Greetings, this Tip being sent by special request….
According to DOAH’s annual report, last year over 50% of Petitions for Benefits sought a correction to the Average Weekly Wage/TTD/TPD. And one of the known unknowns that often comes back to bite us is the correction to the AWW due to cancellation of the claimant’s health insurance.
Under the FL WC statute, when the claimant’s health insurance (and other employer paid fringe benefits) cancels, the E/C must add the employer’s cost of the health insurance to the AWW within 7 days. It does not matter why it cancels.
440.14(4) Upon termination of the employee or upon termination of the payment of fringe benefits of any employee who is collecting indemnity benefits pursuant to s. 440.15(2) or (3), the employer shall within 7 days of such termination file a corrected 13-week wage statement reflecting the wages paid and the fringe benefits that had been paid to the injured employee, as provided in s. 440.02(40).
Well, based on my experience, there is often a breakdown in the communication of when the health insurance terminates between the employer and the carrier, costing us penalties and interest, and quite frequently attorney fees.
A PFB is filed by the claimant, and the E/C responds that the AWW is correct based on the wage statement, and we are currently paying indemnity. Then, during the course of litigation, it comes to light that the health insurance ended months prior, there is a retroactive correction to the AWW and resulting indemnity, and we now owe penalties, interest and attorney fees for “securing” the additional indemnity.
So, what are the key points in time we can improve on to help avoid these situations?
- When the accident is reported by the employer, the Wage Statement DWC-1a (https://www.myfloridacfo.com/docs-sf/workers-compensation-libraries/workers-comp-documents/forms/69l-3/dfs-f2-dwc-1a.pdf?sfvrsn=ccb5f5b5_5) is supposed to be completed showing the employer’s cost of the fringe benefits, if any. If that is done, that is the first indication that it needs to be monitored.
- Another opportunity to confirm the potential fringe benefit issue is in the initial statement with the claimant. Adjusters should ask the question about whether they are covered, and also put the bug in the claimant’s ear that if their fringe benefits end, they may get an increase in their WC benefits. Also confirm with the employer in the initial contact and try and get the costs at that time. Key point, it is the employer’s cost of the benefits at the time of the accident, not the time of termination, which can make a pretty big difference with the rising costs of health insurance.
- We are pretty good at finding out the fringe costs when we find out the claimant is terminated, but sometimes their health insurance ends without their employment ending. The claimant’s health insurance premium is usually payroll deducted, and if they are out on WC, that employee portion still needs to be paid. Employers handle this differently, some make the claimant write a check to the health insurance company, some make them reimburse the employer, etc…If the employee premium portion is not paid, the health insurance cancels. If that happens, the employer should let the adjuster know as soon as possible.
- Regardless of WHY the health insurance ends, we do need to increase the AWW. It is pure math, there is no voluntary limitation of income argument to the increase in the AWW, even if they got fired. (A defense to paying indemnity, maybe, defense to AWW increase, no)
- When the PFB is filed seeking either AWW correction or indemnity, it is a good time to re-confirm with the employer the status of the fringe benefits. Any corrections made within 30 days would avoid attorney fees. We still may owe penalties and interest if the underpayments are late beyond 7 days, but not attorney fees.
As always, please let me know if you have any questions.
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Sincerely,
Morgan Indek | Managing Partner