A $500,000 Underpayment?

    From Newsweek:

A Kentucky woman said she is owed more than $500,000 after the Social Security Administration began underpaying her in the 1990s.

Wyonia Butler, 65, worked as a nurse in the 1990s, but at the young age of 32, she was injured on the job and wound up unable to work. ...

While Butler said she initially received workers' compensation, the payments ceased after just seven months. ...

In June of 1997, Butler received a letter saying she would get only 80 percent of her earnings due to the workers' compensation, despite the payments having stopped. That totaled $1,620 taken out of her benefits, which has easily surpassed $500,000 in lost money today.

While Butler immediately went to correct the error, confirming that she did not receive any workers' compensation anymore, the past 27 years have left her without answers and a heavy hit to her financial situation. ...

She initially received a letter saying they needed to secure more information and she needed to complete a few forms. She mailed them out and followed up but was told the forms were in backlog. The SSA representatives she spoke to said they weren't sure why her account still said she receives workers' compensation. ...

"I did as I was asked," Butler said. "However, to this date, it's never been done or addressed. They are still withholding $1,625 out of my check every month. I called, of course, and was told each time to be patient, it's being worked up."

After five years of failing to get answers, Butler said she stopped. It was affecting her health, but 27 years later, she still is unsure where a half-million dollars is and why it's been withheld from her. ...

In the meantime, Butler said she has been deprived of at least $500,000 in payments and lost her farm. ...

"I should have continued every day until I got an answer," Butler said. "I should have called more. Due to health reasons, I had to stop. I did call last year and this year. The line just rings and rings."

She received a denial of reconsideration after five months despite having immediately corrected the Social Security error. ...

    What happened here? I think the most likely explanation is that Ms. Butler was receiving her full, unreduced benefits. She thought her payment was reduced by the workers compensation offset but she was just confused about how much she was owed each month. She was certainly confused about what that 80% that she heard something about meant. It's complicated but while 80% is part of the workers compensation offset, it doesn't mean that there's an 80% reduction. The actual reduction could be more or less than that. Even though Ms. Butler seems confused -- as well she should be since this is all so complicated -- there is the real possibility that she has been underpaid all these years. Social Security has a hard time administering the complex workers compensation offset. I don't think that Social Security would deny that they make a lot of workers compensation offset mistakes but 27 years of mistakes is at the extreme end of what would be imaginable.

    If I were representing her, I'd like to see that reconsideration determination she received and I'd like to know what she did after receiving it. I'd like to see any other paperwork she has. Was there a settlement of her workers compensation case with a lump sum benefit payment? Was this paid by an annuity? Did her benefit payments change when she turned 62? If it did, that would suggest that the agency was still applying the workers compensation offset until then. I'm not going to explain why age 62 matters other than to say that I'm talking about the RIB-DIB election. If you don't know what the RIB-DIB election is, you don't know enough to be commenting on any of this.

Change In Workers Comp Offset Computation -- This Is The Sort Of Arcane Stuff That Can Make A Difference Of Tens Of Thousands Of Dollars To A Claimant

    From a newly added changes to POMS (Program Operations Manual Series) §DI 52150:

... A lump sum award may specify a payment amount based on the number holder’s (NH) life expectancy determined by insurance life expectancy tables. The life expectancy of the NH is often given in weeks, months, or years. These awards usually specify a life expectancy (LE) rate. ...

If the award indicates it should be prorated over the claimant's lifetime but does not specify a rate or time period, and the development proves unsuccessful, following is a link to a table provided by SSA's Office of the Chief Actuary to assist in determining the life expectancy:

https//www.ssa.gov/OACT/HistEst/CohLifeTablesHome.html ...

    This doesn't help if the workers compensation settlement agreement says nothing about proration but it helps in cases where there has been a simpler mistake in settling a workers compensation case, a failure to include specific language giving the proration formula. They're continuing with the no amendment provision. That needs to be changed. Don't punish claimants for failing to have an experienced workers comp attorney.

    This is also an example for ALJs. If this seems incomprehensible, it's because there's a lot more going on with Social Security disability cases than you're aware of. I have seen former ALJs struggle to represent claimants because they didn't realize that they would face a significant learning curve.

Delay After Delay

     From the Cleveland Plain Dealer:

Today is the day Isaac Everhart has long been waiting for, the day he appears before an administrative law judge with the Social Security Administration in a bid for disability benefits.

