COLA BENEFIT CALCULATIONS AND. Tim Mussack, B&B Ratings B&B Sacramento (916) or Ext 1144

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1 COLA AND BENEFIT CALCULATIONS Tim Mussack, B&B Ratings B&B Sacramento (916) or Ext , Bradford & Barthel, LLP 2 1

2 Benefit Calculations COLA Temporary Disability Death Benefits Life Pension Permanent Total Disability Calculation of Lifetime Benefits 2017, Bradford & Barthel, LLP 3 Benefits when due LC 4650 a TD Within 14 days LC 4650 b, PD Within 14 days of TD end LC 4650 (b) (1) until the employer's reasonable estimate of permanent disability indemnity due has been paid LC 4650 c every 14 days LC 4650 d if not timely, increase by 10% not within 14 days of claim form or with formal delay Calculate early and accurately. 2017, Bradford & Barthel, LLP 4 2

3 TTD and PPD exceptions LC 4652 waiting period -provides no disability benefits are payable for the first 3 days of lost time, unless TD lasts for more than 14 days or IW was hospitalized. LC 4650 (b) (2) -As of January 1, 2013 no PD advances if the employer offers return to work with wages 85% and to last one year, or if the employee is employed in a position that pays at least 100% of the wages and compensation until an award or order is issued by the WCAB. If there is no valid return to work offer within 60 days from MMI and the existence of PD, then permanent disability advances are due. PD benefits do accrue. Brower vs. David Jones Construction 5/21/14 WCAB en banc decision 2017, Bradford & Barthel, LLP 5 Benefit Rate AWE LC 4453 (c) Full time Part time Seasonal Temporary/ Occasional Irregular rate Recent increases in wages 2 or more employers 4453 (c) (4): AWE shall be the sum which reasonably represents the average weekly earning capacity of the injured employee at the time of his injury 2017, Bradford & Barthel, LLP 6 3

4 Minimum & Maximum Earnings Rates LC 4653 (a) = TD; LC 4653 (b) = PD TD and PD rates are subject to statutory minimum and maximum earnings for the date of injury. (Review rates based on year of injury) Example: 5/1/2015 DOI; Earnings = $1800/ week Maximum TD earnings for 2015 = $1, x 2/3 = maximum TD rate of $1,103.29; Maximum PD earnings for 2015 = $435 x 2/3 = $290 maximum PD rate. 2017, Bradford & Barthel, LLP 7 Increase to TTD LC year rule Benefits paid more than two years post injury are subject to current maximum/ minimum TTD average weekly earnings [LC4661.5] (this LC section is applicable only to injuries occurring on or after 1/1/1990) unless computing the payment on this basis produces a lower payment because of a reduction in the minimum average weekly earnings applicable under Section , Bradford & Barthel, LLP 8 4

5 Permanent Disability DOI: 1/1/ /31/2012 LC 4658 (d) +/-15% adjustments DOI: 1/1/ /31/2012 Off work -Job Offer = -15% Off work -No Job Offer = + 15% No lost time no increase or decrease [City of Sebastopol v. WCAB(2012) 1 st District Court of Appeals] LC 4658 (3) (B) increase shall not apply to an employer that employs fewer than 50 employees. 2017, Bradford & Barthel, LLP 9 Minimum & Maximum Earnings Rates Summary Minimum and maximum rates vary based on: Date of Injury Benefit type TTD Death Benefits PD PD amount of PD -until 1/1/2014 DOI , Bradford & Barthel, LLP 10 5

6 Benefit Rate Adjustment - COLA Cost of Living Adjustment LC 4659 (c) For injuries occurring on or after January 1, 2003, an employee who becomes entitled to receive a life pension or total permanent disability indemnity shall have that payment increased annually commencing on January 1, 2004, and each January 1 thereafter, by an amount equal to the percentage increase in the "state average weekly wage" 2017, Bradford & Barthel, LLP 11 SAWW State Average Weekly Wage United States Department of Labor Collects, and publishes quarterly, Unemployment Insurance data from each state COLA is obtained by comparing year to year. California WC uses 1Q data for California , Bradford & Barthel, LLP 12 6

