Is an Injured Employee’s Transitional Duty Work at a Charity Tax Deductible?

Some employers have their injured employees work transitional duty at a charitable organization until they fully recover. For example, the employer will send the employee to their local Goodwill or Humane Society, if they cannot accommodate the injured worker’s medical restrictions in house.

 
When this happens and the employer continues to pay the employee’s salary yet “donates” the employee’s time to the charity (rather than having the insurance company pay workers comp indemnity lost wages), are the wages a charitable donation?

 

 
IRS Section 162

 
United States tax law Section 162 of the Internal Revenue Code is found at 26 U.S.C. § 162. It concerns deductions for business expenses. According to the IRS, to be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in the business. A necessary expense is one that is helpful and appropriate for the business. An expense does not have to be indispensable to be considered necessary.

 

 

The United States Supreme Court in the case of Welch v. Helvering found that the words “ordinary” and “necessary” have different meanings, both of which must be satisfied. The Supreme Court said that an “ordinary” expenseis customary or usual and of common or frequent occurrence in the taxpayer’s trade or business. A “necessary” expense is one that is appropriate and helpful for development of the business.

 
Section 162(a)(1) allow as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including “ a reasonable allowance for salaries or other compensation for personal services actually rendered.”

 
Section 162(b) excepts charitable contributions and gifts from business deductions. It states that: “No deduction shall be allowed under subsection (a) for any contribution or gift which would be allowable as a deduction under section 170 were it not for the percentage limitations, the dollar limitations, or the requirements as to the time of payment, set forth in such section.” (See classification issues, below).

 

 
Employee’s Donated Time to Charity

 
According to Ron Larrow, CPA, MST, the wages an employer pays an injured worker donating their time to charity are a deductible business expense under Section 162. They are ordinary and necessary expenses as paid or incurred in the trade or business of the taxpayer without limitation. There are limitations to deducting charitable expenses. These expenses need not be reclassified as “charitable” deductions.

 

 

The employer’s ability to deduct these expenses incurred for wages is NOT further restricted by assigning the injured workers to help in the community instead of allowing the worker to not report to any particular place (such as an idle room or taking work home) because suitable assignments are not currently available.

 

 

In other words, these expenses need not be qualified as a charitable deduction to get the business tax deduction.

 

 
Issues of Classification

 

One problem with classification as a charitable deduction versus an ordinary business expense is that charitable donations are limited to 10% of taxable income of a C corporation.

 

An individual taxpayer who includes on their individual income tax return their share of an S corporation, LLC or partnership business income and is allowed a deduction for specifically allocated deductions such as charitable deductions are limited to 50% of adjusted gross income (AGI) for charitable deduction in addition to the limitation on use of itemized deductions, which are only deducted after computing AGI on the first page of the individual tax return. Some states, like Connecticut, do not allow those deductions for individuals.

 

 

 

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

 

©2015 Amaxx LLC. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Contradiction of Famous 100 Yr Old High Court Work Comp Decision

Five weeks ago, a decision was published dealing with a worker who had a severe hand injury (Barclay v. Techno Design, Inc.) The decision hinged on whether the injury met the statutory requirements for a “serious” injury, which required the loss of fingers (the worker had loss the use of the fingers). The court held it was not a serious injury, according to the statutory definition.

 

 

Contradiction of High Court Decision

 

What is interesting about this decision is that the very same issue was the subject of the very first NY work comp decision to be issued by NY’s highest court (the Court of Appeals) in 1915!! The decision, “Matter of Petrie”, said that loss of USE of a finger is the same as actual loss of the finger –directly contradicting this latest decision a century later. The new decision made no mention of “Matter of Petrie”.

 

Your correspondent was planning on writing a piece about that first decision, to honor its centennial, but this newest decision now compels it. “Matter of Petrie” is the most cited case in NY comp and created the principle of liberal interpretation of the statute. Yet, somehow, in recent years the source of that principle has been forgotten.

 

 

Basic Principles Should Not Be Taken For Granted

 

The point of this piece is to emphasize that basic principles should not be taken for granted. The most important ones will fall into a black hole unless we understand where and how the basics arose. The present story is not finished. The recent decision was issued by the Appellate Division, which is one level below the Court of Appeals, so the result may well change in the near future.

 

 

1930 Amendment to Permit Employer to Change Treating Doctor

 

What other principles have been forgotten which might be of use to employers? Well, in 1930 the statute was amended to permit the employer to change the treating doctor if it was in the best interest of the worker (WCL Sect 13-a(3)). This was changed to prevent workers from being swept up by dubious medical practices. This is still the law, although few today believe it – it too has been forgotten. But every employer should write, preserve and remember that section. It needs to be judiciously used.

