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Worker's Compensation Offset

Letter to the Commissioner

by David R. Bryant

[Note: Also see Memo to Workers Compensation Lawyers Association]

October 31, 1997

Commissioner of Social Security
PO Box 1585
Baltimore, MD 21235
§ 404.408

FR. Doc 97-23506

Commissioner Apfel:

I have reviewed the proposed Rules concerning the Offset between Social Security Disability Insurance Benefits and Workers Compensation Benefits. I wish to make some observations, notes and comments.

On a technical basis, [p. 46685], the example under (h)(2) [line 4] "…Harold’s average current earnings is" $16,000.00 which converts to a monthly maximum of $800.00 in combined benefits. The "$800.00" is a monthly figure, not an annualized amount as defined under ACE.

Second, the Notice indicates a "survey in States" was done. In order to determine if the basis for some of the statements made in the Notice (i.e. "no consequence to the insurer how the award is portrayed"). I requested a copy of the "Survey" and responses (6 or 7). I called Jim Troy or Bob Hastings (OPP) at (410) 965-9176 and –7675 on 9/30/97. I was told "in two weeks". I have yet to receive this survey and responses.

Third, the exclusive use of "Method C" "removes offset at the earliest possible time and could even end the proration prior to the first possible month offset". [p. 46683]. This is a misleading if not false statement and request is made of SSA to document one instance of such event ever happening since 1971.

Fourth, in defining "related" expenses, the Commissioner states:

"Because we are aware of no expenses other than medical or legal expenses, that should be excluded from offset… we propose to … offset only medical and legal expenses." [p. 46683] [Emphasis added].

I challenge the Commissioner to deny that vocational retraining and other compensatory benefits are available to individuals under state (in particular, Illinois) Workers Compensation laws. For example, the law in Illinois provides for penalties being imposed on Respondents if they do bad things. Yet no mention is made if the Award includes payment of penalties much less future vocational retraining.

Fifth, the Proposed Rules over ambiguous as to retroactive application. The Commissioner wants a "return to our pre-1971 policy." Since SSA has been "coding" all "life expectancy" awards over the last several years, the implication of reviewing these Settlements is a district possibility. The Proposed Rule should be amended to give specific date of application to Awards/Settlements. This "fear" has caused a rush to Settlement See: Lawyers Weekly (10/6/97).

Sixth, the apparent basis for returning to use of Method C is the abuse ("….artificially low rate in the lump sum award . . . based on the workers life expectancy") of the Settlement process. Yet, nowhere does the Commissioner address the rate in the lump sum award… based on work life (age 65) expectancy which in many cases is eminently reasonable. This latter method is supported by case law, yet never mentioned in the Present Policy Statement. The Rule should allow a "work life" proration and eliminate the abuse of "life expectancy" Awards. The Proposed Rule is overkill.

Seventh, in gathering information [p. 46685] about "Items not counted for reduction" you will look to official documents and "other evidence". In particular, "(d)(1)." A detailed statement by the individuals physician or the employers insurance carrier;…" is a source of "future medical" expense data. Does "physician", as defined in Illinois law, include chiropractor? Is a psychologist report of future treatment excluded? Will a self-insured employer be allowed to give information? Will Wage Earner’s attorney in the WC case be allowed as a source of information? The Rules as proposed are unclear.

Eighth, the Proposed Rule is clear that in Illinois the rate to be used in the offset process is 2/3 of Average Weekly Wage (AWW), [p. 46685]. Yet Awards and Settlements are often based on a Permanency Rate (i.e. loss of an eye or limb) which is normally lower than the percentage of the workers average weekly wage" (TTD). Yet the Rule as suggested overrides the Statutory Permanency Rate in favor of the higher TTD rate. The Rules don’t reflect reality. Again, overkill.

Ninth, the sneaker change is the recalculation of the underlying basis (earnings) for the Offset. When Congress passed "The Offset", it was without debate and inserted at the last minute. The intent was subsequently made clear that Congress did not want someone staying home and collecting more money from two "paychecks" (i.e. WC & SSA) than when working.

In some cases, (i.e. a nurse client who taught at the University of Illinois and worked at a private hospital), people who worked two jobs (covered – security services; non-covered – Chicago cop) would be put in this position. The new Rules indicate "we cannot count non-covered earnings" [p. 46682]. In practical terms, 80% of $80,000.00 (teaching & nursing) is a better deal than 80% of $35,000.00 (nursing) as a basis for calculating any offset. The effect f this Rule will be disastrous and spawn litigation.

Tenth, I disagree with the statement that "the proposed rules do not meet the criteria for a significant regulatory action….[and] are not subject to OMB review". I disagree that the "rules impose no additional report in or record keeping requirements".

In general, the application of these proposed Rules will impact the poorer worker who has been injured on the job. There is not question that the proposed Rules will correct a perceived method of avoiding the Offset. Yet the same Rules as proposed create some uncertainty, ambiguity, and unintended consequences. I think that some of the language was inserted to meet criticism rather than resolve any abuse. I suggest you step back and consider these Proposed Rules – possibility Hearings – as promulgated by Acting Commissioner Callaghan.

Respectfully submitted,



David R. Bryant


cc: Sally Katzen, OMB

cc: Sen. Durbin (IL)

cc: Sen. Braun (IL)

cc: Ruth Stelzman, WCLA

cc: Ethel Zelenske, NOSSCR

cc: Patty Best, CBA


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