To: Self-Insured Employers From: The Department of Labor & Industries Date: November 2014 Re: Crabb v. DLI This memo is to advise you that a recent Court of Appeals decision impacts wage replacement payments to all injured workers who were entitled to the statutory maximum benefit rate as of July 1, 2011. Workers’ compensation reform legislation passed in 2011 included a one-time freeze of cost-ofliving adjustments (COLA)1 for workers’ compensation benefits. The freeze was in effect for one year, from July 1, 2011 to June 30, 2012, for those who receive time-loss compensation or pension benefits. In addition, for workers injured on or after July 1, 2011, future COLAs would be effective the second July 1st following their date of injury or disease manifestation. Labor and Industries interpreted the law to apply to claims of all injured workers, including those capped at the statutory maximum. This interpretation was challenged, and the court of appeals decided the COLA changes did not apply to these workers. To implement the court’s decision, all workers who were entitled to the maximum time-loss or pension benefit must now be compensated for the increase as of July 1, 2011 and ongoing, provided their claim is currently open. Closed claims do not need to be adjusted unless and until they reopen. Self-insured employers must make the necessary payment increases to the entitled workers and can submit these claim payments on the Quarterly Statement of Supplemental Benefits Paid asking for reimbursement out of the Supplemental Pension Fund. The department will administer the payments to self-insured workers receiving pension benefits. If a worker’s claim is not currently open, but reopens in the future, the employee would be entitled to the maximum time loss rate on reopening with no interruption in the increase. What follows is an example of the calculation that would need to be made for a worker entitled to time-loss continually since 7-1-2011. The table below shows the maximum payment rate effective 7-1-2011 before and after the court decision, and for each subsequent year after. 1 COLA is an adjustment to time-loss or pension payments based on the change in the state’s average wage for the prior calendar year. COLAs are effective each July 1. Monthly Benefit Rate Paid Corrected Monthly Benefit Rate 7-1-2011 $4,715.30 7-1-2012 $4,884.86 7-1-2013 $5,051.16 7-1-2014 $5,152.97 $4,816.20 $4,989.40 $5,159.50 $5,263.50 Adjusted benefit calculation: 7-1-2011 through 6-30-2012: $4,816.20 - $4,715.30 = $100.90/month X 12 months = $1,210.80 7-1-2012 through 6-30-2013: $4,989.40 - $4,884.86 = $104.54/month X 12 months = $1,254.48 7-1-2013 through 6-30-2014: $5,159.50 - $5,051.16 = $108.34/month X 12 months = $1,300.08 7-1-2014 through 11-30-2014: $5,263.50 - $5,152.97 = $110.53/month X 5 months = $552.65 Total owed to the worker: $4,318.01 For future use, the Maximum Time Loss Rates table can be found on the L&I website at: http://www.lni.wa.gov/ClaimsIns/Files/SelfIns/ClaimMgt/MaxTimeLossRates.pdf