Chapter E-1000 State Workers' Compensation

1. Purpose and Scope. This chapter describes procedures for coordinating Part E benefits with state workers’ compensation benefits. “Coordination of benefits” occurs when the compensation payable under Part E of the Act is reduced to reflect certain benefits previously received by the beneficiary under a state workers’ compensation program for the same covered illness.

2. Authority. 42 U.S.C. § 7385s-11 requires OWCP to reduce the Part E monetary award(s) by the amount of the benefits received from a state workers’ compensation program for the same covered illness, after deducting the reasonable costs incurred by the claimant in obtaining those benefits.

3. State Workers’ Compensation Benefits. State workers’ compensation programs are no fault systems designed to provide injured workers benefits for work-related injuries or illnesses without having to sue their employers. Benefits from the state commonly include payments for medical services, cash payments to the injured worker for wage loss or reduction in earning capacity, as well as death and funeral benefits to the worker’s survivor(s). The laws creating these systems differ by state, but the cash benefits (whether for temporary total disability, permanent total disability, permanent partial disability, or death of a worker) are typically a calculated percentage of the injured worker’s weekly earnings for a set number of weeks. State workers’ compensation benefits can be administered directly by a state commission (as in Ohio). Another method is to have a state board supervise or adjudicate some claims and enforce the required payments made by private parties such as employers or insurance companies. Payments can be issued in a lump-sum award or settlement, on an ongoing basis (weekly or monthly), or a combination of both.

4. When a reduction is required. A reduction of Part E benefits is required if the covered Part E employee, or the covered Part E survivor received benefits through a state workers’ compensation program only for the same covered illness for which that employee or claimant is eligible to receive benefits under Part E. This means the CE first determines the employee/claimant’s eligibility to Part E benefits then determines the beneficiary of the state workers’ compensation benefits before determining whether a reduction is required. For example, if the employee settles a state workers’ compensation claim for asbestosis and the accepted covered illness for which the employee is entitled to Part E benefits is also asbestosis, a reduction of the Part E monetary award is required to reflect the amount of state workers’ compensation benefits the employee has received. However, if the employee settles a state workers’ compensation claim for asbestosis and the accepted covered illness for which the spouse is entitled to Part E benefits is also asbestosis, the CE will not consider this claim for a reduction (unless that spouse also received some form of state workers’ compensation benefits for asbestosis, such as death benefits).

5. Exceptions. The following are exceptions to the reduction requirement rule.

a. Multiple illness(s). If the beneficiary under a state workers’ compensation program receives state workers’ compensation benefits for a different illness, or for both a covered and a non-covered illness arising out of and in the course of the same work-related exposure, the CE does not reduce the Part E award. For example, if the employee/claimant settles a state workers’ compensation claim for asbestosis and silicosis, and the accepted covered illness for which the employee/claimant is entitled to Part E benefits is only asbestosis, a reduction of the Part E benefits is not required.

b. Waivers. OWCP may waive the requirement to coordinate Part E benefits with benefits paid under a state workers’ compensation program, if it determines that the administrative costs and burdens of coordinating Part E benefits in a particular case or class of cases justifies the waiver. A waiver should be automatically granted if the total amount of state workers’ compensation benefits the employee/claimant received is under $200. If a waiver is to be granted,the CE prepares a memo to file, approved by the District Director, explaining that the requirement to coordinate the benefits is waived due to the dollar amount associated with the state workers’ compensation benefits the employee/claimant received.

c. Pending State Workers’ Compensation Payment.

Coordination of benefits is tied to the dollar value of what the employee/claimant received from the state in workers’ compensation benefits for the same illness. Therefore, the requirement to reduce benefits does not apply if the employee/claimant has not received state workers’ compensation benefits as of the time of the Part E payment. If the employee/claimant has filed a state claim for the same covered illness, but payment of the state workers’ compensation benefits is pending at the time of the Part E payment, the CE does not defer issuing the RD. The CE issues the RD without a reduction since the employee/claimant did not actually receive state workers’ compensation benefits.

However, if the employee/claimant receives payment on the pending state workers’ compensation claim at any time after issuing the recommended or final decision(s), but before the issuance of the Part E payment, the Part E payment cannot be issued until further actions are taken.

(1) Claims Pending at the DO. If the employee/claimant filed a state claim for the same covered illness, but payment of the state workers’ compensation benefits is pending at the time of the RD, the CE issues the RD without a reduction. However, the CE states in the recommended decision’s cover letter that if the employee/claimant receives state workers’ compensation benefits after the issuance of the RD, but before issuance of the final decision (FD) the claim will be remanded by the FAB for coordination.

