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OhioBWC - Basics: (Policy library) - File

Policy Name:

Lump Sum Advancement

Policy #:

CP-12-04

Code/Rule Reference:

R.C. 4123.64; O.A.C. 4123-3-37; Industrial Commission of Ohio (IC) Resolution R07-1-02

Effective Date:

12/21/2015

Approved:

Rick Percy, Chief of Operational Policy, Analytics and Compliance (Signature on File)

Origin:

Claims Policy

Supersedes:

All Injury Management policies, directives and memos regarding lump sum advancement that predate the effective date of this policy.

History:

New

Review date:

12/21/2020

 

 

I.      POLICY PURPOSE

 

The purpose of this policy is to ensure that a lump sum advancement (LSA) is determined and paid according to the applicable laws and rules. 

II.    APPLICABILITY

 

This policy applies to BWC Field Operations staff.   

III.   DEFINITIONS

Lump Sum Advancement (LSA):  Payment that is made to the injured worker (IW) or surviving spouse and then deducted from future compensation awards of permanent total disability (PTD), scheduled loss (SL), Percentage of Permanent Partial (%PP), or death benefits for rendering the IW or surviving spouse financial relief or for the purpose of furthering the IW’s rehabilitation. 

 

Lump Sum Advancement for Attorney Fees (LSA-AF):  An LSA filed with and granted by the IC for payment to be made directly to the attorney who represented the applicant(s) with regard to the receipt of the award that is to be advanced. 

 

LSA Options Form:  A document sent by the Bureau of Workers’ Compensation (BWC) to the LSA applicant that allows the applicant to select the weekly reduction and repayment period for the LSA. 

 

Net Present Value (NPV):  The present value of a sum of money in contrast to the value it will have in the future.

 

Parties to the Claim:  For purposes of this policy, injured worker (IW), IW authorized representative, dependent(s) in a death claim, authorized representative of dependent(s) in a death claim, employer, employer authorized representative, and BWC.

 

Principal:  For purposes of this policy, the amount of money that is advanced to the applicant(s).   

IV.  POLICY

 

A.    Applicants shall request an LSA on an Application for Payment of Lump Sum Advancement (C-32).  The C-32 must be fully completed and notarized. 

 

B.    The applicant must submit evidence to support the need for financial relief or for furthering the IW’s rehabilitation.   

1.    Evidence supporting financial relief must include the name(s) of the creditor(s) and the amount(s) owed (e.g., an affidavit detailing this information).

2.    Evidence establishing furtherance of the IW’s rehabilitation must include the name of the facility providing the services and the amount that is owed or anticipated to be owed (e.g., an affidavit detailing this information).

 

C.   Eligibility

1.    BWC may grant an LSA to:

a.    An IW who is currently receiving:

i.      Permanent Total Disability (PTD);   

ii.     A scheduled loss (SL) award; or

iii.    A Percentage of Permanent Partial (%PP) award; or

b.    A surviving spouse who is currently receiving death benefits.

2.    BWC will not grant an LSA to:

a.    A surviving spouse receiving scheduled loss payments;

b.    A dependent child(ren) receiving:

i.      Scheduled loss payments; or

ii.     Death benefits; or

c.    An applicant requesting an LSA when allowance of the PTD, SL, or %PP award that is to be advanced has been appealed to the IC or court. 

D.   BWC policy prohibits BWC from granting an additional LSA in a claim when there are already two LSAs granted on or after 12/1/2004 currently being recouped.

1.     A subsequent LSA may be granted once a previously granted LSA has been recouped.    

2.    Any LSA-AF is not considered to be one of the two LSAs granted by BWC.

 

E.    BWC shall not grant an LSA when:

1.    The total amount of all LSAs for death benefits exceeds the amount of death benefits payable over a two-year period; or 

2.    The reduction to recoup the LSA reduces the original biweekly rate of compensation by more than one-third (1/3), excluding the reduction made for recoupment of any LSA-AF.

a.    Example (biweekly):  $460.00 x 2=$920.00-biweekly rate $920.00/3=$306.67-maximum reduction

$920.00-$306.67=$613.33-minimum biweekly rate after 1/3 reduction, less any reductions for recoupment of LSA-AF

b.    Example (weekly):  $460.00/3=$153.33-maximum reduction, less any reductions for recoupment of LSA-AF

$460.00-$153.33=$306.67-minimum weekly rate after 1/3 reduction, less any reductions for recoupment of LSA-AF

c.    The 1/3 reduction limitation does not apply to LSAs of SL or %PP. 

F.    BWC will verify that the amount requested matches or exceeds the amount owed or anticipated by the applicant as listed on the C-32. 

 

G.   Repayment

1.    For LSAs approved prior to 12/1/2004, the rate reduction is effective for the life of the claim and the rate will not return to the original rate.

