BASIC (09-08)

Citations:

AR 95-2(9), Acquiescence Ruling, Hodge v. Shalala, 27F.3.d, 430 (Ninth Circuit 1994)

The Oregon WC system changed significantly due to major legislative reforms enacted between 1987 and 1995. The following instructions reflect current Oregon WC laws. See DI 52120.205H. below for information on the earlier WC system and also for historical WC offset instructions.

A. Oregon WC periodic payments

1. Types of periodic payments

a. Temporary Total (TT)

• paid biweekly and often called “Time Loss”

• maximum period is duration of the disability

• payment records usually show “from” and “to” dates representing 14 day periods that start on the “from” date and end with the day before the “to” date

• Time Loss payments may be paid during vocational training (coded as “Voc TD” on printouts)

• Time Loss payments may be paid to supplement wages if the worker returns to modified or light duty work at a lower rate of pay or fewer hours

b. Temporary Partial (TP)

• paid biweekly

• maximum period is duration of the disability

c. Permanent Partial (PP)

• paid monthly

• if award is greater than $6,000.00, paid monthly at TT rate times 4.35 or the disabled worker may request payment in a lump sum

• awards less than $6,000.00 always paid in a lump sum

• for information on PP lump sum awards, see DI 52120.205C below

d. Permanent Total (PT)

• paid monthly

• the only Oregon WC type to which reverse offset applies (see DI 52120.205B below)

2. Cost-of-living adjustments (COLAs)

• Temporary benefits normally increase every July 1

• Permanent benefits increase every October 1

3. Subsequent award for the same injury

The effective date of a subsequent award may overlap a prior award for the same injury. When this occurs, the subsequent award supersedes the prior award for the period involved.

4. Days lost

• Oregon WC records may show that a certain number of days were lost. The number of days lost refers to the number of work days in the period the worker would have normally worked had he not been injured. We typically see 10 days lost for the 14 day period for which payment is being made, but it could be less if the worker was working less than 5 days per week at the time of injury.

• For SSA offset purposes, the number of days lost is not usually material. Whether the records, for example, indicated 6 days or 10 days were lost in a 14 day period; we would still look at the total amount paid for the two week period and then divide by 2 for the weekly rate or 14 to determine the daily rate.

• Analyze the payments further when the period for which payment is made is other than a regular 14 day period.

B. Oregon PT WC payments and reverse offset

Oregon WC law provides for a reduction in PT WC if a disabled worker is also entitled to Social Security disability insurance benefits (DIB). This is a recognized reverse offset plan. For more information, see DI 52105.001 – Reverse Offset Plans.

Use the following instructions when adjudicating claims and post-entitlement actions on or after 12/01/1984. If the case was processed before 12/01/1984, see the instructions in DI 52120.205H.2 below.

1. Processing claims involving PT WC

1. Offset PT WC from the first possible month of offset up to and including the month after the month of adjudication (but not earlier than 07/1978)

2. Remove offset the second calendar month after the month of adjudication. Answer “Y” to “REVERSE JURISDICTION INVOLVED?” on the WC/PDB Claim Data (WPCL) screen in MCS or the WCCD screen in ICF WC/PDB, and input a START date equal to the second calendar month after the month of adjudication.

Example:

MCS, A101 or EF101 (Determination of Award) adjudicated: 10/15/2008

Month of entitlement (MOET): 10/2007

First month of offset: 10/2007

Offset DIB: 10/2007 through 11/2008

Remove offset (reverse offset START date): 12/2008

For this purpose only, the month of adjudication is the month in which the adjudicator:

• takes action on the MCS DECI screen, A101 ADJU screen or EF101 EFADJU screen, or

• adjudicates an ICF WC/PDB to initiate DIB payment, or

• adjudicates an SSA-1203 (Determination of Benefits Payable After Offset)

  NOTE: Payments under the Critical Payment System do not constitute adjudication. A delay in processing due to exceptions, etc., will not normally change this date.

2. Applying offset when PT WC is effective after the DIB award

Most cases involving PT WC will be cases where the disabled worker is already in DIB payment status when the PT award is made.

• Offset DIB due to PT WC up to and including the month after the month you adjudicate ICF WC/PDB.

• Remove offset the second calendar month following the month you adjudicate the ICF WC/PDB. On the ICF WCCD screen, enter “Y” under “REVERSE JURISDICTION INVOLVED (Y/N)” and a START date equal to the second calendar month after the month of adjudication.

Example:

DIB date claim filed: 11/15/2007

Month of entitlement: 05/2008

PT award effective date: 07/01/2008

ICF WC/PDB adjudicated: 10/03/2008

Apply offset: 07/2008 through 11/2008

Remove offset (reverse offset START date): 12/2008.

3. Applying offset when an appeal decision reverses DIB cessation

Offset DIB from the month for which DIB benefits were reinstated up to and including the month after the month of adjudication to resume DIB.