(2) Claims Pending at the FAB. If the employee/claimant filed a state claim for the same covered illness, but payment of the state workers’ compensation benefits is pending at the time of the FD, the FAB CE issues the FD without a reduction. However, the FAB CE states in the final decision’s cover letter that if the employee/claimant receives state workers’ compensation benefits after the issuance of the FD, but before issuance of the Part E payment the final decision authorizing the payment will be vacated by the program’s Director.

(3) Claims pending at the time of payment. Before issuing the Part E payment, the DO calls the employee/claimant to verify that payment of the state workers’ compensation benefits is still pending. If the employee/claimant receives payment of state workers’ compensation benefits after issuance of the FD, but before issuance of the Part E payment, the DO forwards the claim to the National Office for a reopening.

d. Medical or Vocational Benefits Only Claims. Medical or vocational benefits paid by a state workers’ compensation program do not require any “coordination of benefits”. If the employee/claimant received only medical or vocational benefits under a state workers’ compensation program, the CE does not reduce the Part E award. The CE treats this as a pending claim (as instructed above) and issues the RD without a reduction.

6. Verifying State Workers’ Compensation Claims. To verify the existence of a state workers’ compensation claim, all applicants filing a claim under the EEOICPA provide an affidavit (the EE-1/EE-2 forms) reporting whether the employee/claimant filed a state workers’ compensation claim. If the employee/claimant identifies on the EE-1/EE-2 form that he/she filed a state workers’ compensation claim, the CE develops for verification of the illness, and state workers’ compensation benefits received, but only after the CE determines Part E eligibility.

Once the DO determines that there is qualifying employment, accepted covered illness, and a state workers’ compensation claim for the same illness, the CE sends the covered Part E employee, or each eligible surviving beneficiary, development letters. The development letter states that a decision under the EEOICPA cannot be rendered until the employee/claimant provides a written statement from the state commission, board, or payment-issuing agency verifying the total amount and type of state workers’ compensation benefits paid to date.

a. Benefit categories. The CE requests in the development letters that the confirmation from the state commission, board, or payment-issuing agency specify the total amount in benefits the employee/claimant received to date (as of the date of the reply) and an itemized account of the benefits paid for each benefit category. The verification should detail the total amount paid to the employee/claimant in every applicable category such as: medical benefits; disability benefits; death benefits; settlement amount; attorney fees; vocational rehabilitation; and the amount of any disability payment issued during vocational rehabilitation training.

b. If the claimant does not respond to the requests or if the material submitted does not meet the requirements to coordinate benefits, the claim is administratively closed and the claimant is advised that no additional action will be taken until the required documentation is provided.

7. Calculate Amount of Reduction. Once the CE receives the documentation which verifies the amount of state workers’ compensation benefits the employee/claimant received for the same covered illness, the CE completes Exhibit 1 which consists of the “EEOICPA/SWC Coordination of Benefits Worksheet”. This Worksheet is to be used by the CE to make the calculations necessary to determine how much to “coordinate” (reduce) a claimant’s EEOICPA Part E benefits to reflect benefits received from a state workers’ compensation program for a covered illness compensable under Part E. The Worksheet includes detailed instructions on how to compute the different figures that the CE enters on the Worksheet and are used to calculate the amount of any coordination of SWC with Part E benefits. After completing the Worksheet, the CE files it in the claimant’s case record.

a. If the amount of EEOICPA Part E benefits (which may consist of lump-sum payments and/or post-filing and ongoing medical benefits) to which the claimant is currently entitled is MORE than the amount of the SWC requiring coordination, the balance due the claimant (i.e. a positive amount) will be listed on Line 7 of the Worksheet. This is the amount of EEOICPA Part E benefits that must be referenced in the recommended decision, together with an explanation of how this amount was calculated.

b. If the amount of EEOICPA Part E benefits is LESS than the amount of the SWC requiring coordination, the amount of the “surplus” (i.e. a negative amount) is listed on Line 7 of the Worksheet. Because a surplus can only be absorbed from EEOICPA Part E benefits due an employee currently or in the future, no further action is required for a survivor claim. If there is a surplus to be absorbed in an employee’s Part E claim, this must be noted in the recommended decision, along with an explanation that OWCP will not pay medical benefits and will apply the amount it would otherwise pay (directly to a medical provider, or to reimburse an employee for ongoing medical treatment) to the remaining surplus until it is absorbed. In addition an explanation that OWCP will not pay any further lump-sum payments for wage-loss and/or impairment due in the future until the surplus is absorbed must also be noted in the recommended decision.

