Chapter Thirty-Three

• Jurisdiction: New York

Chapter Thirty-three

Workers’ Compensation

Martin Minkowitz, Esq.*

* This chapter was previously updated by Donald T. DeCarlo, Esq.

I. Introduction

A. Concept

In all states and the District of Columbia, workers’ compensation laws have been enacted to address the economic consequences of occupational injury or disease. These laws afford specific benefits including, and most significantly, medical care and income replacement benefits to those who sustain injury, illness or death that arose out of and in the course of employment.

The fundamental concept behind workers’ compensation is that the employer is responsible for certain benefits to an employee injured on the job, without consideration for the issue of fault. With limited statutory exceptions,⁴⁶⁰² where the injury “arises out of and in the course of the employment,” the liability of the employer is absolute. In exchange for the certainty of those benefits, the employee cannot seek additional damages through legal action against the employer, even where negligence on the part of such employer can be demonstrated. Before the first Employer Liability and Workmen’s Compensation laws were enacted, a worker’s sole recourse for injury was under common law where, in order to obtain any recovery from the employer, the worker had to prove that the injury resulted from negligence on the part of the employer. In responding to such an action seeking damages, the employer could avail himself of certain defenses—contributory negligence, assumption of risk and the fellow-servant rule. Even in situations where injured workers were able to overcome those defenses, the court remedy proved to be slow, costly and frequently uncertain.

B. State Laws

By the beginning of the 20th century—as commercial enterprise expanded coincident with the Industrial Revolution—the number of workers injured or killed as a result of work-related accidents increased. Early attempts at mitigating the employer defenses did little in the way of ensuring adequate recovery for the worker. Concurrent with that activity, with the evolution of organized labor, states began to experiment with a benefit scheme that had its origin in Europe. Maryland passed the first Workmen’s Compensation Law in 1902, but it was limited in application and was subsequently ruled unconstitutional by the courts. Other early attempts suffered a similar fate, but states continued to pursue such action and in 1911 Wisconsin enacted the first compensation law still in effect today. New York’s early efforts in 1910 to pass a Workers’ Compensation Law were held unconstitutional;⁴⁶⁰³ however, a law was enacted effective July 1, 1914 and held to be constitutional only after passing a state constitutional amendment.⁴⁶⁰⁴

Compensation to an injured worker was the initial step in social insurance and it adopted the principle of liability without fault. The employer is held responsible to provide Workers’ Compensation benefits and is absolutely liable for injury or disease that “arises out of and in the course of the employment,” without regard to the issue of fault. In exchange, the worker receives unlimited medical care and a level of income replacement of a portion of his or her pre-injury earnings in accordance with a schedule of benefits established by law. The worker is also precluded from bringing an action against the employer based upon the theory of negligence in causing the employee’s injury.

There exist multiple means by which employers subject to Workers’ Compensation Law can obtain insurance coverage. In four states, insurance may be purchased through an exclusive state insurance fund. In the remainder of states and the District of Columbia, coverage may be purchased through private insurers licensed to conduct business in the state. Twenty-one states have legislatively created competitive state insurance funds as an alternative to private insurance for purposes of affording coverage to employers seeking to insure.⁴⁶⁰⁵

Employers may qualify to be responsible for their own risk—by applying to be permitted to be self-insured—in all states with the exception of North Dakota and Wyoming. In those states that permit self-insurance, groups of employers can join together for purposes of insuring under a group self-insurance program. For employers unable to purchase insurance or qualify as a self-insured, many states have established residual markets for the purchase of ensuring a market for insurance coverage. State Insurance Funds, where they exist, have acted as such residual markets.

