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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.M.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.
–
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.M.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.M.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.M.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.M.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.