STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)
MARY LOHMAN, Applicant
SOUTHDALE HEALTH CARE SERVICES, Employer
TRAVELERS INS COMPANY, Insurer
WORKER'S COMPENSATION DECISION
Claim No. 1995018345
An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter on February 17, 1998. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and order in that decision as its own, except that it makes the following modifications:
1. Delete the paragraph beginning on page 1 and ending on page 2 of the ALJ's February 1998 decision and substitute:
"As of December 17, 1997, 113 weeks and two days of compensation for permanent partial disability has accrued. After accounting for the social security reverse offset under Wis. Stat. § 102.44(5), the applicant is entitled to $74 per week for permanent partial disability. The accrued award for permanent disability is thus $8,386.67 (113.333 times $74), subject to an overpayment of temporary disability because of the social security reverse offset of $978.05. The amount due the applicant as of December 17, 1997 is $7,408.62 ($8,386.67 less $978.05).
"In addition, the applicant's attorney is entitled to a fee equal to 20 percent of the accrued award, or $1,677.33, as well as costs of $1,130.75. As provided in Wis. Stat. § 102.44(5)(a), the attorney fees and costs shall not be subtracted from the applicant's award as reduced by the social security reverse offset."
2. In the first paragraph of the ALJ's Interlocutory Order in the February 1998 decision, delete "Mary Lohman, the sum of Six thousand two hundred seventy-seven dollars and eighty-seven cents ($6,277.87)" and substitute "Mary Lohman, the sum of Seven thousand four hundred eight dollars and sixty-two cents ($7,408.62)."
3. In the second paragraph of the ALJ's Interlocutory Order in the February 1998 decision, delete "($327.67) and substitute ($320.67)."
The findings and order of the administrative law judge, as modified, are affirmed.
Dated and mailed: July 14, 1998
lohman . wmd : 101 : 7 ND § 5.35
/s/ David B. Falstad, Chairman
/s/ Pamela I. Anderson, Commissioner
James A. Rutkowski, Commissioner
A hearing was held in this matter on June 5, 1997. By order dated July 3, 1997, the ALJ awarded permanent partial disability for loss of earning capacity at 40 percent. The record now before the commission indicates that no appeal was taken within 21 days of that order. (1) Thereafter, on February 17, 1998, the ALJ issued a second order, modifying the July 1997 order to account for the social security reverse offset under Wis. Stat. § 102.44(5). The applicant filed a timely appeal of this second order on March 9, 1998.
In her petition for commission review, the applicant first asserts that she should be found permanently and totally disabled because she is receiving social security and because the employer's expert is not credible. The applicant's attorney also states he does not understand how ALJ Clarke calculated the award. Neither party has submitted briefs on either issue.
As noted above, the applicant did not file a timely appeal of the July 3, 1997 order that awarded the applicant loss of earning capacity at 40 percent. Consequently, the commission does not have jurisdiction to review that issue. However, the applicant did timely appeal the February 17, 1998 order recalculating the award. Therefore, the commission limits its review to the recalculation of the award to account for the social security reverse offset.
According to the supplementary report on form WC-13 attached to the respondent's answer to the application for hearing, the respondent paid $6,120.12 in temporary total disability (TTD) for various periods to October 16, 1995, based on a weekly TTD rate of $180.89. As of August 1, 1995, the applicant began receiving social security benefits. The social security reverse offset under Wis. Stat. § 102.44(5) reduced the applicant's weekly TTD rate for the period from August 1, 1995 to October 16, 1995, by $90 per week to $90.80. (2) Thus, after accounting for the social security reverse offset, the department calculated the TTD actually due to be only $5,142.07, resulting in an overpayment of TTD in the amount of $978.05.
When she reached an end of healing on October 16, 1995, the applicant became entitled to permanent disability, specifically 400 weeks of permanent partial disability (PPD) based on the ALJ's award of loss of earning capacity at 40 percent. The applicant's weekly PPD rate is $74 per week (after a $90 per week reduction from the maximum PPD rate of $164 by virtue of the social security reverse offset.)