 

 

Long Term Disability Liens

 

In 1986, long term disability plans tried to assert a lien on NY comp awards – but were rebuffed with the statement that no such lien existed. However, a search of the law and Board forms showed that such a lien was established in 1947 (Sect 25(4)(c)) and the Board had created forms (still in force in 1986) for long term disability carriers to use. (The forms were found in a manila folder which had not been opened since 1952.)

 

 

Location of Board Headquarters

 

The NY comp law also required that the Board headquarters be in Albany and be open six days a week. For almost 70 years the Board headquarters was in lower Manhattan and was NEVER open six days a week. (That has since been corrected.)

 

 

Remember These Sections Exist

 

Employers cannot be expected to be work comp historians. But they can make the effort to find out what details of the law benefit them and, gently, remind others that those sections still exist.

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2015 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

Opt-Out In Workers Compensation Is Not A New Concept

Currently, there are proposals in some states for allowing workers to “opt out” of workers’ comp. Is this a radical departure from the past history of work comp? Hardly. In fact, for the first three decades of work comp the issue was “opting in”, not “opting out”.

 

 

When Comp Laws Began, Only Fraction of Work Force Had Mandatory Coverage

 

When the comp laws began to be passed at the end of the first decade of the 20th century, only a fraction of the work force had mandatory coverage under work comp laws. The office clerical workers, even in a “hazardous” employment (such as construction) did not have mandatory coverage, although in most states they had the right to voluntarily insist on comp coverage.

 

But even that was not new. In the era of “employers’ liability” laws, many states had voluntary work comp provisions. The employee had the right to be covered under voluntary work comp, but could always opt out if that was the wish. Thus, the employers’ liability policies already had the rudiments of coverage A and coverage B even before work comp laws were passed. And even before employers’ liability laws, voluntary comp policies were being sold to employers (as far back as the 1870’S!)

 

 

U.S. Has 60 Year History of Voluntary Workers Comp Coverage

 

So the US has already gone through an era of voluntary coverage, lasting nearly sixty years, and seen the advantages and disadvantages of that system. In New York, all workers of every business for profit had mandatory comp coverage after the late 1930s, ending the era of “opting in” (or out).

 

Surprisingly, the voluntary opt in/opt out comp laws remain on the books in certain states. In NY, municipal and county workers do not have mandatory comp coverage and many large unions (police, fire and teachers) have the members covered under disability insurance, preserving the right to sue for negligence.

 

If anyone would like to see a voluntary work comp law still in effect, see the New York Employers’ Liability Law, Sects. 9-15. However, at present no one seems to be covered by the sections.

 

 

We Don’t Have To Speculate What Opt-Out Looks Like

 

What would it be like for workers to opt out of comp? We don’t have to speculate. As previously mentioned, New York has over 100,000 well paid employees presently in a non-comp disability system. When injuries occur, and lawyers are needed, the usual comp lawyers are not asked to participate. Specialized law firms with union connections handle the claims, mostly through negotiation.

 

On 9/11, over 400 NY police and fire first responders were killed – and none had work comp coverage.

 

So, “opting out” has already been in place since the very beginning of comp and employers’ liability – and is still in place, even in states where you would least expect it.

 

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2015 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

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SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

The Prohibited Acts Doctrine: Do Not Pass GO; Do Not Collect $200

monopoly.imagesThe Prohibited Acts Doctrine is used in workers’ compensation cases as a primary liability defense.  While this defense is something every claims management team should explore in workplace injuries, it is often difficult to employ successfully.

 

 

A Hypothetical

 

Consider the case of a truck driver.  As part of the hiring process, the employee underwent a three-day orientation and received a copy of the employer’s policy manual.  The manual included a number of statements concerning employee conduct, which included a prohibition of the “possession or consumption of alcoholic beverage while on company property, using company equipment, or traveling for work.”

 

Shortly after employment begins, the employee stopped in central Kentucky for a two-day layover.  On the first full day of his layover, the employee wanted to watch the big basketball game and was told by an attendant at the truck stop he was staying that there was a bar about one mile away that had the game on the television.  That afternoon he walked to the bar to watch the game and consumed “a few alcoholic drinks.”

 

While walking back to the truck stop, a car with bright lights approached the employee, slowed to a crawl, and then accelerated causing him to jump back.  The employee fell off the road into a ditch hitting the base of his spine.  A workers’ compensation action was initiated related to this incident and primary liability was denied based on the Prohibited Acts Doctrine.

