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Policy and Procedure Name:
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Lump Sum Advancement (LSA)
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Policy #:
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CP-12-04
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Code/Rule Reference:
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R.C. 4123.64
& 4123.06;
O.A.C. 4123-3-37;
Ohio Industrial Commission (IC) Resolution R18-1-08
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Effective Date:
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9/23/22
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Approved:
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Patricia Harris, Chief Operating Officer
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Origin:
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Operational Policy and Support
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Supersedes:
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Policy # CP-12-04, effective 07/28/22
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History:
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Previous versions of this policy are available upon
request
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Table of Contents
I. POLICY PURPOSE
II. APPLICABILITY
III. DEFINITIONS
Lump Sum Advancement (LSA)
Lump Sum Advancement for Attorney
Fees (LSA-AF)
LSA Options Form
Net Present Value (NPV)
Parties to the Claim
IV. POLICY
A. LSA Application
B. Granting LSA
C. Repayment
D. Reducing Weekly Benefit
Amounts
E. Sending Payment
V. PROCEDURE
A. General Claim Note and
Documentation Requirements
B. The Application
C. LSA and Home or Vehicle
Modifications
D. LSA Options Form
E. LSA Calculation Sheet
F. LSA and Family Support
G. LSA and Overpayments
H. LSA and Incarceration
I. Death Benefits
J. PTD
K. SL and %PP
L. LSA-AF
M. Issuing a Decision
The purpose of this policy is to ensure that a lump sum
advancement (LSA) is determined and paid according to the applicable laws and
rules.
This policy applies to Ohio Bureau of Workers’ Compensation
(BWC) Claims Services staff.
Lump Sum
Advancement (LSA): Payment that is made to the injured worker
(IW) or surviving spouse under special circumstances and then deducted from
future compensation awards of permanent total disability (PTD), scheduled loss (SL),
percentage of permanent partial disability (%PP), or death benefits for
rendering the IW or surviving spouse financial relief or for the purpose of
furthering the IW’s rehabilitation.
Lump Sum
Advancement for Attorney Fees (LSA-AF): A LSA filed with and
granted by the IC for payment to be made directly to the attorney who
represented the applicant(s) with regard to the receipt of the award that is to
be advanced.
LSA Options
Form: A document sent by BWC to the LSA applicant that allows
the applicant to select the weekly reduction and repayment period for the LSA.
Net Present
Value (NPV): The present value of a sum of money in contrast
to the value it will have in the future.
Parties to
the Claim: For purposes of this policy, IW, IW authorized representative,
dependent(s) in a death claim, authorized representative of dependent(s) in a
death claim, employer, employer authorized representative, and BWC.
A. LSA
Application
1. Applicants
must request a LSA on an Application for Payment of Lump Sum Advancement
(C-32).
2. The C-32
must include:
a. An
explanation of the special circumstances that exist to support the request;
b. Evidence
to support the need for financial relief or for furthering the IW’s
rehabilitation; and
c. A
requested amount that matches or exceeds the amount owed or anticipated by the
applicant as listed on the C-32.
1. BWC may
grant a LSA to an IW who is currently receiving:
a. PTD;
b. A SL
award; or
c. A %PP
award.
2. BWC may
also grant a LSA to a surviving spouse who is currently receiving death
benefits.
1. For LSAs
approved prior to 12/1/2004, the rate reduction is effective for the life of
the claim and the rate will not return to the original rate following repayment
of the advancement.
2. For LSAs
of PTD or death benefits approved on or after 12/1/2004:
a. BWC may
offer the following four repayment options:
i. Five
years;
ii. 10 years;
iii. 20 years; or
iv. The applicant’s
life expectancy.
b. Once the
repayment option has started:
i. The
reduction will remain in effect for the remainder of the selected repayment
option; and
ii. Cannot be
changed to a different option, including early payoff.
c. The rate
of payment of compensation will return to the pre-LSA rate once the LSA has
been recouped.
d. BWC will
not offer a repayment option that:
i. Exceeds
the life expectancy of the applicant;
ii. Extends
the recoupment period past the 18th birthday of a dependent child(ren) when
paying a LSA-AF of death benefits; or
iii. Will result in a
reduction of the award by more than that which is permitted for the applicable
compensation type.
