Errors In Workers Compensation Offsets

A recent report from Social Security's Office of Inspector General (OIG) on workers compensation offset computations will come as no surprise to attorneys who represent Social Security claimants -- or to any Social Security employee who regularly deals with workers compensation issues. The computations are complex and Social Security makes plenty of mistakes. Some excerpts from the OIG report:

Workers injured on the job may qualify for DI [Disability Insurance] benefits in addition to benefits under Federal and State workers' compensation (WC) programs. However, combined DI and WC benefits could result in workers receiving more in disability payments than they earned before they became disabled. To prevent this, Congress enacted the WC offset provision under section 224 of the Act, which requires that SSA adjust DI benefits based on an offset formula set forth in that provision of the Act.

While SSA adjusts DI benefits based on an offset calculation, to protect DI beneficiaries with a continuous WC offset against inflation, SSA is required to re-compute the beneficiary's average current earnings (ACE) [a figure used in computing the workers compensation offset] on a triennial basis. This recalculation is known as a triennial redetermination (REDET). A REDET may result in increased benefits ...

In 2006, SSA identified 36,177 DI claims that required a REDET. As of June 30, 2007, SSA had completed 21,976 REDETs, from which we selected a random sample of 250 DI claims for review. To determine whether the REDETs were accurate, we

• reviewed all available documentation for independent proof of current WC rates,
• calculated the WC offset based on the current proven WC benefits data,
• compared the total benefits paid to the total benefits owed, and
• obtained SSA's review and comments for each payment error. ...
  

SSA did not always accurately process and calculate the 2006 REDETs in our sample. In total, 24 (9.6 percent) of the 250 sampled DI claims we reviewed had payment errors. Of the 24 claims, 19 had payment errors totaling $219,610 related to the WC offset calculation. Based on this error rate, for the 21,976 REDETs in our population, we estimate approximately 1,670 DI claims totaling about $19.3 million had payment errors related to the WC offset calculation. The five remaining claims, totaling $53,320, had DI processing errors unrelated to the WC offset calculation.

Also, 16 of the 24 REDET claims had payment errors that continued after August 31, 2007. Fourteen of these errors were related to the WC offset calculation, and the remaining two were unrelated to this calculation. Based on the number of continuing errors, we estimate that for the 12 months following our audit period, approximately 1,406 claims had payment errors totaling about $4.8 million.