7 COLA SAWW history STATE AVERAGE WEEKLY WAGE As reported by the Department of Industrial Relations Year SAWW SAWW change COLA Effective Date 2002 $ /1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/2017 COLA, Death Benefits & Mileage Rates info at: ** tableabove has been enhanced 2017, Bradford & Barthel, LLP 13 COLA % is established through 2017 SAWW data released in 2016 Department of Industrial Relations, State of California Newsline No.: Date: June DWC Announces Temporary Total Disability Rates for 2017 The 2017 minimum and maximum temporary total disability (TTD) rates will increase on January 1, The minimum TTD rate will increase from $ to $ and the maximum TTD rate will increase from $1, to $1, per week. 2017, Bradford & Barthel, LLP 14 7

8 When Does COLA Apply in WC? TTD Benefits -maximum and minimum earnings [LC 4453 (a) (10)] Death Benefits indirectly -[LC 4702 (b); LC ] Death benefits paid in same manner as TTD; TTDpayments subject to 2 year rule. Potential impact to TTD/ Death benefit rate if minimum or maximum wage earner. PTD Benefits [LC 4659 (c)] Life Pension Benefits [LC 4659 (c)] 2017, Bradford & Barthel, LLP 15 TTD Benefits and COLA LC 4453 (a) (10) Computing average annual earnings for the purposes of TTD and PTD For injuries on or after 1/1/2006 AWW: max = $1,260; min = $189 Commencing 1/1/2007, these limits shall be increased by the SAWW increase Decreases are not applied 2017, Bradford & Barthel, LLP 16 8

9 Increase to TTD LC year rule Benefits paid more than two years post injury are subject to current maximum/ minimum TTD average weekly earnings [LC4661.5] (this LC section is applicable only to injuries occurring on or after 1/1/1990) 2017, Bradford & Barthel, LLP 17 Maximum Period for TTD LC 4656 it depends on the date of injury: DOI on or after and before up to 104 weeks in a period of 2 years from the commencement of temporary disability payments. DOI on or after up to 104 weeks in a period of 5 years from the date of injury. 2016, Bradford & Barthel, LLP 18 9

10 Death Benefits and COLA Death Benefits - for injuries on or after 1/1/2006 [LC 4702] One Total Dependent and No Partial Dependents- $250, Two Total Dependents- $290, Three or More Total Dependents- $320, One Total Plus One or More Partial Dependents- $250, plus 4x the annual amount spent to support any partial dependents, not to exceed $290, One or More Partial Dependents - 8 x the annual amount spent to support the partial dependents not to exceed $250, Funeral Benefits: DOI: 1/1/91-12/31/2012 = $5000; DOI 1/1/2013: $ , Bradford & Barthel, LLP 19 Death Benefits LC 4702 (b) A death benefit in all cases shall be paid in installments in the same manner and amounts as temporary total disability indemnity would have to be made to the employee, unless the appeals board otherwise orders. However, no payment shall be made at a weekly rate of less than two hundred twenty-four dollars ($224). It is paid every two weeks It is subject to the two-year rule and the SAWW increases up to the employee s average weekly wage at time of injury 2017, Bradford & Barthel, LLP 20 10

11 Death Benefits Labor Code : "In the case of one or more totally dependent minor children and notwithstanding the maximum limitations specified in Section 4702 and 4703, payment of death benefits shall continue until the youngest child attains age 18 in the same manner and amount as temporary total disability indemnity would have been paid to the employee For children of public servant, to age 19 is still in high school This has sometimes been referred to as the Minor Dependency Benefit It has no dollar amount cap 2017, Bradford & Barthel, LLP 21 Death Benefits Any accrued and unpaid TTD and/ or PD to the dependents, heirs, or estate (LC 4700) Beginning on date of death, TTD Rate, based on AWE at the time of injury that causes death, although not less than $224/ week WCAB can order otherwise (eg, higher weekly rate) 2 years after date of injury, benefit rate is subject to current AWE/ TTD max/ min, although not less than $224/ week Payable until Death Benefit as provided in LC 4702 (or with no dependents) is paid in its entirety, or until dependent minor benefit is paid (LC ) (whichever is greater) 2017, Bradford & Barthel, LLP 22 11

12 Death Benefits and COLA Indirect application In the same manner and amount as TTD: Increase to TTD -LC year rule Increase is subject to AWE at time of injury Example: DOI 5/7/2013; AWE = $1800 (x 2/3 = $1200) Rate Increase 5/7/2015 (2 years post DOI); Max AWE = $ (x 2/3 = $ ) 1/1/2016 = $ (new max TTD rate) 1/1/2017 = $ (new max TTD rate) TTD/ Death Benefit rate will be maximum of $1200, based on this worker s AWE of $1800 [this will likely be reached during 2018, assuming an approximate 3% COLA for 2018] 2017, Bradford & Barthel, LLP 23 Death Benefits For maximum wage earners, death benefit payments can increase, but will cap at 2/3 of wages at time of injury. For minimum wage earners, death benefit payments to a dependent can increase when COLA increases result in minimum earnings above $336 per week (x 2/3 = $224 per week benefit payment). 2017, Bradford & Barthel, LLP 24 12

