S2 E50 NY Workers' Compensation One Two Punch

New York Senate Bill S6376-A proposes significant changes to the Workers' Compensation system that could reshape how permanent partial disability claims are handled across the state. The legislation would eliminate labor market attachment as a basis for reducing or denying benefits, continue medical treatment even after indemnity benefits end, and shift important burdens of proof onto insurance carriers. It also clarifies how benefit weeks are calculated, potentially impacting long-term claim costs and administration.

In this episode of Deep Dive, we examine what the bill actually does, why it was introduced, and what these proposed changes could mean for injured workers, employers, insurance carriers, claims professionals, and the future of workers' compensation in New York. Whether you support or oppose the legislation, understanding its practical implications is essential. 

Let's Dive In!

Transcript

SPEAKER_00 0:07

So imagine you get injured on the job, you take some time to recover, and then you know, eventually you just decide you don't really want to work anymore.

SPEAKER_01 0:14

Right, like you just officially retire.

SPEAKER_00 0:16

Exactly. You officially retire, maybe you move out of state and you just completely exit the workforce. Now imagine your former employer is legally required to keep paying your weekly salary indefinitely.

SPEAKER_01 0:27

Just forever.

SPEAKER_00 0:28

Yeah, treating you exactly the same as someone who is desperately scouring the classified every single day for a job they can actually perform. In York State, that scenario might soon be perfectly legal.

SPEAKER_01 0:41

Which is pretty wild to think about.

SPEAKER_00 0:44

Is so welcome to the deep dive.

SPEAKER_01 0:46

Oh.

SPEAKER_00 0:46

Today we are looking at a hidden legislative one-two punch that critics argue could fundamentally break the mechanics of the state's workers' compensation system.

SPEAKER_01 0:55

And you know, the machinery of workers comp is already fascinating because it was originally designed as this grand compromise, right? Right. The employees basically gave up the right to sue their employers for negligence, and in exchange, they got a guarantee of swift, no-fault medical care and wage replacement if they got hurt.

SPEAKER_00 1:11

A safety net, essentially.

SPEAKER_01 1:13

Yeah, a safety net. But when you start um pulling levers and changing the foundational rules of that compromise, the economic ripple effects are just immediate and severe.

SPEAKER_00 1:23

Which brings us to the mission for today's deep dive. We are unpacking two major concurrent proposals happening right now in New York.

SPEAKER_01 1:32

Yes, the one-two punch.

SPEAKER_00 1:33

Right. The first is Senate Bill S 6376A, which was introduced back in March of 2025. And the second is a regulatory change at the agency level, specifically to 12 NYCRR 300.1C.

SPEAKER_01 1:47

And that second one, the regulatory change, actually just ended its public comment stage today, July 16th.

SPEAKER_00 1:54

Right, today. So just so we are perfectly calibrated for you listening at home, our sources for this analysis include the raw legislative and regulatory text, alongside a piece of highly critical industry insider commentary.

SPEAKER_01 2:05

And we really need to lean into this commentary to understand the mechanics of the opposition here.

SPEAKER_00 2:09

Absolutely. And to be crystal clear, we are not taking a political stance here. We aren't endorsing the viewpoints of the commentary, nor are we, you know, advocating for the legislation.

SPEAKER_01 2:18

No, not at all.

SPEAKER_00 2:19

Our goal is strictly to impartially unpack how these laws function, what the arguments are, and why these industry insiders are sounding the alarm.

SPEAKER_01 2:28

And I mean the alarm is deafening right now. The crux of the insider commentary is that these two changes just cannot be viewed in isolation.

SPEAKER_00 2:35

Aaron Powell They're just bureaucratic housekeeping.

SPEAKER_01 2:37

No, not even close. The critic describes them as a highly coordinated effort to fundamentally alter who gets benefits, how long they get them, and this is key whether an employer even has the legal right to challenge a doctor's medical findings.

SPEAKER_00 2:51

So let's start with the first punch. I read the text for Senate Bill S 6376A, and it is shockingly brief for something causing this much panic.

SPEAKER_01 3:00

It really is, just a few lines.

SPEAKER_00 3:02

Yeah, it essentially amends Section 15 of the workers' comp law by adding a new uh subdivision 10. And the text explicitly prohibits insurance carriers and employers from withholding or diminishing benefits based on an injured worker demonstrating attachment to the labor market. But my understanding was that proving you are actively looking for work is the entire bedrock of receiving partial disability. I mean, how does the system even function without that requirement?

