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Policy
and Procedure Name:
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Lump
Sum Advancement (LSA)
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Policy
#:
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CP-12-04
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Code/Rule
Reference:
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R.C.
4123.64 & 4123.06; O.A.C. 4123-3-37; Ohio
Industrial Commission (IC) Resolution R18-1-08
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Effective
Date:
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9/23/2022
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Approved:
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Patricia
Harris, Chief Operating Officer
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Origin:
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Operational
Policy and Support
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Supersedes:
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Policy
# CP-12-04, effective 07/28/2022
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History:
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Previous
versions of this policy are available upon request
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Table of Contents
I.
POLICY PURPOSE
II.
APPLICABILITY
III.
DEFINITIONS
Lump
Sum Advancement (LSA)
Lump
Sum Advancement for Attorney Fees (LSA-AF)
LSA
Options Form
Net
Present Value (NPV)
Parties
to the Claim
IV.
POLICY
A. LSA Application
B. Granting LSA
C. Repayment
D. Reducing Weekly Benefit Amounts
E. Sending Payment
V.
PROCEDURE
A. General Claim Note and
Documentation Requirements
B. The Application
C. LSA and Home or Vehicle
Modifications
D. LSA Options Form and SL and C-92
Calculation Worksheet
E. LSA and Family Support
F. LSA and Overpayments
G. LSA and Incarceration
H. Death Benefits
I. PTD
J. SL and %PP
K. LSA-AF
L. Issuing a Decision
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.
This
policy applies to Ohio Bureau of Workers’ Compensation (BWC) Claims Services
staff.
Lump Sum
Advancement (LSA): Payment that is made to the injured
worker (IW) or surviving spouse under special circumstances and then deducted
from future compensation awards of permanent total disability (PTD), scheduled
loss (SL), percentage of permanent partial disability (%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): A 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 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, 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.
1. Applicants must
request a LSA on an Application for Payment of Lump Sum Advancement (C-32).
2. The C-32 must
include:
a. An explanation
of the special circumstances that exist to support the request;
b. Evidence to
support the need for financial relief or for furthering the IW’s
rehabilitation; and
c. A requested
amount that matches or exceeds the amount owed or anticipated by the applicant
as listed on the C-32.
1. BWC may grant a
LSA to an IW who is currently receiving:
a. PTD;
b. A SL award; or
c. A %PP award.
2. BWC may also
grant a LSA to a surviving spouse who is currently receiving death benefits.
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 following repayment
of the advancement.
2. For LSAs of PTD
or death benefits approved on or after 12/1/2004:
a. BWC may offer
the following four repayment options:
i.
Five
years;
ii. 10 years;
iii. 20 years; or
iv. The applicant’s
life expectancy.
b. Once the
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;
ii. Extends the
recoupment period past the 18th birthday of a dependent child(ren) when paying
a LSA-AF of death benefits; or
iii. Will result in
a reduction of the award by more than that which is permitted for the
applicable compensation type.
3. For LSAs of SL
approved on or after 12/1/2004, BWC will calculate the reduction based on the
weeks of the award remaining to be paid. When there are multiple SL awards
payable, BWC may calculate the reduction from one or more of the awards, as
necessary.
1. When reducing
weekly benefit amounts, BWC will use the appropriate NPV factors for the year
the LSA is paid.
2. The NPV charts
are on BWC’s website at www.bwc.ohio.gov.
1. It is BWC’s
policy to send payment for:
a. A LSA directly
to the applicant; or
b. A LSA-AF to the
attorney with the name of the attorney only on the warrant.
2. BWC will mail
the applicant’s check to the applicant’s attorney if there is a valid Authorization
to Receive Workers’ Compensation Payment (C-230).
1. BWC staff must refer
to the Standard Claim
File Documentation and Altered Documents policy and procedure for claim
note and documentation requirements; and
2. Must follow any
other specific instructions for claim notes and documentation included in this
procedure.
1. If the C-32 is
missing information or not completed correctly, claims services staff must:
a. Send a blank
C-32 to the applicant with an explanation of what is required to make the
application a valid request; and
b. Set a seven-day
work item for the return of the C-32. If the application is returned incomplete
or not returned within seven calendar days of the date requested, claims
services staff may, at their discretion:
i.
Extend
the time for return; or
ii. Dismiss the
original C-32 by order. See V.L.1.c.i-viii. below for more information
regarding dismissal.
2. If the C-32 is
fully completed and returned within seven calendar days, claims services staff must
continue to process the application according to this procedure and related
policy. Under these circumstances, it is not necessary for claims services
staff to dismiss either C-32.