(1) In situations involving a surplus, the FAB issues an award letter to the claimant containing special language. The FAB award letter accompanies the final decision and advises the claimant of the exact amount of the surplus.

(a) The award letter explains that the surplus will be absorbed out of medical benefits payable and further lump-sum payments due in the future (i.e. wage loss and impairment) under Part E of the EEOICPA.

(b) The award letter further instructs the claimant to submit proof of payment of medical bills to the DO until notice is received that the surplus has been absorbed.

(c) In addition, the award letter instructs the claimant to advise medical providers to submit proof of payment of medical bills to the DO during this time.

(2) DO Offset Point of Contact (POC) Role. Each District Director appoints a qualified individual to serve as the POC for all offsets. The POC monitors surplus situations for both tort settlements and SWC benefits. Tort settlement and SWC benefit surpluses are absorbed until the surplus is exhausted and EEOICPA benefit disbursement can commence. The POC tabulates the amounts of proofs of payment until they equal or exceed the surplus amount.

(a) Red Jacketed Files. While the surplus is being absorbed, the DO offset POC temporarily places the affected case file in a red jacket denoting that a surplus exists. All case file contents are maintained in the red jacket throughout the process of surplus depletion.

(i) No further lump-sum payments are made on any case file contained in a red jacket.

(ii) Once the surplus is completely absorbed and EEOICPA benefits may commence, the DO offset POC removes the temporary red jacket and returns the case contents to the original file jacket. Removal of the red jacket signifies that future lump sum payments may be made on the case.

8. ECMS Coding.

a. State Workers’ Compensation (SWC) Indicator:

(1) Case Create: For the question “Have you filed any workers’ compensation claims in connection with the above claimed condition(s)?” the CCC selects the appropriate option below. If neither box is checked, the CCC leaves the indicator blank. The following are entered directly from the EE-1 or EE-2:

(a) “Y - SWC Checked Yes on Claim” – The claimant checked the Yes box on the EE-1/2, indicating that the employee/claimant filed a state workers’ compensation claim.

(b) “N - SWC Checked No on Claim” – The claimant checked the No box on the EE-1/2, indicating that the employee/claimant has not filed a state workers’ compensation claim.

(2) CE/Hearing Rep: During the development process, the CE/Hearing Rep updates this field to reflect the current status of the employee/claimant’s state workers’ compensation claim. The State Workers’ Compensation Indicator must be entered on all Part E cases, even if no state workers’ compensation claim was filed, as noted below. If the case has been properly created in Part B only (based on medical condition) and the claimant marks the SWC section of the form, the CE enters the information into Part B.

(a) “X – Confirmed no SWC claim” – To be used when the employee/claimant is determined to have not filed a state workers’ compensation claim.

(b) “R – Benefits rec’d; Reduce comp” – To be used when the employee/claimant is determined to have received benefits from state workers’ compensation for an accepted Part E medical condition wherein compensation benefits must be reduced.

(c) “S – SWC; No Reduce comp” – To be used when the employee/claimant is determined to have state workers’ compensation, but there is no reduction in benefits required. This code is also used in the case of a denied SWC claim where the employee received no benefits.

(d) “P – SWC Pending” – To be used when the employee/claimant is determined to have a state workers’ compensation claim that is currently pending.

(3) “SWC State” Identifier Drop-Down Box. Once the existence of a SWC claim is verified, the CE access the ‘SWC State’ drop-down box and selects the appropriate state in which the SWC claim was filed (i.e. ‘OH’ if the claim was filed in the State of Ohio).

b. Condition Status Field:

(1) In all claims described in section 7b above, upon issuance of the final decision the FAB representative will update ECMS in the condition status field with the “O” (Offset) code for the affected medical condition(s) on the medical condition screen for the Employee’s claim. The offset will only apply to the Employee’s claim, even in the event that the Employee died prior to adjudication of the case, and the survivor is entitled to compensation. The ECMS process for Part E claims is as follows:

(a) Offset for a Living Employee: For any medical condition(s) that will be affected by a surplus, the FAB representative:

(i) Updates the condition status field for the medical condition(s) from “A” (Accepted, entered by the DO) to “O” (Offset) on the Employee Medical Condition screen;

(ii) Confirms that the corresponding medical status effective date is equal to the Employee’s claim filing date; and

(iii) Confirms that the corresponding data for the medical condition(s) is correct (condition type, ICD-9 code and diagnosis date).