SPEAKER_01 3:30

Aaron Powell Well, to understand the impact, we first have to define what benefits actually means in the specific context.

SPEAKER_00 3:36

Aaron Powell Okay, break it down.

SPEAKER_01 3:38

In the workers' comp universe, you basically have two main buckets. The first is medical benefits. So paying for the surgery, the physical therapy, the prescriptions, all that.

SPEAKER_00 3:47

Aaron Powell And this proposed bill doesn't touch the medical side.

SPEAKER_01 3:50

No, it doesn't touch those at all. The second bucket is indemnity benefits. And indemnity is simply just a formal legal term for a weekly wage replacement check.

SPEAKER_00 3:58

Aaron Powell So this is about the money replacing the paycheck, not the money paying the hospital.

SPEAKER_01 4:02

Precisely. Now, under the current status quo, if a worker is 100% totally disabled, meaning they are physically incapable of doing any work whatsoever, they receive their indemnity benefits full stop.

SPEAKER_00 4:14

Makes sense.

SPEAKER_01 4:14

But the law recognizes a vast middle ground called partial disability. This means the worker has an injury and they have physical restrictions, but they still have the medical capacity to work in a lighter role.

SPEAKER_00 4:26

Like maybe they can't lift 50 pounds on a construction site anymore, but they can sit at a desk and answer phones.

SPEAKER_01 4:32

Exactly, yeah. And the way it works now is that if a claimant is partially disabled, they must seek work within their physical restrictions to show that they remain attached to the labor market.

SPEAKER_00 4:42

So under the current rules, that partially disabled worker has a legal obligation to basically mitigate their damages. They have to engage in a good faith work search.

SPEAKER_01 4:51

They do. And failure to engage in a good faith work search will result in a finding of voluntary removal and the suspension of benefits.

SPEAKER_00 4:59

Wow. Okay, so if they just stop looking, the checks stop.

SPEAKER_01 5:02

Right. The immediate consequence of voluntary removal is the suspension of those weekly indemnity checks.

SPEAKER_00 5:08

Okay, let's unpack this with an analogy, because I totally get the source's frustration here. Think of indemnity benefits like commuter insurance that replaces your train ticket costs if you get injured and can't take the train.

SPEAKER_01 5:20

Okay, I like that.

SPEAKER_00 5:21

If you completely retire and stop commuting entirely, so you voluntarily withdraw from the commuter market, why would you still get the ticket payout?

SPEAKER_01 5:30

You wouldn't. And that's exactly the commentator's point. The source material argues that this proposal is completely inconsistent with the workers' compensation law.

SPEAKER_00 5:38

Because it defies the basic logic of wage replacement.

SPEAKER_01 5:41

Yes. As it stands right now, if this passes, a claimant who has voluntarily withdrawn from the labor market would still be entitled to indemnity benefits. But of course, indemnity benefits are for wage replacement, so the logic makes no sense.

SPEAKER_00 5:55

Right, because if you aren't working, you don't have wages to replace.

SPEAKER_01 5:58

Exactly. If you have voluntarily withdrawn from the labor market, then you obviously do not have wages to replace. By removing the labor market attachment rule, the bill basically transforms wage replacement into a guaranteed unconditional payout.

SPEAKER_00 6:12

Completely divorced from the claimant's actual economic loss.

SPEAKER_01 6:15

Yeah, or their desire to work at all. And the commentary notes that the assumption here is there is heavy influence from the NYS TLA, the New York State Trial Lawyers Association.

SPEAKER_00 6:26

Oh, interesting. And labor unions too.

SPEAKER_01 6:27

Yeah, it appears labor is going to get behind this as well. We'll definitely get into why trial lawyers have such a massive vested interest in this in a minute, but for now let's look at the causality. Okay. If the state removes the requirement for a worker to prove they are looking for a job, the only defense an employer has left to mitigate their financial exposure is to medically prove the worker is fully healed.

SPEAKER_00 6:48

Or at least only partially disabled.

SPEAKER_01 6:50

Right. But what happens if the state simultaneously takes away the employer's right to question the doctor?

SPEAKER_00 6:56

Oh man. Okay, so that brings us to the regulatory side of this one-two punch. We leave the state senate and enter the engine room of the workers' compensation board, right? The WCB.

SPEAKER_01 7:07

Yes. Specifically, we need to examine the proposed changes to the regulation governing hearings and adjournments, which is 12 NYCRR 300.10.