1. When the IW
submits a request for a LSA to pay for home or vehicle modifications, and the
home or vehicle modifications appear to be necessary due to allowed
condition(s) in the claim, additional investigation by claims services staff is
warranted. It is possible that home or vehicle modifications that are necessary
due to allowed condition(s) in the claim could be paid as a medical cost
directly from the State Insurance Fund instead of as an advancement of
compensation benefits. To determine whether home or vehicle modifications are a
medical cost to be paid directly from the State Insurance Fund, claims services
staff must:
a.
Discuss
the issue with a BWC catastrophic nurse by sending an e-mail to BWC CAT Nurse
Referrals & Questions (bwc.catnurse@bwc.ohio.gov);
i.
Enter
“Lump Sum Advancement” in the subject line of the e-mail; and
ii. Include the
claim number and the IW name in the body of the e-mail.
b. Continue
considering the advancement as requested if the modifications are not payable
by BWC.
c. If the
modifications are payable by BWC, claims services staff must contact the IW/IW
representative to determine if they would like to dismiss the LSA request and
pursue direct payment for the expense by BWC. If the IW/IW representative
chooses to move forward with the LSA as submitted, claims services staff must continue
considering the advancement as requested.
2. Examples of
common requests for LSA with home or vehicle modifications:
a. BWC may pay for
vehicle modifications and repairs; however, BWC will not pay for the vehicle
itself. If the IW applies and qualifies for a LSA, they may use those funds to
purchase a vehicle.
b. BWC may modify
one vehicle at a frequency of every five years; therefore, an applicant may
submit a request for LSA to cover the cost of modifications to a second vehicle
within the five years.
c. BWC may pay for
home modifications when the IW’s home requires modifications due to conditions
allowed in the claim. If the IW lives in an apartment or rental house and the
owner will not permit the modifications, the IW may submit a request for a LSA
to purchase a house or as a down payment on a house.
d. A request for a
LSA may be submitted for home modifications that are not medically
necessary or not covered by BWC (e.g., whirlpool bath, jacuzzi, new
bathroom when existing bathroom is handicap accessible).
1. For LSAs of PTD
and death benefits approved on or after 12/1/2004, claims services staff must complete
the LSA Options Form and send it to the applicant (and authorized
representative, if represented) for their selection of rate reduction and
reduction period.
2. Completing the
Form:
a. To access the
form, claims services staff must:
i.
Go
to the LSA page on Claims On-Line Resources (COR) under Tips and Tools; and
ii. Select the link
to the form.
b. To input
information, claims services staff must make a selection based on:
i.
The
type of compensation being paid; and
ii. The type of LSA
requested, then
c. Enter the
applicable information.
3. Sending the
Form
a. Before mailing
the form, claims services staff must 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.
b. Claims services
staff must mail the form only if fax or email is not possible.
c. After sending
the form, claims services staff must:
i.
Image
a copy of the form to the claim; and
ii. Set a work item
for follow up in seven calendar days.
a) If the form is
not returned to BWC within seven calendar days, claims services staff must contact
the applicant (and authorized representative, if represented) by phone.
b) Claims services
staff must inform the applicant and authorized representative, if applicable,
that the form has not been returned; therefore, the repayment option has
defaulted to the applicant’s life expectancy.
c) At the request
of the applicant or authorized representative, claims services staff may extend
the return period an additional five calendar days before defaulting to the
applicant’s life expectancy.
d) If the form is
not returned by the expiration of the extension, claims services staff must designate
the life expectancy option.
4. SL and C-92 Calculation
Worksheet
5.
a. - Claims
services staff must use the SL or C-92 offering on the LSA Options Form and SL
and C-92 Calculation worksheet when a LSA of SL or %PP is requested.
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LSAs are subject to lump sum family support processing. Claims services staff
will refer to the Family Support
and Attorney Fees
policy and procedure for additional information.
–
Claims services staff will refer to the Overpayment of
Compensation
policy
and procedure for information regarding recouping an overpayment from a LSA.
–
Claims services staff will refer to the Incarceration policy and
procedure for information regarding repayment of a LSA during a period of
incarceration.
1. Complete the LSA
Options Form (see V.D.2. above);
2. Print a copy of
the form locally;
3. Send the LSA
Options Form (see V.D.3. above);
4. Issue a BWC
Order addressed to the surviving spouse, including the information listed in V.L.2.,
once a decision regarding the appropriate repayment option of the LSA has been
made; and
5. If no appeal is
filed to the order:
a. Pay the LSA;
and
b. Offset the
death benefits rate in the claims management system.
i.