13 PTD, LP Benefits and COLA LC 4659(c) Applies to all injuries on or after Jan 1, Life Pension and Permanent Total Disability Payment increased annually [LC4659 (c)] Increase is equal to percentage increase of SAWW compared to prior year. Applied on each Jan 1 after payments start. [A decrease in SAWW is not applied.] 2017, Bradford & Barthel, LLP 25 Lifetime benefits (PTD, LP) and COLA When does COLA start? COLA begins January 1 after entitlement to applicable benefit Baker v. WCAB PD entitlement is based on end of TTD Brower v. David Jones Construction 2017, Bradford & Barthel, LLP 26 13

14 Baker v. WCAB [previously Duncan v. WCAB] Supreme Court of California August 11, 2011 The court held that: COLAs are to be calculated and applied prospectively commencing on the January 1 following the date on which the injured worker first becomes entitled to receive, and actually begins receiving, such benefit payments The applicant could not obtain retroactive COLA's prior to his date of entitlement to benefits. 2017, Bradford & Barthel, LLP 27 Baker v. WCAB Supreme Court of California This case addressed COLA application for injuries occurring on or after injury 1/1/2003 (inception of COLA), and before 4/19/04 (when TTD was capped at 104 weeks). [1/20/2004 DOI; TTD to 10/19/06 in this case] For later injuries, it may be that an injured worker would become entitled to total permanent disability payments, and corresponding COLA's, before the worker's medical condition is permanent and stationary. 2017, Bradford & Barthel, LLP 28 14

15 Brower v. David Jones Construction WCAB en banc 5/21/2014 Addressed cases with 104 week TTD cap (LC 4656 c). 1. PD advances should start when TD ends based on reasonable estimate of PD, even if not P&S; 2. If found to be PTD at P&S, PTD payments retroactive to TD end; 3. COLA begins on Jan 1 after IW entitled to first receive PTD. 2017, Bradford & Barthel, LLP 29 COLA Projections Lifetime Benefits When does PPD/ LP or PTDbegin? Maximum Period for TTD LC 4656: depends on the date of injury: DOI on or after and before up to 104 weeks in a period of 2 years from the commencement of temporary disability payments. DOI on or after up to 104 weeks in a period of 5 years from the date of injury. 2017, Bradford & Barthel, LLP 30 15

16 Future COLA Projections What rate do you project? oevery June, the rate for the following January 1 is determined by the DWC o3% is current projection beyond set COLA amount 2017, Bradford & Barthel, LLP 31 COLA Projections DEU had used a 50 year average = 4.7% average increase = 4.6% average increase year average 4.5% Relevant Court Cases Attorney Fees For each year the actual increase is less than predicted, IW benefits are disproportionally reduced to accommodate AA fee. The risk that actual COLA is greater than predicted COLA is better borne by the attorney. 2017, Bradford & Barthel, LLP 32 16

17 COLA SAWW recent history STATE AVERAGE WEEKLY WAGE As reported by the Department of Industrial Relations Year SAWW SAWW change COLA Effective Date 2002 $ /1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $ % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/ $1, % % 1/1/2017 COLA, Death Benefits & Mileage Rates info at: , Bradford & Barthel, LLP 33 COLA Projections Relevant Court Cases Attorney Fees For each year the actual increase is less than predicted, IW benefits are disproportionally reduced to accommodate AA fee. The risk that actual COLA is greater than predicted COLA is better borne by the attorney. 2015, Bradford & Barthel, LLP 34 17

18 Southern California Edison v WCAB and Elsie Martinez Second Court of Appeals 8/23/13 not to be published B No justification for inflating the award at a flat, unwavering rate of 4.6%. Neither inflation nor the cost of living, nor average wages, increase from year to year at the unvarying rate of 4.6%. 2017, Bradford & Barthel, LLP 35 Southern California Edison v. WCAB and Elsie Martinez Section 5101, which governs how workers compensation awards are to be commuted, requires discounting to present value at 3%. Inflating the recovery nullifies the whole exercise of discounting to present value. 2017, Bradford & Barthel, LLP 36 18

