Tag Archives: loss of earning power

Increase in mileage payments necessary for injured workers in Nebraska, but inflation erodes the value of workers’ compensation benefits

Posted on June 20, 2022 by Jon Rehm

In Nebraska workers’ compensation benefits are not indexed for inflation. Further inflation can work to decrease the amount of benefits paid in addition to the value of those benefits.

The Nebraska Workers’ Compensation Court announced earlier this month that mileage reimbursement for medical and vocational travel will increase from $.585 per mile to $.625 a mile effective July 1, 2022.

The rule change should benefit injured workers – particularly those who live in rural parts of Nebraska who are often required to travel long distances to larger cities for specialized medical care. But increased travel costs are part of a broader trend of rising inflation. That trend will impact injured workers in less helpful ways.

Workers’ compensation benefits are set by an employee’s wages at or near the time of injury. Inflation is rising at a rate higher that wages. So workers are starting their claims with reduced real wages.

Inflation is bad for injured workers in Nebraska (and most places) for other reasons. In Nebraska, weekly workers compensation benefits are fixed at earnings near the time of injury. Nebraska doesn’t adjust those benefits for inflation. Even when inflation was more moderate injured workers got a raw deal because the value of their benefits declined relative to inflation. Higher inflation just further erodes the grand bargain of workers’ compensations.

But inflation doesn’t just decrease the purchasing power of workers’ compensation benefits, it can reduce the nominal or gross amount of benefits awarded.

An award of permanent disability benefits is based on how the injury effects a person’s ability to earn a living. Further, injured workers who have long lasting injuries often have their disability determined by wages at the time they healed from their injury. So even if an employee can’t increase their benefits for inflation, their earning power is based wages that have inflated while they have been healing from their injury.

Again, even during times of modest inflation workers could get nickeled and dimed a 2.5-5 percent of loss of earning power based on inflation. Higher inflation will probably mean that loss of earning power benefits will be further discounted. I’ve written about how to argue against using inflation in lost of earning power analysis. I think those kinds of arguments will be more urgent with higher inflation, but I don’t know how appellate courts will come down on the issue.

While higher inflation is an overall negative for most injured employees, there could be some positive effects of higher inflation.

One bit of good news is that higher transportation costs could increase awards of permanent disability

An award of permanent disability benefits is based on how the injury effects a person’s ability to earn a living. That hinges in part on where you live. Commute costs factor into the amount of available jobs and will be considered by Judges in how disabled an individual is for the purposes of workers’ compensation. Higher commuting costs tend to lead to higher disability awards.

Commute costs can also be a decisive factor in deciding whether an employee is permanently partially or permanently totally disabled. Permanent partial disability benefits are limited to 300 weeks while permanent total disability benefits are paid out over a lifetime. The difference can amount to hundreds of thousands of dollars.

What renewed concerns over inflation could mean for analyzing loss of earning power in workers’ compensation

Posted on November 15, 2021 by Jon Rehm

Last week the United States Department of Labor announced inflation reached a 30 year high. Here in Nebraska, the Governor announced a $8 p/h or 40 percent pay increase for corrections officers. But how could eye popping wage increases and renewed attention to inflation impact workers’ compensation in Nebraska?

Back in February, I wrote a post about a Mississippi decision that took wage inflation into account when determining loss of earning power. Loss of earning power determines how permanent disability (and sometimes temporary disability) are paid. Put another way, the Mississippi court held that just because overall wages increase that doesn’t mean an employee’s earning power increases along with wages. After all, earning power is a measure of an employee’s ability to compete for jobs not necessarily wages earned.

The issue of wage inflation matters in workers compensation because workers are often stuck with benefit rates based on their wages at the time of the accident. In some cases, loss of earning power, or how the injury impacts their ability to work may not be decided until a few years after the accident,

Put yet another way, employers try to use wage inflation to reduce loss of earning power benefits. In times of more moderate inflation, it seemed as if some courts would adopt those arguments.

But with renewed attention to inflation and news of major wage increases, hopefully workers’ compensation courts will start raising an eyebrow when an employer argues that wages have increased for an injured worker since the time of their injury.

In Nebraska, loss of earning power is often calculated by vocational counselors who write loss of earning power assessments. I used a wage inflation argument to get a counselor to nudge up a loss of earning power assessment for a lower wage worker with a small amount of loss of earning power. I was also using wage inflation data between 2018-2020 before the post-pandemic labor shortage really took effect.