II. Mandated Benefits

The benefits to which an injured employee may be entitled include the replacement of a portion of lost wages and access to the medical care or treatment required to effect complete recovery. In addition to these two primary forms of protection, the injured worker is entitled to rehabilitation benefits and the spouse and dependents of an employee killed as a result of a work-related incident are entitled to replacement of a portion of the worker’s prior average weekly earnings in addition to a funeral allowance.⁴⁶⁰⁶

Income replacement benefits for an injured worker are generally based upon a portion of the average weekly earnings—generally two-thirds of such prior weekly earnings—subject to a maximum and minimum weekly compensation rate set by the state. The maximum weekly compensation rate in many states is equal to 100% of the statewide average weekly wage. The minimum weekly compensation rate is frequently set at a percentage of the statewide average weekly wage (a number of states set the minimum weekly benefit at 20% of the statewide average weekly wage), or the average weekly earnings of the injured worker, whichever is the lesser amount.

Benefits for income replacement begin following a waiting period set forth in the statute. The waiting period is three days, five days, or seven days, depending upon the particular jurisdiction. Where time away from work continues beyond a prescribed number of days, again set by statute, the worker is compensated for the time period covered by the original waiting period.⁴⁶⁰⁷

There are a number of specific forms of income replacement or disability benefits. The following provides an abbreviated description of each:

Temporary Total Disability—Temporary total or partial disability refers to the period of time that an employee is temporarily unable to engage in his or her regular employment because of a compensable injury or disease. In the majority of states, temporary total disability is payable for the duration of the temporary disability.

Temporary Partial Disability—Disability that is partial in character and temporary in nature would qualify a worker for temporary partial benefits. Partial in character refers to the ability to do some work (e.g., work three or four hours per day) but not engage in full-time employment. Benefits for temporary partial disability are based on the portion of prior earnings that are lost and are subject to the state maximum weekly benefit amount.

Permanent Partial Disability—Permanent partial disability benefits are designed to compensate for the permanent disability of a work-related injury. Benefits may be either in the form of a scheduled award where benefits are payable based upon a prescribed period of time set forth in the statute. Benefits may also be in the form of an unscheduled award where, depending upon the particular state, benefits are based on lost earnings or lost earning capacity, the degree of physical impairment, or some variant approach designed to adequately compensate for the injury based on loss of earning or earning capacity. ⁴⁶⁰⁸

Permanent Total Disability—Permanent total disability represents the most serious form of work-related injury wherein the injured worker, because of the extent of the injury, is not expected to ever be able to return to gainful employment. In the majority of states, permanent total benefits are payable at the same rate as benefits payable for temporary total disability and certain states allow for the periodic adjustment of benefits to maintain the employee’s standard of living. Many states provide for the payment of benefits for the remainder of the injured worker’s life.

Medical benefits encompass the furnishing of necessary care and treatment to effect maximum medical recovery. Medical coverage is provided from the first dollar and is not subject to any deductible or co-payment arrangements. Medical coverage includes the services of a medical provider, care rendered at a medical facility—either in-patient or outpatient—and any drugs or prescriptions prescribed by a treating physician. In the case of medical benefits, such benefits continue for the duration of the period of recovery and are thereby not subject to any maximum duration or payable amount.⁴⁶⁰⁹

Benefits for rehabilitation take the form of either physical rehabilitation or vocational rehabilitation. Physical rehabilitation encompasses those services required to reduce or alleviate the extent of the disability to the degree possible. Vocational rehabilitation is concerned with providing the injured worker with retraining or the development of job skills necessary to return the employee as a productive member of the community.

Survivor’s benefits are payable to the surviving spouse and/or dependent children upon the death of a worker resulting from a work-related incident. In the majority of states, death benefits are payable at the same rate as the benefit for total disability.⁴⁶¹⁰ In addition to the periodic benefits payable to the survivor(s), the law also permits a burial allowance. Each state establishes a maximum burial allowance that ranges between a low of $2,000 in Mississippi to a high of 15 times the state average weekly wage in Hawaii. In New York, the maximum by regulation subject to actual expenses is $5,000 north of Rockland County (upstate) and $6,000 south of Rockland County (downstate).⁴⁶¹¹

III. The Employer...