Isaac is counting on the benefits to lift his wife, Violet, and daughter, Tiffany, out of their subsistence existence – the result of his inability to work since 2015 because of a back injury. ...

Isaac assumes the hearing is just a formality, that the judge will make an immediate ruling to grant him monthly disability checks and retroactive pay to the date of his fall. But he is mistaken.

At the end of the hearing, the judge informs Isaac that a review of the material in the nearly six-inch binder could take as long as 75 days. If the decision is in Isaac’s favor, it would likely be three to six months before Isaac sees the first check.

The news reduces Isaac to tears.

“I don’t understand how they can make us wait any longer,” Isaac tells his lawyer. ...

      No, it's not likely to take three to six months to get first payment of benefits. In most cases, it's a month. It can certainly take longer to get everything paid, particularly if there's a windfall offset or a workers compensation offset but it doesn't sound like that would be the case here. The 75 days to get an ALJ decision would be on the optimistic side where I practice. There's a big backlog in getting out ALJ decisions nationally. It's good that this article talks about the delays AFTER an ALJ hearing is held. They're significant. Claimants also need relief on that side.

That's A Lot Of Payment Mistakes

     From a recent report by Social Security's Office of Inspector General:

When beneficiaries receive both DI [Disability Insurance] and WC/PDB [Workers Compensation/Public Disability Benefit], SSA [Social Security Administration] must reduce, or offset, their DI payments to ensure the combined amount of DI and WC/PDB does not exceed whichever is greater of (1) 80 percent of their average current earnings or (2) the total family benefits.

During DI claims processing, SSA staff should obtain WC/PDB information, verify WC/PDB payments, retain WC/PDB documents, and remind beneficiaries of their responsibility to report WC/PDB payments to SSA. SSA systems calculate DI payments based on WC/PDB information entered by SSA staff. Incomplete and inaccurate WC/PDB information can cause improper payments.

From 1 segment of the Master Beneficiary Record, we identified 4,558 beneficiaries awarded DI benefits in Calendar Year 2014 who indicated they had filed, or intended to file , for WC/PDB. From this population, we reviewed a random sample of 200 cases. ...

SSA did not always accurately determine WC/PDB offset during DI claims processing. Of the 200 cases in our review, SSA

• did not obtain sufficient information for 60 beneficiaries’ WC/PDB claims and/or payments before it processed their DI claims ;

• obtained sufficient WC/PDB information for 43 beneficiaries but did not accurately enter it into SSA’ s records ; and

• did not retain the documents that supported the WC/PDB information entered for 6 beneficiaries.

Additionally, SSA did not always provide required printed reminders to beneficiaries of their responsibility to report changes to their WC/PDB payments to SSA.

The insufficient information and inaccurate records caused SSA to improperly pay 25 beneficiaries $26 6,929—$207,941 in underpayments and $58,988 in overpayments. Based on these results, we estimate 11,400 beneficiaries were under- and overpaid $121.7 million because SSA did not properly offset their DI benefits when it processed their DI claims.

SSA subsequently detected the improper payments in 15 of the 25 cases after it processed the DI claim. In one additional case, SSA detected some, but not all, of the improper payments. For the remaining nine cases, SSA did not detect the improper payments. Although SSA found many of the improper payments, the errors that occurred when it processed the D I claims still had negative effects, including SSA’ s inability to recover some of the resulting overpayments. ...

     I don't know what the solution is. The workers comp offset is too complicated but I don't know how to simplify it without increasing unfairness. More staff would help. If there was some way of making state workers comp agencies report workers comp payments in a standardized way that would help but I fear that would just shift the mistakes to the state agencies. Things get complicated when cases get settled.
     By the way, I doubt that OIG was even looking at subrogation cases. Subrogation is where a claimant gets workers comp but later settles a third party claim. Let's say the claimant was in an on the job automobile accident. They get workers comp but sue the driver of the other vehicle. If they get a settlement or jury award, they have to pay back their workers comp. That means they should be treated as if they never received workers comp. The problem is that frequently the subrogation isn't reported to Social Security. I'm betting that claimants are underpaid in most subrogation cases, usually by tens of thousands of dollars and sometimes by hundreds of thousands of dollars.

