Collecting Both Social Security Disability Insurance And Workers’ Compensation Benefits Generates Inequality of Benefits

A recent study by the federal government reports that some disabled workers who receive workers' compensation or public disability benefits may receive less money than their counterparts. The reason why this phenomenon occurs is because the Social Security benefit computation is designed to replace more of the lower earner’s pre-retirement or predisability earnings than a higher earner’s.

“The Social Security benefit computation is designed to replace more of a lower earner's preretirement or predisability earnings (average indexed monthly earnings) than a higher earner's. This is done by "bend points" in the primary insurance amount formula, which create three earnings brackets. Earnings up to the first bend point are replaced at 90 percent; earnings between the first and second bend point, at 32 percent; and earnings above the second bend point, at 15 percent, up to the taxable maximum. The three brackets are a convenient way to group workers by income (represented here by AIME). This grouping also helps distinguish differences in replacement rates, which are largely determined by the earnings bracket in which the worker belongs.”

The Social Security disability system was established in 1956 to pay cash benefits to those workers who sustained long-term disabilities and were insured for coverage. On the other hand, state workers compensation systems had been in place since 1911 and may be combined with other public disability benefits in addition to Social Security benefits.

The Social Security system, unlike state workers compensation programs, provides a nationally distributed benefit to over 8 million disabled-worker beneficiaries. State public disability benefits are paid under numerous laws including federal, state or local government were plans that provide compensation for medical conditions that are not work related. Some of them may be short-term such as state temporary disability benefits.

As of December 2005, the date that the study utilized for collection of data, there were 8,305,702 disabled-worker beneficiaries in the Social Security program. Of those beneficiaries, 1,440,772 had some past or present connection to workers compensation or public disability benefits and 798,476 at a current connection to workers' compensation or public disability benefits.

In 1984 Congress amended The Social Security Amendments of 1956 and required that workers’ compensation benefits were to be offset against the federal Social Security disability insurance benefit. In 1985 the offset was eliminated and it was again reinstituted in 1989 by Congress. Further amendments in 1996 to The Omnibus Budget Reconciliation Act Of 1981 extended the offset provision to public disability benefit programs. However, Congress excluded the offsets of workers’ compensation and public disability beneficiaries who are receiving Social Security disability benefits in those states where the State took the offset. These have been named reverse offset states. The state law needed to be in effect as of February 18, 1981. Presently there are 16 states and Puerto Rico that are reverse offset states.

The recent study involving 18 month period from January 2003 through June 2004, identifies that a proximately 11% of all Social Security disability beneficiaries were also entitled to receive state workers compensation for public disability payments. It reported that those who receive combined benefits were most likely to be male, high earners, older it retirement and from the Western states.

The report concludes that the earnings replacement rate for disability insurance beneficiaries under the Social Security system, as measured by the ratio of the monthly disability insurance benefits to the average indexed monthly earnings, demonstrates that disabled workers without workers’ compensation or public disability benefits had higher replacement rates. Therefore, collecting multiple benefits may create an economic disparity.

The Future of Spitzer’s NY Workers’ Compensation Reform Effort and the AMA Guides 6th ed.

With Governor Spitzer now embroiled in a major scandal that may end in his resignation as Governor of the State of New York, all eyes in the workers’ compensation arena are now focused on his reform efforts. On February 27, 2007 shortly after taking office he signed landmark legislation to overhaul the NY system.

The legislation mirrors the concerns of Labor and Industry throughout the country about a workers’ compensation system bogged down in administrative bureaucracy and failing to meet the medical and permanent disability needs of injured workers. The new NY act is a skeleton on a program that will be reconstructed by regulations and administrative memos.

Injured workers in NY, as in other parts of the country, are concerned of the implantation of the new AMA Guidelines as the criteria for determining disability. It has been remarked that the new AMA Guidelines 6th edition will eliminate at 60% of all findings of disability resulting in no benefits for those injured workers. The Business Council on NY has been advocating for their implementation.

It is doubtful that there will be a change of course in NY. The NY legislation was originally drafted under the Republication Administration of Governor Pataki and merely passed in the Democratic Administration of Spitzer in about 45 days after he took office. The political deal was struck NY long before the Spitzer Administration, but the legislation is only a skeleton that will require additional crafting and implementation.