 

Sounds like a clear-cut case for the defense, right?

 

 

Application of the Prohibited Acts Doctrine

 

As a general rule, an employer/insurer can successfully use the Prohibited Acts Doctrine “where an employer expressly prohibits the doing of a certain specific act, the disregard of which is not reasonably foreseeable to the employer, a violation thereof takes the employee outside the scope of his employment and injuries resulting therefrom are not compensable even though the act might be considered to be in furtherance of the employer’s business.”[1]  Whether the employee’s performance of a prohibited act takes the employee outside the sphere of the employment depends, in part, on the nature of the act or conduct, which is prohibited.  Not every safety rule limits the scope of employment.  The less hazardous the conduct prohibited by the safety rule, the more likely the rule proscribes conduct within the scope of employment.  The more routine or minor the prohibited conduct, the more foreseeable it is an employee will violate the rule.[2]

 

Based upon the general application of the Doctrine, an employer and insurer asserting this defense in the above hypothetical would likely not prevail.  Even if consuming alcohol is prohibited, courts will often look to other factors such as the nature of one’s employment, rules considering traveling employees and other factors such as the surface or condition that play a role in the subsequent injury.

 

 

Tips to Successfully Asserting a Defense

 

Cases involving a Prohibited Acts Doctrine are complex, fact dependent and vary in each jurisdiction.  Employees are also given some latitude by the courts when the defense is asserted.  It is important to remember the following considerations associated with the defense:

 

  1. Each case should be analyzed on its own merits and fact. Other factors that make it a difficult defense to assert successfully include obtaining information and testimony from eyewitnesses and specific documentation or prohibitions by an employer.  Just because something is prohibited does not mean one will be successful when asserting the defense.
  2. Practitioners should also note that the prohibited act must also be causally connected to the injury. An injured worker will likely succeed in their claim if the prohibited act plays little to no role in the injury.
  3. Cases involving a prohibited acts defense may also include other defenses such as possible intoxication or the foreseeable activities of traveling employees.

 

[1] Bartley v. C-H Riding Stables, Inc., 206 N.W.2d 660, 663, 26 W.C.D. 675, 678-80 (Minn. 1973)

[2] Otto v. Midwest of Cannon Falls, 59 W.C.D. 25, 35 (W.C.C.A. 1999)

 

 

 

Author Michael Stack, Principal of Amaxx Risk Solutions, Inc. He is an expert in employer communication systems and helps employers reduce their workers comp costs by 20% to 50%. He resides in the Boston area and works as a Qualified Loss Management Program provider working with high experience modification factor companies in the Massachusetts State Risk Pool.  As the senior editor of Amaxx’s publishing division, Michael is on the cutting edge of innovation and thought leadership in workers compensation cost containment. http://reduceyourworkerscomp.com/about/.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

MODIFIED DUTY CALCULATOR:   http://reduceyourworkerscomp.com/transitional-duty-cost-calculators/

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Know Your Rights In New York Comp Claim Hearings

Employer’s rights in NY comp claims? What might those be?

 

The NY Workers Comp Board­­ has, on its website an “Employer’s Handbook”. On page 53 is a section called “Employer’s Rights”. The section doesn’t list anything as promising as, say, the US Bill of Rights, of course, but it clearly lists two rights of which employers should be aware.

 

 

Right of the Employer to Attend Hearings

 

The first is the right of the employer to attend hearings. If that comes as a surprise, your author remembers times (two years ago!) when a judge tried to keep an employer out of a hearing by saying it had no right to attend since the employer was not a party in interest. (That was double wrong. The employer is a party in interest and does have a right to be present.)

 

The judge was doing what others have done for years – limit the number of people in the room, especially one who might express dismay at the proceedings. The presence of the employer has a tendency to force everyone else to stick to the law, not Board “custom”.

 

Therefore, employers should attend, and it wouldn’t hurt to download page 53 of the handbook and bring several copies to the hearing. Don’t argue. Just distribute copies to the other attendees.

 

 

Right of the Employer to View The Documents At Board Hearing Points

 

The other significant right is the right of the employer to view the documents in claims against the employer on a computer screen at Board hearing points. Every file may now be seen at any hearing point. Just go to the nearest hearing point, even if it not the one where hearings are being held. Bring photo ID and proof that your company is the employer. (Type the request to review the file on company stationery.)

 

The first time you review an e-file the contents won’t make much sense (every new comp attorney knows that feeling). Be patient. A Board employee will assist you and answer questions.