Workers Comp Offset Change

     From a notice that Social Security is posting in the Federal Register on Monday:

We propose to amend our regulations to incorporate changes made by the ABLE Act to section 224(a) of the Social Security Act. The ABLE Act amends section 224(a) by changing the age at which disability insurance benefits (DIB) are no longer subject to reduction (offset) based on receipt of workers’ compensation or public disability benefits (WC/PDB), from age 65 to the day the individual attains full retirement age. This change will make our rules consistent with the provisions of the Act, as amended by the ABLE Act

Workers Comp Changes Costing Social Security

     From National Public Radio (emphasis added):

Ten ranking Democrats on key Senate and House committees are urging the Labor Department to respond to a "pattern of detrimental changes in state workers' compensation laws" that have reduced protections and benefits for injured workers over the past decade. ...

The letter also referred to NPR/ProPublica stories last week that detailed an emerging trend that permits employers to dump out of state-regulated workers' comp programs, write their own injury plans and limit benefits on their own. ...

The Center for Economic and Policy Research is releasing a study Wednesday that estimates that more than 20 percent of the increase in federal disability cases is due to cuts in workers' comp programs. ...

A 2007 study by J. Paul Leigh, a health economist at the University of California, Davis, estimated that workplace injuries not covered by workers' comp cost government programs about $30 billion a year.

Federal intervention may also come as the result of the "opt out" movement in Texas and Oklahoma, in which employers shun heavily-regulated workers' comp and are permitted to write and administer their own largely-unregulated workplace injury plans. South Carolina and Tennessee are considering opt-out laws now and proponents are aiming for a dozen states by the end of the decade. ...

Opting Out Of The Workers Compensation Offset In Texas

     Let me explain first why I'm writing about a development in workers compensation law. Claimants receiving Social Security disability benefits as well as workers compensation benefits are subject to an offset. Usually, Social Security disability benefits are reduced because of the receipt of workers compensation benefits. Sometimes the offset works in the opposite direction. 

     The states of Texas and Oklahoma now allow employers to opt out of workers compensation. You read that right -- opt out of workers compensation. The employers have to set up benefits that parallel workers compensation but they can arrange things in ways that save money, such as refusing to pay for carpal tunnel syndrome or refusing to pay benefits unless a worker reports an injury by the end of his or her work shift or cutting off all benefits after two years. 

     In terms of workers rights, these plans are very worrisome but I'm writing about the Social Security implications. Social Security has decided that benefits under the company plans that substitute for workers compensation aren't subject to the workers compensation offset. This development is already costing Social Security's Disability Insurance Trust Fund money. Other states are studying what Texas and Oklahoma have done. There may be significant effects upon Social Security. Employers are trying to shift the burden of providing for workers injured on the job to Social Security and Medicare. This needs Congressional scrutiny.

NCSSMA Newsletter

     The National Council of Social Security Management Associations (NCSSMA), an organization of Social Security management personnel has issued its September 2015 newsletter. The newsletter lists NCSSMA's legislative proposals:

1. Eliminate SSI Dedicated Accounts
2. Eliminate the SSI Holding Out Provisions among Couple 
3. Streamline Worker’s Compensation Offset

     No, I don't know how they want to streamline the workers compensation offset.

A Solution For The Disability Trust Fund?

     I've been looking into the question of what happens if Congress is deadlocked, as it may be, on a fix for the possible exhaustion of the Social Security Disability Insurance Trust Fund. I'm encountering some interesting issues. If we actually go over the precipice and the Disability Insurance Trust Fund runs out of money, it's going to be a mess. The shortfall in the Disability Insurance Trust Fund will vary from month to month since FICA collections vary from month to month. One or two months a year there may be little or no shortfall and some other months there may be a 30% or greater shortfall. There is also the substitution problem. I'll go into this in much more detail later but recipients of Disability Insurance Benefits (DIB) who are 62 or older are also entitled to Retirement Insurance Benefits (RIB). They don't get paid both, just the higher amount. Normally, the DIB is higher than the RIB but if the DIB is reduced because the Disability Insurance Trust Fund is short of money, the RIB will often be larger. That would be a messy computational problem since the number of people affected by this would vary from month to month and because shifting them to RIB would itself have an effect upon the amount available to pay everyone eligible for DIB. I'm sure that computers could solve this problem but it wouldn't be easy since the computers have never been programmed for the task and the agency isn't brimming with computer programmers who have nothing else to do.
     What I wonder is whether Social Security could start routinely charging benefits in a dual eligibility situation first against the Retirement Insurance Trust Fund and only paying the difference out of the Disability Insurance Trust Fund. That would significantly reduce the amount paid out of the Disability Insurance Trust Fund.
     The interesting thing is that the Social Security Act really doesn't speak to the question of how benefits are to be charged between the Disability and Retirement Insurance Trust funds when a claimant is dually eligible. To this point, normally 100% has been charged to the Disability Insurance Trust Fund but I don't think the statute requires that result. This is the closest that the Social Security Act comes to dealing with the issue:

42 U.S.C.A. §402 ...

(k)(3)(A) If an individual is entitled to an old-age or disability insurance benefit for any month and to any other monthly insurance benefit for such month, such other insurance benefit for such month ... shall be reduced, but not below zero, by an amount equal to such old-age or disability insurance benefit (after reduction under such subsection (q) of this section)....

(k)(4): Any individual who, under this section [which has to do with benefits paid from the Retirement Insurance Trust Fund] and section 423 [DIB], is entitled for any month to both an old-age insurance benefit and a disability insurance benefit under this title shall be entitled to only the larger of such benefits for such month, except that, if such individual so elects, he shall instead be entitled to only the smaller of such benefits for such month.

     This section uses the word "entitled" in contradictory ways. It first talks of a person being "entitled" to both RIB and DIB but then says that such a dually "entitled" person is only "entitled" to one benefit. How can you be dually "entitled" if you're only "entitled" to one benefit? The only reasonable way to interpret this is that that the word "entitled" was used in two different ways, which is poor legislative drafting but we have to deal with the statute as it is. At first, the word "entitled' is used to mean "eligible for" but at the end it is used to mean "paid for." The intent is that a person does not receive both the RIB and the DIB, only the higher of the two benefits even though he or she is technically entitled to both.
     Because the most the claimant can receive is the higher of the two benefits, does that mean that the benefits must be paid 100% out of the trust fund of the higher benefit? I don't think the statute speaks to this question. The statute speaks to how much the claimant is paid, not how is charged against each trust funds.
     When Social Security first started to implement this provision, mainframe computers were in their infancy. All of Social Security's computers at that time put together probably had less computing power than my cell phone does today. In the late 1950s, splitting the benefit payment between two different trust funds might have required manual computation on a case by case basis. The simpler thing to do was to charge the benefits solely against the Disability Insurance Trust Fund.
    One might think that if an individual is paid reduced RIB before their full retirement age that they must receive reduced RIB for the rest of their life but that's not the way Social Security's has interpreted the Act. To the best of my knowledge, there's only one situation now in which the dually eligible are paid the RIB first. That's done where a person eligible for DIB is over 62 and has a workers compensation offset. The workers compensation offset would reduce the DIB but not the RIB. The claimant can take the early retirement benefit. We call this the RIB-DIB election. The retirement benefit is 25% less per month than the full DIB but in most cases it's still more than the DIB would be after the workers compensation offset. After a claimant who has made the RIB-DIB election reaches full retirement age, they're no longer subject to the 25% reduction in their retirement benefits because they went on early RIB. The dual eligibility eliminates the 25% actuarial reduction. This has been Social Security's practice for decades.
     If you're not really familiar with Social Security law, you might object that there's no way a person can be dually eligible for DIB and RIB without filing a claim for each benefit. However, this objection is easily dealt with. The claim form for DIB says at the top: "I apply for a period of disability and/or all insurance benefits for which I am eligible under Title II and Part A of the Social Security Act, as presently amended." Thus, a claim for DIB is also a claim for RIB. But what if the claimant was ineligible for a retirement benefit at the time he or she filed the claim for disability benefits because he or she was less than 62 at the time? The Social Security Act says:

42 U.S.C. §402(j)(2): An application for any monthly benefits under this section filed before the first month in which the applicant satisfies the requirements for such benefits shall be deemed a valid application (and shall be deemed to have been filed in such first month) only if the applicant satisfies the requirements for such benefits before the Commissioner of Social Security makes a final decision on the application ...