19 Future COLA Projections At the 2015 DWC Educational conference, SAWW was one of the topics. On slide 17, the DEU referenced the DEU Commutation Request form This form notes that unless the Judge includes a different value, the DEU will use 3% On slide 22, the DEU included an attorney fee calculator example and noted that 3% is the Assumed annual SAWW increase The Martinez Appellate Decision was referenced (slide 36) 2017, Bradford & Barthel, LLP 37 Future COLA Projections Conclusion: The DEU uses 3.0% as a default on Commutations This is not set either by statute or regulation. 2017, Bradford & Barthel, LLP 38 19

20 2017, Bradford & Barthel, LLP 39 Calculating Future Benefits Death Benefits Whichever is greater: Computation/ dependents - LC 4702 Dependent Children to age 18 or lifetime if incapacitated from earning - LC Payable in same manner as TTD 2 year rule - current maximum and minimum -subject to the worker s AWE LC , Bradford & Barthel, LLP 40 20

21 Calculating Future Benefits PTD Awarded benefit rate payable through initial year of PTD Life expectancy tables male/ female Life Tables were published by the CDC 11/28/16 adopted by OSIP for projections in 2017 Every January 1, apply COLA projections for PTD for duration of life expectancy 2017, Bradford & Barthel, LLP 41 Calculating Future Benefits Life Pension PPD award calculate end date of PPD LP rate awarded rate is paid through end of year initiated Life expectancy COLA projections for LP for life expectancy 2017, Bradford & Barthel, LLP 42 21

22 Calculating Reserves/ Future Benefits Use a spreadsheet Use some method of date calculation Excel has an available date calculator formula Use correct Life Expectancy tables male/ female date of calculation/ commutation affects benefit end date , Bradford & Barthel, LLP 43 Calculating Benefits/ Reserves Examples (date of calculation = 4/19/2017) Death Benefit PTD Life Pension 75% PD 85% PD 99% PD 2017, Bradford & Barthel, LLP 44 22

23 Calculating Benefits/ Reserves Example: Injured worker: David Burbank (male) DOI: 2/2/2013 DOB: 2/7/1963 AWE: $1500 TTD/ Death/ PTDRate: $1000/ week (max TTDrate for 2013 DOI= $ ) 2017, Bradford & Barthel, LLP 45 Death Benefits Example: Injured worker: David Burbank (male) DOI: 2/2/2013 DOB: 2/7/1963 AWE: $1500 TTD Rate: $1000/ week (max TTDrate for 2013 DOI = $ ) 2017, Bradford & Barthel, LLP 46 23

24 Death Benefits Example: DOI/ Date of Death = 2/2/ total dependents ($320,000) Date of Birth of youngest dependent = 7/1/ years after DOI: 2/2/2015 review for adjustment Pay $320,000 or until 7/1/2026 (youngest turns 18), whichever is greater 2017, Bradford & Barthel, LLP 47 Death Benefits 2/2/ years after DOI TTDRate in effect = $1, AWE $1500 = maximum TTD/ Death Benefit Rate of $1000 Unless minimum AWE/TTDincreases above $1500/ $1000 when benefits are paid, $1000 = Death Benefit Rate $320,000 paid approximately 3/23/2019 Benefits payable through 2/2/2013-6/30/2026 (youngest = 18 on 7/1/2026) = $699, , Bradford & Barthel, LLP 48 24

25 Death Benefits Calculation (example 2: AWE = $1800; max TTD Rate = $1200) 2/2/ years after DOI Max TTDRate in effect = $1, = Death Benefit 1/1/2016 Max TTDRate = $ = Death Benefit 1/1/2017 Max TTD Rate = $ = Death Benefit 1/1/2018 Max TTDRate (with 3% COLA projected) = $ ; maximum TTD Rate based on AWE of $1800 = $1200 = maximum Death Benefit Rate 2017, Bradford & Barthel, LLP 49 Death Benefits Calculation (example 2: AWE = $1800; max TTDRate = $1200) $320,000 paid approximately 7/31/18 Benefits payable through 6/30/2026 (youngest = 18 on 7/1/2026) = $815, , Bradford & Barthel, LLP 50 25

