BASIC (09-08)

DI 52120.030 California Workers' Compensation (WC)

A. Types of California (CA) WC payments

B. Important dates

C. How California makes WC payments

D. Attorney fees

E. Retirement insurance benefit (RIB) considerations

F. WC and CA PDB (SDI)

G. Vocational Rehabilitation Maintenance Allowance (VRMA) payments

H. Lump sum (LS) awards

I. Compromise & Release

J. Stipulations with Request for Award

K. How to Verify WC Payment Amounts

L. Exhibits

M. Case examples

N. References

A. Types of California (CA) WC payments

The State of California WC system includes the following types of payments which are discussed in more detail later in this section.

1. Types of periodic payments

  • Temporary disability: temporary total disability (TTD), temporary partial disability (TPD), Vocational Rehabilitation temporary disability (VRTD)

  • Permanent disability: permanent partial disability (PPD), permanent total disability (PTD)

  • Vocational Rehabilitation Maintenance Allowance (VRMA).

2. Permanent disability advance (PDA)

Permanent disability (PD) payments are also called PDA. PDAs are:

  • paid at an established permanent partial (PP) or permanent total (PT) rate as periodic payments or may be paid as small “on request” hardship lump sum payments

  • considered an advance against any future WC settlement and are usually subtracted from the settlement

3. Types of settlements

a. Compromise and Release (C&R)

  • represents a final lump sum settlement of the WC claim

  • specifies attorney fee expense amount

  • usually subtracts PDA amounts (see DI 52120.030A.2.)

  • may include a purchased annuity or incorporate a structured settlement

  • typically specifies an amount to cover, in whole or part, any State public disability benefit (PDB) payments previously paid (referred to as an Employment Development Department or “EDD” lien).

b. Stipulations with Request for Award (Stipulations)

  • not a lump sum final settlement

  • an agreement for payment of periodic PD benefits until a specified maximum amount has been paid

  • can be reopened or followed by another Stipulated Award and/or C&R

    NOTE: State Disability Insurance (SDI) payments made by the State Employment Development Department (EDD) under the State's Unemployment Disability Insurance Program are not part of the State WC system. SDI payments are subject to PDB offset, not WC offset. See DI 52120.030F.

B. Important date - 01/01/2004

As of 01/01/2004, Vocational Rehabilitation Temporary Disability and Vocational Rehabilitation Maintenance Allowance (VRTD/VRMA) benefits are no longer available to new applicants. The State replaced these benefits with a voucher system. The State refers to the non-transferable vouchers as "Supplemental Job Displacement Benefits (SJDB)." Prior to 01/01/2013, the State issued vouchers in amounts ranging from $4,000 to $10,000, depending on the permanent disability (PD) rating; for injuries occurring on or after 01/01/2013, the voucher amount is $6,000 regardless of the PD rating. Recipients can only use the vouchers to pay for educational re-training or skill enhancement at state-approved or accredited schools. SJDB vouchers do not cause offset.

C. How California makes WC payments

California WC is administered primarily by private parties - authorized insurance companies and self-insured employers. The State Workers' Compensation Appeals Board (WCAB) oversees the provision of WC benefits and resolves disputes.

This section describes how WC payers in California make WC payments under State law and provides instructions on how to treat these payments for SSA offset purposes.

1. WC payers

  • Insurance carriers (licensed by the State to transact WC)

  • SCIF (State Compensation Insurance Fund) – A State agency which operates by charter as a not-for-profit insurance carrier

  • Self-insured employers

  • Third party administrators (service organizations hired by self-insured employers), e.g., Cambridge Integrated Services Group, Inc.

  • Uninsured employers - The State’s Uninsured Employers Benefits Fund (UEBTF) assists in payment of WC benefits to workers injured on the job and whose employer failed to insure them for WC, but should have. Such payments are subject to offset. Payments made directly by uninsured employers in lieu of WC are also subject to offset

2. Periodic payments

NOTE: A key factor in differentiating between temporary disability (TD) benefits and permanent disability (PD) benefits is the “permanent and stationary” (P&S) date. The P&S date, as determined by a doctor's report, is the point in time at which no further medical improvement is expected.

a. Temporary Disability (TD)

WC TypeHow Awarded and PaidAmount for SSA Offset

Temporary total disability (TTD)

Payable if the disabled worker cannot do any work

  • Awarded at a 7-day weekly rate; paid biweekly

  • Rate based on date of injury and subject to minimum and maximum limits (see DI 52150.045)

  • 2-year, 104-week limit from date of first TTD payment for injuries 04/19/2004-12/31/2007 (with certain exceptions); 5-year, 104-week limit from date of injury for injuries 01/01/2008 or later*

  • Payments end when disabled worker can or does return to work or when doctor determines that condition is “permanent & stationary” (P&S)

  • 10 percent penalty may be added if payment is late

  • VRTD payments are TD payments (same rate and payment schedule) made while a worker is temporarily disabled and participating in vocational rehabilitation under an individualized plan (for information on VRMA payments, see DI 52120.030C.2.c. )

  • Use the weekly or biweekly amount for ICF input

  • Amounts designated as penalties, if known, are not offsettable per DI 52105.015

Temporary partial disability (TPD)

Payable if the disabled worker can do some work and the employer offers this type of work.