     If a claim for DIB is also a claim for RIB and there has been no "final decision" on that RIB application, there's no problem with saying that the RIB claim remains alive and can be acted upon at a later date. The award certificate issued at the time a DIB claim is approved does say "This benefit is the only benefit you can receive from us at this time" but that's hardly a final determination denying a retirement claim. What I'm suggesting here is Social Security's practice. When a person who is drawing DIB reaches full retirement age, Social Security doesn't waste time contacting him or her to take a claim for RIB. The claimant is automatically transferred to RIB since they filed a claim for RIB at the same time they filed a claim for DIB. (By the way, there's an interesting technical question about whether a person remains entitled to DIB after achieving full retirement age but let's leave that issue for another day.)
     The bottom line here is that this is simply a question of how one construes statutory language that's a lot less than crystal clear. When the statute uses the key word "entitled" in two different ways in the same sentence it's hard to say there's any plain meaning to that sentence. I don't think that what I'm talking about does any violence to the Social Security Act. It's just an interpretation. I won't belabor it but I've looked at the legislative history and I didn't see anything that explains how Congress intended that benefits would be charged to differing trust funds in dual eligibility situations.
     What I'm suggesting can be done without changing any of Social Security's regulations since they don't speak to the issue. All that would be required would be some minor changes in Social Security's POMS manual, some changes in Social Security's bookkeeping programs which probably wouldn't be that difficult since something close to this is already being done when there's a RIB-DIB election, and a press release.
     If Social Security did this, could Congress or someone else sue and get it overturned? They could try but they would have a real standing problem, that is, the Courts would ask, in effect, "Who are you to sue over this? How have you been affected?" Merely saying "I don't like what you're doing" or "I think what you're doing is illegal"  or "I'm a member of Congress" or "I'm on Social Security retirement benefits and maybe someday this will make the Retirement Trust Fund run out of money" probably won't enough to give one standing. Even if a Plaintiff gets past the standing issue, they have to get past an even bigger problem, the deference required under the Chevron doctrine for an agency's reasonable interpretation of a statute. Is the interpretation I'm suggesting unreasonable or is it just one of at least two possible interpretations of an ambiguous statute? This wouldn't be easy to challenge.
     Congress could try to pass a bill blocking this interpretation but such a bill could be filibustered in the Senate or vetoed by the President.
     There's a real problem that I haven't discussed so far. It may not be enough to solve the Disability Insurance Trust Fund's problem. The predicted shortfall in the Disability Trust Fund under the Intermediate projection is about 20% while only 24% of DIB payments are made to those between 62 and 66 (doublecheck my math since the only figures given are the number at each age and the average benefit amount for each age). However, paying the RIB first still leaves the Disability Trust Fund responsible for at least 25% of the total benefit paid for claimants who go on disability benefits at or before age 62. If they go on disability benefits after they turn 62, the reduction is less. However, what I've talked about so far isn't the only dual eligibility situation. There are other claimants who are eligible for DIB plus one or more other benefits paid out of the Retirement and Survivors Insurance Trust Fund, such as widows and widowers benefits, husbands and wives benefits, mothers and fathers benefits and disabled adult child benefits. I doubt that those other dual eligibility situations would completely take up the slack but I just don't know. I don't think anyone will know unless Social Security's actuaries run the numbers. Also, the Intermediate projection for the Disability Trust Fund is just that, a projection. Last year and so far this year, the numbers are a bit better than the projection. Even a modest improvement over the projection might be enough. Of course, any worsening of the numbers would take things in the opposite direction. There's also the issue of whether any change would be applied only prospectively. If the change I'm suggesting were applied retrospectively, even for a few years, the change in the Disability Insurance Trust Fund balance would be dramatic.
     I can't say what the political effects would be if Social Security did this. Certainly, Congressional Republicans would protest but I don't know if even Fox News could get traction on this issue. It's so damned technical. I wonder how many readers have gotten this far in reading this blog post and can really follow what I'm saying. I wonder if Congressional Republicans would even be unhappy if this issue was taken off the table. It's not like it's an issue that their base really cares about. The ideas they have put forward so far on the Disability Insurance Trust Fund seem vague and confused.
     I hope the Administration has the audacity to do this. The Disability Insurance Trust Fund may not be at the top of the agenda for the President or Congress at this moment but a year from now it probably will be. If you think about what a mess it will be if the Disability Insurance Trust Fund runs out of money, what I'm suggesting may start to sound reasonable.

