Workers’ Compensation Offset of Social Security Retirement Benefits – Can it be stopped?

THE HISTORY:  In Washington State the workers’ compensation system has been offsetting a claimant’s receipt of social security retirement benefits since 1986.  Social Security disability benefits have been offset since the 1970s, but it took a while longer to implement an offset to retirement benefits.  All injured workers who were not on Social Security Retirement in July 1986 have had their later entitlement to retirement benefits subject to the potential for offset.

Generally the offset is calculated based on either a worker’s average current earnings (ACE) or their time loss rate.  The average current earnings are calculated based on the highest calendar year earnings of the worker divided by 12 to find an average month.  The offset is then calculated by taking 80% of the ACE.  That figure represents the maximum beyond which the combination of SS retirement and worker’s compensation benefits cannot exceed.  Since a worker’s compensation cannot be reduced because of the offset, if that 80% figure is below the time loss rate, then the time loss rate will be used to calculate the “cap”.  In that latter case all of the retirement benefits are subtracted from the time loss benefit and the worker receives no increase due to the entitlement to retirement benefits.  Where the ACE is higher than the time loss rate, then the workers’ compensation benefits are reduced to the point where the retirement benefits plus the workers’ compensation benefits equal the ACE figure.  In that case the worker receives more money than on workers’ compensation alone, but still at a reduced rate due to the social security offset.  There are periodic cost of living adjustments provided, either yearly for those whose time loss rate is the basis for the offset or every three years if the ACE is the basis for the offset.  [Yes, it is complicated!]

The offset was challenged as being in violation of the Washington State constitution but that was rejected by the Washington Supreme Court in 1993.  A recent challenge to a similar law in Utah was successful as the Utah Supreme Court found it violated the Utah and U.S. Constitutions (exactly the opposite decision from Washington’s court some 16 years earlier).  It is unlikely the Washington Court would be willing to revisit that issue having already considered and ruled on the issue, despite the different outcome in Utah.

CAN THIS BE FIXED?  A bill has been introduced in the Washington Legislature (HB 1211) to repeal the retirement offset.  That bill has yet to gain any real traction despite being introduced again this year.  Representative Steve Kirby (D-Tacoma) is the only sponsor of the bill and remains committed to its passage, but without more support the bill is unlikely to move forward.  The Legislature is out of session for the year and meets in short session next year.  Although economic times are tough for the state, they are also tough for those workers’ on time loss or pension benefits and who are having their hard earned retirement benefits from social security offset against their compensation benefits.

WHAT CAN YOU DO?  All legislators respond to constituents’ needs and demands in one form or another.  One call might receive a polite reply, dozens calls from different constituents might raise an eyebrow (and polite replies), hundreds of calls might reflect a groundswell, thousands of calls might reflect a movement was underway.  If every injured worker called their representative and asked them to contact Representative Kirby to become a co-sponsor on the bill (or at a minimum to otherwise support the bill) and if every injured worker called their state senator and asked them to support the bill when it gets to the Senate the bill can ultimately have a change of passage.

IS THERE HOPE?  Even with a strong groundswell from the injured worker community the bill is not assured of passage.  While it has strong support on equitable grounds (SS retirement is based on a lifetime of work and is intended to replace wages during a worker’s retirement years) and has nothing to do with disability or the disability system (which offsets workers’ compensation and SS disability to make sure a worker has incentive to return to the work force and that life will not be too comfortable – financially – on disability) the bill will have a huge fiscal impact on the Department of Labor and Industries.  On all bills filed which affect the state budgetary process the agency involved files a “fiscal note” with the Legislature advising what the financial impact will be if the legislation is passed.  While workers’ compensation benefits are not funded out of general revenues – rather from employer and worker premiums – if there is a large fiscal impact it could include the need for some premium increases or consideration thereof.  This could spook the Legislature into rejecting the bill despite large popular support from constituents.

FINAL WORD:  The bill will go nowhere despite the good intentions of Rep. Steve Kirby unless support can be generated from other legislators.  The way to start that process is to spread the word among injured workers, friends of injured workers, unions, disabled support groups, retirement groups, etc.  If those groups can get behind this bill, and should a steady groundswell rise up, the Legislature cannot ignore it.  Like all long marches, they must begin with the first step.  Rep. Kirby can be reached at: kirby.steve@leg.wa.gov.  Let him know you care.  Let you own Representative know you care.  Step up and make some phone calls, send some emails, spread the word that the time has come to pass HB 1211 and repeal the social security retirement offset from Washington State workers’ compensation benefits.

Will the $250 federal stimulus payment to SSA and SSI recipients be subject to workers’ compensation offset?

