A recent update from the New York Workers’ Compensation Board (WCB) may impact your exposure when accepting claims without liability under Section 21-a.
For many of our clients, this may increase indemnity payments while investigating liability as indemnity benefits will be based on the medical reports of the claimant’s treating medical providers.
If you have questions regarding whether a claim should be denied or accepted without liability, we encourage you to consult with our team.
Workers’ Compensation Law (WCL) § 21-a allows a payer to make temporary payments of compensation, if unsure of the extent of its liability for a claim, for up to one year without prejudice and without admitting liability. Under an update provided by the WCB:
When a payer elects to make temporary payments of compensation to a claimant under WCL § 21-a, the payments must be consistent with the medical reports of the claimant’s treating medical providers in the WCB file, and information in its possession concerning wages paid to the claimant.
The payer may not reduce indemnity benefits based on an independent medical exam (IME). Nor may a payer pay the minimum benefit rate to a claimant who was working full time prior to the work-related injury just because there is no Employer’s Statement of Wage Earnings (Preceding Date of Injury/Illness) (Form C-240) in the file.
Failure to comply with this directive may result in the payer losing its right to continue making temporary payments of compensation pursuant to WCL § 21-a and the imposition of penalties for instituting or continuing proceedings without reasonable grounds per WCL § 114-a(3).
Under the update, the payer now explicitly (1) cannot reduce indemnity benefits based on an IME; and (2) cannot pay the minimum benefit rate to a claimant who was working full time prior to the work-related injury due to no C-240 on file.
This change essentially makes it so if the payer accepts the claim without liability, the claimant is to be paid per the disability findings of their treating providers even if the carrier may have a contrary IME finding. The reduction of temporary payments of compensation to the claimant may result in the payer losing its right to accept the claim without liability, possibly being found to have accepted the claim with liability, and the imposition of penalties on the payer.
Given the typical disability findings at the outset of claims, the payer will for the majority of claims have to pay at a total disability or high disability rate until they: (1) Accept the case; (2) Controvert the case; or (3) Accept the case by allowing a year to pass.
Prior to accepting a claim without liability under Section 21-a, the payer must closely examine the file for disability findings made by the claimant’s treating providers.
Situations where it may be beneficial for the payer to accept the claim without liability under Section 21-a would be where the claimant either: (1) Does not have medical records provided and the carrier is able to investigate the claim prior to accepting or denying the claim; or (2) The medical reports of the claimant’s treating providers indicate a 50% disability or lower.
We are prepared to assist clients as we always do with guidance on legal questions of compensability and early claims handling risk mitigation. When considering whether to accept a claim without liability pursuant to Section 21-a, we stress the importance for early contact with employers to complete investigations with special emphasis on gathering wage information and considering obtaining an IME earlier in the claim than one might normally.