SPEAKER_00 7:18

Okay, and the catalyst for this regulatory change is a very specific 2023 Court of Appeals decision, right? Leslie V. Wegman's Food Markets, Inc.

SPEAKER_01 7:28

That's the one. And the crux of this issue is that the regulation stated that a workers' comp referee shall grant an adjournment in order to facilitate a request to take testimony from the claimant or a medical provider.

SPEAKER_00 7:40

And the facts of that case hinged on that single word, shall.

SPEAKER_01 7:44

Yeah, in legal drafting, the distinction between shall and may is huge. Right. It's the difference between a mandate and a suggestion.

SPEAKER_00 7:52

So the employer essentially says, hey, the claimant's doctor submitted a report saying they're totally disabled, but we have surveillance footage of them carrying heavy groceries. We need to pause and cross-examine this doctor under oath.

SPEAKER_01 8:03

Aaron Ross Powell Right. And the Court of Appeals in Laslie reiterated that the word shall means exactly what it says. The judges don't have a choice. The court ruled that the WCLJs, the workers' comp law judges, must grant the request when an application is timely made. Trevor Burrus, Jr.

SPEAKER_00 8:17

So they stripped away any ambiguity. If the request is on time, you get the deposition.

SPEAKER_01 8:22

Yes, but the Workers' Compensation Board clearly did not like that. In response to the Lazalee decision, the WCB has sought to change this regulation and place the determination to grant depositions entirely at the discretion of the judge.

SPEAKER_00 8:35

So they are trying to change the mandate into a choice.

SPEAKER_01 8:38

Exactly. They have included that an offer of proof must be made before the judge will allow it. But, and this is crucial, they don't define what an offer of proof actually is.

SPEAKER_00 8:51

Okay, let me play devil's advocate for a second here. Go for it. If I am an injured worker, dragging my treating physician into a contentious legal deposition sounds like an absolute nightmare.

SPEAKER_01 9:01

Sure, it's not fun.

SPEAKER_00 9:02

I mean, it sounds incredibly expensive, delays my care, and it forces my doctor to spend their afternoon dealing with hostile lawyers instead of treating patients. The board's stated goal here is to cut down on litigation and limit the number of depositions granted. So on the surface, isn't cutting this red tape a massive win for the patient?

SPEAKER_01 9:21

Well, the insider commentary strongly pushes back on that assessment. The critic argues that while the stating goal is to limit litigation, the result will actually mean more litigation around what offer of proof will mean.

SPEAKER_00 9:34

Wait, how does stopping a legal deposition create more litigation?

SPEAKER_01 9:39

Because they deliberately left the term undefined. So instead of litigating the actual medical facts of the injury with the doctor under oath, the system will now just get bogged down with endless preliminary hearings where lawyers just argue over whether the paperwork meets this invisible standard of an offer of proof.

SPEAKER_00 9:56

Oh, I see. So it replaces factual medical litigation with procedural litigation.

SPEAKER_01 10:00

Exactly. And while they are fighting over what counts as proof, the commentary argues this is simultaneously denying an employer's right to due process.

SPEAKER_00 10:08

Because the doctor's initial report just sits there on the desk, unchallenged.

SPEAKER_01 10:11

Right. And the source makes a very strong claim here. They assert that the system is rife with abuse. Given the rampant fraud amongst the medical providers before the WCB, this in effect removes a layer of scrutiny and accountability.

SPEAKER_00 10:24

Let's unpack the mechanism of that alleged fraud for a second. Why would a doctor submit an exaggerated report in the first place? And why wouldn't they just voluntarily downgrade a patient's disability rating once they start healing?

SPEAKER_01 10:38

It comes down to the perverse economic incentives within the medical billing system itself. From a purely financial standpoint, a medical provider treating a worker's comp patient has a steady, guaranteed stream of billing. Okay. If they declare the patient partially healed and capable of light duty, the insurance carrier might push to close the case, or the patient might be forced to return to work and seek less treatment.

SPEAKER_00 11:02

And the doctor risks alienating their patient by basically acting as the agent that cuts off their weekly indemnity check.

SPEAKER_01 11:08

Exactly. The doctor becomes the bad guy. So there is a built-in incentive to maintain a finding of total disability for as long as possible. The commentator points out that the right to depose a doctor essentially removes one of the few arrows in our quiver when it comes to stopping bad actors.

SPEAKER_00 11:23

Because if you take away the ability to cross-examine them under oath, you are essentially rubber stamping their initial medical report.