Apply
the offset to the next scheduled payment period after the LSA is paid; and
ii. End the offset
when the LSA is repaid, if applicable. The rate will return to the pre-LSA rate
when the LSA is approved on or after 12/1/2004; or
iii. Continue with
the offset for the life of the claim. The rate will not return to the pre-LSA
rate when the LSA was approved before 12/1/2004.
6. Upon remarriage
of a spouse receiving death benefits, the spouse is due a lump sum payment
equal to two years of death benefits. Claims services staff must offset the
two-year payment by the unpaid balance of any previous LSA already paid to the
spouse and still affecting the claim.
Example: A surviving
spouse received a LSA of their death benefits in the amount of $15,000. They have
repaid $5,000 when they remarry. The unpaid balance of $10,000 ($15,000-$5,000)
must be deducted from the two-year payment due to the surviving spouse.
7. A surviving
spouse may not receive a LSA(s) in excess of the amount of death benefits
payable to them over a two-year period (excluding LSA-AF). When a requested
LSA(s) for death benefits exceeds the amount of death benefits payable to a
surviving spouse over a two-year period, claims services staff must deny the
most recently requested LSA.
a. Prior to
issuing the order to deny the request, claims services staff must make
reasonable attempts (e.g., two phone calls) to contact the applicant to inform them
of the maximum amount to which they’re entitled; and
b. Ask the
applicant if they would like to withdraw the original application and submit a
revised application. See V.L.1.c.i. below if the original application is
withdrawn.
–
When claims services staff is approving a C-32 requesting an advancement of
PTD, claims services staff must:
1. Complete the LSA
Options Form (see V.D.2. above);
2. Print a copy of
the LSA Options Form locally;
3. Send the LSA
Options Form (see V.D.3. above);
4. Following a
decision regarding the appropriate repayment option of the LSA, issue a BWC
Order in the claims management system to grant the LSA; and
5. If no appeal is
filed to the BWC Order granting the LSA:
a. Pay the LSA in
the claims management system; and
b. Offset the PTD
recipient’s rate in the claims management system;
i.
Enter
the offset to begin with the next scheduled payment period after the LSA will
be paid and to continue;
ii. End the offset
when the LSA is repaid, when applicable. The rate will return to the pre-LSA
rate for claims with an approved LSA on or after 12/1/2004; or
iii. Continue with
the offset for the life of the claim. The rate will not return to the pre-LSA
rate for claims with an approved LSA before 12/1/2004.
c. If a LSA is
granted in a claim in which PTD is being paid, but the LSA is not deducted in
error, claims services staff must review the issue with their supervisor when
the error is discovered and staff the issue with a BWC attorney to determine
what steps to take to begin recouping the advancement considering the overall
circumstances of the claim.
1. An advancement
of a SL or %PP award may be paid as follows:
a. Balance of the
award
i.
No
amount of the award remains after making the advancement; and
ii. No future
payments will be made for the award.
iii. Claims services
staff must contact the applicant by phone to inform them that the award will be
paid out and no future payment will be made.
b. Portion of the
award
i.
Part
of the award is requested as an advancement.
ii. Future payments
of the award will be made at a reduced rate.
2. When there are
multiple scheduled loss awards payable, claims services staff may enter the LSA
in the claims management system from one or more of the awards, as necessary.
3. Claims services
staff must:
a. Complete the LSA
Options Form and SL and C-92 Calculation Worksheet found on COR/LSA/Tips and
Tools;
b. Image the
calculation sheet into the claim via RightFax;
c. Issue an order
to allow or deny the LSA, including the information in V.L.2;
d. If the LSA is
allowed and no appeal is filed to the order, pay the LSA in the claims
management system; and
e. Enter the
offset of the SL or %PP rate in the claims management system.
1. Claims services
staff must forward all requests for a LSA-AF to the IC.
2. The request
must be filed on an Application for Lump Sum Payment of Attorney Fees
(IC-32-A).
3. Upon receipt of
an approved LSA-AF from the IC, claims services staff must:
a. Complete the LSA
Options Form (see V.D.2. above) or the Calculation Sheet for LSA-AF of SL or
%PP;
b. Locally print a
copy of the LSA Options Form prior to sending it;
c. Send the LSA
Options Form (see V.D.3. above); and
d. Refrain from
issuing a BWC Order. The order for LSA-AF is issued by the IC; therefore, it is
not necessary for BWC to issue an order.
