Collateral offsets to workers' compensation benefits.

• Author: Staver, Matthew D.
• Position: Florida

The purpose behind the offset rules is to prevent an injured employee from being compensated more after than before the accident.

An employee who is injured in the course and scope of employment may be entitled to receive indemnity and medical benefits. However, the employer/carrier (E/C) also may be entitled to offset certain collateral benefits against workers' compensation indemnity benefits. The purpose behind the offset rules is to prevent an injured employee from reaping a windfall from the work accident so that the employee is not compensated more after than before the accident.

Social Security Offsets

F.S. [sections] 440.15(9) provides the E/C with an offset when the employee is receiving Social Security disability benefits and weekly workers' compensation benefits. An employee's benefits may be reduced by the E/C to the extent that the sum of the employee's workers' compensation benefits and the Social Security disability benefits exceeds 80 percent of the average weekly wage (AWW). American Bankers Insurance Co. v. Little, 393 So. 2d 1063 (Fla. 1980); Trilla v. Braman Cadillac, 527 So. 2d 873 (Fla. 1st DCA 1988); Whitman v. Hillsborough County School Board, 386 So. 2d 877 (Fla. 1st DCA 1980).

An E/C can take an offset when the employee is receiving temporary total disability (TTD), temporary partial disability (TPD) or permanent total disability (PTD) benefits. Good Housekeeping Gas Company v. Kitler, 492 So. 2d 700 (Fla. 1st DCA 1986). Social Security disability is considered a weekly benefit and may be offset against workers' compensation weekly benefits. However, weekly Social Security benefits may not be offset against monthly compensation benefits. Id. at 701-02.

In 1994, the legislature enacted F.S. [sections] 440.15(1)(f)(2)(b). This section of the statute requires the employee to cooperate with the employer/carrier in applying for Social Security disability benefits. The E/C is not required to make any payment of PTD benefits for any period during which the employee willfully fails or refuses to cooperate with the E/C in applying for these benefits. This statute is retroactive to accidents that occurred prior to January 1, 1994. ACE Disposal and Florida Air Condition Contractors v. Clarence Holley, 668 So. 2d 645, 653 (Fla. 1st DCA 1996).

As of January 1, 1994, F.S. [sections] 440.15(1)(b) states that only catastrophic injuries as defined by Chapter 440 constitute PTD. ES. [sections] 440.02(34) states that catastrophic injury includes any injury that would otherwise qualify the claimant to receive Social Security disability benefits. This section of the statute is not retroactive.

1. Calculating the offset. Once "the initial calculation of the Social Security offset has been performed, the offset need not be recalculated annually. However, the total amount of benefits receivable after the offset will change annually to account for the cost of living increase provided as PTD supplemental benefits." Cruse Construction v. Remy, 23 Fla. L. Weekly 197 (Fla. 1st DCA 1997). See also Hunt v. Stratton, 677 So. 2d 64, 67 (Fla. 1st DCA 1996). For example, if the Social Security offset results in a $50 per week offset, that amount remains the same so long as the Social Security offset is available.

2. Monthly v. weekly. Effective October 1, 1989, the Florida Legislature amended [sections] 440.15(3)(b)1 to provide that wage loss benefits would be based on an employee's average weekly, rather than monthly, wages. With this statutory amendment, the door was opened for the Social Security disability offset to be applied to wage loss benefits as well. However, it was not until recently that the First District Court of Appeal officially ruled on this issue. In University Medical Center v. Sumpter, (591 So. 2d 288 (Fla. 1st DCA 1991), the First DCA stated that when F.S. [sections] 440.15(3)(b)1 was amended, changing wage loss benefits from monthly to weekly, it had the effect of creating for the first time the E/C's right to a Social Security offset against wage loss benefits paid to an injured employee. Now, the E/C's liability can be reduced not only when the employee is receiving TTD, TPD, or PTD, but also when the employee is receiving wage loss benefits.

3. Dependent benefits. In addition to the offset for Social Security disability benefits received by the employee, the E/C also may take an offset when the employee's dependents are receiving Social Security disability benefits. Modern Plating Co. v. Whitton, 394 So. 2d 515 (Fla. 1st DCA 1981). Prior to the decision in Modern Plating, there was a line of cases ruling that dependent benefits should not be included in the computation of the Social Security disability offset. See Hersey v. Orkin Exterminating Company, I.R.C. Order No. 2-3622 (November 30, 1978); Contractors Services v. Garoutte, I.R.C. Order No. 2-3514 (August 28, 1978); and Oroweat Foods Co. v. Valle, I.R.C. Order No. 2-3512 (August 25, 1978). However, these decisions were overruled by Modern Plating. Additionally, in 1979, F.S. [sections] 440.15(9)(a) was amended to include the words "and his dependents." Therefore, the total amount of benefits received by the claimant and his dependents should be considered in calculating the amount that should not exceed 80 percent of the claimant's AWW or average current earnings (ACE). Dax & Trim Development Co. v. Mullens, 590 So. 2d 539 (Fla. 1st DCA 1992). It also should be noted that this change in the statute to permit consideration of the benefits to an employee's dependents is procedural in nature. Therefore, it is applicable regardless of the date of the accident. State...