Opinions & Reports
How should the NYS Comp System
deal with undocumented workers?
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OTHER PAGES’ THIS PAGE This week’s Opinions & Reports How should the NYS Comp System Deal with undocumented Workers? Prior Weeks’ Opinion & Reports Why you’re being Fired! Injured Workers Bar Association Meeting Jan 31, 2009 Compensation Costs: Up or Down?? Rocket Docket: Sock it to your Pocket! Will Medicare Kill §32’s Myth Busters TV Show Review of the 2007 Reforms Scodary v Serritella Ramroop v Flexocraft Printing |
The Issue
In the NEWSWIRE page, I reference some talk coming from South Carolina that state legislators there have come up with a truly bad idea. They are proposing to reduce the Workers Compensation benefits for illegal aliens. While the bill would still have the WC system pay for medical costs for injured illegals, it would deny them disability payments.
This certainly flies the face of the intent of workers compensation which is to give not just medical but compensation to those injured on the job.
In New York State WCL§17 and years of Board decisions as well as those from the Appellate Court (see The Matter of Amaoh v Mallah Mgt, 3rd A.D. decided 10/30/18 #504220.) have affirmed the right of undocumented workers to collect both workers compensation and medical benefits if the facts in the case would have warranted those same awards and/or medical care to an American citizen or an alien with a green card.
Philosophically
The very basic concept behind the initial legislation of the workers compensation law back in 1912 was to insure injured workers replacement wages and appropriate medical care without the delay that would be occasioned by a civil suit. It is meant to insure that workers will get proper care. And the requirement that all employers have insurance is a warning that they, too, are participants in the system and be sure and insure that if they have a worker get injured that there will be money to pay that worker.
To in any way allow an employer to segregate against a class of employees by virtue of any specific indicia would allow, if not encourage, them to only hire those workers whose indicia test would mean no coverage. No coverage would mean no losses to calculate into their insurance premiums. Instead, they probably assume that the State and taxpayers would pick up all the costs resulting from the injury, or maybe a call to the INS would result in that injured worker’s native country being stuck with the bills.
What is interesting is that, as for those who feel that the decision in which I participated, Ramroop V Flexocraft Printing, discriminated against an undocumented worker, they are wrong. For the panel determined that the injured worker’s lack of interest in getting a green card was a voluntary withdrawal from the labor market; had he sought a green card the decision would have been different. Just for the record, I have always supported compensation for undocumented workers, if they meet all the other legal criteria. In December 2006 WCB#4000-9028, we found that someone who gave false ID’s to get a job and was injured did not commit fraud under WCL §114a and the injured worker was awarded compensation.
Some said that he should or could have been disqualified because he used someone else’s ID to get his job, this violating §114-a, fraud. But that is not valid either as §114-a requires that the fraudulent misrepresentation be for the purposes of collecting money on a claim. The use of a false ID does not disqualify someone from getting compensation or medical. Contrary to the carrier’s assertion of §114-a fraud, the Board Panel found none but did send it back to get an identity for the claimant so that our records for the claimant would be accurate
The fact that there may have been a misrepresentation in getting the job or opening a bank account are not issues within the jurisdiction of the WCB and thus not grounds for denying a claim.
Recommendation
The concern has been raised that undocumented workers are taking jobs away from Americans and that they, the undocumented workers, are being taken advantage of by unscrupulous employers.
In Chapter 21 ‘Other Recommendation’ in my book, Behind The Closed Doors, I have a recommendation that proposes a penalty but not on the injured work. After all many of them do not speak English and certainly would not know that there exists a law that specifically discriminate against them. But my suggestion one that goes to the heart of the matter: cost advantages to employers who hire (and underpay) illegal workers.
For example, in order to emphasize that the hiring of workers under certain ages are prohibited, WCL §14-a mandates that whatever award of compensation is made, it should be doubled, with the employer and not the carrier responsible for the additional payments to the injured worker.