 

 

You Want to View The Worker’s C-3 Form

 

What you really want to see is the worker’s C-3 form, which is completed in order to file a comp claim. Does this form contain anything that you dispute? After reviewing, discuss with your carrier.

 

 

Review The Decisions After Each Hearing

 

Also review the decisions after each hearing. You can get the Board to send you these automatically after each hearing if you send a request in writing. That would be a good idea since you might want to have the carrier appeal or challenge the findings.

 

 

Attending Hearings & Reviewing Documents Can Bring Claim Disasters To a Halt

 

Another “right” that is listed is the right to request a carrier to appeal or contest, but the carrier has the co-equal right to ignore your request, which is why your author did not list your requests as a right.

 

Attending hearings and reviewing documents may not seem to be game changers but in fact these acts can bring claims disasters to a halt. Claims are all about information and the employer won’t be hurt by gathering as much as possible.

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

SALES TO PAY FOR ACCIDENTS CALCULATOR:  http://reduceyourworkerscomp.com/sales-to-pay-for-accidents-calculator/

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WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

The Death of Workers’ Compensation?

On August 13, 2014, Miami-Dade County Circuit Judge Jorge Cueto issued a declaratory order finding the provision of the Florida workers’ compensation law providing employers with immunity from civil liability in work-related accidents to be unconstitutional. Employees in Miami-Dade County are now free to sue their employers any time they get hurt on the job.

 

 

Florida Judge Ruled Workers Compensation Law Unconstitutional
Circuit Judge Cueto (who was elected in 2008 and is currently running unopposed for reelection) reasoning for declaring the Florida worker’s compensation law unconstitutional, in his opinion, the workers’ compensation law was not generous enough to fully compensate all injured workers in all situations.

 
While the injured employee utilized a local south Florida attorney, the case had been pursued by two outside interest groups for injured employees, the Florida Worker’s Advocates (FWA) and the Workers’ Injury Law & Advocacy Group (WILG). The FWA is located in Tallahassee, FL over 450 miles from Miami. The WILG is located at 2020 Pennsylvania Avenue, Washington, DC (three blocks from the White House). The FWA’s website states they are “an association of attorneys dedicated to protecting the rights of injured workers in Florida”.

 
Case Involved Worker Who Tripped Over Boxes Left On The Floor
The FWA and WILG picked an extreme case to test the workers’ compensation statute, in a very liberal jurisdiction. The case before Judge Cueto involved Elsa Padgett, a Miami-Dade County government worker who sustained injuries on January 27, 2012 when she tripped over boxes a co-worker had left on the floor. Ms. Padgett, who was already at retirement age, fell on her hip, but sustained a more serious injury to her shoulder. Ms. Padgett had shoulder replacement surgery, but remained in pain and was eventually ‘forced to retire’.

 

Judge Cueto stated the Florida Workers’ Compensation Act no longer provides adequate benefits to injured workers, and therefore is unconstitutional. Prior to Judge Cueto’s ruling the Florida Workers’ Compensation Act required injured employees to seek benefits under the workers’ compensation system. Per the ruling, the exclusive remedy portion of the workers’ compensation act “is no longer an adequate exclusive replacement remedy in place of common law tort”. The Judge further stated “the benefits in the Act have been so decimated {by changes in the workers’ compensation statutes} “that it no longer providers a reasonable alternative” to civil court.
Per the Judge’s opinion, the current benefits provided to injured employees are inadequate and the law deprives the injured employees of any other option for seeking relief. Therefore, the Judge felt the Florida workers’ compensation law was unconstitutional as it violated the due process clause of the Constitution.

 
Florida Plaintiff Attorneys Licking Their Chops

 

The plaintiff attorneys in Florida are licking their chops. The idea of turning every workers’ compensation claim into a civil lawsuit has visions of yachts and private jets dancing in their heads. Even in cases where the sole cause of an employee’s injury is the employee’s own negligence, the plaintiff lawyers know they can basically coerce employers and insurers into paying civil damages to avoid monstrous legal fees in defending civil lawsuits.

 

For now, only the Florida Eleventh Circuit Court – Miami and Dade County – will consider the ruling as legal precedent. Further litigation is expected. The Judge’s Order in not yet a final order and a motion for rehearing could be pursued. If the Order does become final, an appeal to the Third District Court of Appeals is expected. The Third District Court of Appeals could rule on the question of the constitutionality of the workers’ compensation statute, or the Third District Court could take a pass, and send the appeal to the Florida Supreme Court.
If the Florida Supreme Court was to rule the workers’ compensation statute is unconstitutional, legal chaos will probably result, along with many employers facing impossible workers’ compensation premiums. Such a result would force many small employers out of business.

