New York Comp: Thorougly Documented Downward Spiral

Friday, June 22, 2012 | 0

We live in the digital age, with all its conveniences and consequences. It would be hard to imagine a law requiring that all telephone calls be routed through live operators, or limiting maps to those that can be purchased at your neighborhood gas station. But each technological innovation creates a few new jobs and, seemingly, the loss of many others. Which brings us to the continued and mandated use of stenographers in virtually every workers comp claim filed in New York.

Senator Diane Savino (D-Staten Island) has filed S. 4112, which would certainly help the employment prospects of stenographers in the Empire state. Following an aborted effort by the State Workers' Compensation Board to test the use of digital recording in a few of the 300,000 or so annual workers' comp hearings, Savino wants to ban digital recording from any comp hearing and require stenographic reports as the sole recognized form of documentation. Her bill, currently under consideration, would make stenographers a permanent fixture in workers comp for years to come.

Stenographers and their allies will argue that their presence improves the accuracy of court reporting. There are fewer "inaudibles" in their transcripts. But such accuracy comes at a substantial cost. The wages of a stenographer are in the $50-60K range, plus benefits. The cost of installing digital recording equipment in a courtroom runs less than $20,000, and once installed, the cost of maintenance is minimal. The trade off becomes even more reasonable when you consider that the New York system requires an unprecedented number of hearings for each and every workers' comp claim.

In contrast to virtually every other non-monopolistic jurisdiction, New York insurers and third-party administrators are not allowed to make routine, unilateral changes in the status of any claim. A change in claim status requires a hearing, in front of a judge, complete with legal representation on both sides and a stenographer. This is enormously redundant and, in a word, non-sensical. It is also the root of New York's highest-in-the-country, soon-to-go-higher administrative costs. On a per capita basis, New York has more judges, more bureaucrats, more hearings, more paper flow and more stenographers than any other competitive state.

No Easy Answers

The fundamental goals of reasonable reform in New York can be easily stated: improve benefits for injured workers and lower the exorbitant cost of insurance for employers. It is not difficult to imagine how this can be done: simply look at the way most other competitive states manage workers' comp claims. New York would have to streamline its entire system: instead of operating like a monopolistic state, micro-managing every claim, New York could empower insurers and TPAs to manage claims as skillfully and independently as they do in other states; by doing away with unnecessary hearings and hugely redundant reviews of literally millions of forms, New York could substantially reduce staffing levels at the Workers' Comp Board.

But efficiency comes at a cost. One person's cost savings is another's job loss. These needed reforms would eliminate many, many jobs and in doing so, would throw hundreds of loyal workers into the already burgeoning unemployment lines. In this one small example, the elimination of stenographers from hearings would lower administrative costs, even as it would increase the unemployment of people with potentially obsolete skills. This is not an easy trade off, but a necessary one.

At some point, New York has to look at the big picture: workers' comp is way too expensive, even though the benefits, for the most part, are mediocre. Every adjustment to the current statute, every administrative decision, should pass through a single filter: Does this improve the benefits to injured workers and does it reduce the cost to employers? When you run Senator Savino's S. 4112 through this filter, it's not part of the solution, but just another clog in an already overloaded drain.

Jon Coppelman is a principal with Lynch Ryan & Associates, a Massachusetts-based employer consulting firm. This column was reprinted with his permission from the firm's Workers' Comp Insider blog.