NY mirrors the same issues of other jurisdictions. Unfortunately implementing the AMA Guidelines 6th edition will not solve the problem in NY or elsewhere. It is like taking a wheel off a vehicle with 2 flat tires already. Yes the system needs reform, but one that will be crafted as the fathers of workers’ compensation legislation intended, which is a system that provides expeditious and adequate compensation for injured workers.

Now Available: New 2008 Supplement for Gelman on Workers' Compensation Law 3rd Ed.

Thomson/West has published the 2008 supplement to Workers' Compensation Law 3rd ed., (Vols. 38 - 39A, New Jersey Practice Series) authored by Jon L. Gelman.

NEW MATERIAL INCLUDES:

• These pocket parts provide information concerning the Asbestos Fund, which has been established for those entities where workers' compensation coverage cannot be established. The newly designed forms that need to be utilized in filing for benefits are included. Also, the newly designed Motion for Temporary and Medical Benefits, including the required certification, is provided and discussed.

• The newly revised Judgments for Total and Permanent Disability are included. The Judgments include new refinements in offsets for pensions and Social Security disability benefits.

• The recently promulgated administrative rules governing the disposition of Temporary Disability Benefits are discussed. The nonduplication of benefits provisions are reviewed including the multiple agency adjudication process.

• Collateral medical benefit issues are discussed in light of the recent Supreme Court decision concerning this matter, including a Motion to Join the Collateral Health Carrier and sample Certifications to be used in support of the application.

• Additionally, these pocket parts provide information concerning thenew rules of the Division of Workers' Compensation embodying electronic filing requirements and new procedures involving both formal and informal proceedings, motion practice, post judgment process, and judicial performance. The expanded Medicare secondary reporting requirements and the mandatory coordination of benefits are reviewed in this supplement. The recovery aspects of Medicare conditional payments as well as future medical provisions are updatedand discussed. The new Child Support Lien distribution forms, computation worksheets and judgments are provided and explained in depth.

• This pocket part also discusses recent changes in the application for counsel fees. The supplement includes the newly promulgated administrative directive embodying those changes

To order: Click Here

The volume is also available on Westlaw and in CD-Rom format.

NJ WC Reports a Drop of 46% of CMS Backlog in 60 days

NJ, a State that elected not to data match with CMS, is now reporting a drop of 46% of its backlog from the cases designated "waiting for CMS approval," MCARE matters. In a memo to all judges and attorneys, the Director and Chief Judge reported the drop in the cases so designated.

The memo encourages and the use of "specialists" and suggestions that the cost for that service be shared among the parties. It also suggested that some cases be tried fully or partially and that special language be incorporated in Judgments/Settlements where cases have been compromised, providing the opportunity for the cases to be re-heard at a later date to address Medicare issues when reviews are actually completed by CMS. It is difficult to determine whether the CMS issues are actually being completely resolved or whether they are deferred to a later date. The State of NJ continues to offer the judicial assistance of the Division of Workers' Compensation to reduce the backlog of cases designated as MCARE matters.

The memo also recognizes that little action has occurred on the Industry supported, and previously ill fated, Medicare Secondary Payer Statute which attempts to modify the CMS recoupment procedure for conditional medical payments. The proposed admendments discourage the periodic payments of compensation benefits, a basic premise of the entire workers' compensation system.

Attention was brought to the NJ situation when local attorneys enlightened Senator Lautenberg who then introduce Federal legislation requesting the that CMS provide status on the CMS recovery effort.

“These delays mean that thousands of workers in New Jersey and across the country are waiting months and even years to be compensated for their workplace injuries. Workers who are hurt on the job rely on these payments for medical expenses and to get their lives back on track. Medicare needs to provide information to Congress immediately on the number and length of these delays so we can determine the best way to end them and get workers the settlements they need and deserve,” said Sen. Lautenberg, who is a member of the Senate Appropriations Committee.

CMS has since supported newely enacted legislation and Rules to place an increased burden on primary medical providers, major medical carriers and employers to comply with reporting issues.

NJ Workers' Compensation Carriers Win a "Get Out of Jail Card" on Asbestos Liability Claims

Workers' compensation insurance companies have a long history of guarding themselves from liability from asbestos exposure issues. Recently the NJ courts have ruled that workers' compensation insurance companies are shielded from liability when the insurance company performs hygiene studies and does not take action to protect the employees that it has insured under the policy. This ruling further limits the ability of asbestos victims to obtain benefits.