 
NCCI Has Suspended Rate Making In Florida Pending Final Decision

 

The National Council on Compensation Insurance, Inc. (NCCI) has suspended rate making in Florida per spokesperson Lori Lovgren. Per the NCCI spokesperson: “at this point we’re just holding and not pricing (Florida) because we need to see if it will be a final decision or not.”

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

Managing Litigation Cost for Workers Compensation Cases

Litigation cost is a factor calculated into premium as an allocated expense. Each state retains a record of all allocated cost expenses. Through the various state formulas, all allocated expenses become a part of the experience modification code. The experience modification code sets the stage for premium calculation.

 

 

Fee Determination
Plaintiff attorney fees are generally capped as a percentage of the employee’s benefits awarded in contested claims. They also become a part of the final ruling by the judge or mediator. When paid they are paid as part of the indemnity benefit. Since indemnity benefits are already part of the experience modification process there is no separate impact as an allocated expense.

 

Defense costs are based on billable hours at the attorney’s hourly fee rate. Defense attorney fees are payable regardless of a win or a loss of the case. The defense attorney bills are paid on the file in separate direct payment. Legal reserves are required to cover the payments.

 

Billable time includes: telephone calls, legal research, investigative steps, reporting, deposition time, trial time, and trial preparation, witness briefing, consultation time with fellow counsel and or witnesses, as well as negotiating time with plaintiff counsel.
In addition to the lawyer’s time fee, a defense legal bill may include clerical time charges, photocopying fees, postage, subpoena service cost, investigative cost, messenger service, witness fees, paralegal service time, travel time and cost. Some bills may even go so far as to charge for filing time and paper supplies.

 

 

 

Retaining Defense Counsel
All too often there can be a scarcity of local defense counsel. Fewer legal firms are taking defense work in rural areas or smaller towns. This limits legal counsel choices. All local claim units may be using the same attorneys. Fee rates and costs may become non-negotiable, and quality and quantity of defense work may be weak. Worst of all, the judges and mediators might give little credence to their defensive presentations. Larger communities might have more defense counsel choices, but all too often there is still a tendency to rely on the same legal firms.

 

Contacting the local legal bar association is one step to locate new attorneys. The association can advise of the current practicing and newly licensed counsel. They will also advise field of practice.

 

Attending a workers compensation court hearing and observing the defense counsel is a second way to search for new legal counsel. Probably the most used method, however, is to obtain a recommendation from professional associates or employers.

 

Before fully engaging any attorney, obtain their resume and request references. After reviewing the resume and contacting the references arrange for a personal interview. Discuss fees, reporting requirements, and all other expectations desired from the attorney. Do not be afraid to offer fees lower than those being asked as many attorneys will adjust fees to obtain business.

 

When reaching an agreement with an attorney follow through with a written confirmation.

 

 

 

Effective Use of Attorneys
Since attorney fees and bills are charged by the hour, it is incumbent on the claim technician to limit those hours. The following list of ideas should help:

 

  1. Keep telephone calls to a minimum. Know what you are going to discuss before calling. During the call gather the necessary information and terminate the call as quickly as possible. Document the telephone call information in the claim file notes.
  2. Use e-mail as much as possible and limit them to necessary information. This automatically documents the claim file and reduces time to document a telephone call. Use formal letters and regular mail only as necessary.
  3. Limit the attorney’s need for additional investigations. This is accomplished by the claim technician obtaining all defense and claimant statements. The adjuster should supply all personnel records that may be needed, arrange and forward all information from independent medical examinations, as well as supplying claim file reports and investigation information.
  4. Require a legal cost estimate and follow up on this for necessary revisions. Use the estimates as a basis for legal reserving.
  5. Require the attorney to obtain permission to do any additional investigations, hire private investigators, and schedule depositions (if statements are in the file defense depositions should be minimal).
  6. Limit verbosity in reporting. Once the attorney has made initial assessment (which should include a full review of the loss facts) and given a plan of action, it will only be necessary to comment on current happenings. It is not necessary to have the attorney copy the claim file on interrogatories, depositions etc. These are seldom needed if the attorney is reporting on the findings and results. The cost of reproduction and mailing can be eliminated.
  7. Obtain all information the attorney may request as promptly as possible.
  8. Try to employ more than one attorney. Competition generates better results in litigation and disposition.
  9. Negotiate settlements and agreements as much as possible. Attorney negotiating should be limited to court house steps, pretrial conferences, arbitration, and trial.
  10. When the attorney does negotiate, set limits and authorities. Require a telephone request for additional limits and authorities. If possible, serve subpoenas for the attorney.
  11. Require regular and timely billing by counsel. Audit each bill line by line to ascertain accuracy. It should also conform to the written agreement. Charges should coincide with legal information in the claim file records. If any reductions are necessary, let the attorney know why. Pay the bill promptly to avoid late fees and charges. Check to ascertain that a paralegal fee is not accidentally submitted as the attorney’s fee.
  12. Due to inflation and other impacting factors fees may need to be increased. This should always be done by mutual agreement and direct negotiation.

