Inside The Long Retreat of Workers’ Compensation in New York

Every day counts with an injury like hers. But it took D’Angelo six months to find a doctor in the area willing to take on the hassle of getting paid through the state’s workers’ comp system.

She had serious doubts about the surgeon she finally found, but went ahead with treatment because she couldn’t find anyone else who accepted the benefit. The first surgery “butchered” D’Angelo, she said. It required three more surgeries and resulted in a 14-inch incision and the use of porcine dermal collagen — pig skin — to hold her abdomen together. Each attempt left her body with irreversible scar-like adhesions, and left her unable to bear children.

New York became the first state in the nation to set up a workers’ compensation system in the wake of the 1911 Triangle Shirtwaist Factory Fire. In the century since, the social insurance program has covered medical bills and cash for recovery time for countless injured construction workers, prison guards, nurses, and other workers.

Yet in recent years, the program’s benefits have quietly shrunk by over a third.

From 2014 to 2023, the dollar amount of benefits insurers pay to workers fell by $1.4 billion per year — a 37 percent drop, according to the latest available insurance data compiled by economist James Parrott and shared with New York Focus. In that same period, Parrott calculated, insurers pocketed nearly $11 billion in profits. (Parrott is not related to this reporter.)

The decline doesn’t correspond to jobs getting safer. Payouts have decreased even in years in which injury rates have gone up. Instead, labor attorneys argue, it’s the result of a series of decisions made by the Workers’ Compensation Board, the state body that administers the system, that have made it harder for workers like D’Angelo to file and prove their medical claims.

Those policy changes were made under the board’s four previous executive directors, a position that watchdogs say has taken an increasingly central role in running the agency. After their tenures, all four immediately joined workers’ comp insurance companies that they’d just been in charge of overseeing.

“It’s a closed system where people see one common set of interests,” Parrott said.

This year, Governor Kathy Hochul is pushing to tackle “red tape” in the workers’ comp system by lifting a requirement for medical providers to receive special authorization to take on workers’ comp cases.

“New Yorkers who are injured or become ill on the job need more options for care,” Hochul said when she unveiled the policy in last year’s State of the State address. The proposal didn’t make it into last year’s budget, but Hochul is trying again this year.

Her plan would lift one hurdle doctors face, but it would leave one of the most onerous parts of the bureaucratic machine intact: a policy adopted in 2010 that allows insurers to pre-deny medical procedures that aren’t on an authorized list.

“How the Board treats procedures that are not on the list of pre-authorized procedures is a huge barrier to treatment,” said Holly Manillo, a co-chair of the New York Workers’ Compensation Alliance, or WCA, a group of attorneys representing injured workers. “The pre-authorization list was intended to expedite certain procedures, not to automatically deny treatments that are not on the list.”

It’s not clear how many claims get pre-denied. The board’s current executive director, Steven Scotti, who has overseen the implementation of the online filing system, has warned carriers not to deny authorization requests solely because they are not on the list, but the board does not review denials until after insurance providers have two opportunities to deny a claim.

“The board always acts properly to fulfill its mission to protect the rights of employees and employers by ensuring the proper delivery of benefits and compliance with the law,” spokesperson Craig Smith said in a statement.

The WCA opposes Hochul’s proposal; without more comprehensive reforms, the group argues, suddenly expanding a pool of doctors who are unfamiliar with the highly technical system would produce a flood of denials for workers.

“What they’ve chosen to do for a long time now is just keep piling on to protect employers and reduce benefits,” said Robert Grey, a longtime worker-side attorney. “How do you justify this when employer costs are lower than they were in 1990 and the carriers are making a billion dollars a year?”

The Revolving Door

For much of the twentieth century, New York courts used a liberal interpretation of workers’ compensation that favored labor protections. That began to change in the 1990s and especially the 2000s, when Governor Eliot Spitzer oversaw a 2007 reform package that increased maximum benefits but also gave the Workers’ Compensation Board, employers, and insurers sweeping new authority over medical care, with the explicit goal of “lower[ing] employer premiums.”

In the years since 2007, labor attorneys say, the power of the board’s executive director has grown within the agency. One after another, those executive directors have overseen changes that benefit insurers — then gone on to work for those insurers.

The board’s 15 commissioners guide policy by reviewing appeals of worker claims, which creates precedent. Frank Kerbein, who represents the Business Council of New York State, said over time the members of the body have tended to come overwhelmingly from public service and labor rather than “employer-side” backgrounds. But the commissioners, who are appointed by the governor, often don’t have extensive experience with the insurance side of the system, and in practice the general counsel’s office often writes board decisions for them to sign.

