Never Stipulate to Maximum Earnings: A Sixty-Second Seminar in Workers’ Compensation Claims Handling

Without a doubt, it is a major error whenever a claims professional stipulates to an injured workers’ Average Weekly Wage (AWW) being “maximum”, even though maximum earnings may exist. The AWW should always be identified as a specific dollar figure instead of taking a shortcut by stating “maximum.” The reason is quite simple. Although the injured worker may be a maximum earner today, it doesn’t mean he or she will be a maximum earner tomorrow.

Allow us to provide a horror story of what happened to a claims administrator who took a shortcut by stipulating to “maximum” earnings instead of identifying a dollar figure.

The worker was injured in December 2017 with an AWW of $1,800, which was $41.15 above the amount needed to qualify for maximum TD benefits. When settling the case, the claims administrator stipulated to maximum earnings instead of $1,800.

In 2021 the applicant reopened the claim to undergo surgery. TD was once again owed due to surgery and TD benefits were still available as the 104-week limitation had not been exhausted. In addition, the two-year TD rule under LC §4661.5 now applied. To qualify for maximum TD benefits in 2021 an AWW of at least $2,034.46 was required. Despite the applicant’s AWW being only $1,800, he nevertheless was awarded TD at the current maximum rate because pursuant to the stipulations he was a maximum earner.

Wait! It gets worse, much worse. The applicant died as a result of a post-surgical infection. He was survived by a disabled minor child, who was now entitled to lifetime death benefits. Because of the “maximum” earnings stipulation, death benefits were ordered at the maximum TD rate each year for the rest of the child’s life thanks to the annual COLA increase and LC §4661.5. It is projected that this blunder of identifying the AWW as “maximum,” as opposed to $1,800.00, will end up costing the employer an estimated $2.5 million extra over the life of the claim!

The moral of the story is never stipulate to “maximum” earnings. Always identify a dollar figure.