  • Awarded and paid as per TTD shown above

  • Use the weekly or biweekly amount for ICF input

*No limit on duration of payments for injuries 01/01/1979-04/19/2004 except for TPD which was limited to 240 weeks within a period of 5 years from date of injury

For information on Industrial Disability Leave (IDL) benefits for State employees, see DI 52120.030C.7.b. For information on workers' compensation payments made to an employer, see DI 52120.030C.8.

b. Permanent Disability (PD)

WC TypeHow Awarded and PaidAmount for SSA Offset

Permanent partial disability (PPD)

PPD and PTD (see below) are also called PDA (Permanent Disability Advance)

Payable when a worker's condition becomes “permanent & stationary” – even if working

Awarded at a 7-day weekly rate; paid biweekly

Payable for a fixed number of weeks based on percent of disability, date of injury, and wages

Considered an advance (PDA) against anticipated future lump sum settlement

If 70-99.75 percent disability, a nominal life pension is payable after PP ends

Occasional one-time “hardship” lump sum PDA payments payable at carrier's discretion, if requested (usually in amounts ranging from $500 to $2000)

Payments end when maximum amount allowed by law has been paid or the case is settled by a lump sum payment

LS settlement usually reduced by PDAs

10 percent penalty may be added if payment is late

For injuries occurring 01/01/2005 through 12/31/2012 (eliminated for injuries occurring 01/01/2013 or later):

  • PD payments increase by 15 percent effective 60 days after the permanent & stationary date if the employer has 50 or more employees and does not make a timely offer of return to work. (In this situation, the increased PD rate may exceed the TD rate.)

  • PD payments decrease by 15 percent effective from the offer date if the employer makes a timely offer of return to work.

Prior to settlement:

  • Treat as periodic payment using weekly or biweekly rate

  • Amounts designated as penalties, if known, are not offsettable per DI 52105.015

  • PDAs that overlap awarded TD or VRMA* payments are not offsettable at the time of payment; control for adjustments after the WC claim is settled. (*Exception: PDAs that supplement VRMA up to the TD rate are offsettable. See DI 52120.030G.)

  • One-time lump sum PDA:

    1. If a LS PDA is paid in addition to ongoing biweekly PD payments, do not offset for the LS PDA. Diary to take action after the WC claim is settled.

    2. If a LS PDA is paid but no ongoing PD payments are being made, ascertain the PP rate and prorate the LS beginning the day after the last TD or VRMA payment (or the date of injury if no prior periodic payments were made). Do not overlap with TD or VRMA. Diary to make any needed adjustments when the WC claim is settled. Include AURORA paragraph PCWCP5004 in the notice.

At settlement:

  • If PD advances (PDAs) were subtracted from gross LS, prorate gross LS and treat PDAs (including one-time lump sum PDAs) as “not paid”

  • For more information on LS awards involving advance payments, see DI 52150.065C.

Permanent total disability

(PTD)

Awarded at a 7-day weekly rate (=TD weekly rate) for life; paid biweekly.

Disability rating 100 percent

Rare

PDA and penalty information shown above for PPD also applies to PTD

  • Use the weekly or biweekly amount for ICF input.

  • See PPD above for treatment of PDAs and penalties

For information on payments from the Subsequent Injuries Fund, see DI 52120.030C.7.a. below.

c. Vocational Rehabilitation Maintenance Allowance (VRMA)

NOTE: When verifying WC payments for injuries prior to 2004 through insurance companies and other payers, specifically ask that VRMA payments be included. Payers do not routinely include information on VRMA payments unless specifically asked.

WC TypeHow Awarded and PaidAmount for SSA Offset

Vocational Rehabilitation Maintenance Allowance (VRMA)

Payable while the worker is participating in VR under an individualized plan

(If VRTD payments are involved, see DI 52120.030C.2.a. above.)

  • Payable only if injured before 2004 and available only through 12/31/2008

  • Awarded at a 7-day weekly rate; paid biweekly

  • Payable if worker is P&S (not receiving TD)

  • Maximum $246.00/week for 52 weeks

  • May be supplemented by PDA up to TD amount

  • $16,000 total limit effective 01/01/1994-12/31/2003.

  • May be reduced by up to 15 percent for attorney fees

  • Not deducted from any settlement

  • Must be either specifically closed out as part of a settlement or closed out separately

  • Most California VRMA payments are paid in lieu of WC and are offsettable. Follow DI 52110.005. See also DI 52120.030G.