SPEAKER_01 11:31

Regardless of how inaccurate it might be. Because, as the source notes, if we are denied the right to depose a doctor, we cannot secure a partial disability unless the treating physicians concede it.

SPEAKER_00 11:43

Which you're saying is almost never.

SPEAKER_01 11:44

Which is almost never, yeah. We also won't be able to determine what the physical restrictions even are.

SPEAKER_00 11:50

Wow. Okay, I want to synthesize all of this so we can really see the big picture.

SPEAKER_01 11:54

Yeah.

SPEAKER_00 11:54

Think of the state's workers' compensation pool as a massive boat, right? And fraudulent or exaggerated claims are water leaking into the hull.

SPEAKER_01 12:03

Okay, tracking with you.

SPEAKER_00 12:04

The right to depose a doctor is the bucket the employer uses to bail the water out. And the labor market attachment rule, that's a plug you use to finally patch the hole once the worker is partially healed. If you take away the bucket and you take away the plug, the boat is guaranteed to sink.

SPEAKER_01 12:21

That's a really great way to look at it. Because what we are facing is a one-to-punch designed to allow treatment and benefits to go unchecked. Let's follow the timeline of a claim under these proposed rules. Step one. Step one. An employee gets hurt and their doctor submits a report declaring them 100% totally disabled. The employer reviews it, maybe has surveillance footage, and strongly suspects the worker actually just has a partial disability.

SPEAKER_00 12:47

So they want to challenge it.

SPEAKER_01 12:48

Right. So step two, the employer tries to schedule a deposition to question the doctor. But under the new regulation, the judge uses their discretion, decides the undefined offer of proof wasn't sufficient, and denies the request entirely.

SPEAKER_00 13:03

Aaron Powell So the employer is completely blocked from gathering evidence. The first punch lands.

SPEAKER_01 13:07

Yes, the employer is stuck paying maximum benefits. But and this is where it gets crazy, let's assume the employer somehow survives that first punch.

SPEAKER_00 13:15

Let's say they manage to present a miraculous offer of proof, they get the deposition, and the judge officially rules the worker is only partially disabled. They proved their case.

SPEAKER_01 13:25

Aaron Powell That is exactly when the second punch lands. Because if we do secure a finding of a partial disability, it will be completely toothless.

SPEAKER_00 13:33

Because of the Senate bill.

SPEAKER_01 13:35

Yes. S6376A. Because under the new law, the worker no longer has to prove they are attached to the labor market. They don't have to look for work. They can voluntarily withdraw from the workforce entirely, and the employer still has to pick them wage replacement.

SPEAKER_00 13:50

So the employer fought tooth and nail, won the medical argument, and it changes absolutely nothing about the financial payout.

SPEAKER_01 13:57

Nothing at all. These are two of the best defenses clients have to mitigate damages at the workers' comp level, and they are being dismantled simultaneously.

SPEAKER_00 14:05

Aaron Powell And the commentary emphasizes this will have a negative impact across all lines of business, right? Not just workers' comp premiums.

SPEAKER_01 14:12

Oh, absolutely. And this ties back to why the Trial Lawyers Association is so invested. Of course, as you know, the workers' comp claim is always a vehicle for the third-party labor law cases when the exposure exists.

SPEAKER_00 14:22

Aaron Powell Let's dive deep into the mechanics of that. How does a workers' comp claim mutate into a massive civil lawsuit?

SPEAKER_01 14:30

Well, New York has very unique, incredibly strict labor laws, specifically labor law 240, which is often called the scaffold law.

SPEAKER_00 14:38

Right, I've heard of that.

SPEAKER_01 14:39

Under this law, property owners and general contractors are held strictly, absolutely liable for gravity-related injuries on a construction site.

SPEAKER_00 14:48

Meaning if a subcontractor's employee falls off a ladder, it doesn't matter if the employee was acting recklessly, right?

SPEAKER_01 14:54

Right.

SPEAKER_00 14:55

The owner of the building and the general contractor are automatically at fault.

SPEAKER_01 14:58

That's the essence of strict liability. So let's say a worker falls. They file a worker's comp claim against their direct employer. Now, worker's comp is supposed to be the exclusive remedy. You can't sue your own boss.

SPEAKER_00 15:10

But because of the scaffold lock.

SPEAKER_01 15:12

Exactly. That worker can take the medical evidence gathered in the worker's comp system and use it to launch a massive multimillion dollar third-party civil lawsuit against the general contractor or the property owner.

