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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 R07-1-02
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Effective
Date:
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05/06/19
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Approved:
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Kevin
R. Abrams, Chief Operating Officer
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Origin:
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Claims
Policy
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Supersedes:
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Policy
# CP-12-04, effective 11/14/16 and Procedure # CP-12-04.PR1, effective 08/07/18
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History:
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CP-12-04
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Rev. 11/14/16; New 12/21/15
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CP-12-04.PR1
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Rev. 11/14/16, 05/06/19; New 12/21/15
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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 Ohio
Bureau of Workers’ Compensation (BWC) Claims Services staff.
III. DEFINITIONS
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.
IV.
Policy
A. Applicants shall
request a LSA on an Application for Payment of Lump Sum Advancement
(C-32). The application must include:
1. An explanation of the
special circumstances that exist to support the request;
2. Evidence to support
the need for financial relief or for furthering the IW’s rehabilitation;
3. A requested amount
that matches or exceeds the amount owed or anticipated by the applicant as
listed on the C-32; and must be
4. Completed and
correctly notarized. If the date of the notary’s signature and the date of the
applicant’s signature are not the same, the C-32 is not properly notarized.
B.
BWC
may grant a LSA to:
1. An IW who is currently
receiving:
a. PTD;
b. A SL award;
c. A %PP award; or
2. A surviving spouse who
is currently receiving death benefits.
C.
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 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 (4) repayment options:
i. Five (5) 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.
D.
When
reducing weekly benefit amounts, BWC will use the appropriate NPV factors for
the year the LSA is paid. The NPV charts are on BWC’s website at www.bwc.ohio.gov.
E.
It
is BWC’s policy to:
1. 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. Mail the applicant’s
check to the applicant’s attorney if there is a valid Authorization to
Receive Workers’ Compensation Payment (C-230).
V.
Procedure
A. Claims services staff
shall refer to the Standard Claim File Documentation and Altered Documents
policy and procedure for claim-note requirements and shall follow any other
specific instructions included in the procedure.
B. The Application
1. If the C-32 is missing
information or not completed correctly (including notarization), claims
services staff shall:
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 7-day work item
for the return of the C-32. If the application is returned incomplete or not
returned within 7 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, correctly notarized, and returned within 7 calendar days, claims
services staff shall 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.
C. LSA and Home/Vehicle
Modifications
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 shall:
a. Discuss the issue with
a BWC catastrophic nurse by sending an e-mail to BWC CAT Nurse Referrals &
Questions (bwc.catnurse@bwc.state.oh.us);
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 shall contact the
IW/IW representative to determine if he/she 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 shall continue considering the advancement as requested.
2.
Examples
of common requests for LSA with home/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, he/she may use
those funds to purchase a vehicle.
b.
BWC
may modify one vehicle at a frequency of every five (5) years; therefore, an
applicant may submit a request for LSA to cover the cost of modifications to a second
vehicle within the five (5) years.
c.
BWC
may pay for home modifications when the IW’s home requires modifications due to
conditions allowed in the claim. If he/she 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).
D.
LSA
Options Form – For LSAs of PTD and death benefits approved on or after
12/1/2004, claims services staff shall complete the LSA Options Form and send
it to the applicant (and authorized representative, if represented) for his/her
selection of rate reduction and reduction period.
1. Completing the Form:
a. To access the form,
claims services staff shall:
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 shall 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.
2. Sending the Form
a. Before mailing the
form, claims services staff shall 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
shall mail the form only if fax or email is not possible.
c. After sending the form,
claims services staff shall:
i. Image a copy of the
form to the claim; and
ii. Set a work item for
follow up in seven (7) calendar days.
a) If the form is not
returned to BWC within seven (7) calendar days, claims services staff shall
contact the applicant (and authorized representative, if represented) by phone.
b) Claims services staff
shall 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 (5) 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 shall
designate the life expectancy option.
E.