The court in Fackelman v Lac d'Amiante du Quebec, LTEE, et al ruled on that workers' compensation carriers are shielded from liability for failing to notify workers of known hazards on the job site and take efforts to correct them. An asbestos victim worked at the Owens-Corning plant in Berlin NJ for 10 months as a stripper of Kaylo, asbestos pipe covering. The ambient air conditions were described as "dusty" and "foggy" in the plant. His employer provided no information to the employee about presence of high levels of asbestos fiber and a mask was not required to be worn. Air testing was conducted by the workers' compensation insurance carrier, but the employees were not informed as to the results nor the hazards of asbestos fiber. The employee was diagnosed with asbestosis in 2002.

Between 1958 and 1972 Aetna insurance company conducted air testing at the plant. The testing revealed that asbestos in the air (10,000,000 parts per cubic foot) at the plant far exceeded the minimal standards then in place. Aetna had meetings with Owens and discussed with Owens Corning, the employer, what actions should be taken to improve the industrial environment.

The asbestos worker filed a civil action against Aetna for failing to warn the employees of the hazardous conditions and for its failure to minimize the exposure to a safe level at the Owens Corning plant. The Court dismissed the case and did not extent third party liability against the workers' compensation carrier. The court reasoned that there was no surrender of responsibility to maintain a safe workplace from the employer to the insurance carrier. The court also held that there was no common law liability for an insurance carrier did not have a duty "to reduce the risks of exposure or to warn the employees directly."

The long history of the involvement of the insurance industry with the asbestos industry has been memorialized in depositions and affidavits for decades. The conspiracy of silence has lead to premature and needless and agonizing deaths of those who have been exposed to asbestos fiber. NJ has been reported to have one of the highest rates of asbestos related disease in the US. That should be no surprise since it is the legacy of the State's enormous rate of asbestos production during the war years and shortly thereafter.

The NJ compensation system for the payment of benefits to asbestos victims is stagnant. The recent legislation to provide benefits from the "Uninsured Employers Fund" has been ineffective in moving the cases along and adequately compensating asbestos victims. The civil litigation system has been bogged down in bureaucratic bankruptcies. Hopefully the NJ Legislature will see fit to review this inequitable situation and provide the speedy and remedial benefits to asbestos victims.

Medicare Finalizes New Rules To Collect Conditional Payments

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule to tighten its procedure in collecting conditional payments made in workers' compensation actions.. On February 22, 2008 the Department of Health and Human Services published a final rule (PDF) in its program to strengthen CMS's ability to collect payments under the Medicare Secondary Payer (MSP) Amendments.


CMS has designated third party administrators (TPAs) and self-insured plans as "primary payers."

The rule continues to provide that, "...As is the case with group health plan and large group health plan insurance, Medicare may not make payment if payment with respect to the same item or service has been made or can reasonably be expected to be made under workers' compensation..."

The final rule removes the requirement that the reimbursement will be made "promptly" and now substitutes that the primary payer is "...obligated to reimburse CMS if and when it is demonstrated that the primary payer has or had primary payment responsibility. This responsibility may be demonstrated by a judgment, a payment conditioned upon the recipient's compromise, waiver, or release (whether or not there is a determination or admission of liability) of payment for items and services included in a claim against the primary payer, or by other means, including but not limited to a settlement, award, or contractual obligation. This means that a primary payer may not extinguish its obligations under the MSP provisions by paying the wrong party--for example, by paying the Medicare beneficiary or the provider when it should have reimbursed the Medicare program. Primary payers are expected to reimburse CMS when it is demonstrated that they have or had payment responsibility."

This rule supplements the recent legislation requiring the timely disclosure of information which was contained in the Medicare Medicaid and SCHIP Extension Act of 2007 and again reflects the Administration concern that cost shifting should not be transferred from workers' compensation onto CMS. The insurance industry continues to press for legislation that will would shift the burden from workers' compensation onto Medicare and require the US taxpayers to continue to supplement contested workers' compensation claims. CMS recently announced improper payments in 3 states amounted to $371.5 Million dollars alone. Previously this legislation was introduced and efforts to enact it failed.