The state of Nebraska will announce wage inflation numbers 2021 shortly and those will be adopted by the Nebraska Workers Compensation Court. My educated guess is that plaintiffs should be able to use these numbers to push up the value of loss of earning power assessments further. Every 10 percent of loss of earning power is worth $12,000 to a worker making $15 p/h on a 40 hour week.

Wage inflation should become a good argument for plaintiffs in workers compensation cases.

A common sense decision on loss of earning power and inflation from Mississippi

Posted on February 15, 2021 by Jon Rehm

The Mississippi Court of Appeals found that a worker who was still employed with their employer and earning a higher wage than before the injury was still entitled to an award of 20 percent loss of earning power.

So a lot of workers comp. heads who read this blog may wonder why this decision blogworthy and why it applies to Nebraska?

The answer to those questions is 1) I think the reasoning behind Chambers v. Howard Industries is interesting and it questions some assumption behind a recent Nebraska Supreme Court case on apportioning benefits to previous injuries.

In his post on Chambers, commentator Thomas Robinson pointed out that the plaintiff proved that since his job was altered to fit his restrictions that helped prove that he had lost earning capacity which is different than wages earned. The Mississippi Court was also persuaded by the fact that average wages had increased between the time of the plaintiff’s injury and the award, so an increase in wages wouldn’t necessarily equate in an increase in earning power.

I think the Chambers decision is also fair and equitable in that workers are stuck with benefit rates based on their date of injury. Additionally, in Nebraska, workers’ compensation benefits don’t increase along with the cost of living or inflation. Fairness should dictate employers can’t use inflation to decrease benefit payments to workers under these circumstances.

Apportionment

This summer the Nebraska Supreme Court more or less ignored these arguments in the Picard case. In Picard the Nebraska Supreme Court found it was error to award an injured worker additional loss of earning power benefits for an injury to a different body parts because they were working for the same employer at a higher wage.

Chambers is distinguishable from Picard in that Chambers didn’t involve apportioning benefits paid from a prior injury. Mississippi law is also different from Nebraska law in that there is a formal presumption that an employee who is earning more after an injury does not have a loss of earning power. At least in cases where there was prior payment of loss of earning power, courts in Nebraska are still clearly looking at how an injury effects your ability to earn wages and not solely earned wages post-injury in determining loss of earning power.

I believe the Chambers decision adds some persuasive weight for employees arguing that overall increases in wages should not factor into determinations about loss of earning power. It’s not unusual to try workers compensation cases a 2-3 years after a date of injury. From 2018 to 2021, the average wage in Nebraska has increased nearly 10 percent. Chambers stands for the proposition of law that increases in wages in line with the overall increase in wages should not factor into a loss of earning power analysis.

Close cases with two member LOEP

While a 10 percent different in wages may seem relatively insignificant it may mean the difference between an employee being found to have a 30 percent loss of earning power for the purposes of a multi-member impairment and being stuck with compensation for scheduled member impairment for purposes of Neb. Rev. Stat. 48-121(3)

Loss of earning power is determined by a formula that takes wages, education, location and other factors in to account. Changes to the variables in the formula can lead to significant changes in loss of earning power. The difference between compensating and injury based on scheduled member impairments or at 30 percent loss of earning capacity can add up to 45-60 weeks of benefits which for an employee earning $15 per hour for a 40 hour week can up to between $18,000-$24,000.

Does higher unemployment mean higher workers’ compensation benefits?

Posted on June 29, 2020 by Jon Rehm

Last fall, I wrote about my opinion that good economic conditions often lead workers to be underpaid for work injuries.

But will that conclusion change now that unemployment has increased to historic highs? Maybe, here is how I believe higher unemployment could affect the value of workers’ compensation cases.

Loss of earning power

Nebraska law pays back injuries, head injuries, mental injuries, burns, multiple body part injuries on how they impact your ability to work. Nebraska calls the impact of a work injury on your ability to work “loss of earning power” or “LOEP” for short. A medical opinion about the harm, restrictions or loss of use caused by an injury is just starting point in deciding loss of earning power.

Courts consider social and economic factors along with physical restrictions in calculating loss of earning power. Those other factors include: education, age, where you live and transferable skills.

The competitive labor market

Where you live is important because it gives the court an idea of the jobs available to you. Oftentimes in workers’ compensation cases there is an argument about which cities or areas to include in a job market. But the mere availability of work in your area doesn’t determine your loss of earning power.