3. For LSAs
of SL approved on or after 12/1/2004, BWC will calculate the reduction based on
the weeks of the award remaining to be paid. When there are multiple SL awards
payable, BWC may calculate the reduction from one or more of the awards, as
necessary.
1. When
reducing weekly benefit amounts, BWC will use the appropriate NPV factors for
the year the LSA is paid.
2. The NPV
charts are on BWC’s website at www.bwc.ohio.gov.
1. It is
BWC’s policy to send payment for:
a. A LSA
directly to the applicant; or
b. A LSA-AF
to the attorney with the name of the attorney only on the warrant.
2. BWC will mail
the applicant’s check to the applicant’s attorney if there is a valid Authorization
to Receive Workers’ Compensation Payment (C-230).
1. BWC staff must
refer to the Standard
Claim File Documentation and Altered Documents policy and procedure for
claim note and documentation requirements; and
2. Must follow
any other specific instructions for claim notes and documentation included in
this procedure.
1. If the
C-32 is missing information or not completed correctly, claims services staff must:
a. Send a
blank C-32 to the applicant with an explanation of what is required to make the
application a valid request; and
b. Set a seven-day
work item for the return of the C-32. If the application is returned incomplete
or not returned within seven calendar days of the date requested, claims
services staff may, at their discretion:
i. Extend
the time for return; or
ii. Dismiss
the original C-32 by order. See V.M.1.c.i-viii. below for more information
regarding dismissal.
2. If the
C-32 is fully completed and returned within seven calendar days, claims
services staff must continue to process the application according to this
procedure and related policy. Under these circumstances, it is not necessary
for claims services staff to dismiss either C-32.
1. When the
IW submits a request for a LSA to pay for home or vehicle modifications, and
the home or vehicle modifications appear to be necessary due to allowed
condition(s) in the claim, additional investigation by claims services staff is
warranted. It is possible that home or vehicle modifications that are necessary
due to allowed condition(s) in the claim could be paid as a medical cost
directly from the State Insurance Fund instead of as an advancement of
compensation benefits. To determine whether home or vehicle modifications are a
medical cost to be paid directly from the State Insurance Fund, claims services
staff must:
a. Discuss
the issue with a BWC catastrophic nurse by sending an e-mail to BWC CAT Nurse
Referrals & Questions (bwc.catnurse@bwc.state.oh.us);
i. Enter
“Lump Sum Advancement” in the subject line of the e-mail; and
ii. Include
the claim number and the IW name in the body of the e-mail.
b. Continue
considering the advancement as requested if the modifications are not payable
by BWC.
c. If the
modifications are payable by BWC, claims services staff must contact the IW/IW
representative to determine if they would like to dismiss the LSA request and
pursue direct payment for the expense by BWC. If the IW/IW representative
chooses to move forward with the LSA as submitted, claims services staff must continue
considering the advancement as requested.
2. Examples
of common requests for LSA with home or vehicle modifications:
a. BWC may
pay for vehicle modifications and repairs; however, BWC will not pay for the
vehicle itself. If the IW applies and qualifies for a LSA, they may use those
funds to purchase a vehicle.
b. BWC may
modify one vehicle at a frequency of every five years; therefore, an applicant
may submit a request for LSA to cover the cost of modifications to a second
vehicle within the five years.
c. BWC may pay
for home modifications when the IW’s home requires modifications due to
conditions allowed in the claim. If the IW lives in an apartment or rental
house and the owner will not permit the modifications, the IW may submit a
request for a LSA to purchase a house or as a down payment on a house.