Casino Employee in NJ Wins Cancer Suit for Second-Hand Smoke Forecasting a New Wave in Litigation

An Atlantic City NJ casino card dealer employed at the Claridge Hotel who was exposed to second hand tobacco smoke was awarded workers' compensation benefits. NJ Judge Cosmo Giovinazzi awarded $150,00 for lost wages and medical benefits to a card dealer holding that second-hand tobacco smoke materially contributed to the employee's lung cancer.

Environmental tobacco smoke has long been associated with lung cancer. A survey of London casino workers indicated that most wanted their environments should be smoke-free. A recently published study by researchers at the University of Nevada revealed that casino floor workers are exposed to four times more tobacco smoke tham amy other workers increasing their risk of cradiovascular disease and lung cancer. Ventilation does not eliminate the poisonous toxins and chimcal components of secondhand smoking.

In The History of the War on Cancer , authored by Devra Davis, in a recent speech broadcast on Book-TV, expresses the urgent need for the removal of carcinogens, inluding tobacco, from the workplace and indicates the need to eliminate the causes.

The Surgeon General of the United States has stated two major observations:

"For the majority of American workers who smoke, cigarette smoking represents a greater cause of death and disability than their work environment." U.S. Department of Health and Human Service. The Health Consequences of Smoking. A Report of the Surgeon General, U.S. Department of Health and Human Services, Public Health Service, 1985 at p. 11.

"In those worksites where well-established disease outcomes occur, smoking control and reduction in exposure to hazardous agents are effective, compatible, and occasionally synergistic approaches to the reduction of disease for the individual worker ..." However, "asbestos exposure can increase the risk of developing lung cancer in both cigarette smokers and non-smokers." Id. at p. 13.

"Cigarette smoking is a major cause of cancer of the lung, larynx, oral cavity, and esophagus and is a contributory factor for cancer of the kidney, urinary bladder, and pancreas. These cancers will cause 278,700 of the estimated 910,000 new cancer cases in the United States during 1985 (ACS 1985), or 30.6 percent of the cancers occurring in the United States other than skin cancer. Exposures to agents in the workplace other than cigarette smoke will also cause some of these new cancers, and a number of cancers will result from the combined effects of cigarette smoking and carcinogenic exposures in the workplace." Id. at p. 101.

Approximately 30 percent of indoor workers in the United States are not covered by smoke-free workplace policies. Secondhand smoke exposure causes disease and premature death in children and adults who do not smoke. Exposure of adults to secondhand smoke has immediate adverse effects on the cardiovascular system and causes coronary heart disease and lung cancer.

Secondhand smoke contains hundreds of chemicals known to be toxic or carcinogenic (cancer-causing), including formaldehyde, benzene, vinyl chloride, arsenic, ammonia, and hydrogen cyanide. Secondhand smoke has been designated as a known human carcinogen (cancer-causing agent) by the U.S. Environmental Protection Agency, National Toxicology Program and the International Agency for Research on Cancer (IARC). The National Institute for Occupational Safety and Health has concluded the secondhand smoke is an occupational carcinogen.

Eliminating smoking in indoor spaces fully protects nonsmokers from exposure to secondhand smoke. Separating smokers from nonsmokers, cleaning the air, and ventilating buildings cannot eliminate exposures of nonsmokers to secondhand smoke.

Conventional air cleaning systems can remove large particles, but not the smaller particles or gases found in secondhand smoke. Routine operation of a heating, ventilating, and air conditioning system can distribute secondhand smoke throughout a building. The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), the preeminent U.S. body on ventilation issues, has concluded that ventilation technology cannot be relied on to control health risks from secondhand smoke exposure. U.S. Department of Health and Human Services. The Health Consequences of Involuntary Exposure to Tobacco Smoke: A Report of the Surgeon General. U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2006.

Already an area of new litigation is that of Suing the Smoker Next Door. Ironically, in a lawsuit against their neighbors, tenants allege that the common hallways of their NY apartment building smell like "a Las Vegas casino," jeopardizing the health of those who live and work in building.

Workers' Compensation has been the genius of many lawsuits and one could easily predict that a new wave of litigation will be third-party civl actions generated against building property owners and those who are responsible to maintain the premises including: management companies, co-op and condominium associations.