P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)




Claim No. 1983-044687

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.


The findings and order of the administrative law judge are affirmed.

Dated and mailed March 15, 2006
benites . wsd : 101 : 8  ND 5.35

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner


On appeal, the only issue is whether the social security reverse offset under Wis. Stat. § 102.44(5) may be taken against payments made under Wis. Stat. § 102.43(5) in connection with vocational rehabilitation benefits.

The department and the commission have followed the practice of not allowing a social security reverse offset against the temporary total disability benefits paid under Wis. Stat. 102.43(5). Indeed, Neal & Danas, Worker's Compensation Handbook 5.35 (5th ed., 2005) observes that "DWD has ruled administratively (and internally) that the offset does not apply to vocational retraining benefits under section 102.43(5)." The policy is reflected in a letter from then-WC division administrator Chris M. Faulhaber to all WC insurers dated August 1, 1987 discussing the reverse social security offset.(1)  The letter advises the insurers

"You cannot take a reverse offset if a worker is being paid:

1. Vocational rehabilitation."

The commission has followed department practice on this point. In Christine Schultz v. Service America Corporation, WC Claim Nos. 89034766, 93007271 (LIRC, January 31, 1995), aff'd sub nom. Home Insurance Company v. LIRC, case no. 95-CV-409 (Waukesha Cty. Cir. Ct., Jan. 30, 1996), the commission stated:

The respondent requested the commission to apply the social security offset against the benefits paid for vocational rehabilitation under sec. 102.43 (5), Stats. However, the commission declines to do so, consistent with the department's policy against such allocation. This policy is set out in a letter from Chris M. Faulhaber, Worker's Compensation Division Administrator to all insurance carriers and self-insured employers, dated August 1, 1987. See: Allen Roofing and Construction v. LIRC and Matthew J. Flynn, Court of Appeals case no. 93-0892, District IV unpublished decision (March 31, 1994); and Neal & Danas, Worker's Compensation Handbook, sec. 5.35 and appendix 4, Exhibit G (3d ed., 1990). The rationale behind this policy is simple: the amounts paid for vocational retraining are not, strictly speaking, temporary disability benefits, but rather benefits for vocational rehabilitation paid at the temporary total disability rate.

In affirming the commission's decision in Christine Schultz, the circuit court characterized the commission's decision as holding that the benefits paid under Wis. Stat. 102.43(5) were maintenance benefits under Wis. Stat. 102.61 paid at the temporary disability rate, rather than an actual temporary disability benefit. The circuit court noted, too, that the GTC Auto case (2) did not address the issue of whether vocational retaining benefits were subject to the social security reverse offset. The circuit court held that, by referring to the "period" of temporary disability as including the period during which a person receives vocational retraining, Wis. Stat. § 102.43(5) "only addresses the length of time that an employee may receive temporary disability benefits and not the benefits themselves." Home Insurance Company v. LIRC, case no. 95-CV-409 (Waukesha Cty. Cir. Ct., Jan. 30, 1996), slip op., page 5.

This issue was also considered in Matthew P Flynn v. Allen Roofing & Construction, WC Claim No. 97-01992, 1992 WI Work. Comp. LEXIS 563 (LIRC, April 30, 1992), aff'd sub nom. Allen Roofing and Construction v. LIRC & Matthew Flynn, case no. 93-0892 (Wis. Ct. App., March 31, 1994). In that case, the applicant, a quadriplegic, had been receiving permanent total disability subject to the social security reverse offset when he started retraining. Upon starting retraining, the ALJ held, the employer was liable for the Wis. Stat. § 102.43(5) "maintenance payment" at the full temporary total disability rate with no offset. The ALJ then ordered the employer to pay the difference between the full TTD rate and the offset PTD rate for the periods when the applicant was receiving instruction. The commission affirmed, holding that "an employer may not offset social security disability benefits against maintenance benefits paid during the vocational rehabilitation training program."

On appeal, the court of appeals affirmed the commission in an unpublished decision. The court stated the issue was whether the insurer "was entitled to offset the value of the social security benefits he received ... against the vocational rehabilitation maintenance benefits (retraining benefits) it was obligated to make to Flynn." Allen Roofing and Construction v. LIRC & Matthew Flynn, case no. 93-0892 (Wis. Ct. App., March 31, 1994), slip op. at page 3. The court of appeals affirmed the commission indicating (as did ALJ Phillips in this case) that the 102.43(5) payment is not a disability indemnity, but a separate, additional maintenance benefit. The court of appeals added that it would have affirmed the commission under even a de novo standard of review.

In short, the department and the commission have previously determined that the social security reverse offset may not be taken against payments made under Wis. Stat. § 102.43(5) during the period an employee is receiving instruction under Wis. Stat. § 102.61(1) or (1m). That practice has been affirmed on judicial review. The commission therefore affirms the ALJ's decision which follows that past practice in this case.

cc: Attorney Thomas M. Rohe

Appealed to Circuit Court.  Affirmed February 9, 2007.  Appealed to the Court of Appeals. Reversed sub nom., Michels Pipeline Construction v. LIRC and Benites, 2008 WI App 55,   309 Wis.2d 470, 750 N.W.2d 465 (#2007AP0607, Filed March 13, 2008)  

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(1)( Back ) This letter is identified as "Ins. 220" and reprinted at Neal & Danas, Appx 4, page 33, 35 (5th ed. 2005).

(2)( Back ) GTC Auto Parts v. LIRC, 184 Wis. 2d 450, 462 (1994).


uploaded 2006/03/20