WILLIAM P BRANDT, Applicant
HALL CHEVROLET CO INC, Employer
UNITED WISCONSIN, Insurer
WORKER'S COMPENSATION DECISION
Claim No. 2003-038582
An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development issued a decision in this matter. 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 third full paragraph beginning on page 3 of the ALJ's decision and substitute:
"From May 4, 2004 to February 27, 2005, is a period of 42 weeks and four days. The applicant's weekly temporary total disability rate, after calculation of the social security reverse offset, is $216.88. The gross amount due the applicant in temporary total disability for the period at issue is $9,255.55. However, the parties agreed the applicant was overpaid benefits as a result of the social security reverse offset in the amount of $4,439.91. The amount now due the applicant is thus $4,813.64. The fee is set at 20 percent of that mount, or $962.73, which together with costs of $155.87 shall be paid from the reverse offset savings. Jurisdiction shall be reserved."
2. Delete the ALJ's Interlocutory Order and substitute:
"Within 30 days, the employer and its insurer shall pay all of the following:
"1. To the applicant, William P. Brandt, Four thousand eight hundred thirteen dollars and sixty-four cents ($4,813.64) in disability compensation.
"2. To the applicant's attorney, Thomas Domer, the sum of Nine hundred sixty-two dollars and seventy-three cents ($962.73) in fee and One hundred fifty-five dollars and eighty-seven cents ($155.87) in costs."
Jurisdiction is reserved for further orders and awards as may be warranted.
The findings and order of the administrative law judge, as modified, are affirmed.
Dated and mailed March 7, 2006
brandtw . wmd : 101 : 8 ND § 5.35
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
The only issue on appeal is the effect of the social security reverse offset under Wis. Stat. § 102.44(5) on the applicant's award for temporary total disability from May 4, 2004 to February 27, 2005, a period of 42 weeks and four days. The parties agree that the applicant's weekly temporary total disability rate, after calculation of the social security reverse offset, is $216.88, or $9,255.55 for the period at issue. The department initially calculated the 20 percent fee on that amount to be $1,850.88. (1)
Accordingly, the ALJ ordered payment to the applicant in the amount of $9,255.55, and to his attorney of $1,850.88. However, based on the information provided to the applicant at the time of the hearing, the ALJ could not determine the amount of benefits overpaid based on previous payments at the full temporary total disability rate without accounting for the reverse social security offset. Accordingly, the ALJ stated in his order that "a reduction may be taken if the parties agree on an overpayment amount."
The parties have, in fact, agreed on an overpayment amount. Specifically, on appeal the parties agree that the amount of the overpayment is $4,439.91. The parties do not agree, however, on how that affects the amount of the applicant's award and attorney fees.
The employer and its insurer (collectively, the respondent) asserts that the overpayment ($4,439.91) should be subtracted from the amount due the applicant as calculated by the ALJ ($9,253.55) yielding $4,813.64 now due the applicant. The respondent asserts the 20 percent should be based on that lower figure now due the applicant, yielding $962.73.
The applicant offers a different approach. It suggests the ALJ should have originally calculated the fee to be 20 percent of the total paid both to the applicant in compensation and to his attorney in fee. In effect, the attorney suggests that fee should be 25 percent of the amount paid to the applicant for the period at issue, or $54.22 per week. (2) The applicant suggests that the $4,439.91 overpayment should be subtracted from the sum of the payments due to the applicant and his attorney for the weeks at issue, or $11,566.93, (3) leaving $7,127.02. The applicant goes on to assert that of that amount:
(a) 20 percent of that amount, or $1,425.40, should be paid to his attorney in fee,
(b) $155.87 should be paid to the attorney in costs, and
(c) the remainder, $5,545.75, should be paid to the applicant in compensation.
Payment in this fashion, the applicant asserts, assures that the applicant is not penalized for retaining counsel.
The commission must agree with the method of calculation offered by the respondent. As even the applicant's calculations recognize, the department's usual practice is to base fees on the additional amount awarded, net of overpayments. The dispute here is whether the additional amount for purposes of this case is the amount awarded to the applicant alone, or that amount plus the fees on that amount.
In cases involving the social security offset, the applicant is paid the full disability rate, without subtraction of fees. Fees are paid from the reverse offset savings and are not subtracted from the award itself. In such cases, then, the additional amount awarded is best reflected by the amount paid to the applicant, exclusive of the amounts paid to the applicant and his or her attorney from the reverse offset savings.
Similar reasoning applies to the applicant's argument that the attorney fee should be 25 percent of the applicant's award or 20 percent of the total paid to the applicant and his attorney. In cases where the social security reverse offset does not apply, the compensation as determined by applicable weekly compensation rate is generally divided on an 80/20 split, so that after subtraction of the fees the applicant has only 80 percent of the gross award. In cases involving the reverse social security offset, fees (and costs) are not subtracted from the award itself, but paid from the reverse offset savings. In other words, the full $216.88 weekly rate calculated by application of social security reverse offset is paid to the applicant; fees are not "netted out" of that amount but paid in addition from the offset savings. Under such circumstances, calculating the fee based on the sum of the amounts awarded to the applicant and the amount paid to her attorney would in effect double-count a portion of the fee.
cc:
Attorney Thomas M. Domer
Attorney Christine K. Nelson
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