Today we will discuss a recent development in workers’ compensation law involving a situation that arose when EDD was not immediately reimbursed following an award of compensability.
Our story begins with a denied claim for worker’s compensation benefits where the claimant filed for and received 52-weeks of SDI benefits from the EDD. Two years later the work comp case went to trial where a compensability decision was issued in applicant’s favor. An award for retroactive temporary disability benefits from the date of injury was issued. The claims administrator applied a one-year SDI offset and paid the applicant an additional year of TD before discontinuing benefits per the 104-week rule. Unfortunately, the administrator did not reimburse EDD, deciding to wait until the conclusion of the case to address the SDI lien.
After another year passed and the case was ready for settlement. The Judge issued a permanent disability award but refused to grant the administrator credit for the 52-weeks of SDI benefits paid by EDD. Because the credit was disallowed, the administrator was ordered to pay the claimant the 52 weeks of TD they had previously taken credit for. This had never been done before. The claims administrator ended up paying two years TD to the injured worker plus one year reimbursement to EDD for an aggregate total of three years of TD. So, what happened?
The problem began when the claims administrator failed to immediately reimburse EDD upon receipt of the original award. Had they reimbursed EDD it would have been as if the injured worker had never filed an SDI claim, thus allowing the claimant to reopen his EDD claim to collect benefits for up to an additional 52-weeks. However, because the administrator failed to immediately reimburse EDD, the injured worker was unable to reopen his SDI claim because the account was never replenished. Consequently, the claimant lost out on a year of additional SDI benefits. To make the employee whole, the WCJ refused to allow the administrator to take credit against sums paid by SDI. In explanation the Judge commented, “How could an administrator be granted credit against SDI benefits that were never reimbursed?” The Judge did however note the decision would have been different had the administrator reimbursed EDD.
In a way, this ruling makes sense as an injured worker should not suffer due to the administrator’s failure to timely reimburse EDD. The lesson to be learned is that claims administrators now run the risk of being denied credit against SDI benefits unless EDD is timely reimbursed. Failure to timely reimburse EDD may lead to a whole new TD entitlement.
Should you have any questions about EDD or SDI procedures please feel free to call upon the experts here at Friedman + Bartoumian for assistance!
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