The applicant agreed to the protection of a twenty percent attorney fee under Wis. Stat. § 102.26. However, as explained more fully below, the applicant is entitled to the full amount of the remaining $74 weekly PPD entitlement without deduction for attorney fees or costs; (3) thus, the attorney fee is an additional 20 percent calculated on that figure. As a result the attorney receives a fee at $14.80 per week for the 400 weeks of PPD in addtiion to the $74 paid weekly to the applicant.
As of the date of the recalculated award (December 17, 1997), 113 weeks and 2 days of benefits had accrued since the October 16, 1995 healing plateau date. Thus, $8,386.67 (113.333 times $74) was then due the applicant for disability and $1,677.33 (113.33 times $14.40) was due her attorney for fees. The remaining 286.667 (400 minus 113.333) weeks of PPD continues to accrue at the same $74 and $14.80 rates, but the ALJ appropriately ordered it paid monthly at the respective rates of $320.67 (4) and $64.13.
The ALJ did not order the full amount currently due to be paid to the applicant, however. Instead, he deducted the $978.05 overpaid in TTD and $1,130.75 in legal costs. As a result, the ALJ ordered the applicant paid only the lump sum of $6,277.87.
However, the legal costs, like the attorney fee, should not have been deducted from the applicant's award. While both an attorney fee and costs are deducted from an applicant's award when no offset is involved, as stated above special rules apply when the award is reduced pursuant to the social security reverse offset. In these cases, the amount determined by statute is an absolute minimum the applicant himself must receive, the attorney fees and costs are paid from the "reverse offset savings" (or windfall) to the insurer. In other words, the fees and costs are "netted out" before the offset is calculated; fees and costs are paid from the insurer's reverse offset savings. Wis. Stat. § 102.44(5)(a); Neal & Danas, Workers Compensation Handbook, sec. 5.35 (4th ed. 1997) and Memo from WC Division Administrator Faulhaber to insurance carriers and self insured employers, dated August 1, 1987, re "Social Security Reverse Offset," page 9, note 7. (5)
The commission notes three final points. First, because the social security reverse offset is based on "average current earnings," a social security administration figure subject to redetermination, the amount of the applicant's award may well be recalculated yet again. Second, because of that possible recalculation, a lump sum attorney fee cannot be computed. Thus, the ALJ properly ordered periodic payment to the attorney, and left his order interlocutory. Faulhaber memo, supra. Also because of the possibility of redetermination, the commission did not attempt to recalculate the figures to reflect accruals past December 17, 1997.
cc: ATTORNEY JAMES L CIRILLI
CIRILLI GONDIK MOLDENHAUER & ZUBER
ATTORNEY JEFFREY R MUNSON
SPINDLER ROITBURD SCHWEMER & MUNSON
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(1)( Back ) See, Wis. Stat. § 102.18(3).
(2)( Back ) Wisconsin Statutes § 102.44(5) applies when the combined total of an injured employe's workers compensation disability benefit and his social security benefit exceeds 80 percent of his "average current earnings" for social security purposes (ACE). In that event, the workers compensation benefit payment must be reduced so the combined total equals the greater of 80 percent of ACE or the "normal" workers compensation benefit. In this case, 80 percent of the applicant's ACE is $544 per month, or $125.54 per week, which is less than the "normal" weekly TTD rate of $180.80 and the "normal" weekly PPD rate of $164. Consequently, the floors for determining the social security reverse offsets are the "normal" TTD and PPD rates, $180.80 and $164 respectively. The applicant's monthly social security benefit is $390 or $90 per week. Thus, $90 must be deducted from the applicant's "normal" TTD and PPD rates to accomplish the social security reverse offset. During weeks of TTD the applicant will receive $90 in social security and $90.80 in TTD for a total of $180.80; in weeks of PPD, the applicant will receive $90 in social security and $74 in PPD for a total of $164.
(3)( Back ) Wis. Stat. § 102.44(5)(a).
(4)( Back ) Though his order states the incorrect amount parenthetically at $327.67.
(5)( Back ) This memo is at Neal & Danas, supra, appendix 4, item G, page 31.