A ten page report from the NY state Workers’ Compensation Board indicates the workers’ compensation trusts are closing in on the billion dollar mark …in the hole. This is an adjusted figure compared to last summer’s estimate of approximately $600 million deficit. The report was required by Governor Cuomo whose administration inherited the problem. According to the latest audited financial statements, the workers’ compensation deficit is not at $924.6 million.
So how did this happen when employers are required to pay into the trust to ensure their workers have the necessary coverage should they become injured as a result of an accident at work? It is alleged that the Compensation Risk Managers mismanaged or worse defrauded the employers paying into the trust resulting in the deficit.
Unfortunately these employers are now on the hook for the shortfall, despite being the very source of the funds in the first place. The state has sued the Poughkeepsie based company accused of mishandling the funds, however the proposed settlement will only result in a $41 million payout, with small business owners across the state left holding the bag for the remaining shortage.
As reported by BusinessInsurance.com, “The employers are appealing”. Mark Teich, president of M&T Plumbing & Heating Co, “I paid a premium to cover my company and now they’re coming back and saying (employers) owe $925 million, it’s insane.”
Most small business owners are required to provide workers’ compensation insurance to guarantee their workers are covered in the event of an injury or accident. Workers’ compensation insurance ensures an injured worker has compensation for lost wages and medical expenses resulting from an accident at work.
To pay insurance premiums with the understanding your workers are covered, only to find out the finances have been mismanaged is a blow to small business owners who struggle to provide the necessary coverage for their employees.