Cuomo Vetos Jockey Fund Legislation

Legislation permitting the New York Jockey Injury Compensation Fund to look at alternative coverage options for its increasingly expensive workers compensation insurance program has been vetoed by Gov. Andrew Cuomo.

The governor's veto message, released Nov. 29, said the measure "does not provide an appropriate solution to controlling workers' compensation costs and instead decreases workers' compensation protections for workers.''

But Richard Violette Jr., president of the New York Thoroughbred Horsemen's Association, said the veto was based on "factually incorrect" assumptions, such as the governor's claims that existing annual state agency approvals of the insurance coverage plan would be dropped.

The veto explanations did not make sense, Violette said, because the measure would have allowed the Jockey Fund to explore alternative insurance offerings "without fast-tracking any of the necessary approval protocols."

"It's leap-frogging to a conclusion before any of the work has been done,'' he said of the Cuomo veto.

Facing sharply rising costs over the years, the Jockey Fund would have been able to look at self-insurance or other coverage options under a plan approved last spring by the legislature.

The measure also permited an expansion of job titles that can be covered by the Jockey Injury Fund to include "licensed employees of licensed trainers,'' such as assistant trainers, foremen, watchmen and stable employees, including grooms and hot walkers. The fund now covers jockeys, apprentice jockeys, and exercise riders.

The legislation proposed giving Thoroughbred owners and trainers more options, including creation of a self-insurance system, to try to control workers compensation costs that officials say have made New York an increasingly uncompetitive place for some in the industry.

Before passage of the legislation, the NYTHA said workers compensation costs were going from 13% of payroll expenses to 22% this year. A large part of the increase, officials say, has been attributed to injuries involving exercise riders.

"We're not asking for any subsidy from the state or special dispensation,'' said Violette.

No matter the coverage, various state agencies, including the Gaming Commission, have to approve any insurance offered by the Jockey Fund.

Violette said the current system has been expensive, in part, because the fund is restricted mostly to so-called guaranteed-cost insurance programs, in which an insurance company, in advance, provides the insured entity with a locked-in cost for a coming year.

"That's a very expensive plan, and it's always lopsided in favor of the insurance companies so they're not caught short,'' Violette said.

The measure does not mandate an insurance change, but permits the Jockey Fund to investigate other forms of coverage, including self-insurance. NYTHA executives believe the overall insurance costs can be lowered by enlarging the pool of insured individuals to include grooms and hot walkers and other back-stretch employees. Such workers, Violette noted, have far fewer claims—up to three times fewer—and less serious insurance claims than, for instance, exercise riders.

The legislation was sponsored by Assemblyman Gary Pretlow and Senator John Bonacic, the chairs of the legislature's racing and gaming committees in the Assembly and Senate.

In their memo accompanying the bill, the lawmakers noted the Jockey Fund was created in 1990 by the legislature in what, at the time, was envisioned as "an efficient manner at a low cost.'' Since 2007, the memo notes, costs have quadrupled in large part due to statutory increases in indemnity payments. They noted the current system results in exercise riders and hot walkers working for the same trainer to be covered by different workers compensation policies. It noted the Jockey Fund's "bargaining power" with insurers should be expanded if the pool of insured people is also expanded.

But in his veto message, Cuomo said the bill would "jeopardize" the original intent of the Jockey Fund's creation to provide insurance protections for jockeys, apprentice jockeys and exercise riders.

Cuomo said the fund would be able to select an insurance company to administer claims without first getting approval from the state's Workers Compensation Board, which would create risks about who might actually be covered by the plan.

Cuomo said the expansion of coverage for licensed employees, such as grooms, does not include any penalty against the Jockey Fund if it were to suddenly eliminate their coverage.

"This would create adverse selection, inadequate coverage and uncertainty, undermining the policy objectives of the (Jockey Fund) to provide reliable workers' compensation coverage for jockeys and exercise riders,'' Cuomo wrote.

The governor continued: "There are more effective approaches to managing risk and expenses in the Thoroughbred industry, such as vesting control of the (Jockey Fund) in the racetracks that oversee the working conditions of the covered employees.''

The veto message did not explain how the New York Racing Association's Aqueduct, Belmont Park, and Saratoga Race Course, or Finger Lakes Gaming & Racetrack—which are the tracks where the Jockey Fund insurance is offered—might take over control of the insurance fund.

"It's one of the biggest reasons that people don't come to New York: the cost of doing business, and the cost of insuring both the Jockey Fund and the backside has literally doubled in the last four years,'' Violette said.