 
Summary

 

Litigation costs impact premium as allocated expenses. Controlling litigation cost is vital and requires the proper choice and use of lawyers.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

Breaking Down New Jersey Workers Compensation Laws

Workers compensation rules and regulations vary from state to state. With that said, do you know how workers comp is run in New Jersey?

 

For Garden State employers with employees, they are required by law to have workers comp coverage. The state’s Workers Compensation Act (WCA) mandates coverage for corporate officers, while workers of sole proprietors (other than the principal owner) and employees of partnerships (minus the partners) are required to have workers comp coverage. Lastly, employers of domestic labors and farm workers must provide workers comp coverage.

 

If you are a New Jersey business owner with independent contractors under your wing, you are not mandated to offer workers comp insurance, though a sizable number of individual independent contractors who would not be looked upon as employees in other states will be thought of as an employee in New Jersey.

 

If the employer retains the right to decide what should be done and how it will be taken care of, or if the work that is done by the independent contractor is a key part of the activities of the business, New Jersey will look upon the individual as an employee.

 

 

Obtaining Coverage in New Jersey

 

In order to receive comp coverage in the Garden State, there are two options for employers:

 

  1. Acquiring a comp policy through an insurer with authority to conduct business in the state;
  2. Receiving approval from the New Jersey Commissioner of the Department of Banking and Insurance to serve as an independent self-insurer, along with the posting of security if requested Governmental agencies in New Jersey must carry compensation insurance, but are not required to obtain it from an authorized insurer or to be self-insured. They can take part in a governmental insurance pool, or they can maintain a separate appropriation for workers comp.

 

 
Reporting a Claim

 

In those instances when a claim must be reported, the injured worker is required to report the incident to his or her boss within three months of the injury.

 

The notice of injury may be passed on to the employees’ supervisor, personnel team or any worker that holds an authoritative position at the company.

 

Upon hearing of the injury, the company must report the comp claim to the insurer at once. At that point, the insurance company must file the First Report of Injury form with the New Jersey Division of Workers Compensation within 21 days of the of obtaining claim notification.

 

 
How Medical Benefits Are Determined

 

In order for medical benefits to move through, the business owner chooses the medical provider.

 

In the event the employer turns down providing medical treatment, the employee is allowed to choose the medical provider. In an emergency scenario, the employee may receive treatment at any emergency care facility or the emergency room of a hospital without the employers’ approval.

 

Once the initial emergency care has been completed, the employee must treat with the employer’s selected medical provider. All reasonable and required medical treatment including prescriptions and hospitalization are provided and approved under New Jersey’s workers comp statutes for as long as the employee needs medical treatment.

 

 
Dealing with Temporary Total Disability Benefits

 

When it comes to temporary total disability (TTD) benefits, these are calculated as 70 percent of the employees’ average weekly wage, not to go beyond the statutory maximum rate or to drop beneath the statutory minimum rate.

 

There is no annual cost of living adjustment for accidents after Jan. 1, 1980. The maximum amount and minimum amount of TTD benefits is altered regularly by the Commissioner of Labor and Workforce Development.

 

The initial seven days of disability (the waiting period) is not paid to the injured employee unless the worker finds themselves disabled for more than a week. TTD benefits can be paid until the employee returns to his or her job, or reaches maximum medical improvement, or for a maximum of 400 weeks. Permanent

 

 
Dealing with Partial Disability Benefits

 

New Jersey employees are paid permanent partial disability (PPD) benefits for any permanent loss of body function that is the result of an on-the-job injury.

 

Once the employee has gotten to the point of “permanent and stationary” (maximum medical improvement), the employee is paid PPD weekly and PPD is paid after TTD benefits have concluded.