  • Use the weekly or biweekly amount for ICF input

  • VRMA supplemented by PDAs is offsettable at the combined VRMA/PDA rate. However, if the WC claim is settled by a C&R LS award, revise the prior offset to exclude the PDA supplement if the C&R subtracts the PDAs. See DI 52120.030G.

For information on WC payments made to an employer, see DI 52120.030C.8.b.

3. Types of negotiated settlements under California law

Most WC cases in California are settled by a C&R or a Stipulations with Request for Award without going to trial. If a settlement between the worker and the insurance company cannot be negotiated using one of these alternatives, the case may go to trial before a Workers' Compensation Appeals Board judge. The judge will then issue a decision called a Findings and Award (see Exhibit 3 in DI 52120.030L).

The following chart shows the standard elements of settlements. Note that attorneys may structure or characterize settlements in various ways, so actual settlements may include elements which are not binding on SSA. For example, if a lump sum award is characterized as representing payments over the worker's expected remaining life, see DI 52150.065A. For information on subsequent addenda to LS awards, see DI 52150.065E.

Settlement TypeSSA
Terminology
How Awarded and Paid

Compromise & Release (C&R)

Lump Sum

  • a final settlement that cannot be reopened

  • paid in a lump sum

  • requires that the worker give up rights to: future medical, reopening the claim, any further temporary disability or permanent disability benefits (vocational rehabilitation may be settled separately)

  • sets forth who is responsible for disputed medical bills and liens (including State Employment Development Department liens)

  • may include a structured settlement (see below)

  • may include a purchased annuity

  • generally does not specify a rate or a period or the type of WC (e.g., PP)

  • specifies allowable attorney fees, if applicable (generally 12-15 percent)

  • may show rates and periods of “paid” TD and VRMA—these may or may not be accurate

Structured Settlement

A C&R may incorporate a “structured settlement” which typically includes:

  • an immediate lump sum, and

  • benefits to be paid at various intervals over a number of years

For more information on structured settlements, see DI 52150.065D.

Stipulations With Request for Award

(abbreviated as STIPS)

Periodic Payment (NOT a lump sum)

  • an agreement that has the same effect as a judge's order guaranteeing that a set sum of money will be paid out on a periodic basis to the claimant

  • usually specifies a weekly TD rate and period

  • usually specifies a weekly PD rate, a maximum amount to be paid, and a starting date. Paid biweekly.

  • may include a lump sum “catch-up” PD payment

  • usually specifies that any PD advances (PDAs) will be credited against the amount of PD specified in the award

  • does not close out the entire case (unlike a C&R)

  • may be one of several stipulated awards, one after the other, or may be followed by a C&R

  • usually specifies attorney fees to be “commuted” from the far end of the settlement. See DI 52120.030D.

See DI 52120.030H Lump sum awards, DI 52120.030I Compromise & Release, and DI 52120.030J Stipulations with Request for Award below for instructions on processing California LS and stipulated settlements.

4. Sequence of payments by type

The sequences in which payers make payments vary considerably but generally follow one of the patterns below. Payments usually begin with TD and end with C&R.

  • TD or PD alone, or followed by C&R

  • TD followed by PD (may or may not be followed by C&R)

  • TD followed by PD followed by VRMA (may involve multiple periods of PD & VRMA; may or may not be followed by C&R)

  • TD followed by PD followed by VRMA followed by STIPS and/or C&R (may involve multiple periods of PD, VRMA, and multiple STIPS)

5. Cost-of-living adjustments (COLAs)

California law currently provides for annual cost-of-living increases only for life pension and PTD benefits (see DI 52120.030C.2.b.). These COLAs, which are effective each January 1, are available only to workers with injuries occurring on or after January 1, 2003.

6. Third party

SSA's treatment of third party settlements in California WC cases follows normal processing guidelines in DI 52105.010.

7. Reverse offset

a. Subsequent Injuries Fund (SIF)

When a worker has a previous permanent disability or impairment and sustains a subsequent injury, the employer is not liable for the combined disability, but only for that caused by the later injury. However, when the combined permanent disability is at least 70 percent and certain other criteria are met, the worker may receive additional compensation from the Subsequent Injuries Fund (SIF). California has a dollar-for-dollar reduction provision which applies only against payments made from the Subsequent Injuries Fund.

  • The basic WC payment is offsettable

  • The additional payments which are made from the Subsequent Injuries Fund are not offsettable. Reverse offset applies to SIF payments.

  • If the number holder is receiving SIF payments only, answer “Y” to the “Reverse Jurisdiction Involved” question on the MCS WCPL screen or ICF WCCL screen. Do not input the case as reverse jurisdiction if the number holder is also receiving the basic WC payment.

