DIR Paid $865,000 since Return-to-Work Fund Launched in April

Published on 06/10/2015 by WorkCompCentral, authored by Greg Jones

The California Department of Industrial Relations has made $865,000 in supplemental payments to injured workers since it launched the return-to-work program created by Senate Bill 863 in April.

As of June 1, the DIR had received 233 applications for the one-time payment of $5,000, of which 37 were denied either because the person was injured before Jan. 1, 2013, or the application was incomplete, according to department spokesman Peter Melton.

Rules adopted by the DIR, which started accepting online applications for payments April 13, require an injured worker to receive the Supplemental Job Displacement Benefit voucher for an injury sustained on or after Jan. 1, 2013, to be eligible for payment from the fund. 

Numbers provided by the department also show that it is deciding eligibility more quickly than required. The department's rules require it to determine whether a worker is eligible within 60 days of receiving a completed application and to issue payments within 25 days of making that decision.

Under those timelines, the latest a determination could have been made on an application submitted on the first day is June 12, and the latest a payment would be made is July 7.

But Melton said the DIR already issued checks to 173 workers who were eligible for payments. 

Melton said the DIR devoted resources to getting checks to injured workers as quickly as possible by building the online portal to apply for payments, installing kiosks at Division of Workers' Compensation district offices so workers without the Internet at home can still apply, and having staff available to assist injured workers.

Melton said the number of eligible applications increased from 22 in the first week to 36 in the final week of May. At this point, the DIR can't predict the number of workers who will apply in the coming months, he said.

That the DIR has paid nearly $1 million from the fund over the first seven weeks of operation would appear to be good news, but applicants' attorneys said they have concerns about the program.

Bernardo de la Torre, president of the California Applicants' Attorneys Association, said he's not certain there is a way to ensure all eligible workers have the opportunity to apply for payments.

He said CAAA does not believe the DIR has a plan to identify workers injured after Jan. 1, 2013, who received the SJDB voucher before the effective date of the Return-to-Work Fund regulations. What's more, he said allowing only electronic submission creates a potential hardship for workers with lower incomes, severe disabilities or limited English-language skills.

Furthermore, he said it's a hardship for some workers who don't have a computer and currently have to travel to a local DWC district office to file an application. And, he's worried that the kiosks available to injured workers might eventually fall into disrepair.

"On any given day at the local Workers' Compensation Appeals Boards, copy machines sit idle, as they are either broken, have a paper jam, or are out of paper, waiting to be put back into full operation," de la Torre said. "Unfortunately, we expect that the access kiosks will eventually face the same fate as all machines eventually do, and there is no alternative plan for assisting an injured worker in submitting an application."

Alan Gurvey, managing partner of applicants' firm Rowen, Gurvey & Win, said the program has been an "unadulterated failure" and demonstrates the problem of ambiguous language in legislation.

SB 863 created the program by adding Labor Code Section 139.48, which says the purpose is to make "supplemental payments to workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss." The section ordered the DIR to work with the Commission on Health and Safety and Workers' Compensation to set eligibility criteria and determine the amount of payments.

CHSWC contracted with the Rand Center for Health and Safety in the Workplace to study earning losses and benefits to try to create a formula for determining whether a worker's losses were disproportionately low in comparison to their loss of earnings. The resulting paper, "Identifying Permanently Disabled Workers with Disproportionate Earnings Losses for Supplemental Payments," found an average decline in post-injury earnings of 30.9% for people with an impairment rating of 1% to 4%, and 93.6% for workers with an impairment rating of 95% to 99%.

Based on these findings, Rand said a possible model for the program would require a worker with an impairment rating between 1% and 4% to demonstrate a 31% or greater loss of earnings to qualify for payments. A worker with an impairment rating of 95% to 99% would need to show more than a 93.7% loss in earnings.

If utilization of the SJDB voucher remains constant, Rand estimated about 10,290 injured workers would qualify for payments each year. With $120 million available, the average payment would be $11,662. If voucher use doubled, Rand said 20,580 workers would receive average payments of $5,831.

Rand's methodology would have required a worker to maintain post-injury earning data for three years to demonstrate an actual loss of earnings. 

The administration wanted something that was less complicated and didn't require injured workers to wait three years for payments, according to David Lanier, secretary of the Labor and Workforce Development Agency. So it decided to use the SJDB as a "proxy" for identifying which workers suffered the greatest financial losses, Lanier told members of the Senate Rules Committee during his confirmation hearing in May 2014.

"It has the clear advantage of putting the money in the hands of the injured workers sooner," Lanier said.

Gurvey said the idea for the program, which was added to SB 863 in the final days of the 2012 legislative session to win support from key leaders such as former Senate President Pro Tem Darrell Steinberg, was to compensate the most seriously injured workers. The department's rules run contrary to that, he said.

"The limitations on the fund have made this notion a total joke," Gurvey said. "In fact, the people who may take advantage of it are most likely not the ones where it will make any difference."

He said he didn't know what to make of the data showing 196 workers have qualified for payments since the DIR started accepting applications in April. But he questioned whether all the eligible workers really need the additional income, or if they were just applying for the benefit because it's there.

"If the Legislature would have been serious about helping out those injured workers who have suffered catastrophic injuries, then the money would have been better spent with different guidelines for dissemination," he said. "This program has been a huge disappointment after all of the hype on the Thursday evening before the fateful Friday vote on SB 863.”