 

The Garden State utilizes a Schedule of Disabilities when it comes to injuries for arms, legs, hands, feet, fingers, toes, vision and hearing. The loss of an arm amounts to 330 weeks of indemnity benefits. The number of weeks of indemnity benefits drops to the loss of a small toe being worth 15 weeks of indemnity benefits (with a week calculated the same as TTD).

 

Injuries to the back, heart and lungs are not scheduled injuries. When a New Jersey worker is dealing with a non-scheduled injury, they will continue to gather TTD benefits, up to 600 weeks or until they are able to go back to their job.

 

 

 

Case for Permanent Total Disability Benefits

 

New Jersey permits the worker to receive 450 weeks of indemnity benefits when the employee can’t return to any form of gainful employment.

 

Benefits can be continued conditionally past the point of the 450 weeks provided the employee has agreed to the prescribed rehabilitation and can show that she/he remains totally disabled.

 

The permanent total disability benefits are paid weekly, based upon 70% of the employees’ average weekly wage, not to exceed the state maximum or to drop beneath the state minimum.

 

 
Looking in at Death Benefits

 

The burial costs in the Garden State are covered for a work-related death up to $3,500. If there is one beneficiary, the death benefits equal 50% of the deceased employee’s average weekly wage.

 

In the case of each additional beneficiary, an added 5% is included up to a maximum of 70%, but not to surpass the maximum weekly benefit rate. The death benefits are payable to a surviving spouse, or spouse and children, or any other member of the family who is able to prove dependency upon the deceased employee.

 

A judge for the Department of Labor and Workforce Development will oversee a hearing to decide how the death benefits are divided by the dependents.

 

Children are defined as being under the age of 18, or under the age of 23 if enrolled full time in an accredited educational institution. A surviving spouse obtains the death benefit for life until the surviving spouse remarries.

 

 
An Overview of Vocational Rehabilitation

 

New Jersey employees’ permanent total disability benefits are referred to the New Jersey Division of Vocational Rehabilitation at the 450 week mark.

 

Permanent total disability benefits may be halted unless the worker has taken part in physical or educational retraining as mandated by the Division of Vocational Rehabilitation.

 

Permanent total disability benefits will continue if the Division of Vocational Rehabilitation certifies the employee is in fact fully disabled.

 

 

 

Author Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.  www.reduceyourworkerscomp.com.  Contact: mstack@reduceyourworkerscomp.com.

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

 

 

 

 

Social Media Basics for Attorneys and Claims Professionals

Social media is web-based interaction that is highly accessible and utilizes scalable publishing techniques. According to Wikipedia, there are over 300 “active” and “well known” social media sites. Some of the more commonly used social media sites include Facebook, Twitter and Linked In.

 

 

Why Should Claim Handlers Care?

 

Even though there has been a steady decline in the use of social media by American youth, it continues to be a popular form of communication and interaction among Generation X’ers and Baby Boomers. Unlike other forms of communication, social media leaves a permanent record that is digital and easily discoverable. There are also a growing number of data collection services such as Spokeo.com, which compile information from social networks, marketing surveys, real estate listing, government censuses resources and other accessible sources.

 

With the rise in the collection of data, there are several benefits to the workers’ compensation claim handler.

 

• Cost effective form of surveillance: Obtain background information and checking honesty/integrity of claimant;

• Discovery: Monitor post-injury activities, or verify limitations or severity of injury; and

• Legal ramifications: Credibility of the party/witness and facts of case – damages/liability, jury considerations, etc.

 

 

Ethics for Social Media

 

Attorneys using social media as part of their discovery efforts should be aware of ethical issues. Professional conduct rules may vary from jurisdiction-to-jurisdiction, so it is important to check when handling any case.

 

• RULE 1.6: Confidentiality of Information

• RULE 4.2: Communication with Person Represented by Counsel

• RULE 4.3: Dealing With Unrepresented Person

• RULE 5.3: Responsibility for Non-Lawyer Assistants

• RULE 8.4: Misconduct

 

Lawyers should also be aware that in at least one jurisdiction, failure to investigate ethically social networking sites violated the lawyer’s duty of competence and diligence.

 

 

Case Law and Social Media

 

Courts are becoming more aware of social media and its societal implications on the judicial system. It is important to be aware of legal precedent and how it can influence your case.

 

Beye v. Horizon Blue Cross Blue Shield of N.J., No. 2:06-cv-5377-FSH-PS, (D.N.J. Dec. 14, 2007). The Insurer sought production of all e-mails, journals, diaries, and communications involving eating disorders or symptoms related to the Claimant. The court allowed for broad discovery related to Facebook and MySpace that was shared with other people.