4. When you receive a data form from the State of Oregon

When PT WC is awarded, the State sends us a data form requesting DIB payment information and also notifying us to remove offset of DIB. Take the following actions when you receive the State data form:

• Remove offset

• Complete the data form

• Retain a copy of the form in the electronic folder, NDRed or Paperless per DI 52145.015

• Return the form to:

  Oregon Department of Consumer and Business Services

  Workers’ Compensation Division

  350 Winter St NE 3rd Floor

  Salem OR 97301

C. Oregon lump sum WC awards

Oregon makes three types of lump sum (LS) awards. If the award does not specify a monthly rate, follow the instructions in DI 52120.205D. below for determining the Hodge work life rate for proration under the Gerald Hodge Acquiescence Ruling (AR).

1. Permanent Partial (PP) award

• PP awards less than $6,000.00 are always paid in a lump sum

• The disabled worker may request that a PP award greater than $6,000.00 be paid in a lump sum.

• PP awards may state the worker’s condition was “medically stationary.”

2. Claim Disposition Agreement

• Since 1990, almost half of Oregon WC awards are settled by a Claim Disposition Agreement (CDA). In return for immediate payment of the lump sum, the worker gives up rights to all other benefits except for the right to medical expenses directly related to the injury, a right that cannot be relinquished under Oregon law.

• Most CDAs specify rates based on life expectancy (LE) and should be handled per DI 52150.065A. A specified LE rate takes priority over the Hodge work life rate in DI 52120.205D below.

3. Disputed Claim Settlement

• Denied WC claims may be resolved by a Disputed Claim Settlement (DCS), which pays a lump sum settlement in exchange for the worker giving up all rights and benefits associated with the claim, including future benefits for the denied medical conditions of the claim. Settlement via a DCS lump sum means that the claim remains denied.

• Like CDAs (see DI 52120.205C.2 above), a DCS usually specifies a rate based on life expectancy (LE) and should be handled per DI 52150.065A. A specified LE rate takes priority over the Hodge work life rate in DI 52120.205D below.

D. Processing Oregon lump sum awards under the Gerald Hodge Acquiescence Ruling

This section provides the rules required by AR 95-2(9) acquiescing in the Ninth Circuit's decision in Hodge v. Shalala.

1. Court decision

The court held that the Secretary's decision on the proration of an Oregon lump sum (LS) WC award should have followed the policy stated below.

2. Ruling

AR 95-2(9) was issued on July 12, 1995.

3. Scope

This AR applies to current State of Oregon WC LS award proration determinations/decisions at any level of administrative review (i.e., initial, reconsideration, administrative law judge hearing, or Appeals Council) for Title II beneficiaries who:

• have received an Oregon WC LS award for permanent disability, and

• live in Alaska, Arizona, California, Idaho, Montana, Nevada, Oregon, Washington, Guam, Hawaii, Northern Mariana Islands, and American Samoa.

4. Hodge case processing effective 07/12/1995

Under Hodge, the priority for establishing the weekly rate for LS proration is:

1. the rate specified in the award

2. if no rate is specified in the award, determine the rate using the Hodge work life rate for proration method in DI 52120.205D.5. below.

Hodge only affects the computation of the rate used to prorate a LS; it does not change the other proration factors, such as the LS start date or the way each method is calculated as detailed in DI 52150.060.

See DI 52120.205H.4. below for processing instructions prior to 07/12/1995.

5. Hodge work life rate for proration

Treat the Oregon LS for permanent disability as a substitute for periodic benefits and calculate the offset based on a monthly WC rate. To determine the monthly WC rate under Hodge, take the following steps:

1. Count the number of months beginning with the month the WC award is signed by the WC Commission, up to but not including the month in which the number holder attains age 65 before December 19, 2015. Effective December 19, 2015 or later, WC offset termination extends from age 65 to full retirement age (FRA). See 2015 Amendment in DI 52101.005.

2. Determine the monthly WC amount by dividing the dollar amount of the WC LS by the number of months as determined in DI 52120.205D.5.a. above.

3. Use the monthly WC amount derived in DI 52120.205D.5.b. above to compute the amounts payable after offset. Offset any LS remainder in the usual manner according to DI 52150.060.

   NOTE: If the Hodge AR applies to the case, use only the Hodge rules to determine the rate for proration, even if the proration results are disadvantageous when compared to the results using proration rates determined according to DI 52150.060.

6. Excludable expenses involved

1. Compute the Hodge work life rate per DI 52120.205D.5. above

2. Determine excludable expenses normally per DI 52150.050

3. Apply the three LS proration methods per DI 52120.060E.

4. Select the most advantageous of the three methods

7. Other actions

Take the following actions when an Oregon WC LS is processed in accordance with the Hodge AR:

• Retain a copy of the LS order in the electronic folder, NDRed or Paperless per DI 52145.015.