  • SIF payments will be identified as such on payment documents

  • We are not required to notify the State in these cases

b. Industrial Disability Leave (IDL)

Industrial Disability Leave (IDL) is a benefit available to State legislative employees and members of the Public Employees' Retirement System (PERS) or the State Teachers' Retirement System (STRS) in lieu of workers' compensation TD benefits.

  • IDL payments are under a reverse offset plan and are not offsettable

  • We are not required to notify the State in these cases

  • Remove offset retroactive to the offset effective date and code the case as reverse jurisdiction if you discover that offset was erroneously imposed based on IDL benefits

For more information on reverse offset, see DI 52105.001.

8. WC payments made to employer

a. WC payment record shows payments made to employer

If a WC payment record shows WC payments paid to the employer instead of the disabled worker, this usually means a “salary continuation plan” is in place. Under the California Labor Code, if the plan meets the statutory requirements, which include minimum salary requirements, then no WC is payable to the disabled worker. However, the insurer may reimburse the employer for the amount of WC that the insurer would have paid to the worker. For the period where the employer, not the NH, receives the WC payments, there is no offset. See DI 52110.010.

b. Section 4850 payments

California Labor Code section 4850 provides a paid leave of absence for up to a year in lieu of workers' compensation TD or VRMA payments for certain public safety officers (police, firemen, etc.) who are found to be disabled. “4850” payments fall under the same salary continuation policy noted in DI 52120.030C.8.a: The leave of absence payments to the worker and any reimbursement paid to the employer by the WC insurer are not offsettable as long as the worker does not actually have use of the WC payments.

D. Attorney fees

Attorney fees and other excludable expense deductions are handled normally for California cases. The State must approve attorney fees; therefore attorney fee expenses always appear on standard documents.

Stipulations settlements (DI 52120.030C.3.) generally specify that attorney fees will be “commuted” from the far end of the settlement, effectively ending the periodic payments sooner. Use a Method C-type proration as a trial computation to calculate the offset ending date unless the award specifies otherwise. Input Stipulations agreements as periodic payments in ICF WC/PDB using the results from the trial computation. See Example #8 in DI 52120.030M.

E. Retirement insurance benefit (RIB) considerations

California does not offset its WC for SSA retirement benefits.

F. WC and California State disability (SDI)

1. SDI in relation to WC

Unlike WC, California State Disability Insurance (SDI) is paid by the State Employment Development Department (EDD) and does not require that the injury or illness be work-related. SDI is funded by non-public employees' paycheck deductions.

a. SDI payments

  • SDI is a PDB and paid biweekly (see DI 52135.030)

  • SDI is paid for a maximum of 52 weeks - fewer than 52 weeks if the worker had low earnings; more than 52 if EDD reduces the weekly payments for “offsets” such as for workers' compensation.

  • Although the SDI benefit amount is roughly equivalent to WC TD benefits, it is important not to confuse the two.

b. How SDI and WC benefits affect each other

Under California law, SDI cannot be paid for any month that workers' compensation TD or PD is payable. However, SDI can be paid if TD is delayed, interrupted, denied, or paid at a lower than correct TD rate. In the latter situation, SDI may pay the difference.

Typically, a worker who becomes injured on the job first files for and starts receiving SDI. Only later does the worker file for or start receiving WC. When this happens, EDD and the WC carrier may coordinate payments and/or EDD will file a lien against the WC for SDI already paid (California Labor Code Section 4904).

If payments are not coordinated timely, EDD and the carrier will negotiate the amount of money to be reimbursed to the worker's SDI account from any WC settlement. The amount to be repaid to EDD may be less than the SDI actually paid. In this situation, the State and carrier may agree to the use of a formula by which only a proportionate amount of the SDI must be reimbursed. The standard formula is called the “Baird Formula” and is explained in SSR 87-20c. See Example #7 in DI 52120.030M.

The EDD lien may be satisfied by withholding from WC lump sum proceeds or via separate reimbursement by the carrier, employer, or a third party. Once any party reimburses EDD for the lien, EDD immediately adds back the amount repaid to the worker's SDI account, making the repaid amount available for payment should the worker reapply and qualify for SDI benefits. For an explanation of the way we adjust for an EDD lien, see DI 52120.030F.2.a.

When processing cases involving both SDI and WC payments:

  • Do not confuse SDI and WC; treat the PDB and WC claims separately for offset.

  • Be aware that there may be unintentional periods of overlap when offset will be based on both SDI and WC payments.

  • Never use an SDI rate or stop date to prorate a workers' compensation lump sum.

2. SDI (EDD) liens repaid as part of a WC lump sum

a. Policy

EDD liens are not excludable expenses for WC LS proration purposes and should be included in the gross LS amount. For instructions on refiguring PDB offset to exclude the amount of SDI repaid to EDD in connection with the WC claim, see DI 52135.030G.

EXAMPLE: The SDI claim was paid out at a weekly rate of $116.00 for 52 weeks (total paid=$6,032.00). EDD filed a lien for $6,032.00 against WC. When the WC claim was settled, $3,016.00 of the $6,032.00 EDD lien was repaid by the WC defendant (employer) and not deducted from the LS amount awarded to the worker.

