Common Adjusting Mistakes, Part 1: Adjust TTD

Saturday, August 30, 2003 | 0

While workers' compensation claims handling is a complex event, requiring broad knowledge of medical issues, legal issues, and financial issues, there seem to be certain specific issues that repeatedly trip up even seasoned adjusters. This is the first article in a series of five articles that will review some common mistakes that are made in the general handling of claims.

Failure To Adjust Td More Than 2 Years After The Date Of Injury One thing that didn't change last year when AB 749 became law was Labor Code section 4661.5. That code section provides that when temporary disability is paid more than two years after the date of injury, such payment must be made in accordance with the statutory maximum rate in effect on the date payment is made:

"Notwithstanding any other provision of this division, when any temporary total disability indemnity payment is made two years or more from the date of injury, the amount of this payment shall be computed in accordance with the temporary disability indemnity average weekly earnings amount specified in Section 4453 in effect on the date each temporary total disability payment is made unless computing the payment on this basis produces a lower payment because of a reduction in the minimum average weekly earnings applicable under Section 4453."

This adjustment applies, even if the parties have stipulated to a TD rate. See Mote vs. WCAB, where the parties had stipulated to average weekly earnings of $800, initially entitling the applicant to TTD at the rate of $336 per week for his 1991 injury (exacerbated in the course of treatment in 1992). On July 1, 1994 the weekly rate was to have been increased to $406, and then to $448 the following year, but the defendant in the case failed to make the required adjustments. No excuse was necessary as to such failure, since the increase is administratively mandatory. Thus the defendant in the Mote case was hit with successive, and cumulative, penalties for this failure.

In addition, this increase also applies to death benefits ruled a split WCAB inPhillips v. Sacramento Co. Utilities Dist.

The applicants in the Phillips case, who the decedent's dependents, were awarded death benefits at the rate of $336 per week. Following that award, a corrected award issued directing payment at various rates up to $441.40 per week, consistent with Labor Code section 4661.5, and thereafter benefits pursuant to Labor Code section 4703.5 payable at the rate of $441.40 per week until decedent's younger child reached the age of 18. Defendant filed a petition for reconsideration contending that Labor Code section 4661.5 is inapplicable to death benefits and to benefits under section 4703.5. Defendant lost.

Under 4661.5, the date of payment becomes the controlling factor, not the period of TD being covered by the payment. If TD is paid more than two years after the injury and a higher statutory maximum has gone into effect (as we will see from now on as prescribed by LC 4553), it must be determined whether the higher rate would apply.

One question is whether 4661.5 requires 2 years of successive TD. The short answer: no. 4661.5 is controlled by the calendar. The measure is whether TD is paid two years after the injury. Not whether TD is continuously paid for two years. Thus if a claimant is awarded TTD payments retroactively for a period of time covered by a lower rate than is presently applicable, the award must be paid at present rates.

We'll assume following for purposes of example: Date of injury 9/1/00; TTD ultimately awarded for the period of 9/1/00 - 12/1/00; maximum wage earner for all purposes. Award issues in 2003 and payment is made in 2003. Back in 2000, the max TTD rate was $490 per week. However, because payment wasn't made until 2003, the max TTD rate for 2003 is applicable at $602 per week.

To add insult to injury, a penalty is due as well, based on the $602 rate! See the Phillips case, above.