SPEAKER_00 15:25

I see the connection now. So if the worker's comp board becomes a rubber stamp, if the employer is denied the right to cross-examine the doctor, and the worker is handed a permanent unchecked disability rating, the trial lawyers are essentially being handed pre-packaged, unverified maximum medical damages to take right into a civil courtroom. The workers' comp system is just doing the prep work for the personal injury lawsuit down the line.

SPEAKER_01 15:50

The stakes are exponentially higher than just the weekly indemnity checks. A rubber-stamped total disability finding in a workers' comp hearing becomes exhibit A in a $10 million civil lawsuit. Wow. And this leads to a point of profound irony that the expert source concludes with regarding state politics.

SPEAKER_00 16:09

The commentary points out a glaring contradiction in the state's approach to fraud, doesn't it?

SPEAKER_01 16:13

It does. The critic points out that in their view, this is entirely inconsistent with the policy position of the governor.

SPEAKER_00 16:20

Aaron Powell Because the governor's administration has publicly pushed a policy of placing more scrutiny on insurance claims, right? To combat fraud and lower the cost of living.

SPEAKER_01 16:28

Aaron Powell Exactly. Who is placing more scrutiny on insurance claims? The governor is. Yet here we have a coordinated legislative and regulatory push to remove scrutiny, limit accountability, and prevent employers from questioning medical claims.

SPEAKER_00 16:41

So we have a macroscopic system where the executive branch is basically holding press conferences saying we need to crack down on insurance abuse. Right. While down in the bureaucratic engine room of the Workers' Compensation Board and the State Senate, they are quietly removing the locks from the vault and throwing away the keys.

SPEAKER_01 16:59

That is the inescapable conclusion of the industry insiders viewing this one-to-punch. It removes the few tools designed to stop bad actors in an environment that is already rife with abuse. Good idea.

SPEAKER_00 17:19

What we are witnessing in New York is a high wire balancing act that has basically defined labor law for a century. On one side, there is the absolute moral necessity of protecting injured workers, right? The system must ensure that legitimate claims are paid swiftly, that treatment isn't delayed by bad faith corporate litigation, and that people aren't driven into poverty because of a workplace accident.

SPEAKER_01 17:42

Absolutely, that's paramount.

SPEAKER_00 17:43

But on the other side of the scale, there is the absolute necessity of employer due process. An employer must have the legal right to question a medical diagnosis, to demand factual proof through cross-examination, and to ensure that a benefit explicitly designed as wage replacement is actually replacing the wages of someone who genuinely wants to participate in the labor market.

SPEAKER_01 18:05

And the compelling argument we've explored today is that Senate Bill S 6376 Day and the regulatory changes to 12 NYCRR 300.10C threaten to violently tip those scales. By eliminating the requirement to search for work and erecting undefined bureaucratic hurdles to medical depositions, the state risks opening the flood dates for unchecked damages.

SPEAKER_00 18:27

Damages that will inevitably bleed into third-party litigation and drive up the cost of doing business across every sector. Like we said, if you take away the bucket and the plug, the boat sinks.

SPEAKER_01 18:36

It really does.

SPEAKER_00 18:36

But I want to leave you, the listener, with a broader, perhaps even more complex concept to mull over on your own as these debates continue to unfold. We have spent this entire deep dive analyzing the traditional legal mechanisms for proving attachment to the labor market. We talked about commuting, searching the classified, and proving a desire to return to a traditional job.

SPEAKER_01 18:57

The old way of doing things.

SPEAKER_00 18:59

Exactly. But what happens if those traditional definitions of employment are already becoming obsolete? As we move further and further into a fluid gig economy, where a worker might, you know, drive for a ride chair app for three hours on a Tuesday, freelance code on a laptop for two hours on a Thursday, and take the rest of the week off? How do you even define labor market attachment?

SPEAKER_01 19:19

That is a fascinating point.

SPEAKER_00 19:21

If the old rigid ways of verifying work searches and physical restrictions are dismantled by laws like S6376A, how might the very definition of work and disability have to fundamentally evolve in the next decade? Are we trying to apply a 20th century factory floor mentality to a 21st century economic reality?

SPEAKER_01 19:40

It's definitely something that's going to have to be addressed sooner rather than later.

SPEAKER_00 19:44

It is a fascinating question, and one you should definitely keep an eye on, regardless of which side of the aisle you sit on. Thank you for joining us on this deep dive. Keep asking questions, keep looking past the surface, and we will catch you next time.