Newsletter

Per the November 23, 1999 Order from the Commissioner of the Department of Workers' Claims, all lump sum settlements effectuated this year must utilize a 6% discount rate. Gone are the old discount rate figures of 342.3683 (425 weeks) and 400.0903 (520 weeks). The new discount figures for the year 2000 are 335.9855 and 391.1551.

KRS 342.0011(11)(a) defines "Temporary Total Disability" (TTD) as the condition of an employee who has not reached maximum medical improvement from an injury and has not reached a level of improvement that would permit a return to employment".

This definition establishes a two-part test to determine a claimant's eligibility for Temporary Total Disability benefits. The "not reached maximum medical improvement" part of the test speaks for itself, but the "return to employment" part is apparently subject to interpretation by the Commissioner of the Department of Workers' Claims. The Commissioner's interpretation is both favorable to the Claimant and problematic for the insurance carrier.

In an internal Policy Statement dated October 7, 1999 Commissioner Turner decreed:

In order to determine whether a medically recovering employee is in a condition with restrictions which would permit a return to employment, a review of a wide range of facts and circumstances is necessary. My bet is that carriers are not looking at the totality of the circumstances, but rather are applying a blanket policy that to be released to work, no matter what restrictions and no matter whether the employer has work within these restrictions available, is grounds for termination of payment of TTD. In my judgment, "blanket denials" simply by reason of a release to work are not warranted and constitute unfair claims settlement practice violations. Certainly, the carrier would be acting with reasonable grounds if TTD were denied because the employer offered to the employee work within the medically imposed restrictions. On the other hand, it is untenable to deny TTD benefits when the employer does not offer restricted duty work and the employee does not possess skills which would be immediately transferable to "new work" during a period of recovery.

The Commissioner's Policy Statement raises a variety of questions for the employer and its insurance carrier. First, the employer and/or its carrier must decide whether it want to abide by the Policy Statement. The Policy Statement seems quite contrary to the statutory definition of Temporary Total Disability in that the claimant must actually return to "suitable employment" before TTD benefits can be terminated. The statutory definition is much less restrictive in that the claimant simply must be able to return to undefined "employment". More often than not, insurance carriers have terminated a claimant's TTD benefits when he or she has been released to light duty work. This well-established practice will no longer be tolerated by the Commissioner.

If the employer or its insurance carrier continues to abide by the statutory definition of Temporary Total Disability, it must be prepared to defend itself against the Commissioner's charge of unfair claims settlement practices. While the Commissioner will probably fine the employer or its carrier, that fine is appealable to an Administrative Law Judge as a question of law (i.e. no need for any evidence). However, all Administrative Law Judges ultimately answer to the Commissioner, so any fine will likely have to be appealed to the Workers' Compensation Board, if not the Kentucky Court of Appeals. While it is easy to think no single case would justify the time and effort associated with three appeals, the employer and/or the insurance carrier would do well to realize the Commissioner's Policy Statement applies to every case. A successful appeal could save insurance carriers thousands of dollars in regard to the "big picture".

If the employer and its insurance carrier decide to abide by the Commissioner's Policy Statement, there must be a mutual understanding as to the availability of suitable employment. This is often problematic inasmuch as insureds have little incentive to make "suitable employment" available when it ordinarily doesn't exist. The insurance carrier may find itself paying out thousands of dollars in excess TTD benefits simply because its insured can't or won't accommodate a claimant's work restrictions. Accordingly, the carrier must stress the importance of providing modified duty work to a claimant if at all possible.

If you have any claims which present these problems, we would be happy to assist you.

James R. Carpenter
Baker, Kriz, Jenkins, & Prewitt
PNC Bank Plaza, Suite 710
200 West Vine Street
Lexington, Kentucky 40507-1620
Telephone: 1.800.897.0837