I recommend we modify WCL §17 ALIENS to include a provision that if an injured worker is found to be an undocumented worker that the employer shall pay a penalty equal to the compensation awarded by the Board. But in this case, the monies should go into either the Board’s general fund, perhaps offsetting the outlays under WCL §151 or into the State’s health budget.
February 27, 2009
“Why you’re Being Fired!!”
In the SOLUTIONS page, I propose some recommendation for claimants’ attorney to make sure they get the fees that they deserve as well as some of the problems they have with those deciding what is a ‘fair’ legal fee. But this also holds true for those who resent the fees that carrier attorneys earn and the fees that honest doctors charge.
This short story, courtesy of Rick Brownell, a regular blogger for the New York Young Republican Club, Inc., explains what I think is the problem with those who have never had to meet a payroll, which usually means someone employer the public sector. Even now with the budget crisis, they prove a point I heard in business school.
When things are tough, in the private sector, they cut expenses because they cannot control their revenue. In the public sector, they don’t care about their expenses because they can control their income: with taxes and ‘fees’. After you read this, go to the SOLUTIONS page, as my explanation and recommendation will make more sense. They do not know what is or care about such stuff as overhead, costs of benefits and taxes, sacrifice, etc.
The Story
There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges. However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country.
First, while it is easy to spew rhetoric that casts employers against employees. Sure, you see me park my Mercedes outside. You’ve seen my big home at last year’s Christmas party.
However, what you don’t see is the BACK STORY: I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you.
My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice. Meanwhile, my friends got jobs. They worked 40 hours a week and made a modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes. Instead of buying the latest hot fashion item, I was trolling through the discount store extracting any clothing item that didn’t look like it was birthed in the 70’s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.
So, while you physically arrive at the office at 9 A.M., mentally check in at about noon, and then leave at 5 P.M., I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… you never realize the Back Story and the sacrifices I’ve made.
Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail out all the people who didn’t. The people that overspent their paychecks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.
Yes, business ownership has its benefits, but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:
I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my “stimulus” check was? Zero.. Nada. Zilch. The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her next welfare check? Obviously, government feels the latter is the economic stimulus of this country.
The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I agree, which is why your job is in jeopardy. Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries.
Business is at the heart of America as it has always been. To restart it, you must stimulate it, not kill it. The power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep. So where am I going with all this? It’s quite simple.
If any new taxes are levied on me, or my company, my reaction will be swift and simple. I’ll fire you. I’ll fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more.
Then, I will close this company down, move to another country, and retire. You see, I’m done. I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be destroyed, and with it, will be my citizenship.
So, if you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about…..
Now go to the SOLUTIONS page…
February 20, 2009
Injured Workers Bar Association
I would like to thank all those who attended both the Friday night dinner and the Saturday CLE Series for such a warm welcome and in particular a thanks to President Barbara Levine, Vice-President Erin McCabe, and speaker Ron Balter.
It was a real pleasure to have such open conversation with the members of the claimants’ bar and to be able to give them honest answers to their questions. While as a commissioner I had occasions to speak to some of the attorneys (on both sides) between hearings, time was always limited and there was always the concern that one of my colleagues would complain that I was ‘talking too much’ to “them”. It was nice not to have a time limit or an observer.
Yes, there were a few questions about who was Commissioner X in my book, which I would not a answer but their “Is it ..?” seemed to indicate that they knew the commissioners as well as did I.
Over the next few weeks I will attempt to answer some of the questions that were raised but a few observations are in order, in no particular order.