(b) Offset for a Deceased Employee: For any medical condition(s) that will be affected by a surplus, the FAB representative:

(i) Confirms the “C3” claim status code was entered in the Employee’s claim status history screen, with a status effective date of the date stamp of receipt of notification of the Employee’s death;

(ii) Adds or updates the actual date of the Employee’s death in the DOD (Date of Death) field in the Employee Census Information box of the case screen;

(iii) Updates through the Employee’s claim, the condition status field for the medical condition(s) to “O” (Offset) on the Employee Medical Condition screen;

(iv) Updates or confirms that the corresponding medical status effective date is equal to the Employee’s claim filing date; and

(v) Updates or confirms that the corresponding data for the medical condition(s) is correct (condition type,

ICD-9 code and diagnosis date).

(2) As an award automatically generates an eligibility file at the medical bill processing center, the “O” code acts as a “suspend” code and will not permit medical bill payment until the surplus is absorbed and the “O” code is removed

from the condition status screen. During the time in which the “O” code remains in the medical condition status screen, the medical bill processing center will return all bills received on a surplus file to the claimant or the billing provider indicating that the bill can not be paid at this time due to a surplus.

(3) As noted above, during the time in which a surplus is in effect, the DO offset point of contact (POC) will be responsible for tracking surplus depletion. The FAB award letter will inform the claimant and medical providers to send all proofs of payment of medical bills to the offset POC.

(a) Should an unpaid bill be submitted to the offset POC during the surplus period, it will be returned to the claimant or the billing provider indicating that it can not be paid at that time due to the existence of a surplus.

(b) During the time in which the surplus is being monitored for depletion, the POC will tabulate the amounts of the proofs of payment until they equal or exceed the surplus amount.

(c) Once the proofs of payment monitored by the offset POC equal the surplus amount, all future medical bills in excess of the surplus amount will be paid under Part E of the EEOICPA.

(4) Once the surplus is absorbed, the DO offset POC updates the medical condition(s) of the Employee’s claim in ECMS to reflect that the offset(s) is complete.

(a) The POC will change the “O” (Offset) in the status field and replace it with an “A” (Accepted) code.

(i) If the Employee is deceased, the POC will confirm that the eligibility end date is equal to the actual date of the Employee’s death.

(b) The POC then enters a comment into ECMS case notes indicating that the surplus has been absorbed and that all future medical bills will be paid under Part E of the EEOICPA.

(5) Once the “A” code is entered into the Medical Condition Status screen in ECMS, the payment eligibility file will become active.

(a) The POC confirms that the status effective date is the Employee’s claim filing date.

(b) Upon entering the “A” code into ECMS, the offset POC will send a letter advising the claimant that the surplus is absorbed.

(i) The letter will provide the claimant with the address of the medical bill processing center and instruct him or her to submit all future unpaid medical bills to that address for review and payment.

(c) At that point, the offset POC will send a copy of all proofs of payment received during the time in which the surplus was in force to the medical bill processing center. The medical bill processing center will maintain a record of these proofs of payment to guard against payment of these previously rejected or otherwise unprocessed bills.

c. During any period when medical benefits are not being paid because of the required coordination of Part E benefits under the EEOICPA, if the CE finds it necessary in the course of normal case management to obtain a second opinion examination, a referee examination, or a medical file review, the costs for these procedures will be directly paid by OWCP and any reasonable expenses incurred by the employee will be reimbursed without being added to the surplus. Therefore, the coordination of benefits will not apply to any prior approval medical conditions in ECMS, coded with a medical condition type of “PA.”

(1) In such situations, the CE will enter a comment into ECMS case notes authorizing the medical bill processing center to pay all bills related to the directed medical examination or medical file review. The CE must follow the procedures outlined in EEOICPA Bulletin No. 03-01 for the processing of bills related to these matters.

9. Contact with a State Workers’ Compensation Office. Due to privacy and disclosure regulations, the CE can not disclose any information regarding a claim filed by an employee or survivor to a State Workers’ Compensation Office unless:

TABLE OF CONTENTS

Paragraph and Subject Date Transmittal No.

Chapter E-1000 State Workers’ Compensation