  • Use the gross LS award amount for proration purposes. Do not adjust for the repaid $3,016.00, regardless of which party repaid the EDD lien.

  • Reduce the PDB offset by the $3,016.00 repaid amount either by using a weekly rate of $58.00 for 52 weeks or $116.00 for 26 weeks, whichever is most advantageous.

b. SDI payment records as evidence of repaid liens

SDI payment record printouts often contain sufficient information to verify that a lien was repaid to EDD and the amount of the lien. This information together with workers' compensation documents containing reference to an EDD lien is generally sufficient proof of a lien, allowing adjustment of PDB offset per DI52135.030G. In a lien repayment situation, the SDI printout will show that:

  • the individual payments on the SDI printout add up to the “MBA” (Maximum Benefit Amount) and

  • the “AMT PD” entry is equal to or less than the “MBA” and

  • “BAL” entry plus the “AMT PD” entry add up to the “MBA” amount

These entries verify that the “BAL” amount was repaid to satisfy the EDD lien. See the following example of an SDI printout which shows the entries indicating a repaid lien: http://sfnet.sf.ssa.gov/wnpsc/dir52001/DI_r52120_030.htm

G. Vocational Rehabilitation Maintenance Allowance (VRMA) payments

California VRMA payments were payable to workers injured before 2004 and were available for these workers through 12/31/2008.

VRMA payments to a worker while participating in a rehabilitation plan had a lower maximum weekly amount ($246 per week) than TD benefits. The worker could, however, supplement the maintenance allowance with PD advances (PDAs) up to the total TD rate.

Policy

When VR is paid “in lieu of” WC, the VRMA benefits paid are considered periodic payments for purposes of starting a LS proration.

Example 1:

  • TD payments @ $250.00/week 06/01/1993-03/10/1994

  • VRMA @ $246.00/week 03/11/1994-10/20/1994

  • PDA @ $148.00/week 10/21/1994-01/15/1995

  • LS for $50,000.00 (less PDA), Attorney Fee $5000.00

In this situation, the VR payments are considered to be "in lieu of" WC and therefore offsettable and the last date of the VR payments is the date from which we start prorating the lump sum.

Example 2:

  • TD payments @ $250.00/week 06/01/1993-03/10/1994

  • VRMA @ $200.00/week plus PD @$50.00/week (total $250.00/week) 03/11/1994-10/20/1994

In this situation the combination of VR and PDAs total the prior TD amount. The VR payments are considered to be "in lieu of" WC and therefore offsettable. Therefore, the total of the VR and PD payments, $250.00, is the amount for offset.

Continuation of VRMA payments

VRMA payments may sometimes continue to be paid after a WC award (i.e., C&R, Stipulations, or Findings & Award) has been approved and paid. VRMA payments may also begin after an award. These situations happen when VR is not specifically included as part of the award and is left open to be finalized separately later. Because the WC award settles all other WC issues, such VRMA payments are considered paid “in addition to” WC and are therefore not offsettable. However, if an amount is set aside from a lump sum to settle VR and a directed plan is not involved, see DI 52110.005A.2.

For LS proration purposes VRMA payments in force at the time of the C&R are deemed to end the day before the WCAB judge approves the C&R, therefore the LS start date is the date of the award. Caution: This is the only situation in which the date of a LS award is used as the start date for proration unless that date is specified in the award as the benefit start date. See DI 52150.060D.2.

H. Lump sum awards

1. Prorating a California C&R lump sum

To establish the weekly proration rate when prorating a Compromise and Release (C&R) lump sum:

  1. Use the PP maximum rate chart in DI 52120.030H.3. when:

    • the LS is specifically designated as a PP LS, or

    • the LS does not specify the type of WC but PP advances were made prior to the LS.

  2. Use the PP advance rate if the advances were paid at a rate less than the maximum rate

  3. Use the normal priority order in DI 52150.060D.3. when the LS does not specify the type of WC and PP advances were not paid

When prorating a C&R LS, include in the gross LS amount all previously paid PDA amounts specified as deducted from the LS award. Do not impose offset for the periods when the PDA amounts were actually paid. If offset was previously imposed for those periods, remove offset.

When a LS was preceded by PP advances (PDA), prorate the LS beginning the day after the last TD or VRMA payment.

2. Processing lump sum awards

  • The C&R format is designed to encompass all aspects of a WC claim including TD, PD, VRMA, medical expenses, etc. so C&R awards are not usually specifically designated as representing a single type of WC such as PP. Therefore, treat a C&R lump sum award as a PP award if the evidence shows that PP advances were paid. Most PDAs are PP advances. PT advances are rare (see DI 52120.030C.2.b.