Ron Blater’s CLE lecture was an analysis of the 2008 Court of Appeals and Appellate Court decisions. While I was not at the Board for the pre-board analysis of the 2008 decisions usually given by a member of the staff from the Office of the General Counsel of the NYS WCB, I was there for all the prior years and I observed that the emphasis and interpretation by Balter was quite different from that of the WCB. While the General Counsel’s representative’s interpretation was on the purely legal perspectives, Balter’s discussion emphasized the potential impact of the decision on strategies for the workers bar as well as an attempt to divine the direction in which the Board was heading. As the author of some of the key decisions covered in the lecture, it was interesting to see how their interpretation differed from that of mine and my colleagues who actually participated in drafting those decisions. But then again, it was also quite often that the General Counsel’s representative’s interpretation of the Board’s decision was at odds with what the panel who write that decision was intending to do.
It would be a great service to all parties if, in January of 2010, Balter were to be joined by someone from the Office of the General Counsel’s office as well as a member of the carriers’ bar to give their respective interpretation of the major 2009 cases. And, if course, I would be pleased to moderate.
Which goes to my second observation. When I first came to the Board, I was informed that my work as a commissioner was to adjudicate cases between two adversaries: the claimants and the carriers. That seems to have changed; the attorneys last week gave me the same impression that attorneys from both sides had been giving me in the last two years or so at the Board. The claimants and carriers are no longer the adversaries. They are on one side and their adversary is on the other: The Workers Compensation Board.
I am quite sure, that this is simply the result of lack of communications and a frustration by some at the Board for how long some changes take. But tweaking a system that has been in place for nearly 100 years is not easy. There are as many precedents for the procedures that have been in place as there are for the laws and decisions but the history of the procedures is not documented. Hence TALKING with some of the people who have been involved in the system for years is essential.
For example, consider fees. Is there a single document that explains from where the additional $100 added to Lump Sum Settlements in New York City was derived, as it was not at one time applied upstate. And how the 10% figure was derived ast the basic fee on Lump Sums?
Four years, each panel of three commissioners had an ‘A’, ‘B’, and ‘C’ member but a few years ago when I looked into the reasons for that, it was dropped. But this change in procedure as to how document were prepared for the commissioners’ review was done not with the upper management but with middle level staff and completed without anyone at Park Street noticing the change. It was based on the old paper-based system but was made obsolete when we went to the paper-less system.
There are people at the middle staff level who have been there for years, many having received awards for their 25, 30, or more years of service. Yet when it comes time to make changes, no one asks them why procedures were the way they were.
This open communication can only come in open meetings. Plus some of the staff who actually do the work, as compared to most of those in Albany who have never been in a hearing part or processed a claim, can make far better recommendations as to how to fix the system. And while it is true that many of these in the middle staff do not have MBA’s, PhD’s, JD’s or even BA’s, this does not mean they are not as knowledgeable in their areas of specialty as are the great minds at 20 Park Street
Aside from fees, the second biggest concern dealt with the lack of decisions being issues by the Board that were consistent on legal and procedural issues. Of course, one does not need to go to a dinner or conference to learn that the occasionally incoherent and often inconsistent decisions are a concern, but many of the participants find it difficult to plan their strategies and offer advice to their clients when they feel they are rolling the dice on a decision by a law judge, panel of commissioners, or a full board review.
When I raised the issue of indicia tables, a point I have often made in this web site and in several places in my book, Behind The Closed Doors, and gave out one sample indicia table to the attendees, I was asked by many if I could give them copies of all the tables I have developed. While they recognize that we may have different opinions on shades of gray, they feel it is important on key legal and some medical issues that everyone have a common frame of reference. There is no reason that this can not be done and I have already given specific recommendations how it can be done.
I spent several hours at the dinner and the conference the next morning and will in the coming weeks discuss more of the issues, including making some recommendations on legal fees.
It was most disappointing to notice that no one from the Board was in attendance, either formally or informally. They would have learnt a great from the meeting and I am sure that all those in attendance would have appreciated some sort of demonstration of an interest in their needs as they are equal partners in the New York State Workers Compensation system.
February 5, 2009
COMP COSTS: UP OR DOWN?