Mass Mailing To Some Workers Compensation Recipients

     This is an Administrative Message (AM) sent out recently to Social Security field offices:

Instruction

Identification Number AM-14066 Effective Date: 10/07/2014 Intended Audience: All RCs/ARCs/ADs/FOs/TSCs/PSCs/OCO/OCO-CSTs

Originating Office: DCO OPSOS

Title: Workers' Compensation (WC) or Public Disability Benefits (PDB) Offset Pending Mass Mailings

Type: AM - Admin Messages

 

Program: Disability

Link To Reference: See References at the end of this AM.

 

Retention Date: April 7, 2015

 

A. Purpose

 

This administrative message (AM) advises you of the mass mailing project for the Workers' Compensation Pending Cleanup workload.

B. Background

 

Disability (DIB) beneficiaries are subject to possible offset if they receive WC [Workers Compensation] or PDB [Public Disability Benefits] payments. When SSA [Social Security Administration] adjudicates a disability award and the claimant's WC or PDB claim is still pending, or under appeal, the Modernized Claims System (MCS) posts limited WC or PDB claim data to the Master Beneficiary Record (MBR) with an alert "WC Type OFFSET PENDING."

The Office of the Inspector General (OIG) discovered that beneficiaries often do not report when their WC or PDB claims are approved and, prior to March 2011, SSA did not have an effective systems control to ensure processing center (PC) technicians follow up and resolve OFFSET PENDING cases. As a result, SSA has a backlog of OFFSET PENDING cases that the PCs must review and resolve.

 

C. Mass mailings to solicit information on pending WC or PDB claims

 

Effective October 2014 through December 2014, the PCs will send mass mailing letters to a group of DIB beneficiaries for whom:

 

We first processed the claims in 2001-2003; and MBR [Master Beneficiary Record] data indicate a WC or PDB claim is still "pending." The letters solicit information about the outcome of the WC or PDB claim. Based on the MBR language indicator, we will print the mass mailing letters in English or in Spanish. When the PCs release the letter, a special message will post to the MBR indicating that the PC sent the letter and includes a reference to this AM.

Example of Special Message Text:

 

" PROGRAM CENTER MASS MAILING DIRECT CONTACT LETTER SENT TO BIC A FOR STATUS OF WC/PDB CLAIM--SEE AM-14066".

 

The letter provides and requests the following information:

 

Reminds the beneficiary that "you told us you filed or intended to file for workers'

compensation or public disability benefit payments or that you were appealing the decision made on your workers' compensation or public disability benefit claim" and "we are writing to update the information;" Asks the beneficiary to answer the questions in the letter by checking each item that applies, to fill in any requested information, to sign and date the letter, and return it in the enclosed envelope; Requests the beneficiary to enclose proof of any workers' compensation or public disability benefit payments received; Includes SSA's 800# (including TTY) for any questions; and Includes a return envelope addressed to:

Social Security Administration

Western Program Service Center

P.O. Box 4213

Richmond, CA 94804-0213

 

NOTE: Although the beneficiary should return the letter to the Richmond CA address, the Richmond office dispatches the returned letters to the PC [Payment Center] of jurisdiction for final action.

See the attached facsimile of the English language mass mailing letter.

 

WCPE FY15 MASS MAILING ATTACHMENT (ENGLISH).doc

 

D. Handling inquiries from beneficiaries

 

The following instructions provide guidance for handling inquiries from beneficiaries regarding the mass mailing letters.

 

1. Field Office (FO) instructions

 

If the beneficiary:

misplaced the return envelope enclosure, ask him or her to send the completed and signed letter to the Richmond CA address shown in section C.; brings proof of WC or PDB payments into the FO instead of mailing it to the PC address, the claims representative should promptly input the information into the Interactive Computation Facility (ICF) system. After update to ICF, fax the proof into NDRED [Non-Disability Repository for Evidentiary Documents]; and states he or she already provided SSA with proof of the WC or PDB claim or appeal status, check eView, NDRED, and PCACS [Processing Center Action Control System] to determine whether SSA has received the documents. Advise the beneficiary if the FO or PC has already input the information or if it is still under review. If the documents are not in eView, NDRED, or PCACS, ask the beneficiary to resubmit the proof to the FO and input the information when receive

2. 800 Number instructions

 

If the beneficiary:

 

misplaced the return envelope enclosure, ask him or her to send the completed and signed letter to the Richmond CA address shown in Section C.; and states he or she already provided SSA with proof of the WC or PDB claim or appeal status, send an MDW to the servicing FO. On the MDW, indicate WC Pending Cleanup workload and that the beneficiary alleges providing SSA with proof of WC or PDB claim. Advise the beneficiary that someone from the FO will contact him or her.

