The ABC s of Accurate and Timely Payment of Income Benefits

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1 The ABC s of Accurate and Timely Payment of Income Benefits Brandi Prejean Attorney Thornton, Biechlin, Segrato, Reynolds & Guerra LC 2015 Insurance Council of Texas Workers Compensation Seminars April 8, 2015, Austin, Texas April 23, 2015, Addison, Texas

2 ABOUT THE SPEAKER Brandi Prejean is an attorney with the Austin office of Thornton, Biechlin, Segrato, Reynolds and Guerra, Attorneys at Law. Ms. Prejean handles workers' compensation, administrative law, employment-related litigation and bad faith litigation. She is also a frequent speaker at educational seminars regarding workers' compensation matters and legislative changes. Ms. Prejean is a member of the American Bar Association, Travis County Bar Association, Austin Young Lawyers Association, Travis County Women Lawyers Association, and a faculty member of the National Alliance for Insurance Education and Research. She is Board Certified in Workers' Compensation by the Texas Board of Legal Specialization. Ms. Prejean received her legal education at Louisiana State University's Paul Hebert School of Law where she earned her J.D. and Bachelor of Civil Law in She received her B.A. degree from Louisiana State University in 1998.

3 THE ABCS OF THE ACCURATE AND TIMELY PAYMENT OF INCOME BENEFITS Brandi Prejean Common problems identified by the Division causing significant underpayment of income benefits Not calculating AWW correctly by not adding in non-pecuniary wages. Not calculating AWW during salary continuation and paying TIBs accordingly. Failure to pay 75% for low wage earners. Underpayment of LIBs, application of maximum rate.

4 AWW Calculation Rule 128.1: Except as provided by 128.7, an employee's wage, for the purpose of calculating the AWW, shall include: (1) all pecuniary wages paid by the employer to the employee even if the employer has continued to provide the wages after the date of injury and (2) all nonpecuniary wages paid by the employer to the employee prior to the compensable injury but not continued by the employer after the injury (though only during a period in which the employer has discontinued providing the wages). APD Rule (c)(2) does not pertain to school district employees. What is Non-Pecuniary? Rule 126.1: Wages paid to an ee in a form other than money. Include but are not limited to: Health insurance premiums; Laundry/cleaning Clothing/uniforms; Lodging/housing/rent Payment of professional license fees Food/Meals Provision of a vehicle/fuel. **** Does not include: stipend, reimbursement, or monetary allowance.

5 AWW calculation Full-time (non-school district employee) Add earnings for 13 weeks prior to DOI inclusive of OT and special pay Divide total by 13 =$700 Add in Non-Pecuniary Not in ME, non-claim employer Not for school district Employer pay $100 a week of health insurance premium. Discontinues paying after 3 months. AWW needs to be re-calculated. $700+$100=$800 Hypo A school district employee has a average weekly wage of $1000. School District pays $100 week in health insurance. Three months after DOI, School District stops paying insurance. What is the claimant s recalculated AWW? For how long to be paid?

6 Salary Continuation and TIBS Salary continuation is considered PIE. Salary continuation is subtracted from the claimant s AWW to determine whether the claimant has lost wages. If the salary continuation is less than the claimant s AWW, the claimant has lost wages and is entitled to TIBs. The same deadlines for paying TIBs apply in cases where the claimant is receiving salary continuation. Rule 129.3(c): In determining the PIE, the carrier shall base its calculations on specific wage information reported by the employer and/or the employee. A generic statement by the employer indicating the employer is continuing full salary or the employee is earning full salary is not adequate documentation ti to be considered d PIE. Rule 124.2(e) requires the carrier to notify the Division and claimant of the following: employer continuation of salary equal to or exceeding the employee's Average Weekly Wage as defined by this title (Full Salary) within: (A) seven days of receipt of the Employer's First Report of Injury or a Supplemental Report of Injury (if the report included information that salary would be continued) if the carrier has not initiated temporary income benefits; or (B) ten days of making the last payment of temporary income benefits due to the employer's continuation of full salary. Salary Continuation Not calculating AWW during salary continuation. Salary is $1000 a week. AWW for prior 13 weeks is $1400 including OT and commissions Salary continuation is Post Injury Earnings (PIE) AWW-PIE = $400 70% of $400 =$280 TIBs owed.

7 Eyes of Texas Missing the 26 week calculation Rule 129.3(f) Subject to the minimum and maximum TIBs rates as provided in subsection (g) of this section, an employee is entitled to TIBs as follows: (1) an employee who earns $8.50 or more per hour is entitled to TIBs in the amount of 70% of the lost wages; or (2) an employee who earns less than $8.50 per hour is entitled to TIBs as follows: (A) 75% of the lost wages for the first 26 weeks of TIBs due; and (B) 70% of the lost wages for all TIBs payments thereafter. LIBs Rule Rule 131.2: Lifetime income benefits shall be calculated by multiplying the employee's average weekly wage by.75. The lifetime income benefit payable each week under this formula shall not exceed the weekly maximum benefit under the Workers' Compensation Act, for the first year of benefits. (b) Each year on the anniversary date of the day lifetime income benefits began to accrue, the amount of those benefits being paid shall be increased by 3.0%. The employee is entitled to the annual increase without regard to the limits imposed by the maximum weekly benefit.

8 LIBS example $1200 AWW. 1 st year $861 max 3% increase after 1 st year. 2 nd year $886.83

Workers Compensation 101. Laura Romaine WC Claims Program Consultant laura.romaine@tasb.org (800)482-7276 ext. 8406

Workers Compensation 101. Laura Romaine WC Claims Program Consultant laura.romaine@tasb.org (800)482-7276 ext. 8406 Workers Compensation 101 Laura Romaine WC Claims Program Consultant laura.romaine@tasb.org (800)482-7276 ext. 8406 Today s Objective Employer Responsibilities in WC Posting and Reporting State Required