A question has come up whether workers’ compensation programs will offset, as permitted by federal and state law for those who receive both workers’ compensation benefits and social security benefits, the one time $250 federal stimulus payment due to SSA and SSI recipients in late May 2009. At least in Washington State it appears that the federal stimulus monies will NOT be offset by the Department of Labor and Industries, the agency which administers both the state fund and self insurance programs. While it appears likely a workers’ compensation program COULD offset the $250 just like any other benefits received from Social Security, the Department of Labor and Industries, upon inquiry, has advised that it will NOT be offsetting the one time payment. It is quite likely that the costs of entering a separate order in each individual claim modifying the offset based on a one time payment was felt to exceed any benefit enjoyed from the one time $250 windfall, but for whatever reason, it appears that the stimulus monies are safe for now…

Injured in Iraq or Afghanistan? Welcome to Defense Base Act claims.

Many civilian workers injured while working in Iraq and Afghanistan are returning home with uncertainty as how to pursue their claims for workers’ compensation benefits.  While not including all civilian, non government, workers in those geographic regions, the bulk of injured workers returning from Iraq or Afghanistan will have claims under the federal Defense Base Act (“DBA”).  While a separate federal law, the DBA incorporates the procedures applicable to Longshore and Harbor Workers’ Compensation Act for processing and resolution of claims. 

 

The DBA provides coverage for those injured while working for a contractor engaged in “public work” overseas which generally includes fixed improvements in conjunction with the national defense or operations under service contracts in connection with national defense, war activities, harbor improvements, dams, roadways, housing and ancillary work in connection therewith.  To be “public work” covered under the DBA the claim must arise from a contract with the United States to perform public work overseas.  Also included are service contracts in conjunction with the performance of such overseas public work.    

 

Accordingly many of the civilian workers employed in Iraq and Afghanistan under contracts to aid the war effort or contracts for “public work” involving construction, alteration, removal or repair of the United States or its allies are covered by the DBA.  There is coverage in conjunction with activities arising out of the scope and course of the performance of the work (e.g. a truck driver carrying war supplies is injured in a collision with another truck) as well as the extended coverage available in the “zone of special danger” for injuries/deaths not necessarily arising out the scope and course of the work.    

 

Under the “zone of special danger” doctrine, coverage is extended to those whose injury did not occur in the normal space and time boundaries of work, but to those who are injured or killed while within an area where the obligations of the employment create a zone of special danger out of which the injury arose.  Included in the “zone of special danger” cases are injuries/deaths in employer sponsored recreational areas, or even further removed injuries/deaths such as an employee injured or killed while on a weekend outing (the employee had to work “under the exacting and dangerous conditions” of the area and thus was covered).  Also covered in the “zone of special danger” was a worker who suffered a heart attack while off duty in his barracks in Greenland. 

 

While handled similar to Longshore and Harbor Workers’ Compensation Act cases, there are differences in some details that make finding an experienced attorney important.  There can be slight differences in the calculation of the Average Weekly Wage, there are procedural differences (while the claims must occur outside the continental U.S. they must be initiated in very specific district offices of the Office of Workers Compensation Programs; they are adjudicated in that District office until the employee returns home in which case the case can be transferred to the District appropriate to the worker’s residence) and under certain circumstances the appeal procedures differ from Longshore and Harbor Workers Compensation Act cases. 

 

In my own practice, I have handled cases under the DBA to include, for example, a truck driver who suffered a herniated disc in his back when his tanker truck slipped into a two foot deep “rut” while delivering jet fuel to support the war effort in Iraq (a case where the injury occurred in the “scope and course of employment” much like any workers’ compensation claim) and a physician’s assistant employed to provide medical support to the activities of rebuilding the science research station at the South Pole who slipped on ice and fractured his leg on the way to the bathroom (“injured in the zone of special danger”). 

 

As such, whether injured in Iraq, Afghanistan, the South Pole, Saudi Arabia, Greenland, South Sea islands, or anywhere else work is being performed under a contract of the United States to complete public work for the U.S. or its allies and/or under a service contract for such operations, the Defense Base Act is likely the applicable Act to provide workers’ compensation coverage.  Care must be taken to assure your rights are protected as many employers will attempt to cover these types of claims under state workers’ compensation acts (where benefits are reduced) or otherwise to avoid financial responsibility.  Even if one is receiving benefits under a state workers’ compensation benefits for such an injury which occurred outside the continental U.S., consultation with an attorney experienced in the Defense Base Act is advisable to assure that one’s claim is being processed under the correct workers’ compensation act to maximize benefits received. 

 

War Hazards Compensation Act:  For those who are injured or killed by hostile actions under a declared war or “hostile action” there is coverage under the War Hazards Compensation Act (“WHCA”).  This covers all civilian workers injured or killed due to “hostile actions” even if they would have otherwise been covered by the DBA or other workers’ compensation acts if injured or killed due to injuries which occur in the scope or course of their employment (not arising out of hostile actions or which occur in the “special zone of danger” not arising out of hostile actions).  All WHCA claims are handled through the Washington, D.C. district of the OWCP, under the procedures applicable to the Longshore and Harbor Workers’ Compensation Act.  

