Members of the claim management team face many challenges when it comes to dealing with injured employees seeking entitlement to permanent total disability (PTD) benefits. Exposure for these types of claims is high. It is important to be proactive on these claims in order to reduce costs in a workers’ compensation program.
The Aging Workforce and Workers’ Compensation
Notwithstanding the recent economic upturn and increasing wages, Americans continue to suffer from the effects of the Great Recession. Proof of this can be found labor market statistics from the U.S. Department of Labor. According to a recent survey, the “greying” of the workforce continues:
- In 1994, 11.9% of the U.S. labor marker was 55 years old and older.
- In 2014, this age group comprised 21.7%.
- By 2024, people 55 years old and older will make up 24.8% of the labor market.
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Older people miss work for longer periods of time compared to their younger counterparts. On average, someone over the age of 55 will miss up to two weeks following an injury. Those between the ages 20-24 will only miss four days.
Permanently and Totally Disabled Defined
According to Prof. Arthur Larson, someone is totally disabled when the “claimant has been able to earn occasional wages or perform certain kinds of gainful work does not necessarily rule out a finding of total disability or require that it be reduced to partial. The task is to phrase a rule delimitating the amount and character of work a man can be able to do without forfeiting his total disability status.”
Reduced into a general rule, courts in many jurisdictions will review the following factors when determining if someone qualifies for permanent total disability benefits:
- Job Search: Employee’s in most jurisdictions are required to conduct a reasonable and diligent job search. Examples of what is “reasonable and diligent” includes time spent looking for work, the location where one seeks employment, and the overall effort spent.
- Cooperation with Vocational Rehabilitation Assistance: In many states, employees have access to a Qualified Rehabilitation Consultant (QRC) to assist in job search efforts. A QRC performs a variety of roles when it comes to assisting an injured employee re-enter the workforce.
- Earning Capacity: This factor takes into consideration the employee’s ability to work and earn a wage comparable to what they were making prior to the injury. It is important to note an employee working in a limited capacity can be successful in their efforts to obtain permanent total disability benefits.
- Refusal of Suitable Job Offer: The employee’s willingness to accept a job offer often comes down to concerns of whether they are able to perform a job offered by the employer. When reviewing this factor, it is important to evaluate medical and vocational evidence to determine if the work offered by the employer is similar to what they were performing at the time of injury, and uses their training and experience in a manner that would advance the interests of all parties.
Other Defenses to Consider in Defending PTD Claims
There are other issues to consider when defending PTD claims.
- Withdrawal from Labor Market: Employees seeking workers’ compensation benefits are required to stay active in the labor market until they demonstrate an inability to secure suitable gainful employment. A withdrawal from the labor market can include a move to another geographic location that has fewer job opportunities, or an area where jobs pay lower wages. It may be necessary to secure a vocational expert to successfully employ this defense.
- Retirement Defense: Most states allow for the termination of PTD benefits when an employee retires. This is often not a clear-cut distinction, and requires investigation. This can include statements made by the employee as to how long they intended to work prior to their injury and application for Social Security retirement benefits, and receiving payments from a pension.
The aging workforce is driving members of the claim management team to be proactive when it comes to claims for permanent total disability (PTD) benefits. This requires a complete investigation and determination as to the employee’s job search efforts, cooperation with their QRC, earning capacity, and refusal of a job offer. Failure to take the necessary steps can add costs to a claim and reduce a program’s effectiveness.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center.
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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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.