Under Nebraska law, loss of earning power is based on a competitive labor market. When times are good, the players in the workers’ compensation system ignore the idea of a competitive labor market.

But when unemployment rises, lawyers, judges and vocational counselors, (the experts who help decide LOEP) may remember the idea of a competitive labor market. In a competitive labor market, someone who lost a job due to a work injury is going to have difficulty finding a job. The same goes for workers with serious work restrictions.

Retail jobs, along with food service jobs, are considered by many to be an employer of last result. But when unemployment spiked in March, Wal-Mart has 1,000,000 applicants for 150,000 open jobs. In comparison, Ivy League school Cornell University accepted 14.1 percent of applicants in this year. So I think it’s fair to say that the labor market is competitive. (I’ve noticed a lack of articles about the “skills gap” and “employee ghosting” since March)

No place like Nebraska?

Under Nebraska law, judges decide loss of earning power based on local economic conditions.. The good news/bad news for Nebraska workers is that Nebraska still has the lowest unemployment in the nation. Nebraskans may not see a major increase in permanent disability benefits due to economic conditions.

But workers who live outside of Nebraska can claim Nebraska workers compensation benefits. Generally they can claim benefits if they were hurt in Nebraska, hired in Nebraska or their employer is based in Nebraska. Residents of other states would have their loss of earning power or disability determined based on where they live. These workers may see increased permanent disability benefits.

What is a Functional Capacity Evaluation and what does it mean for a workers’ compensation claim?

Posted on July 2, 2018 by Jon Rehm

A functional capacity evaluation, or FCE for short, is a test that is usually conducted by a physical therapist that tests your physical abilities. They are common in workers’ compensation claims that involve surgeries or extended courses of treatment. So why are injured workers asked to perform functional capacity evaluations:

Injured worker is done treating and medically stable: Usually a doctor will order a functional capacity when the injured worker is medically stable. Sometimes the term “maximum medical improvement” or MMI is used in conjunction with an order for an FCE. MMI is as much a legal determination as it a medical determination. But when an injured worker is at the point of an FCE, the insurer likely believes or would like to believe the claim is close to finished.

Determining restrictions for return to work, permanent disability and vocational rehabilitation. FCE results are given almost total deference by workers’ comp bureaucrats like adjusters and case managers. HR managers also rely on them to place injured workers back in employment. But the FCE is only an estimate. By law an employee can testify to the extent of their own restrictions and an employer has some reasonable obligation to work with those restrictions. A Judge can also rely on testimony from a worker about the extent of their own restrictions. The problems is that an employee may have to wait months before they can testify to their own restrictions and go without benefits and pay until then.

Restrictions from an FCE can also be used to determine permanent disability or vocational rehabilitation benefits. This should mean that at some point a vocational rehabilitation counselor should be involved in your case. Even if you have returned to work for the same employer, in many cases a counselor should be still he helping to determine your disability. Also even if you haven’t gone back to work and might have applied for or be receiving social security disability a counselor should be performing a loss of earning power evaluation in many cases. Often times an insurance company will attempt to close a case after an FCE.

Employers/Insurers may be trying to the validity of your work restrictions. FCEs are designed to see if an employee is giving full effort on the test. In many cases an FCE that is set up by employer/insurer harkens back to the old concept of “trial by ordeal” or “trial by battle” where success in a physical feat could prove guilt or innocence. In the case of a workers’ compensation claim success or failure in an FCE can go a long way towards determining the ultimate outcome of a workers’ compensation case.

Regardless of why an injured worker is being sent to an FCE, it is probably good idea for an injured worker to check-in with an experienced workers’ compensation attorney for a free consultation if they are scheduled for an FCE. The attorneys at our firm can help injured employees navigate the trial by battle that an employer-scheduled FCE can be. We can also let you know what to expect after an FCE and help you overcome the consequences of a bad FCE.

Workers' Compensation Watch

Published by Rehm, Bennett, Moore & Rehm

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Tag Archives: loss of earning power

Increase in mileage payments necessary for injured workers in Nebraska, but inflation erodes the value of workers’ compensation benefits

What renewed concerns over inflation could mean for analyzing loss of earning power in workers’ compensation

A common sense decision on loss of earning power and inflation from Mississippi

Does higher unemployment mean higher workers’ compensation benefits?

Loss of earning power

The competitive labor market

No place like Nebraska?

What is a Functional Capacity Evaluation and what does it mean for a workers’ compensation claim?

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Loss of earning power

The competitive labor market

No place like Nebraska?

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