 

Direct all program-related and technical questions to your Regional Office support staff or Processing Center Operations Analysis staff.

RO [Regional Office] support staff may refer questions or problems to their Central Office contacts.

 

Reference:

 

DI 52140.010 Processing Center (PC)

Responsibilities for Processing Workers'

Workers Compensation Offset Study

Social Security's Office of Inspector General (OIG) has done a study to determine the agency's accuracy rate in making the offset computations required when a recipient of disability insurance benefits from Social Security is also receiving workers compensation. This was a followup to a 2006 study. The earlier study showed a 17% error rate. This new study shows a 12% error rate which is a significant improvement but still far too high.

The report does not make clear who determined whether there was an error. I strongly doubt that OIG has anyone with the training and experience needed to spot all possible errors, especially errors when there is a lump sum settlement of a workers compensation case, a not uncommon situation. Without knowing more about how this study was done, I cannot say how meaningful it is.

In fairness to Social Security and OIG, workers compensation offset computations are complicated. There are reasons for the high error rate and reasons why OIG would have difficulty doing an audit.

Problems With Federal Workers Compensation Offsets

Social Security's Office of Inspector General (OIG) recently looked at a sample of 50 people who were receiving both Social Security disability benefits and federal workers compensation benefits. Of that group, 32 had overpayments because their federal workers compensation benefits had not been considered in computing their Social Security disability benefits. Additionally, OIG looked at another 50 who were receiving Supplemental Security Income (SSI) benefits and federal workers compensation and found that 21 of them were being overpaid.

Before you assign the blame to Social Security, let me tell you that the federal Office of Workers Compensation Programs (OWCP) has a longstanding reputation for being incredibly incompetent. There are many attorneys who have handled one federal workers compensation case and decided that they never wanted to mess with OWCP ever again. At the moment, I am not sure that there is any attorney in the state of North Carolina who regularly takes on federal workers compensation cases. Around here, even the federal employee unions do not know who to refer these cases to. OWCP is the biggest mess of any agency, federal or state, that I have ever dealt with. Social Security has real problems with workers compensation offsets in general but difficulty in getting information from OWCP almost certainly exacerbates the problem for claimants receiving federal workers compensation benefits.

Staffing Shortages Cost Money

Social Security's Office of Inspector General (OIG) issued a report in September 2005 calling upon the agency to do better follow-up of the offsets that reduce Social Security disability benefits due to workers compensation benefits. At the time, Social Security had a large backlog of cases to work through. OIG decided to take a look at what Social Security has done in response to that report. The report is discouraging. Social Security had done little or nothing, with the result being:

...the volume of cases with WC [Workers Compensation] claims pending for 2 or more years increased from 227,615 in January 2005 to 268,825 in November 2009, an 18-percent increase over the past 4 years. In addition, we estimated SSA had overpaid Title II beneficiaries between $44 and $58 million because of unreported WC payments since our [earlier report].

The reason that Social Security has not taken action on this problem:

An official from the Office of the Deputy Commissioner for Operations told us the Agency plans to pursue processing its pending WC workload to the extent possible. However, according to this official, SSA resources are limited, and the Agency must take a holistic approach in applying those resources, considering many other priority workloads.

Inadequate budgets and the staffing shortages that result from inadequate budgets cost money.

NASI To Get A Contract

From a procurement notice posted by Social Security:

The Social Security Administration (SSA) intends to negotiate a sole source agreement with the National Academy of Social Insurance (NASI) for the purposes of providing services to organize and conduct a 1-day policy research and education seminar that would examine the interactions between workers compensation and SSAs disability programs. ... In order to systematically collect and analyze state data, NASI has organized and heads a Workers Compensation Steering committee comprised of the nations leading experts in workers compensation policy and practice. This unique steering committee provides expertise needed to shape the data collection and review process, as well as the expertise needed to inform NASIs policy related discussions and analyses in the areas of disability and workers compensation. As a result, NASI has the unique expertise to provide the most comprehensive national aggregates and state level estimates of workers compensation costs and benefits, as well as the mechanisms to readily provide the best high level research and analysis as a result of the data they have collected. The seminar is to be conducted in the September/October 2009 timeframe.

