Any avoidable workplace accident or injury can be devastating, but when a worker is permanently, physically altered from the incident, structured protections are placed on the compensation provided to that worker in the form of scheduled loss of use (SLU) awards. An SLU award is an additional cash payment made to a worker who suffers a workplace injury that leaves him with less ability in a body part than he had before the injury. Changes to the impairment guidelines used to allocate SLU awards are having significant impact on workers’ compensation plan costs. Understanding the factors that impact SLUs can guide your risk management plan strategy.
Permanent Partial Disability
SLU awards may be determined if one or more of the following body parts does not fully heal to the functionality it had prior to the injury:
Permanent injury to a body part may include: fractures, amputations, surgeries, tears, dislocations, second and third degree burns, crush injuries, severe nerve damage, hearing loss, or vision loss.
The length and amount of compensation is based on an assessment of how badly the body part has been damaged. SLU awards are determined by using standard impairment guidelines.
Historical Impairment Guidelines
In 1983, the New York State Legislature established a Temporary State Commission on Workers’ Compensation and Disability Benefits to study and evaluate the New York State Workers’ Compensation Board systems. In 1986, the Commission issued its final recommendations, among which was the establishment of published uniform medical guidelines for the evaluation of functional impairments. A committee was formed to determine the guidelines and the result was the formation of a comprehensive document, the 1994 Medical Guidelines, which addressed both scheduled and nonscheduled permanent partial disabilities. In 1996 the Board issued updated guidelines which were operational from 1996 to 2011.
In 2007 workers’ compensation reform legislation established duration limitations on non-schedule permanent partial disability awards based on an injured worker’s loss of wage-earning capacity (LWEC).
In 2008, the Workers’ Compensation Reform Task Force began developing guidelines for evaluating loss of wage earning capacity. In 2010, the Task Force issued recommended guidelines for the evaluation of medical impairment for non-schedule permanent partial disabilities, as well as recommended guidelines for the evaluation of functional abilities and losses. It did not, however, formalize guidelines for evaluating loss of wage-earning capacity.
In 2010, the Workers’ Compensation Board published proposed medical impairment and functional evaluation guidelines. Based on public comments the Board then updated its medical impairment guidelines.
The 2012 Impairment Guidelines
New impairment guidelines were published in December 2012 for evaluation of impairment for SLUs. They address the evaluation of both schedule loss of use awards and non-schedule permanent disabilities. The portion devoted to schedule loss of use awards is unchanged from the 1996 Guidelines. The non-schedule permanent disability sections are largely based on the work of the Insurance Department’s Workers’ Compensation Reform Task Force and Advisory Committee.
The goal of the 2012 guidelines was to bring greater clarity to the implementation of the duration caps on permanent partial disability benefits that were an important component of the 2007 Workers’ Compensation reform.
The Financial Impact
As a result of the new guidelines significant SLU permanency awards are being upheld on cases where the injured worker returns to full unrestricted duty, and a much higher percentage of SLUs are being awarded as a result of the following factors:
- Lack of a baseline data for pre-existing range of motion (ROM)
- Subjective exams with possible exaggeration of ROM
- No objective measurement of ROM
- No component for functional impairment
- Deficits are being added together causing inflated SLU awards coupled with 111% increase in the maximum weekly compensation rates since the previous workers’ compensation reform, which took place in 2007
As a result of the new guidelines and the factors listed above, greater compensation percentages are being awarded on a more frequent basis, ultimately adding costs to workers’ compensation plans’ bottom lines.
For more information on SLU awards, or safety programs that you can establish at your organization to reduce your workers’ risks of accidental injuries, talk to the risk management experts at POMCO today.