1. For LSAs
of PTD and death benefits approved on or after 12/1/2004, claims services staff
must complete the LSA Options Form and send it to the applicant (and authorized
representative, if represented) for their selection of rate reduction and reduction
period.
2. Completing
the Form:
a. To access
the form, claims services staff must:
i. Go
to the LSA page on Claims On-Line Resources (COR) under Tips and Tools; and
ii. Select the
link to the form.
b. To input
information, claims services staff must make a selection based on:
i. The
type of compensation being paid; and
ii. The type
of LSA requested, then
c. Enter the
applicable information.
3. Sending
the Form
a. Before
mailing the form, claims services staff must call the applicant to explain the
LSA options and to determine if it is possible for the applicant to receive the
form by fax or email.
b. Claims
services staff must mail the form only if fax or email is not possible.
c. After
sending the form, claims services staff must:
i. Image
a copy of the form to the claim; and
ii. Set a work
item for follow up in seven calendar days.
a) If the form is
not returned to BWC within seven calendar days, claims services staff must contact
the applicant (and authorized representative, if represented) by phone.
b) Claims services
staff must inform the applicant and authorized representative, if applicable,
that the form has not been returned; therefore, the repayment option has
defaulted to the applicant’s life expectancy.
c) At the
request of the applicant or authorized representative, claims services staff
may extend the return period an additional five calendar days before defaulting
to the applicant’s life expectancy.
d) If the form is
not returned by the expiration of the extension, claims services staff must designate
the life expectancy option.
– Claims services staff must complete the Calculation Sheet
for LSA of a SL or %PP Award, not the LSA Options Form, when a LSA of SL or %PP
is requested.
– LSAs are subject to lump sum family support processing.
Claims services staff will refer to the Family
Support and Attorney Fees policy and procedure for additional
information.
– Claims services staff will refer to the Overpayment
of Compensation policy and procedure for information regarding
recouping an overpayment from a LSA.
– Claims services staff will refer to the Incarceration
policy and procedure for information regarding repayment of a LSA during a
period of incarceration.
1. Complete
the LSA Options Form (see V.D.2. above);
2. Print a
copy of the form locally;
3. Send the LSA
Options Form (see V.D.3. above);
4. Issue a
BWC Order addressed to the surviving spouse, including the information listed
in V.M.2., once a decision regarding the appropriate repayment option of the
LSA has been made; and
5. If no
appeal is filed to the order:
a. Pay the
LSA; and
b. Offset the
death benefits rate in the claims management system.
i. Apply
the offset to the next scheduled payment period after the LSA is paid; and
ii. End the
offset when the LSA is repaid, if applicable. The rate will return to the
pre-LSA rate when the LSA is approved on or after 12/1/2004; or
iii. Continue with
the offset for the life of the claim. The rate will not return to the pre-LSA
rate when the LSA was approved before 12/1/2004.
6. Upon
remarriage of a spouse receiving death benefits, the spouse is due a lump sum
payment equal to two years of death benefits. Claims services staff must offset
the two-year payment by the unpaid balance of any previous LSA already paid to
the spouse and still affecting the claim.
Example:
A surviving spouse received a LSA of their death benefits in the amount of
$15,000. They have repaid $5,000 when they remarry. The unpaid balance of
$10,000 ($15,000-$5,000) must be deducted from the two-year payment due to the
surviving spouse.
7. A
surviving spouse may not receive a LSA(s) in excess of the amount of death
benefits payable to them over a two-year period (excluding LSA-AF). When a
requested LSA(s) for death benefits exceeds the amount of death benefits
payable to a surviving spouse over a two-year period, claims services staff must
deny the most recently requested LSA.
a. Prior to
issuing the order to deny the request, claims services staff must make
reasonable attempts (e.g., two phone calls) to contact the applicant to inform them
of the maximum amount to which they’re entitled; and
b. Ask the
applicant if they would like to withdraw the original application and submit a
revised application. See V.M.1.c.i. below if the original application is
withdrawn.