The Spitzer reforms capped the duration of permanent partial disability benefits to a maximum of 10 years. In the following years, the board began classifying more injured workers as having permanent partial disabilities, starting the clock on the end of their benefits.

In 2010, the board adopted the policy of using preauthorized treatments, which it said would expedite care. But insurance companies began to effectively pre-deny any treatment not on the list, forcing doctors to provide complex legal justifications to get them approved.

Jeffrey Fenster, the WCB executive director at the time, came to the position with little workers’ comp or administrative experience. In 2014, he left the post abruptly for AmTrust Financial, an insurance company that provides workers’ compensation services.

The next executive director, Mark Wade, served for a few months and then left for the Argo Group, an insurer with a specialty in workers’ compensation. Neither Fenster nor Wade responded to requests for comment.

In 2017, under Executive Director Mary Beth Woods, the board reduced the amount of a cash benefit that pays workers for the loss of a body part, known as a “schedule loss award.” The state Assembly pushed back in a series of hearings that ended up revising the guidelines and forcing the chair of the board to resign.

Woods left the job in 2021 to serve as executive director of PERMA, the public insurance carrier that D’Angelo dealt with.

Woods’s longtime general counsel, David Wertheim, took over as acting executive director and instituted a drawn-out electronic filing process for treatments that aren’t preauthorized. In 2022, he left for the New York State Insurance Fund (NYSIF), another state-run insurer and the largest workers’ comp provider in New York.

Workers’ comp attorneys say that under Woods and Wertheim, the board aggressively shifted from an “outreach-oriented” system to one in which claimants must actively fight to get a hearing. From 2017 to 2024, New York employers saw workers’ compensation loss costs drop by 54 percent, and data that Grey collected shows insurers collected cumulative profits of around $7.7 billion.

“Mary Beth and David were … very active, both administratively and in terms of the board’s administrative appeal decisions in positioning the board so that it would save employers money,” Grey said. “That approach was clearly transferable to their next positions with insurance companies.” Neither Woods nor Wertheim responded to a request for comment.

This fall, a group of state lawmakers accused the WCB of being captured by the insurance industry and called on its current executive director, Steven Scotti, to resign. Though the Board did not respond to New York Focus about this push, at the time it called the claims “baseless.”

During his tenure, Scotti has sought to fine-tune the online pre-authorization process, making it easier for insurance companies to agree to pre-authorization requests over legal objections, and making the online approval process more efficient.

Lawmakers have proposed some measures in recent years to tilt the scales back toward workers, but business and insurance lobbies have kept them at bay.

Kerbein, who in addition to representing the Business Council sits on the New York Compensation Insurance Rating Board, said that the council has been “playing defense” and “trying to maintain the changes” made in 2017. He pointed out that New York has some of the highest workers’ comp premiums in the country, so it was appropriate for the recent reforms to be geared toward saving employers money.

“Let’s not piecemeal this to death like it has been done in the past. That’s our main argument on almost every piece of workers’ comp legislation that’s proposed,” said Kerbein.

In 2023, Hochul vetoed a bill that would have guaranteed all workers’ comp claimants a hearing on their case before a judge. One purpose of the bill was to prevent employers like the City of New York, which unlawfully delays a majority of all new workers’ comp cases, from indefinitely postponing cases without a court appearance.

Wertheim, the NYSIF executive and former WCB head, wrote a memo arguing that the bill would be burdensome to carriers and employers and would require additional WCB staff.

Hochul’s veto memo echoed Wertheim’s concern over the staffing burden, which she argued would lead to greater delays in workers’ comp claims.

“Workers’ comp is often the sort of sacrificial lamb to business for governors who are trying to appear progressive and worker-friendly in other arenas,” Grey said. “That’s just the nature of the beast.”

“The Really Injured People Give Up”

It took D’Angelo eight years after her accident to be recognized by the workers’ comp system as permanently disabled. To navigate workers’ comp, she said, is to be “assumed fraudulent the minute you have your injury.”

During that time, she avoided some treatment for fear that it wouldn’t be covered, she said.

“There were several times my husband and I felt like I needed to go to the emergency room, but I was too afraid to, because those are one of the things that get denied payment quite often,” D’Angelo said.

Fraud isn’t a theoretical concern, though it’s hard to determine how common it is. In 2024, New York’s inspector general uncovered nearly $2 million in claimant fraud cases. Five of the charges it levied against 14 people resulted in criminal convictions that year.