME finds a partial disability and the claimant’s treating physicians continue to report a total disability, or (2) litigate the issue of degree of temporary disability for those post-130-week mark periods at which awards were made at a tentative rate during permanency litigation (likely the more cost-effective option). In most cases, temporary total disability benefits are not awarded over 2.5 years post-accident, other than during a post-operative period.
The question of when the issues of MMI and the applicability of the credit will be addressed by the Board (i.e., 130 weeks from the date of accident/disablement, after payment of 130 weeks of temporary disability benefits, or once a party produces a medical report finding MMI) will likely be answered by a future WCB Subject Number, or else by future Board decisions. We expect that the issue of MMI will continue to be addressed once either side produces a medical report indicating that the claimant has reached MMI, and that the credit will be calculated at the time of classification.
As usual in enacting reforms beneficial to carriers, the Legislature created a “safety valve” in § 15(3)(w) that extends the period of temporary disability beyond 130 weeks when the Board makes a finding that the claimant has not yet reached MMI by that date. Specifically, WCL § 15(3)(w) as amended provides:
Thus, the credit will not start at the 130-week mark where the Board finds that the claimant has not reached MMI by that date. According to a letter from the WCB’s general counsel included in the Governor’s Bill Jacket to the 2017 reform legislation, the Board will rule on the safety valve only when the issue of classification is ripe (i.e., when there is a permanency/MMI report in the record).
With rare exception, the PPD caps start as of the date of classification (i.e., the date of the LWEC finding). Per the underlined language above, when the safety valve is found to be applicable, the carrier shall receive a credit for any weeks of temporary disability paid – whether awarded at the TT, TP, or TR rate –after the finding of MMI. Such a situation in which temporary disability benefits are paid after a finding of MMI may occur where the issue of MMI is litigated prior to the issue of permanency/LWEC, a WCLJ finds MMI and continues the case for LWEC/attachment testimony, or a WCLJ’s no-MMI finding is overturned on appeal.
In a Subject Number regarding the 2017 reform legislation issued on April 25, 2017, the Board stated that it would offer further guidance regarding application of the safety valve “in the near future,” but it has not done so to date. We will update further upon issuance of any further guidance from the Board.
The imposition of a 130-week cap on temporary disability benefits should reduce overall indemnity and medical exposure for carriers by disincentivizing claimants from delaying a finding of MMI to avoid the start of the caps. That was the Legislature’s goal in enacting this reform. Further, when the credit is applied, the amount of the ATF deposit will be lower, since the credit reduces the number of weeks left on the PPD cap.
The 130-week cap should also incentivize claimants to consider settlement as the 130-week mark approaches in their claims, rather than waiting for the permanency process to begin, since the amount of future indemnity benefits that claimants are entitled to essentially becomes capped at the 130-week mark. Typically, the claimants bar would argue for an increase in the settlement amount to account for temporary disability benefits payable up the date of classification/start of the caps. Now that carriers will have a credit for any temporary disability benefits paid after the 130-week mark, future indemnity exposure is more easily quantifiable.
Accordingly, we encourage carriers to review claims with dates of accident or disablement on or after April 11, 2017 – particularly those in which there has not been a surgery within the past year – for potential settlement or an updated IME on the issues of MMI and permanency. In general, carriers should continue to obtain IMEs on these issues when indicated as they did prior to the 130-week cap coming into play. Chartwell is standing by to assist in updating your defense strategies and reserves/settlement valuations to account for the impact of the 130-week cap.
On the other side, we anticipate that the claimant’s bar will seek to exploit the “safety valve” loophole by producing C-4.3 Doctor’s Reports of MMI/Permanent Impairment that deny that claimants have reached MMI. However, the Board, by defining MMI in Section 1.2 of both the 2012 Impairment Guidelines and 2018 Impairment Guidelines, and by articulating the select few circumstances that may justify a finding that a claimant has not reached MMI within two years of the injury in Subject Number 046-548, has provided defense counsel with strong arguments to dispute a treating physician’s specious denial that a claimant has reached MMI.