Claims
services staff shall complete the Calculation Sheet for LSA of a SL or %PP Award,
not the LSA Options Form, when a LSA of SL or %PP is requested.
F.
LSA
and Family Support – LSAs are subject to lump sum family support processing.
Claims services staff shall refer to the Family Support and Attorney Fees
policy and procedure for additional information.
G.
LSA
and Overpayments – Claims services staff shall refer to the Overpayment of
Compensation policy and procedure for information regarding recouping an
overpayment from a LSA.
H.
LSA
and Incarceration – Claims services staff shall refer to the Incarceration
policy and procedure for information regarding repayment of a LSA during a
period of incarceration.
I.
Death
Benefits - When claims services staff is approving a C-32 requesting
advancement of death benefits for a surviving spouse, claims services staff shall:
1. Complete the LSA
Options Form (see V.D.1. above);
2. Print a copy of the
form locally;
3. Send the LSA Options
Form (see V.D.2. 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 shall
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 his/her death benefits in the amount of $15,000. He/she has
repaid $5,000 when he/she remarries. The unpaid balance of $10,000 ($15,000-$5,000)
shall 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 him/her 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 shall deny the
most recently requested LSA.
a.
Prior
to issuing the order to deny the request, claims services staff shall make
reasonable attempts (e.g., two [2] phone calls) to contact the applicant to
inform him/her of the maximum amount to which he/she is entitled; and
b.
Ask
the applicant if he/she 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.
J. PTD – When claims
services staff is approving a C-32 requesting an advancement of PTD, claims
services staff shall:
1.
Complete
the LSA Options Form (see V.D.1. above);
2.
Print
a copy of the LSA Options Form locally;
3.
Send
the LSA Options Form (see V.D.2. 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.
K. SL and %PP - An
advancement of a SL or %PP award may be paid as follows:
1.
Balance
of the award; or
a.
No
amount of the award remains after making the advancement;
b.
No
future payments will be made for the award.
c.
Claims
services staff shall contact the applicant by phone to inform him/her that the
award will be paid out and no future payment will be made.
2.
Portion
of the award.
a.
Part
of the award is requested as an advancement.
b.
Future
payments of the award will be made at a reduced rate.
3.
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.
4.
Claims
services staff shall:
a.
Complete
the Calculation Sheet for LSA of SL or %PP 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.
L. LSA-AF - Claims
services staff shall forward all requests for a LSA-AF to the IC.
1.
The
request must be filed on an Application for Lump Sum Payment of Attorney
Fees (IC-32-A).
2.
Upon
receipt of an approved LSA-AF from the IC, claims services staff shall:
a.
Complete
the LSA Options Form (see V.D.1. 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.2. 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.
3.
Claims
services staff shall 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. No reduction in the applicant’s weekly compensation rate shall be
greater than:
a.
20
percent for PTD and death benefits; or
b.
33
1/3 percent for a SL or %PP award.
c.
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
shall review the issue with a BWC attorney to determine the appropriate next
steps.
4.
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.3.(a-b) above,
claims services staff shall:
a.
Pay
the LSA-AF in the claims management system after the options form has been
returned;
b.
Apply
the selected/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
Example: the deceased IW and
the surviving spouse have three (3) dependent children and the deceased IW also
has two (2) dependent children from a previous marriage/relationship. The
surviving spouse and all five (5) children had the same attorney represent them
and have received a LSA-AF.
iv.
The
dependent child(ren) when there is no surviving spouse.
5.
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 shall
(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 shall 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.
6.
Claims
services staff shall not withhold family support from a LSA-AF.
M. Issuing a Decision – Claims services
staff shall:
1.
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 (2) LSA rate reductions are already in
effect at the time of the request. The following shall not be included when
counting the two (2) 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;
iv.
Information
is missing from the C-32;
v.
The
requested action is not clear;
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 the IW wishes to withdraw it), claims services
staff shall ensure the procedure in V.B.1.a-b. has been followed.
2.
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.