2.    For  LSAs of PTD or death benefits approved on or after 12/1/2004:

a.    BWC may offer the following four (4) repayment options;

i.      Five (5) years;

ii.     10 years;

iii.    20 years; or

iv.   The applicant’s life expectancy.

b.    Once a repayment option has started:

i.      The reduction will remain in effect for the remainder of the selected repayment option; and

ii.     Cannot be changed to a different option, including early payoff.

c.    The rate of payment of compensation will return to the pre-LSA rate once the LSA has been recouped.  

d.    BWC will not offer a repayment option that:

i.      Exceeds the life expectancy of the applicant; or

ii.     Will result in a reduction of the award by more than that which is permitted for the applicable compensation type.

3.    For LSAs of scheduled loss approved on or after 12/1/2004, BWC shall calculate the reduction based on the weeks of the award remaining to be paid.  When there are multiple scheduled loss awards payable, BWC may calculate the reduction from one or more of the awards, as necessary. 

4.    BWC will not accept early payoff of an LSA. 

H.   It is BWC’s policy to:

1.    Withhold applicable family support obligations from an LSA. Refer to the Family Support and Attorney Fees policy at www.bwc.ohio.gov for additional information.

2.    Use the appropriate net present value (NPV) factors for the year the LSA is paid when reducing weekly benefit amounts.  The NPV charts are on BWC’s website at www.bwc.ohio.gov.

I.      LSA Options Form

1.    For an LSA of PTD or death benefits approved on or after 12/1/2004, it is BWC’s policy to complete and send the LSA Options Form to the applicant (and authorized representative, if represented) for his/her selection of rate reduction and repayment period.

2.    The repayment period options include:

a.    Five (5) years;

b.    10 years;

c.    20 years; or

d.    The applicant’s life expectancy.

3.    BWC shall not offer a repayment option that:

a.    Exceeds the applicant’s life expectancy;

b.    Extends the recoupment period past the 18th birthday of a dependent child(ren) when paying an LSA-AF of death benefits; or

c.    Results in a reduction of the award that exceeds the amount otherwise permitted for the type of advancement being granted. 

4.    Before mailing the LSA Options Form, it is BWC’s policy to call the applicant to explain the LSA options and to determine if it is possible for the applicant to receive the form by fax or email. 

a.    It is BWC’s policy to mail the form only if fax or email is not possible. 

b.    If the form is not returned to BWC within seven (7) days, it is BWC’s policy to designate the life expectancy option for the weekly reduction. 

5.    As a courtesy, BWC will contact the applicant (and authorized representative, if represented) by phone to notify him/her that the LSA Options Form has not been returned, and, as a result, the repayment option has defaulted to the applicant’s life expectancy.

a.    BWC may extend the return period an additional five (5) days at the request of the applicant or authorized representative.

b.    If the form is not returned by the expiration of the extension, BWC will designate the life expectancy option.   

J.    It is BWC’s policy to:

1.    Send payment for an LSA directly to the applicant; or

2.    Mail the applicant’s check to the applicant’s attorney if there is a valid Authorization to Receive Workers’ Compensation Payment (C-230).

K.    Issuing a Decision

1.    It is BWC’s policy to issue an order to all parties to the claim to:

a.    Allow, deny, or dismiss the LSA; and

b.    Provide the following:

i.      The reason(s) for the decision;

ii.     The amount of the advancement;

iii.    The amount and duration of any rate reduction; and

iv.   Any other terms regarding the advancement, when applicable.

2.    An LSA Order is appealable to the IC but not to court.

 

L.    LSA-AF

1.    It is the policy of BWC to forward requests for LSA-AF to the IC. The request must be filed on an Application for Lump Sum Payment of Attorney Fee (IC-32).

2.    When the IC Order allows BWC to do so, BWC will reduce an LSA-AF to the extent necessary to comply with the following weekly compensation rate reduction limitations when the advancement, as approved by the IC, will result in a reduction in the applicant’s weekly compensation rate greater than:

a.    Twenty percent (20%) for:

i.      PTD; and

ii.      Death benefits; and

b.    Thirty-three and one-third percent (33 1/3%) for SL. 

3.    BWC will not withhold family support obligations from LSA-AF.

4.    The name of the attorney only shall appear on the warrant.

5.    Unless otherwise ordered by the IC, the reduction for recoupment of an LSA-AF paid from death benefits will be according to the following succession:

a.    The surviving spouse only when there are multiple dependent children and the surviving spouse is the guardian of all minor children;

b.    The surviving spouse and any dependent children who are 18 years or older;

c.    The surviving spouse and any dependent children for whom the surviving spouse is not the guardian when there are multiple dependent children and the surviving spouse is not the guardian of all minor children; or

Example:  the deceased IW and the surviving spouse have 3 dependent children and the deceased IW also has 2 dependent children from a previous marriage/relationship.  The surviving spouse and all 5 children had the same attorney represent them and have received an LSA-AF. 

d.    The dependent child(ren) when there is no surviving spouse.

6.    An LSA-AF paid from death benefits must be repaid before the dependent child(ren) turns 18 years old. 

 

 

BWC staff may refer to the corresponding procedure for this policy entitled “Lump Sum Advancement” for further guidance.


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