  • PD advances (PDAs) are not an excludable expense. Therefore when prorating a lump sum use the gross LS award amount--effectively sweeping all previously-paid PDAs into the LS. (This includes occasional one-time lump sum PDAs that may have been paid.) In this situation, do not apply offset to any prior periods of actual PDA payments. See the example below. (See DI 52120.030C.2.c. if PDAs were paid as supplements to VRMA payments.)

    NOTE: When changing prior periods of continuous offset that were based on actual PDA payments to “no offset” periods, breaks in offset may result, changing the 3-year count for triennial redeterminations.

  • When prorating a LS involving PDAs, take the following steps unless dates or rates are otherwise specified or the award specifically states that the LS is in addition to PD previously paid:

    1. Start the proration the day after any TD or VRMA payments ended. If TD or VRMA payments were not made, start with the injury date or the date the worker last worked for the industry.

    2. Use the full award amount.

    3. If PP advances were paid, use the maximum PP rate from the table in DI 52120.030H.3. unless PP advances were paid at lower rate, in which case use the lower rate.

Example: MOET 11/2004

TD from MOE through 06/06/2006 at $360/week
PDA 06/07/2006 through 01/02/2007 at $170/week
TD 01/3/2007 through 02/13/2007 at $360/week
PDA 02/14/2007 through 11/20/2007 at $170/week LS Gross Award $50,000, Attorney fees $6,000

When do we start the proration and how do we prorate this case?

  • Proration is based on $50,000 minus attorney fees of $6,000

  • Start date for the proration is 02/14/2007 (after the last TD payment stopped)

  • Prorate at the $170/week PDA rate

NOTE: There is no offset for the period 06/07/2006 through 01/02/2007. Consider the PDAs as “no payment”. Do not deduct the PDAs from the lump sum. The “no payment” period results in a break in offset so a 01/2007 triennial redet does not apply.

3. PP maximum rates for LS proration

NOTE: The WC injury date is not necessarily the same date as the Social Security disability insurance benefit onset date. To determine the correct PP rate, verify the WC injury date from the WC evidence.

  • WC Injuries Occurring

  • Weekly Proration Rate

  • 1974 - 1982

  • $ 70

  • 1983

  • $130

  • 1984 - 1989

  • $140

  • 1990 - 6/30/1994

  • $148

  • 7/1/1994

  • $168

  • 7/1/1995

  • $198

  • 7/1/1996 -12/31/2003

  • $230

  • 1/1/2004 - 12/31/2004

  • $250

  • 1/1/2005 - 12/31/2012

  • $270

  • 1/1/2013 or later

  • $290

4. WC lump sum prorations involving life expectancy (LE) rates

California WC lump sum settlements which specify a LE rate sometimes refer to the “Hartman” formula or method. This is a proration method attorneys often use to characterize settlements as based on life expectancy. SSA does not endorse the use of any specific LE formula such as the Hartman formula. Follow the instructions in DI 52150.065A. to prorate an award involving LE rates.

I. Compromise and Release

For information on how a “C&R” is awarded and paid, see DI 52120.030C.3. The following chart includes item-by-item instructions for processing offset based on a C&R settlement. See Exhibit 1 in DI 52120.030L. for the C&R form.

C&R Paragraph*Offset FactorACTION

1.

Date of Injury

  • If a single date is shown, use the date as the proration Start Date if no periodic payments were made

  • If multiple dates are shown, use the latest date or the date of injury evidenced by WC claim payment documents, if different.

  • For the Start Date priority order, see DI 52150.060D.2.

5.

Periodic Payments

  • This is a standard disclaimer paragraph stating that the C&R does not settle vocational rehabilitation unless expressly ordered by a WC judge. See Addenda below.

6.

Periodic Payments

Temporary Disability Indemnity Paid:

  • If no other evidence is available, use the displayed TD rates and periods as proof of periodic payments

  • If the weekly rate and periods as shown conflict with evidence from the payer, use the payment information provided by the payer as proof of periodic payments

Permanent Disability Indemnity Paid:

  • Use PD weekly rate, if shown, for LS proration.

  • Do not use the total PDA paid to date as a subtraction from the LS. See Excludable Expenses below.

7.

Lump Sum Amount

  • If an amount is shown use the gross award amount for proration

  • If no amount is shown, added remarks will reference attached addendums (structured award)

7.

Excludable Expenses

“The following amounts are to be deducted from the settlement amount:”

$ _____________ for permanent disability advances through _____________(date)

Do not subtract permanent disability advances (PDAs) from the LS. Instead, prorate the gross LS and consider any prior PDAs as “not paid”. (This includes additional PDAs that may continue to be paid while the settlement is being negotiated.)

$ _____________ for temporary disability indemnity overpayment, if any.

Do not subtract any temporary disability indemnity overpayment from the gross LS. Use the correct (“should have been paid”) TD rate and period as determined by the payer to adjust any prior offset based on TD periodic payments. See DI 52150.035A.4.

