New York Injured Workers' Alliance - Advocacy for injured workers

 WCL DEATH TAX!!

By Ron Balter, Louis Dauerer, and James McCarthy

 You and Your Client

Have you sensed a bit of unease in attempting to explain to your client the Surviving Spouse offset off WCL §16?  “Well,” you might humbly state with your best attorney countenance, “it’s the law.”

Legislative History

The offset provision [50%] on workers’ compensation of WCL §15.3(v) is based upon receipt or qualification for SS disability benefits and terminates the WC disability benefit upon receipt or entitlement to receive old-age SS benefits.  This provision raises a question of age discrimination.  Together with WCL §16, these reductions are characterized as “reverse offsets” as distinguished from the SS offset where the combination of workers’ compensation and SS benefits are greater the 80%.  This latter “default offset” was authorized by Congress in 1965.

 Prior to the enactment of the 2007 [WCL 15.3(w)] duration limits on workers’ compensation, the 80% default offset often operated to spur a compromise of the workers’ compensation indemnity rate from total to a partial rate despite evidence of a higher indemnity rate.  Commentators observed that the duration limits of the 2007 reform statute “effectively removes this possibility for compromise.”  [NYS WC Handbook, 5.52(4)].

 In 1981, Congress eliminated “reverse offset” provisions, but grandfathered those in NY and fourteen other states.  WCL §16 was enacted in 1977.  Among others, the legislative purposes cited:  “tax incentives for employers”; “creates jobs”; and “dependents are not without other financial support.”  In 1977, the maximum statutory indemnity for a death claim was $125 per week for an Average Weekly Wage [AWW] of $187.50 compared to the 2011 maximum of $772.96.

 Effects of the “Reverse Offset”

Recent AWW data [Joint Report of the NYS Insurance Department and NYS Workers’ Compensation Board, (March, 2009, p. 21)] indicates that of 83,830 Claims With First Indemnity Benefits paid in 2007-08, 34,022 [69.1%] were male and 13,841 [28.1%] were female, or a ratio of more than two to one.

Thus, the “reverse offset” disproportionately affects the female surviving spouse likely in a similar ratio.  [See Data Below]

Based upon the criteria of WCL §16 [Table 1: Sole Surviving Spouse, no children] the workers’ compensation indemnity reduction ranges from 5% to 50% depending upon the AWW range from $$100 to $200 per week.

The data further demonstrate that 78,339 claims have an AWW in excess of $224, representing 93.5% of the total number of claims potentially subject [in a death claim] to a “reverse offset.”  If the AWW is $450 [$300 per week statutory benefit] , a sole surviving spouse [over age 60] with a SS Survivor Benefit of $1200 per month is subject to a “reverse offset” of $138.46 per week [$1200 x 12/52 x .50] or nearly $7200 per year.  This represents a 46.15% reduction.  In the national debate, this would be characterized as “confiscatory” or a death tax.

 Time To Act

It’s been over 30 years since Congress prohibited (and grandfathered) “reverse offsets” and thirty-four since New York passed its legislation.  Rescission of New York’s “death tax” is long overdue and the Legislature needs to determine whether WCL §16 has met its purposes.  It’s difficult to imagine those goals have been achieved.  While death and taxes may be inevitable, they ought not be even more distressing and painful to surviving spouses.

Since the “reverse offset” is by operation of law, the reduction occurs without a hearing on the issue.  Due Process is at stake:

"To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it. . . . [Roth, 408 US at 577].

The "offset provisions" are more than anachronisms.  They are punitive and survivors of deceased workers need not be victims.  It's time for these provisions to be repealed!!!