WORKERS’ COMPENSATION OFFSET
G.L. c. 32, § 14

MACRS – Spring 2001

What Workers’ Compensation benefits are subject to the offset provisions of
G.L. c. 32, § 14 (2)?


Benefits payable pursuant to G.L. c. 152, § 31 – Compensation for dependents if the injury results in death.

Benefits payable pursuant to G.L. c. 152, § 34 – Compensation for total incapacity. Payable for a maximum of 156 weeks.

Benefits payable pursuant to G.L. c. 152, § 34A – Compensation for total and permanent incapacity.

Benefits payable pursuant to G.L. c. 152, § 34B – This section authorizes the annual evaluation for a supplemental benefit to be paid in addition to the benefits paid under G.L. c. 152, § 31 and 34A. It is similar to a COLA.

Benefits payable pursuant to G.L. c. 152, § 35 - Compensation for partial incapacity.

Benefits payable pursuant to G.L. c. 152, § 35A – Added compensation for dependents. This benefit is equal to $6 per week for each dependent of a person receiving benefits pursuant to G.L. c. 152, § 34, § 34A or § 35. Dependency must be established.

How does the Workers’ Compensation Offset work while the member is receiving weekly benefits?


When a member of a retirement system is paid a disability benefit pursuant to G.L. c. 32, §6 or § 7 at the same time he or she is receiving weekly workers’ compensation benefits for the same injury, the workers’ compensation benefit is payable in lieu of the disability benefit.

When an eligible survivor of a member of a retirement system is paid accidental death benefit pursuant to G.L. c. 32, §9 at the same time he or she is receiving weekly workers’ compensation benefits for the member’s death from the same injury, the workers’ compensation benefit is payable in lieu of the disability benefit.

Example #1:
The pension portion of a member’s accidental disability retirement allowance equals $457.66 per week. (Monthly pension amount x12 ÷ 52). The member receives workers’ compensation in a weekly amount of $785.60. The full amount of the pension is offset. The offset continues until there is a change in the member’s workers’ compensation benefit. The annuity portion of the allowance is payable without adjustment.

Example #2:
The pension portion of the member’s accidental disability retirement allowance is $469.44 per week. The member receives workers’ compensation in a weekly amount of $392.00. The workers’ compensation is offset against the pension, resulting in a pension payable of $77.44 per week. The offset continues until there is a change in the member’s workers’ compensation benefit. The annuity is payable without adjustment.

What happens when a member receiving a retirement allowance receives a lump sum settlement of his workers’ compensation claim?

At some point, a member and the insurer (or self insurer) often agree to settle the workers’ compensation claim by way of a lump sum settlement. The member will receive a lump sum cash settlement of the claim. Any portion of the lump sum settlement that is attributable to weekly benefits is subject to offset. If portions of the lump sum settlement are not specifically attributed to any section of the law, such amounts are presumed to be for weekly benefits and are subject to the offset.

Example:

A member who had been receiving workers compensation benefits in the amount of $427.15 per week is awarded a lump sum settlement, allocated as follows:
Lump Sum (total)                                                            $26,500.00
Deduct:
Lawyer’s Fee                                                                 5,000.00
§36 (payments for specific injuries)                                 1,500.00
Inchoate Rights (spouse waives death benefit)                 9,500.00
                                                                                    10,500.00

The amount of the settlement to be offset, as a result of the lump sum agreement, is $10,500.00. The number of weeks that the pension is to be offset is determined by dividing the amount of the offset by the amount of weekly workers' compensation payments upon which the settlement was based. In this case, the result is 25 weeks over which the pension is to be offset. Any fraction of a week is to be considered a full week for the purposes of the computation.

As in the examples above, if the weekly pension amount is greater than the weekly workers’ compensation benefit, the difference is payable to the member during the period of offset. The annuity is payable without adjustment.

What is the Sciarotta case and is it relevant?

This is a case with several decisions that deal with an offset of a lump sum settlement in a state workers’ compensation claim when the injured worker was also receiving social security disability payments. The courts ordered the Social Security Administration to calculate the offset over the member’s projected life expectancy. This case is often cited in lump sum settlements, but is of no relevance to the workers’ compensation offset discussed in G.L c. 32, § 14.

Can a member agree to pay the Board the full amount of the offset in one sum as part of the agreement?

A lump sum settlement can contain a provision that a specific amount is to be paid to the Board to satisfy the offset. This is acceptable. If the settlement establishes an amount to be offset, the Board cannot accept an amount that is less than that amount as payment in full.

Are all offset calculations as simple as the ones discussed above?

No. Because of the time that passes while a disability retirement application is being processed, a disability retirement allowance is paid retroactively. As a result, when the allowance is paid the offset must be calculated and should be recovered from the first retroactive retirement allowance payment.

Examples:
1. The pension portion of the member’s accidental disability retirement (ADR) allowance, when calculated on a weekly basis, equals $450. The member received workers’ compensation benefits for the whole period that the disability retirement application was being processed in a weekly amount of $400. When the disability allowance is calculated, the member would receive $50 per week (pension) for each week during which both benefits are payable.

2. The pension portion of the member’s ADR allowance, when calculated on a weekly basis, equals $450. The member received workers’ compensation benefits for the whole period that the disability retirement application was being processed in a weekly amount of $475. When the ADR allowance is calculated, the member would receive $0 per week (pension) for each week during which both benefits are payable.

3. The pension portion of the member’s ADR allowance, when calculated on a weekly basis, equals $450. The member received workers’ compensation benefits for the whole period that the disability retirement application was being processed in a weekly amount of $400. The member retired for ordinary disability retirement (ORD) while the ADR application was being processed. The ORD benefit equaled $250 per week and was fully offset against the workers’ compensation benefit. When the ADR allowance is calculated, the member would be entitled to the difference between the ORD and the ADR ($200). The remaining workers’ compensation offset would result in the member’s receipt of $50 per week.

4. The pension portion of the member’s ADR allowance, when calculated on a weekly basis, equals $450. The member received workers’ compensation benefits for the whole period that the disability retirement application was being processed in a weekly amount of $400. The member retired for superannuation retirement (SUPER) while the ADR application was being processed. The SUPER benefit equaled $300 per week. There was no offset against the workers’ compensation benefit. When the ADR allowance is calculated the effective date of the retirement is retroactive. The SUPER would be recalculated as an ADR. The member would be entitled to receive $50 per week of the ADR allowance because of the offset. The member received the SUPER without offset, so would owe money to the Board. Since the allowance is now an ADR, the entire $300 per week, that was originally paid out as a SUPER, is now subject to offset. The Board must recoup this money and apply it towards the remainder of the offset that is due.

Members should be advised of the impact of the workers’ compensation offset on the ultimate receipt of a disability retirement allowance as the application process goes forward.

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