 

Bass v. Miss Porter’s School, No. 3:08cv1807 (JBA), 2009 WL 3724968 (D. Conn. Oct. 27, 2009). Litigation involved the harassment of a high school student at an elite boarding school. The court held discovery “should not be limited to plaintiff’s own determination of what may be ‘reasonably calculated’ to lead to the discovery of admissible evidence.”

 

Moreno v. Hanford Sentinel Inc., 91 Cal Rptr. 3d 858, 862 (Cal. Ct. App. 2009). The court determined that person who makes information available to anyone with a computer also makes the information available to the public at large.

 

EEOC v. Simply Storage Management, LLC, No. 1:09-cv-1223-WTL-DML, (S.D. Ind. May 11, 2010). The Employee objected to demand for production of documents related to social networking. The judge ordered Employee to produce social networking profile information.

 

 

Social Media and Ethical Claim Management

 

Claim professionals should be aware of rules or laws that govern discovery in workers’ compensation claims. While some jurisdictions have adopted ethical codes, it is important to note that failure to follow adopted litigation norms can harm the interests of your company, client, put your license and/or job in jeopardy and subject you to civil fines.

 

• Claim handlers should use social media as a discovery tool and incorporate this information into recorded statements;

 

• Claim handlers should be aware of various ethical and professional limitations involved in social media “discovery;”

 

• Claim handlers should be aware that some items may not be discoverable in court; and

 

• Claim handlers should use professional judgment in personal posts, tweets, blogs, etc.

 

 

 

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality, and manufacturing. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact:RShafer@ReduceYourWorkersComp.com.

 
Editor Michael B. Stack, CPA, Principal, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

In Work Comp, Don’t Be Surprised If…

Work comp is a “remedial statute” which did not exist prior to the first decade of the 20th Century. In addition, most comp laws are “administrative” laws which are not governed by strict rules of procedure, as are negligence claims. And just to complicate things a bit more, most comp laws have a rule that a decision does not have to be based on “preponderance of evidence” – all that is required is a “scintilla” of evidence, meaning just a bit more than nothing at all. Also, comp laws do not have the rule of “stare decisis” (pronounced “starry decisis”, not rhyming with “share”), which means that the comp board can contradict any of it’s decisions with any and all prior decisions.

 

And what about which comp board takes jurisdiction over an accident which occurs in state A, involving an employer from state B, whose home office is in state C?

 

What about all that? Lots of unpleasant surprises.

 
Unpleasant Surprises At Work Comp Hearings

 

Informal Rules of Procedure

 

First, informal rules of procedure. A hearing officer can admit hearsay and facts which are not remotely relevant, allowing witnesses to discuss all manner of things that would never be permitted in formal courts.

 

And do not be quick to assume that you have won because every witness but one testified on your behalf, except for that vague, largely unintelligible witness with memory challenges. If that’s the one the judge wishes to believe, you just may have lost.

 

Have you been to the Board 99 times and won on the same issue? You may, on identical facts, lose the 100th time. It doesn’t matter that you, or anyone else, has ALWAYS won on those facts.

 
Multi-State Jurisdiction

 

Now we come to the issue of which state takes jurisdiction when two, three or even five states could be appropriate. The answer is…………….ALL can simultaneously take jurisdiction. However, the awards, when totaled, cannot exceed the maximum in the state that has the highest comp rates.

 

But really, does that ever happen? Yes, all the time, especially with crew members of commercial airlines. Your author had to endure a period where a New York City comp firm managed to get most of the flight crews to sign up for NY comp, no matter where or how the injury occurred, or even if the claim was already in progress in several states. The idea faded only when the workers discovered that NY rates were the lowest and, just maybe, they might have to appear a few times at the NYC board.

 

Of course, the extreme examples are rare – but possible. Which is why employers should never – EVER – rely on common sense in predicting what problems they may face in comp.

 
Best Preventative Measure Is To Gather Facts & Relay Them To Carrier

 

And the best preventative measure an employer can take is to gather facts and relay them to the carrier. A low, low chance of a bad surprise is far better than rolling the dice at a hearing.

 

 

 

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

 

©2014 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.

 

WORK COMP CALCULATOR:   http://www.LowerWC.com/calculator.php

MODIFIED DUTY CALCULATOR:   http://www.LowerWC.com/transitional-duty-cost-calculator.php

WC GROUP:  http://www.linkedin.com/groups?homeNewMember=&gid=1922050/

SUBSCRIBE: Workers Comp Resource Center Newsletter

 

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

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