Social Security Disability Hearings: Should you accept a video hearing if offered?

The Office of Disability Adjudication and Review (ODAR – where the administrative law judges who do hearings are assigned from) has a program where they offer hearings at remote sites where the judge and many times medical or vocational experts appear via video or audio connections. Is this a good idea?

This technology has been used for several years but seems to be picking up steam as means to save travel costs for judges in a time of tight budgetary constraints (yes, even some federal agencies have to tighten their belts). In this technology the claimant (and representative if he/she has one) appear at one hearing site and the judge is at another (in this area usually Seattle, although sometimes to help reduce the backlog a judge from some other region will participate via the video process).

When these first started the technology was very poor and the images were choppy, the sound sometimes a little garbled and frankly they were a very poor way to have a hearing on something as important as ones right to disability benefits, a decision making process that would very significantly affect the claimant’s future. However the technology has improved some to where the flow of images and sound is fairly consistent and clear. Certainly not yet the equivalent of cable TV (analog not even close to digital or HD) but better technology has arrived to the point where consideration of the video hearing might be appropriate if the positives might outweight any negatives from doing it in that manner.

I have often described to my clients that the hearing process is that time where the judge, serving as the final gate keeper to the social disability benefit access, must carefully listen to the claimant and look him/her in the eye and make a decision (assuming the medical evidence will also support a favorable decision) about putting the claimant on disability benefits for what might in most cases be for the rest of their lives. This is an important decision not only for the claimant but for our social security system. We all want to reserve the system for those who truly are qualified and deserving, denying those who chose not to work and seek some form of government support. So, I have always put great importance in how my clients have presented to the judge and have made sure that they understand that the judge is that final gate keeper and he/she will look them in the eye and make very important mental impressions and later decisions about whether to believe what they are told about the nature and extent of disability the claimant has. When my clients have the time to prepare how to describe how their medical conditions prevent them from even living a normal life, let along working, and then look the judge in the eye and with conviction convince the judge of the truth of what they say it almost always results in a favorable outcome (assuming we’ve been able to gather medical evidence that describes the conditions and offer medical opinions about the general limitations imposed by them).

All of this is lost with a video hearing. Even with large projection screens (they’d be great for a football game or the World Series) the judge is usually a relatively small figure and with unprofessional lighting (using the lighting already in the hearing room with no effort to properly light the participants so they are better visible to those watching in remote sites. While I’ve not been on the other side, I can only assume my client and I are similarly relatively small and with no additional lighting make a less than ideal image to try to look my client “in the eye” and judge his/her credibility. This does a disservice to the entire hearing process.

In addition, many times the medical expert (hired by ODAR to help the judge understand the sometimes complicated medical evidence presented in support of a claim) or vocational expert (also hired by ODAR to advise the judge on vocational issues including better understand the claimant’s past work and trying to identify work the claimant can do given any limitations the judge feels are appropriate given the medical evidence and the claimant’s testimony) are also appearing by video or even audio connections (telephone). When they are not at the same site with the claimant the benefit of the claimant’s testimony is largely lost. A medical expert was unable to benefit from watching the claimant testify and being able to “see” the pain in their faces as they testify is going to be less sympathetic in advising the judge about limitations that might be medically appropriate for the claimant. A vocational expert not present is probably less likely to have an opportunity to testify in a manner favorable to a claimant who he/she believes is honestly presenting their condition, but there are times when a claimant’s physical/mental abilities might be close to performing a job, but where the vocational expert might offer some barrier to the position based on his/her perceptions gained through the course of the hearing and thus eliminate it from consideration. A little sympathy cannot hurt and it is lost without the ability to see the claimant in person.

So, that’s a long way of suggesting video hearings are generally not a good idea. The only benefit is possibly to be able to get a hearing scheduled sooner than waiting for judges to travel to remote sites, but if the net result is to have a greater chance to lose the hearing then there really is no benefit. At this point, I’d only consider advising my clients to agree to video hearing if I’ve been able to develop overwhelming medical and vocational evidence supporting their claim and can see not real way that the outcome would not be favorable. Otherwise, I advise ODAR that we’ll wait for a “live” hearing. The delay does not have to be significant. As an example in late May 2008 we were notified we’d been scheduled for a video hearing for June 30 (we were to appear in Olympia, the judge and vocational expert would be in Seattle). We advised the judge that was not acceptable and were then able to wait and have a “live” hearing in Olympia in mid September. While that is a 2½ month longer wait, when hearings take up to two years to achieve, a small additional wait is well worth improving the changes of success. One additional note, by insisting on a “live” hearing we did lost the availabilty of the initial judge we had scheduled in June. That can cut both ways depending on which judge I might consider more conservative (less likely to award benefits) or more liberal (more likely to award benefits), but that is a good subject of another blog another day…