7.

Excludable Expenses

Liens:

  • If EDD lien is shown, do not deduct the lien or count as an excludable expense; adjust any prior PDB offset by the amount repaid to EDD (by any party). See DI 52135.030G.

  • Liens for legal or medical expenses are excludable if paid from the lump sum but not excludable if paid directly by the insurance company

  • Other liens are not excludable expenses (e.g., child support). See DI 52150.050.

7.

Excludable Expenses

Attorney Fees:

  • Excludable as shown. Enter on ICF WCLS screen.

7.

 

“LEAVING A BALANCE OF $ ___________”

  • Do not use for offset purposes

8.

Excludable Expenses

“Liens not mentioned in Paragraph No. 7 are to be disposed of as follows:”

  • See Liens above

9.

Various

Issues settled (shown as a checklist on the form)

  • This item may refer to attached addenda (labeled A, B, C, etc.).

  • Read this item and any addenda carefully for specified rates, periods or structuring. We should adhere to specified rates and periods to the extent required by DI 52100.000.

Addenda (any format)

Various

  • VR: If the worker never participated in VR, VR may be settled for a specific sum or left open should the worker decide to request VR within a specified time period. VR paid in a lump sum and not under a directed plan is offsettable (DI 52110.005B.3). For further information on VR, see DI 52120.030G.

  • Future medical care: Excludable expense. See DI 52150.050B.2.b.

  • Structured settlement at a life expectancy rate: First determine if the specified life expectancy rate was based on the net award (gross award less excludable expenses). See DI 52150.065A and DI 52150.065D.

  • Purchased annuities: See DI 52110.001.

  • Lump sum for TD (usually a catch-up payment based on a specified rate and specified period): If itemized as a catch-up, adjust any prior offset based on the specified rate and period. See the CAUTION in DI 52150.060B.

  • Medicare Set Aside Trust for future medical care: Excludable per DI 52150.050B.2.c.

  • Subsequent Addenda (those added to a C&R at a later date): SSA is not bound by the terms of subsequent addenda that seek to avoid offset provisions. See DI 52150.065E.

NOTE: C&R paragraph numbers in this chart are based on the current version of the form. The chart only includes those C&R paragraphs containing information needed for SSA's offset determination; it does not include paragraphs consisting solely of pre-printed standard language applicable to all awards.

J. Stipulations with Request for Award

The chart below includes item-by-item instructions for processing offset based on a Stipulations settlement. For information on how a stipulation is awarded and paid, see DI 52120.030C.3.

A Stipulations award is not a final LS award. To the extent possible, we adhere to the periodic payment rates and dates specified in the stipulated award. See Exhibit 2 in DI 52120.030L. for a Stipulations Form.

Stipulations
Paragraph
Offset FactorACTION

1.

Date of Injury

  • If a single date is shown, use the specified date as the date of injury for offset when needed.

  • If multiple dates are shown, use the latest date or the date of injury evidenced by WC claim payment documents, if different.

2.

Periodic Payment (TD) Dates/ Rates

  • Use specified rates and periods for offset.

3.

Periodic Payments (PD) Dates/ Rates

  • Under State law “Per week beginning” date should be within 14 days after TD ended; if not, use the specified date.

  • Use specified rates and periods for offset. Do not adjust for any PDAs or prior Stipulated Award amounts “credited” toward the current award.

  • Part of a PD award may actually be paid as a lump sum because it represents past-due periodic payments. This is a catch-up payment, not a LS. DI 52150.060B

  • Life pension: If 70-99.75 percent disability, a nominal life pension is payable after PP ends.

  • Labor Code section 4658(d) adjustment: Refers to a possible 15 percent increase or decrease in PD payments based on whether or not the employer offered the injured employee work. Use the rates and effective dates as shown for offset.

4.

Excludable Expenses – Future Medical

  • Informational only for offset

  • If a need for medical treatment is indicated, the insurance carrier will continue to be responsible for medical expenses, therefore we would not expect to use any excludable expenses when computing offset.

5.

Excludable Expenses - Medical/ Legal

  • Informational only for offset (lists expenses in connection with the WC claim which the insurance company will cover)

6.

Excludable Expenses -Attorney Fees

  • Use the amount shown (usually 12-15 percent of the gross award)

  • Unless otherwise specified, deduct attorney fees from the far end of the award per DI 52120.030D:

    • Use ICF WC/PDB to compute a trial LS computation treating the gross PD award amount as the “LS” amount

    • Select Method C

    • Use the trial LS results to enter the Stipulations PD award as periodic payments in ICF

    • Establish a manual diary to remove offset

7.

Excludable Expenses -Liens

  • Lists outstanding liens which the insurance company agrees to pay, including doctors, laboratories, EDD, etc. (not attorney fees)

  • Not excludable if paid directly by the insurance company

  • Generally in Stipulations, the insurance company will agree to be responsible for the EDD lien

  • For instructions on adjusting any PDB offset when an EDD lien is repaid by any party, see DI 52135.030G

8.

