Supplemental Job Displacement Benefit; Who Will Use It?

Sunday, July 18, 2004 | 0

In my last article on this site, I discussed process and procedural requirements for the Supplemental Job Displacement Benefit (SJDB) voucher along with some of the inherent obstacles impacting an employer/insurer's ability to efficiently provide this benefit to injured workers. Hopefully the DWC's proposed regulations governing the voucher will be in place by summer's end to provide the guidance payer's need to establish and implement their internal procedures. The other piece of the puzzle for all parties is, How many injured employees will be eligible for a voucher and likely to use the benefit?

Before we attempt to estimate usage, we need to recognize that there are a number of issues with the potential to impact both eligibility and usage patterns. These include employers' willingness to offer modified or alternative positions to injured workers who need job modification, availability of vouchers proximate to the injured employee's P&S date, and the possibility of settlement.

SB 899 certainly demonstrates Legislative intent to encourage and reward employers who offer modified or alternative positions to injured employees who require job modification. L.C. section 139.48 provides reimbursement for costs related to job modification to small employers (50 or fewer employees) who might otherwise lack the necessary resources. L.C. section 4658.6 exempts employers (regardless of size) from the requirement to provide a voucher where a modified or alternative position is offered to the injured employee who needs job modification or reassignment. L.C. section 4658.1(d)(2/3) provides for increases or decreases in weekly PD payments depending on whether the employer offered (15% decrease in PD payments) or failed to offer (15% increase in PD payments for employers with 50 or more employees). One would think that these incentives would encourage most employers to routinely offer modified or alternative work when needed: however many employers are used to having vocational rehabilitation relieve them of return to work considerations. It is therefore unclear how many injured employees will have the voucher as their only return to work option; the potential exists for the number to be substantially greater than the 45,000 or so who were determined QIW in past years.

Use of the voucher will also be governed by the timing of its availability to injured workers who are not offered modified or alternative positions. L.C. section 4658.5 seems to tie the voucher to a Permanent Disability award. In its proposed regulations, the DWC is attempting to make voucher monies available within 30 days of the first PD payment. It certainly makes sense for the voucher to be available close to the injured worker's P&S date; unfortunately, tying the voucher to the end of TD or the beginning of PD does not necessarily coincide with a P&S determination and thus does not mean it will be available to the injured worker when s/he most needs, and can use, the retraining assistance. If the voucher is only available when there is an award (which typically occurs 1-2 years after P&S), it may be viewed as useless and thus may go unused by the majority of injured workers. The necessary solution for this problem is for the Legislature to tie the modified/alternative job offer requirements and availability of the voucher to the P&S determination.

If the voucher is viewed as unusable by injured workers and too difficult to administer by employers/insurers, settlement of the benefit becomes probable. In fact, many attorneys - both applicants and defense - believe the benefit will be routinely settled. The statute certainly doesn't prohibit settlement. If the benefit is viewed as unusable by injured employees and their attorneys, it will become a vehicle to augment settlement of the case in chief. The only possible obstacle to routine settlement may be that employers/insurers also believe the benefit to be unusable and they may not be willing to offer sums acceptable to injured workers. This is clearly a benefit in need of Legislative "cleanup."

If the DWC does manage to iron out some of these wrinkles, who would be most likely to use their voucher? The only "guidance" we have is the profile of injured workers who have used the VR benefit in the past. The California Workers Compensation Institute's pending VR study reflects some characteristics of injured workers using the VR benefit that may give us some clues to those most likely to use a voucher. Approximately two thirds of QIW injured workers have PD under 30%. One half of all QIW injured workers had been employed at their pre-injury job for one year or less and almost 60% made less than $10 per hour. This does not, however, mean that QIW injured workers are primarily entry level workers - approximately one half of this population is in the 30-49 age group. This data suggests that many injured workers have used the VR system to escape low paying, unskilled jobs as much as to avoid returning to physically inappropriate work.

Considering this profile, we should expect there will be some injured workers who will see the wisdom of using the voucher as a vehicle to obtain new skills and escape unskilled, low-paying jobs. These will be the same types of people who demonstrate the motivation to successfully complete rehab plans in the VR system (Despite anecdotal cynicism, there are many injured workers who use the system as intended. A 1989 CWCI study indicated that approximately half of those using the benefit returned to work in the occupation for which they were trained). If the voucher becomes available early enough in the process, some will in fact use their PD for support during retraining. Others will attend classes during the evening and on weekends. And still others will manage to attend training due to family support.