• Input a Special Message to the MBR as follows: “Hodge AR LS amount=$______, Months to Age 65=_____, Monthly Rate=$_______, LS Begin=MMDDYYYY), LS End= MMDDYYYY, LS Remainder=$_______”

E. Home health care supplemental allowance

The State Accident Insurance Fund (SAIF) or other insurers occasionally pay a supplemental allowance for home health care services for certain severe injury cases. In addition, effective 01/01/2002, insurers may reimburse disabled workers for home health care provided by the worker’s family member not under the direct supervision of the attending physician.

Home health care supplemental allowance payments are compensable medical services and are not offsettable. If such an allowance is included in the gross WC lump sum amount, it is an excludable expense.

F. Attorney fees

• Attorney fees must be approved by the Workers’ Compensation Board or, in appeals cases, by the court.

• Approved fees are liens on the compensation award.

• Fee amounts are set by statute:

  1. Fee for obtaining an increase in a TT, PP or PT award: 25 percent of the increase, not to exceed $1,500 for TT, $4,600 for PP or $12,500 for PT. Higher caps apply when an ALJ’s decision is appealed to the WC Board.

  2. Fee for Claim Disposition Agreement (CDA) or Disputed Claim Settlement (DCS): 25 percent of the first $17,500 and 10 percent of any additional amount. The ALJ or board may approve higher amounts in extraordinary circumstances.

G. Retirement benefit considerations

Oregon does not offset its WC for SSA retirement benefits.

H. Processing offset under earlier State laws or earlier SSA policy

1. Important Oregon WC dates

2. Applying reverse offset to claims adjudicated before 12/01/1984

As noted in DI 52120.205B above, Oregon PT payments are under a recognized reverse offset plan. For instructions on processing claims adjudicated 12/01/1984 and later, see DI 52120.205B.1. above. For claims adjudicated before 12/01/1984, apply the following rules:

1. WC injury 10/04/1977 or later: Apply reverse offset to PT WC effective the date of the PT award.

2. WC injury prior to 10/04/1977: Apply reverse offset to PT WC effective 07/01/1978 or the date of the PT award, whichever is later.

3. Processing lump sum payments under Oregon’s pre-reform WC system

Prior to the State’s allowing for Claim Disposition Agreements beginning in 1990, Oregon WC payments frequently included unexplained lump sum (LS) payments made at the same time as ongoing periodic payments. WC records were generally insufficient to determine whether these payments represented underpayments for prior periods or were subsequent awards; however in most cases these LS payments were not paid in lieu of periodic payments. We processed these LS payments by prorating the LS retroactive to the date of injury, using the weekly rate being paid at the time the LS payment was awarded. We added this amount to the periodic payment to determine the weekly rate.

4. When to apply the Hodge AR to cases processed before 07/12/1995

• Do not apply the Hodge AR in DI 52120.205D above to an Oregon LS processed before 06/21/1994.

• If advantageous, apply the Hodge AR to Oregon LS awards processed after 06/21/1994 but before 7/12/1995 if a notice of SSA's Oregon WC LS offset determination was issued on or after 09/21/1994.

5. Dannemiller v. Apfel class action

In addition to the Hodge ruling described in DI 52120.205D. above, SSA was also a party to a class action case, Dannemiller v. Apfel, which raised the same issue of using a work life rate for proration. Dannemiller

affected Oregon LS cases adjudicated 05/01/1994 through 07/11/1995. The Dannemiller class was defined as all Oregon residents who:

• Received Title II DIB benefits which were being or had been reduced because of receipt of an Oregon permanent WC lump sum, and

• Whose permanent WC lump sum award had not been prorated over the worker's work life, and

• Whose decision(s) to reduce benefits were subject to review at any level by SSA or by the court in or after May 1994, or where the decision to offset the DIB benefits was made in or after May 1994.

In a court-approved settlement agreement dated October 2, 1998, SSA agreed to mail a notice to those Oregon residents who met the Dannemiller class definition and whose WC LS decision did not include a specific periodic compensation proration rate. The notice advised them of the option of having their Oregon WC LS recalculated using the work life rate for proration (work life presumed to end at age 65). We conducted a special project in 1999 to identify affected number holders (Dannemiller class members) and give them that option.

I. References

• DI 52101.005 - Social Security Amendments with Workers’ Compensation/Public Disability Benefits (WC/PDB) Offset Provisions

• DI 52105.001 - Reverse Offset

• MSOM COMMON 001.003 - WC/PDB Claim Data (WPCL)

• DI 52165.010C – How to Complete the WC/PDB ICF Screens

• DI 52150.060 - Prorating a WC/PDB Lump Sum Settlement

• DI 52150.050 - Excludable Expenses

• Oregon Workers' Compensation site: http://www.cbs.state.or.us/wcd/

• Oregon Revised Statutes (ORS), Chapter 656, Workers Compensation:http://landru.leg.state.or.us/ors/656.html

• Oregon SAIF Corporation – Not-for-profit, State-chartered company; the leading workers’ compensation insurance provider in Oregon: http://www.saif.com