OhioBWC - Basics: (Policy library) - File

Policy and Procedure Name:

LUMP SUM ADVANCEMENT (LSA)

Policy #:

CP-12-04

Code/Rule

Reference:

R. C. 4123.64 & 4123.06; O.A.C. 4123-3-37; Ohio Industrial Commission (IC) Resolution R07-1-02

Effective Date:

08/07/18

Approved:

Kevin R. Abrams, Chief Operating Officer

Origin: 

Claims Policy

Supersedes:

Policy # CP-12-04, effective 11/14/16 and Procedure # CP-12-04.PR1, effective 11/14/16

History:

CP-12-04

Rev. 11/14/16; New 12/21/15

CP-12-04.PR1

Rev. 11/14/16; New 12/21/15

 

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 task 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 task 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 (the date of the LSA is the day after the last period of the SL or %PP award was paid); 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.