The NY Times ran a series of articles painting a grim picture of Workers Compensation fraud and abuse in New York State: Everything from exaggerated doctors’ reports on minor back pain to workers with serious injuries who find themselves trapped for months in a Kafkaesque nightmare of delays. Many injured workers finally give up fighting and go without medical care or are forced to pay out of their own pockets.
But the Times completely overlooked the other victim: New York businesses and non-profits who foot the bills for Workers Compensation. Whatever workers, doctors and insurance companies do, the employers always lose.
Whenever there’s a claim–whether the claim is legitimate or fraudulent–the employer gets stuck with inflated reserves that the insurance companies set aside to cover costs. And claims are only a small part of the problem. As much as 40% to 60% of employers get overcharged on their premiums because of “mods” (experience rating modifications), miscalculations and more.
In today’s reformist society, there’s an undercurrent of anti-business attitude. So there’s little sympathy for corporations. But it’s not just businesses who get hit. Many organizations, schools and hospitals struggling for funds are continually losing thousands of dollars to excessive overpayments. But that doesn’t make the front page.
Injured workers and sleazy insurance operators always take the spotlight in news stories. They’re more fascinating than the stories of employers who pay the bills and get overcharged on their premiums. So the Times doesn’t report when we analyze companies’ Workers Comp insurance premiums and find errors and omissions that bring big refunds.
But the employers who get refunds through Compensation Refund Co. don’t mind not getting their pictures in the New York Times. They are happy with the paybacks of tens of thousands of dollars. Sometimes hundreds of thousands.
I would like to see the Times do an investigative report on the predicament of businesses in today’s economy. The 2008 reform of the New York State Workers Compensation laws brought positive changes in the system. But not enough. As Kenneth Adams, president of the Business Council of New York State, told the Times: “New York State, prior to the reform, was one of the most expensive states in the country for workers’ comp. With these reductions in premiums, the cost of workers’ comp for most employers has fallen into line with the average of other states. But if you’re in manufacturing, it can still be a significant cost.”
For their own part, businesses should get their own stimulus package–through mining their Workers Compensation insurance premium overpayments for refunds–They might find themselves with five- or six-figure paybacks… and save taxpayers billions.