– When claims services staff is approving a C-32 requesting
an advancement of PTD, claims services staff must:
1. Complete
the LSA Options Form (see V.D.2. above);
2. Print a
copy of the LSA Options Form locally;
3. Send the LSA
Options Form (see V.D.3. above);
4. Following
a decision regarding the appropriate repayment option of the LSA, issue a BWC
Order in the claims management system to grant the LSA; and
5. If no
appeal is filed to the BWC Order granting the LSA:
a. Pay the
LSA in the claims management system; and
b. Offset the
PTD recipient’s rate in the claims management system;
i. Enter
the offset to begin with the next scheduled payment period after the LSA will
be paid and to continue;
ii. End the
offset when the LSA is repaid, when applicable. The rate will return to the
pre-LSA rate for claims with an approved LSA on or after 12/1/2004; or
iii. Continue with
the offset for the life of the claim. The rate will not return to the pre-LSA
rate for claims with an approved LSA before 12/1/2004.
c. If a LSA
is granted in a claim in which PTD is being paid, but the LSA is not deducted
in error, claims services staff must review the issue with their supervisor
when the error is discovered and staff the issue with a BWC attorney to
determine what steps to take to begin recouping the advancement considering the
overall circumstances of the claim.
1. An
advancement of a SL or %PP award may be paid as follows:
a. Balance of
the award
i. No
amount of the award remains after making the advancement; and
ii. No future
payments will be made for the award.
iii. Claims services
staff must contact the applicant by phone to inform them that the award will be
paid out and no future payment will be made.
b. Portion of
the award
i. Part
of the award is requested as an advancement.
ii. Future
payments of the award will be made at a reduced rate.
2. When there
are multiple scheduled loss awards payable, claims services staff may enter the
LSA in the claims management system from one or more of the awards, as
necessary.
3. Claims
services staff must:
a. Complete
the Calculation Sheet for LSA of SL or %PP found on COR/LSA/Tips and Tools;
b. Image the
calculation sheet into the claim via RightFax;
c. Issue an
order to allow or deny the LSA, including the information in V.M.2;
d. If the LSA
is allowed and no appeal is filed to the order, pay the LSA in the claims
management system; and
e. Enter the
offset of the SL or %PP rate in the claims management system.
1. Claims
services staff must forward all requests for a LSA-AF to the IC.
2. The
request must be filed on an Application for Lump Sum Payment of Attorney
Fees (IC-32-A).
3. Upon
receipt of an approved LSA-AF from the IC, claims services staff must:
a. Complete
the LSA Options Form (see V.D.2. above) or the Calculation Sheet for LSA-AF of
SL or %PP;
b. Locally
print a copy of the LSA Options Form prior to sending it;
c. Send the LSA
Options Form (see V.D.3. above); and
d. Refrain
from issuing a BWC Order. The order for LSA-AF is issued by the IC; therefore,
it is not necessary for BWC to issue an order.
4. Claims
services staff must reduce the LSA-AF to the extent necessary to comply with
the following limitations when the IC Order granting the LSA-AF permits BWC to
do so:
a. No
reduction in the applicant’s weekly compensation rate will be greater than:
i. 20
percent for PTD and death benefits; or
ii. 33 1/3
percent for a SL or %PP award.
b. If the IC
Order does not include language that allows BWC to make the reduction necessary
to comply with the aforementioned limitations, claims services staff must review
the issue with a BWC attorney to determine the appropriate next steps.