(New to form, 10/2005)

 
  • Labor Code Section 5814 penalties: Refers to penalties resulting from an employer's failure to make timely WC payments. Amounts specified as penalties are not offsettable.

8. or 9.

Various

Miscellaneous agreements may include:

  • Waiver or declination of Vocational Rehabilitation in exchange for a cash settlement. VR paid in a lump sum and not under a directed plan is offsettable (DI 52110.005B.3). For further information on VR, see DI 52120.030G.

  • Cash settlement of other WC issues such as past-due TD. Past-due periodic payments are not lump sums. See the CAUTION in DI 52150.060B.

  • Agreement that insurance company will reimburse worker for medical expenses: Not excludable per DI 52150.050A.

  • Agreement for the insurance company to “take credit for” a prior Stipulated Award based on the same injury/claim. If this is specified, the current award supersedes the prior award and offset is based only on the current gross award. We do not credit (i.e., exclude) the prior award. Excludable expenses are defined in DI 52150.050.

K. How to Verify WC Payment Amounts

1. Contacting insurance carriers

  • To obtain WC payment information from the number holder (NH), attorney, insurance companies, self-insured employers, third party administrators and the State Compensation Insurance Fund (SCIF), follow the instructions in DI 52145.001 – Verification/Proof of Workers' Compensation/Public Disability Benefit (WC/PDB).

  • Use WNPSC Workers' Compensation Carrier's Address Listing to obtain carrier contact information.

2. Contacting the Workers' Compensation Appeals Board (WCAB)

NOTE: Contact the Appeals Board only as a last resort. WCAB offices only have continuing payment information available online. Prior WC payment information is archived in paper files and must be retrieved.

To contact the California WCAB:

  • Send a Form SSA-1709 (Request for Workers' Compensation/Public Disability Benefit Information) to the WCAB district office that most likely has the material, based on geographical location. See the WCAB directory

    NOTE: Do not send an SSA-1709 to the headquarters office in San Francisco.

  • If you receive a form letter in response, complete and return the WCAB Form AD-2, Request for WCAB Case # Search. WCAB will complete the form to provide the WCAB case #, date of injury, location of the file and status of the file.

  • When the Form AD-2 reply is received, forward the information to the SSA FO parallel to the WCAB office where the file is located.

  • Request the FO to secure the information.

  • If the FO is unable to comply with the request, provide the information to the NH and request the NH to visit the WCAB office, obtain a WC payment history, and forward the information to us.

  • Diary for 45 days.

  • If no response is received from the NH, do not pursue the issue further.

  • Make a determination based on the best available information.

3. Online Access

There is no SSA online WC access for California.

4. Specific development issues

a. Verifying VRMA Payments

As noted in Section DI 52120.030C.2.c, when verifying WC payments for injuries prior to 2004 through insurance companies and other payers, specifically ask that VRMA payments be included. Form SSA-1709 does not specify that VR payments be included as periodic WC/PDB payments and payers do not routinely include information on VRMA payments unless specifically asked.

b. Obtaining Copies of Settlement Documents

Whenever possible, request full copies of any Compromise & Release or other settlement documents. Payment history printouts and SSA-1709 entries often do not contain enough information about a settlement for an accurate offset determination to be made. Copies of settlement documents should be the final versions approved by the WCAB judge.

c. Questioning SSA-1709 Medical Expenses

If a carrier completes Section II.8.b.1 or 2 of the SSA-1709 showing an amount for “Present and past medical expenses” or “Future medical expenses” as a deduction from the gross LS payment, do not routinely use the amount shown as an excludable expense. Carriers may inadvertently list here all the medical expenses they paid on the claim. Prior to excluding any listed amount, verify that the amount shown was in fact deducted from the LS and not paid by the carrier. If a complete copy of the C&R is available, this can be accepted without further development as proof of which expenses were specified in the award.

L. Exhibits

M. Case examples

  1. Coordinated WC and SDI Payments

  2. TD Followed by C&R (No PD Advances)

  3. Prorating WC Lump Sum When Prior PDA Rate Unknown

  4. C&R Involving Prior TD Overpayment

  5. C&R Involving a Lump Sum and Structured Periodic Payments

  6. TD With Intervening Lump Sum PDA & VRMA Followed by C&R – Attorney Fee Expense from VRMA

  7. SDI, PDA, VRMA, PDA, Lump Sum [EDD Lien]

  8. Stipulations With Request for Award [Prior Stipulations]

  9. C&R with Structured Settlement and Purchased Annuity

N. References


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0452120030
DI 52120.030 - California Workers' Compensation (WC) - 02/24/2014
Batch run: 02/25/2014
Rev:02/25/2014