4. Claims services
staff must reduce the LSA-AF to the extent necessary to comply with the
following limitations when the IC Order granting the LSA-AF permits BWC to do
so:
a. No reduction in
the applicant’s weekly compensation rate will be greater than:
i.
20
percent for PTD and death benefits; or
ii. 33 1/3 percent
for a SL or %PP award.
b. If the IC Order
does not include language that allows BWC to make the reduction necessary to
comply with the aforementioned limitations, claims services staff must review
the issue with a BWC attorney to determine the appropriate next steps.
5. If claims
services staff has determined that the amount of the LSA-AF as ordered by the
IC can be paid without exceeding the limitations in V.L.4.a(i-ii) above, claims
services staff must:
a. Pay the LSA-AF
in the claims management system after the options form has been returned;
b. Apply the
selected or designated repayment option of the LSA-AF; and
c. If the LSA-AF
is paid from death benefits, reduce the compensation rate of the dependents
according to the following succession, unless otherwise ordered by the IC:
i.
The
surviving spouse only when there are multiple dependent children and the
surviving spouse is the guardian of all minor children;
ii. The surviving
spouse and any dependent children who are 18 years or older;
iii. 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
iv. Example: The deceased
IW and the surviving spouse have three dependent children and the deceased IW
also has two dependent children from a previous marriage/relationship. The
surviving spouse and all five children had the same attorney represent them and
have received a LSA-AF.
v. The dependent
child(ren) when there is no surviving spouse.
6. If claims
services staff did not pay the LSA-AF prior to receiving the LSA Options Form
or expiration of the hold period of the form, claims services staff must (when
the form has been received or the hold period has expired):
a. Reduce the
applicable compensation rate(s). If the LSA-AF is paid from death benefits,
claims services staff must reduce the compensation rate of the dependents
according to the following succession, unless otherwise ordered by the IC:
i.
The
surviving spouse only when there are multiple dependent children and the
surviving spouse is the guardian of all minor children;
ii. The surviving
spouse only when there are multiple dependent children and the surviving spouse
is the guardian of all minor children;
iii. The surviving
spouse and any dependent children who are 18 years or older;
iv. 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
v. The dependent
child(ren) when there is no surviving spouse.
b. Pay the LSA-AF
in the claims management system with the name of the attorney only appearing on
the warrant.
7. Claims services
staff must not withhold family support from a LSA-AF.
1. Claims services
staff must issue an order to:
a. Allow; or
b. Deny a LSA
when:
i.
The
applicant is:
a) A surviving
spouse receiving scheduled loss payments; or
b) A dependent
child(ren) receiving:
i)
Scheduled
Loss payments; or
ii) Death benefits.
ii. Allowance of
the PTD, SL, or %PP award that is to be advanced has been appealed to the IC or
court;
iii. A subsequent
LSA is requested and two LSA rate reductions are already in effect at the time
of the request. The following must not be included when counting the two LSAs:
a) LSAs approved
prior to 12/1/2004; and
b) LSAs for
attorney fees.
c) Claims services
staff may grant a subsequent LSA once one of the previously granted
advancements has been repaid.
iv. The LSA will
result in a reduction of more than 1/3 of the original compensation rate,
excluding the reduction taken for any lump sum advancement of attorney fees
(LSA-AF). The 1/3 reduction limitation does not apply to LSAs for SL or %PP.
c. Dismiss the
C-32 (use Miscellaneous Order) when:
i.
The
applicant wishes to withdraw it;
ii. It is not
completed correctly;
iii. There is no
evidence to support the request and supporting evidence has been requested, but
not received;
iv. Information is
missing from the C-32;
v. The requested
action is not clear and clarification has been requested, but not received;
vi. The C-32 does
not:
a) Demonstrate the
need for financial relief or the furthering of the IW’s rehabilitation; or
b) Explain the
special circumstances that exist to support the request; or
vii. Unusual
circumstances exist and the claims director (or designee) and BWC attorney(s)
have reviewed and recommend dismissal.
viii. Before dismissing the C-32
(except when V.L.1.c.i, iii, v, and vii. occur), claims services staff must ensure
the procedure in V.B.1.a-b. has been followed.
2. Claims services
staff must include the following when issuing an order:
a. The reason(s)
for the decision; and, when applicable,
b. The amount of
the advancement;
c. The amount and
duration of any rate reduction; and
d. Any other terms
regarding the advancement.
3. A LSA Order is
appealable to the IC but not to court.