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Not quite what the sign says; Despite state's 'Open for Business' mantra, moves toward higher costs belie the rhetoric

In Albany, the mantra has been that New York is "Open for Business."

But in the last year, business groups have found themselves fighting a number of costly mandates and proposals, from higher taxes on millionaires and a proposed hike in the minimum wage by Assembly Democrats to a 45 percent planned jump in tolls for large trucks using the Thruway.

Now businesses say they are facing a new double-digit increase: the amount they pay for injured employees in workers' compensation cases.

The proposed hike of up to 11.5 percent comes despite a much-trumpeted law in 2007 that was supposed to control the spiking costs of a program covering New Yorkers for on-the-job injuries.

"We're still the second-highest in terms of the cost of doing business in the United States, second-highest in state and local tax burdens, and many publications rank us the worst for economic outlook. For all the positives that have been done in the last year, we really haven't done anything except hit the brakes on the runaway train," said Michael E. Durant, state director of the National Federation of Independent Business.

The Cuomo administration, which must approve any hikes in the cost of workers' compensation, told The Buffalo News on Monday that it has problems with the proposed level of increase in premiums but insisted that key cost-saving reforms have been implemented.

In the five years since top government, labor and business officials hailed what they billed as a "historic agreement," a state agency overseeing the system -- and controlled by three governors since 2007 -- has pushed through the deal's expensive benefits for workers but been slothlike in approving agreed-upon controls on spiraling costs.

The experience stemming from that supposed deal raises serious questions about whether Albany can be trusted to fulfill even its most highly publicized and even legally approved deals.

"When this was passed, everyone agreed it was a careful balance, that to make this package produce net savings, the pieces had to work together. The practical experience in its implementation is that balance wasn't achieved," said Kenneth J. Pokalsky, a lobbyist with the New York State Business Council.

A panel of insurance carries, including the State Insurance Fund, recently said, with little fanfare, that workers' compensation costs compared with revenues are such that premiums paid by businesses for workers' compensation insurance might have to soar by 11.5 percent in the coming year. The plan still needs state approval, and one member of the board said that when other discounts are factored in, average premiums could be expected to grow by at least 8.5 percent.

No matter the final hike in premiums, businesses insist that it is greater than anything they were ever led to believe when the state five years ago -- in a deal heralded by then-Gov. Eliot L. Spitzer -- said it was getting control of workers' compensation cost increases.

Interestingly, both sides -- labor and business -- criticize the state Workers' Compensation Board for not carrying through on measures agreed to in 2007, a problem one side says has raised costs for employers but the other side says has also kept some injured workers from getting the health care and benefits they need. They say vacancies on the board and inattention to the agency has led to foot-dragging on key reforms.

"We're asking the Governor's Office to start holding the Workers' Compensation Board accountable for what it is doing," said Brian Sampson, executive director of Unshackle Upstate, a business consortium.

Beyond the rate increase, business interests say lawmakers are trying to join in the effort to make the system more expensive, including a measure expanding the locations at which workers' compensation recipients can obtain prescription drugs. Lawmakers say the changes are needed to provide more consumer options, but critics say it will reduce current incentives for large-volume drug-pricing deals.

The 2007 law called for a long-sought hike in workers' compensation benefits. In return, expenses were to be curtailed, such as ending what was a lifetime benefit for certain kinds of injuries.

The Workers' Compensation Board, which did not return calls seeking comment, was also supposed to come up with health care treatment protocols to be followed for injured workers. In the years since, they approved treatment guidelines for four body parts: neck, shoulder, knee and back. Still not adopted, despite pleas by business and labor, are guidelines for expensive and complicated treatments of chronic pain, as well as conditions including carpal tunnel syndrome.

Arthur N. Wilcox Jr., a member of the New York Compensation Insurance Rating Board, which recently signaled that a large rate hike is in the works, agreed with business groups that the Workers' Compensation Board has been slow to implement changes envisioned in 2007.

But Wilcox, a consultant to the New York State AFL-CIO, said injured workers have been affected when it comes to treatment of such conditions as chronic pain. He said the Workers' Compensation Board, on its own, limited certain kinds of treatments, such as the number of visits to a chiropractor.

"This is a board-provoked problem," Wilcox said.

A task force a year ago reached a deal on carpal tunnel treatment protocols, he noted, but the Workers' Compensation Board has yet to act on the matter. "The board, for whatever reason, is slow to the trigger on a lot of stuff," he said.

Wilcox said that while his advisory panel recently floated the possibility of an average 11.5 percent rate hike, various special assessment decreases on businesses will bring the number down to about 8.5 percent. "I don't want to make it sound like it is insignificant, but it's not double-digit," Wilcox said.

Joshua J. Vlasto, a spokesman for Gov. Andrew M. Cuomo, said all workers' compensation reforms enacted in 2007 "have been implemented."

"While there is a concern that the savings generated from the original reforms is less than anticipated, the administration will review the proposal, but does not believe that such a large increase is warranted at this time," Vlasto said.

Precisely what an 11.5 percent increase would mean to businesses is hard to determine, in part, because of the complexities of the systems in which insurance carriers have multiple lines of products depending on the kind of industry and the risk of workplace injuries.

Although their goals might be different, business and labor are faced with a lack of movement at an agency that determines important health and financial issues. "Whatever ad ministration is running the agency has to recognize it as an important agency," Wilcox said.

Sampson, of Unshackle Upstate, said the original deal called for a 10-year cap on payments for so-called permanent, partial disabilities. But he said delays in the system -- from time of injury to approved diagnosis -- can add an additional two years in payments beyond that. "So it's an extra 104 weeks of pay not factored into the system," he said.

All that and other factors, critics say, has led to far larger rate hikes than state leaders touted in their 2007 deal.

"It was a system that was set up to be successful," Sampson said, "but because of how it's been implemented, it's resulted in additional costs."



Is New York ‘Open for Business'?

Businesses say four recent proposals are not friendly

*Double-digit increase proposed for workers' compensation

$2 billion tax increase on millionaires, including businesses that file taxes through personal income tax

*45 percent proposed toll increase on large trucks on Thruway

*Minimum wage hike to $8.50 per hour proposed by Assembly Democrats