In my review of the 2008 Annual Report from the WCB, I questioned the accuracy of their conclusion that compensation insurance rates for the prior year had been reduced. Recent news articles support that question as substantial underfunding by trusts and self-insureds seems to be the result of miscalculating the rates.
The now closed self-insured trust manager CRM’s questions allegations regarding underfunding of its trusts. Details of this matter are covered in the complaint filed in the Supreme Court of the State of New York, Erie County, against CRM by the Wholesale Retail Workers’ Compensation Trust of New York which claims it had a $19 million deficit as of September 30, 2007.
Last month, The Buffalo News opened a story with the line “If it sounds too good to be true, it probably is.” The story continued, “That axiom is proving painfully accurate for thousands of small-to medium-sized employers across New York State — including the village governments of Lancaster, Kenmore and Sloan — who suddenly find themselves paying dearly for choosing the wrong insurer to handle their workers’ compensation needs. All three unknowingly joined a financially troubled group self-insured trust, thinking it would save a significant amount of money.”it probably is.”
A review showed that these three small communities were underfunded by bills ranging from $3,000 to $31,684, and upstate Plattsburgh has been ordered to pay $186,000.
Over the past two years, 12 of 63 group self-insured trusts operating in New York State have failed due to the methods by which they calculated their future exposure and resulting assessments. The state is currently conducting forensic audits on all 12 failed trusts, which left liabilities totaling more than $360 million against assets of $53 million. This amounts to a shortfall in premiums of $307,000,000 assuming that the assets can be recovered at their book value and that they were not invested with Bernie Madoff, Long Island’s Nicholas Cosmo, or the many other investor gurus making the news these days.
The WCB has stepped in to protect injured workers, so that claims could continue to be paid. But even if the losses are the $307,000,000 initially calculated, from where will these funds come?
They will come from the carriers who in turn will collect it from their clients, the companies who pay workers compensation insurance. So call it what you may. The rates will go up by a minimum of $305,000,000 just for this situation.
It will be interesting to see how this issue of ‘lower’ rates is treated in the future while at the same time rates are increased to cover the short fall allegedly created by these trusts.
But CRM is not the only firm who managed self-insured trusts. And there were many firms, such as Verizon, Con Edison, and General Motors, who were also self-insured and supposed to have set aside funds to cover anticipated claims.
According to the statistics provided by the Workers Compensation Board in its 2007 annual report 18% of the claims submitted in 2007were covered by private-sector self insured/trusts and 16% by public-sector self-insured/trusts. Has anyone looked to see if these are all financially secure? Which raises another question? Who was looking then and now?
But this financial impact is not just limited to those members of these failed trusts. There are additional expenses to be incurred by the remaining trusts and self-insureds, who account of 35.8% of the coverage.
In its January 29, 2009 press release, Financial Week’s Roberto Ceniceros reports that those self-insureds that in the past had been required to put up various financial instruments to meet the WCB’s financial requirements for being self-insured are finding that they now have less options.
“Typically, state regulators require employers to post bonds, letters of credit, securities or cash as collateral to self-insure their workers comp obligations. But now bond insurers are asking some employers to post more collateral just to secure the bonds, insurers and brokers said. Surety contracts often allow insurers to call for additional collateral to secure their bonds during the contract term.”
The article quotes Pam Ferrandino, executive vice president and casualty practice leader for Willis HRH in New York, stating, “Internal discussions about the rising cost of collateral have joined discussions about the cost of purchasing insurance when companies weigh whether to self-insure workers comp and some are holding off on doing so.”
I was recently informed, off the record, by an attorney that one of New York State’s biggest self-insured employers has decided to drop its self-insurance programs and to purchase its coverage from one of the big carriers. Whether this was done to save them money or, because of the current liquidity crisis, they could not put up enough collateral to qualify as self-insured remains to be seen.
But the statement that rates have gone down is only true if you do not consider all the underfunded trusts and self-insured, including those yet to be uncovered.
January 29, 2009