Some additional users will come from the population of very young workers and those who are approaching, or have reached, retirement age. Some younger workers will still have family support that will allow them to attend training programs. Or they may use the voucher as a means to complete vocational or college training already in progress. Older workers, on the other hand, may use the voucher for an entirely different purpose. Some in this group may use the voucher for personal enrichment rather than as a return to work vehicle. Others may seek skills to facilitate part-time employment. Keep in mind that there are essentially no limits on choices other than the requirement for training programs to have either BPPVE or Western Assoc. of Colleges/Universities approval.

There will also be those in the over 30% PD population who have no choice but to seek an alternative occupation due to their physical limitations. These injured workers are also more likely to have sufficient PD to see them through a vocational training program. Injured workers in this category represent approximately one third of the population historically using VR services.

If prior use patterns still apply, approximately two thirds, or 30,000, of the approximately 45.000 QIW injured workers in 2003 will use some VR services and 20,000 or so will start VR plans (we have no idea how many complete plans since a plan ends when the cap is exhausted and not necessarily when training or placement is complete). Should we expect 20 -30,000 to attempt use of their voucher?

The number of workers who are eligible for, and willing to use, a voucher will be impacted by a variety of factors including employer return to work practices, the employee's motivation to return to the pre-injury occupation/employer, timing of voucher availability, the employee's financial imperatives, physical need to seek a new occupation, motivation, family support, current educational status, etc. It is too early to tell if employer incentives will improve return to work rates or if more injured workers will elect to return to pre-injury jobs or accept modified/alternative work offers rather than take their chances with a voucher. We will therefore assess potential voucher use based on past use of the VR benefit.

Of the estimated 20,000 annual VR plans, approximately 6,500 are written for injured workers with more than 30% PD. As noted above, most of these individuals need a change of occupation so it is likely that many will at least attempt some form of retraining. We might conservatively assume that at least half, or 3000, will attempt to make full use of their voucher.

Two thirds of the annual number of VR plans, or approximately 13,000, are written for injured workers with less than 30% PD. For one or more of the reasons enumerated above, it seems unlikely that more than 3,000-4,000 will attempt to use a voucher. Workers in this group have more employment options open to them than the preceding group and many will elect to return to regular duties or accept modified/alternative job offers rather than pursue a voucher of unknown timing and value.

We noted that very young workers might use the voucher to complete programs in progress and some older workers might use the voucher for personal enrichment purposes. Between the two, we might see an additional 1,000 or so vouchers utilized.

This brings us to 7.000-8,000 vouchers utilized annually or about 25% of the current VR utilization rate (counting all use and not just plan cases). This use rate will be very optimistic if vouchers are routinely settled for cash, if the are not available timely, or if they are difficult to use. The use rate might go somewhat higher if schools, counselors, and attorneys find a way to efficiently deliver appropriate training programs to injured workers who need and want them.

There are some inherent problems with the voucher concept for both injured employees and employers. Very little (10%) of the voucher can be spent for counseling services. It is not hard to imagine injured workers entering into training programs that are physically inappropriate or for which they are academically unprepared. The statute contains no provisions for second vouchers so counselors, schools, and applicant attorneys must develop the means to quickly assess worker attributes and match their skill sets and interests to available programs. Without active cooperation among these three parties, the voucher concept will have no chance to serve the needs of injured workers and will quickly be viewed as a waste of resources - and will suffer the same fate as its predecessor.

The simple availability of a voucher will not protect employers from FEHA claims of disability discrimination. The voucher is not vocational rehabilitation and will not serve as a kind of shield against FEHA claims as did VR. Employers must engage in an "interactive process" with the employee to evaluate and identify legitimate modified or alternative job opportunities - or face the consequences and costs associated with an FEHA claim. The employer's best strategy to control workers' comp costs and minimize FEHA exposure will continue to be an active and equitable return to work program.

This may seem to be a pessimistic assessment of potential voucher use; in fact, the utilization estimate may be quite optimistic. The process was poorly designed for injured workers who will need return to work assistance as well as for claims administrators who must initiate the benefit. Favorable DWC regulations and a concerted effort by counselors, schools and applicant attorneys may help some workers benefit from the voucher but the best solution would be for the Legislature to revise L.C. sections 4658.5 & 4658.6 to initiate notice and job offer requirements from P&S rather than the last payment of TTD and to allow the voucher to be accessible after 60 days from P&S.

Contributed by vocational rehabilitation expert Allan Leno, Leno & Associates, (818) 370-8859, allanleno@leno-assoc.com.

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