5. If claims
services staff has determined that the amount of the LSA-AF as ordered by the
IC can be paid without exceeding the limitations in V.L.4.a(i-ii) above, claims
services staff must:
a. Pay the
LSA-AF in the claims management system after the options form has been
returned;
b. Apply the
selected or designated repayment option of the LSA-AF; and
c. If the
LSA-AF is paid from death benefits, reduce the compensation rate of the
dependents according to the following succession, unless otherwise ordered by
the IC:
i. The
surviving spouse only when there are multiple dependent children and the
surviving spouse is the guardian of all minor children;
ii. The
surviving spouse and any dependent children who are 18 years or older;
iii. The surviving
spouse and any dependent children for whom the surviving spouse is not the
guardian when there are multiple dependent children and the surviving spouse is
not the guardian of all minor children; or
iv. Example: The
deceased IW and the surviving spouse have three dependent children and the
deceased IW also has two dependent children from a previous
marriage/relationship. The surviving spouse and all five children had the same
attorney represent them and have received a LSA-AF.
v. The
dependent child(ren) when there is no surviving spouse.
6. If claims
services staff did not pay the LSA-AF prior to receiving the LSA Options Form
or expiration of the hold period of the form, claims services staff must (when
the form has been received or the hold period has expired):
a. Reduce the
applicable compensation rate(s). If the LSA-AF is paid from death benefits,
claims services staff must reduce the compensation rate of the dependents
according to the following succession, unless otherwise ordered by the IC:
i. The
surviving spouse only when there are multiple dependent children and the
surviving spouse is the guardian of all minor children;
ii. The
surviving spouse only when there are multiple dependent children and the
surviving spouse is the guardian of all minor children;
iii. The surviving
spouse and any dependent children who are 18 years or older;
iv. The surviving
spouse and any dependent children for whom the surviving spouse is not the
guardian when there are multiple dependent children and the surviving spouse is
not the guardian of all minor children; or
v. The dependent
child(ren) when there is no surviving spouse.
b. Pay the
LSA-AF in the claims management system with the name of the attorney only
appearing on the warrant.
7. Claims
services staff must not withhold family support from a LSA-AF.
1. Claims
services staff must issue an order to:
a. Allow; or
b. Deny a LSA
when:
i. The
applicant is:
a) A surviving
spouse receiving scheduled loss payments; or
b) A dependent
child(ren) receiving:
i) Scheduled
Loss payments; or
ii) Death
benefits.
ii. Allowance
of the PTD, SL, or %PP award that is to be advanced has been appealed to the IC
or court;
iii. A subsequent LSA
is requested and two LSA rate reductions are already in effect at the time of
the request. The following must not be included when counting the two LSAs:
a) LSAs approved prior
to 12/1/2004; and
b) LSAs for
attorney fees.
c) Claims
services staff may grant a subsequent LSA once one of the previously granted
advancements has been repaid.
iv. The LSA will
result in a reduction of more than 1/3 of the original compensation rate,
excluding the reduction taken for any lump sum advancement of attorney fees
(LSA-AF). The 1/3 reduction limitation does not apply to LSAs for SL or %PP.
c. Dismiss
the C-32 (use Miscellaneous Order) when:
i. The
applicant wishes to withdraw it;
ii. It is not
completed correctly;
iii. There is no
evidence to support the request and supporting evidence has been requested, but
not received;
iv. Information is
missing from the C-32;
v. The
requested action is not clear and clarification has been requested, but not
received;
vi. The C-32 does
not:
a) Demonstrate the
need for financial relief or the furthering of the IW’s rehabilitation; or
b) Explain the
special circumstances that exist to support the request; or
vii. Unusual circumstances
exist and the claims director (or designee) and BWC attorney(s) have reviewed
and recommend dismissal.
viii. Before dismissing the C-32 (except
when V.M.1.c.i, iii, v, and vii. occur), claims services staff must ensure the
procedure in V.B.1.a-b. has been followed.
2. Claims
services staff must include the following when issuing an order:
a. The
reason(s) for the decision; and, when applicable,
b. The amount
of the advancement;
c. The amount
and duration of any rate reduction; and
d. Any other
terms regarding the advancement.
3. A LSA
Order is appealable to the IC but not to court.