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.

Worse Off For Getting Workers Compensation

A recent study by the Social Security Administration shows that because Social Security disability benefits are offset by workers compensation benefits and because of the way in which Social Security disability benefits are computed, Social Security disability benefits recipients who also receive workers compensation benefits actually replace a lower percentage of their pre-injury wages than those who receive only Social Security disability benefits.

Bad Day For Claimant: Legal Malpractice And A Possible Privacy Act Violation

From a recent opinion published in Social Security's Program Operations Manual Series (POMS):

The evidence provided indicates NH [Number Holder] reached a compromise settlement with his employer through the South Carolina Workers' Compensation Commission (SCWCC) in his workers' compensation case. NH was rated as having a 28% impairment to his spine. As part of the settlement, NH's employer agreed to pay NH a sum of $140,000. The parties agreed the sum would include attorney's fees and costs and $93,055.34 over NH's life expectancy of 57 years at the rate of $31.40 per week ...

... when a disability beneficiary receives a lump-sum settlement that is a commutation of, or substitute for, periodic workers' compensation benefits, the Act requires the Agency to prorate that lump-sum payment. Act § 224(b), 42 U.S.C. § 424a(b), 20 C.F.R. § 404.408(g). The Act instructs the Agency to prorate the lump-sum payment in a manner that "will approximate as nearly as practicable the reduction" that would have been applied had the beneficiary received his or her workers' compensation payments on a weekly or monthly basis. Id.. To accomplish this, the Agency must determine the amount of workers' compensation payments the beneficiary would have received weekly or monthly had he not opted for a lump-sum payment, prorate the lump-sum award using the prorated amount, and impose the statutorily prescribed offset accordingly. To guide Agency adjudicators, the longstanding policy in the POMS sets forth a three-tiered set of priorities for prorating state lump-sum workers' compensation awards at an established rate. In priority order, the Agency is to prorate the award at:

1. The rate specified in the lump-sum award.

2. The latest periodic rate paid prior to the lump-sum, if no rate is specified in the lump-sum award.

3. The state's maximum workers' compensation in effect in the year of the injury/illness, if no rate is specified in the award and there was no preceding periodic benefit.

POMS DI 52001.555(C)(4)(a). However, the Agency has for some time been aware that attorneys have seized upon the opportunity offered by these POMS instructions to insert artificially low rates in settlement agreements to lessen or perhaps avoid entirely the reduction that otherwise would be required by section 224 of the Act. While the Agency's long-standing interpretation of section 224 has been that the Act requires it to look to state law to determine what rate would have been paid had the workers' compensation been made on a periodic basis, see § 224(a)(b) of the Act, 42 U.S.C. § 424a(a)(b); 20 C.F.R. § 404.408(g) (2006), the Act still places the ultimate responsibility for determining the offset rate in the hands of the Commissioner. See B~ v. A~, 150 F.3d 177, 181-182 (2nd Cir. 1998). ...

In the settlement, the parties state this weekly allocation rate is based on a life expectancy of 57 years which was determined pursuant to S.C. CODE ANN. § 19-1-150. However, in reviewing this statute, we find that the SCWCC erred in calculating NH's life expectancy. The proper application of S.C.CODE. ANN. § 19-1-150 reveals that a person of NH's age of 57 actually has a life expectancy of 23.10 years. See S. C. CODE ANN. § 19-1-150. Therefore, the SCWCC's life expectancy determination was incorrect in light of the South Carolina statute relied on by the parties. (emphasis added) ...

The life expectancy determination by the SCWCC was incorrect. The Agency is not bound to follow the weekly allocation rate set forth in NH's settlement agreement as would be customary under step one of POMS DI52001.555(C)(4)(a).

If you are following this, the attorney representing this claimant based the worker's compensation settlement upon a life expectancy of 57 years, but 57 was how old the claimant was. His life expectancy was actually 23.1 years.

By the way, I will not repeat it here, but this opinion happens to list the actual name of the claimant. Only his Social Security number is redacted. It may not just the claimant's attorney who fouled up. I wonder if Social Security has some obligations under the Privacy Act in this case.