26 Minimum Maximu TTD m TTD Death Benefit Rate AWE $1800 days at rate Calendar year death benefit total Death Benefit Running Total Death Benefit Rate AWE $1500 days at rate Calendar year death benefit total Death Benefit Running Total /2/ /30/ , Bradford & Barthel, LLP 51 Death Benefits Calculation Summary Youngest of 3 dependents DOB 7/1/2008: Benefits paid 2/2/2013 through 6/30/2026 AWE = $1500 no projected application of COLA Death Benefit = $699, AWE = $1800 COLA increase to maximum TTD Rate up to $1200 (based on AWE of $1800) - Death Benefit = $815, , Bradford & Barthel, LLP 52 26

27 Permanent Total Benefits PTD Benefit Calculation (AWE = $1500) Life Expectancy (2012 US Life Tables) DOB 2/7/1963 on 4/19/2017 = 54 years old 54 year old male L/E = 26.4 years (54 year old female L/E = 29.7 years) Projected end date for PTD = 9/12/2043 using 4/19/2017 as date of calculation COLA Established through 2017; project at 3% from 2018 forward 2017, Bradford & Barthel, LLP 53 Permanent Total Benefits DOI: 2/2/2013 PTD begins 2/2/2015 -$1000 per week First COLA application 1/1/ COLA = % 2017 COLA = % Project 3% annually thereafter 2017, Bradford & Barthel, LLP 54 27

28 Permanent Total Disability Accrued through 4/19/17 2/2/ /31/2015 = 333 $1000/week = $47, /1/ /31/2016 = 366 $ (COLA increase of % applied) = $53, /1/2017 4/19/2017 = 109 $ = $16, $47, $53, $16, = $117, accrued 2/2/2015 4/19/ , Bradford & Barthel, LLP 55 Effective Year Days Payable COLA Weekly Rate Daily Rate $ for Calendar Year $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $0.00 $0.00 $ $1, $ $47, $1, $ $53, $1, $ $16, as of 4/19/2017 Accrued: $117, , Bradford & Barthel, LLP 56 28

29 Permanent Total Benefits Projected PTD projected from 4/20/17 9/12/2043 Prior accrued 2/2/2015 4/19/2017 PTD rate begins 2/2/2015 at $1000/ week (TTD rate) PTD rate as of 1/1/2043 projected to be $2,292.01/ week 2017, Bradford & Barthel, LLP , Bradford & Barthel, LLP 58 29

30 Permanent Total Benefits Summary PTD benefits from 2/2/2015 through life expectancy = 9/12/2043 COLA applied 1/1/2016 and every January 1 thereafter ($ per week increasing to $2, per week) Total Accrued PTD = $117, /2/2015 4/19/2017 Total future PTD projection = $2,204, /20/2017 9/12/2043 Total PTD Benefit = $2,322, /2/2015 9/12/2043 [15% = $348,360.39] 2017, Bradford & Barthel, LLP 59 Life Pension If PPD is 70% or more, paid after PPD payments scheduled to end, for life of injured worker. Calculated: 1.5 % of AWW for every % greater than 60 Maximum AWE = $ (on or after Jan 1, 2006) LC 4659(a)) 2017, Bradford & Barthel, LLP 60 30

31 Life Pension Example 75% PPD Example # 1 75% PD: Injured worker: David Burbank (male) DOI: 2/2/2013 DOB: 2/7/1963 AWE: $1500 PPD Rate: $290/ week 75% = weeks at $290/ week = $148, , Bradford & Barthel, LLP 61 Life Pension Example 75%PD Life Pension Benefit Calculation Life Expectancy (2012 US Life Tables) DOB 2/7/1963 as of 4/19/17 = 54 years old 54 year old male L/E = 26.4 years End date for PD 75% = weeks = $148, PD begins 2/2/2015 to 12/3/ , Bradford & Barthel, LLP 62 31

32 Life Pension Example 75%PD Life Pension begins 12/4/2024 Life Pension initial rate for 75% PD = $ (.75.60) x 1.5 x $ (max AWE for LP) First COLA application 1/1/2025 Project 3% annually 2017, Bradford & Barthel, LLP 63 DOB: 2/7/1963 DOI: 2/2/2013 P&S/ Initial PD date: 2/2/2015 AWW: $1,500 PPD Rate: $ PPD Amount: 75% PPD Rate $ # Weeks PPD Initial Life Pension Rate PPD end date: 12/3/2024 Life Pension Begin Date: 12/4/2024 Life Expectancy (from current Life Tables) 26.4 Projected End date (PTD or LP) based on L/E from 'A2': 9/12/2043 Future COLA projection (Recommend 3%) 3.00% Date Calculators Begin Date: ex 08/11/ /4/2024 End Date: ex 12/31/ /31/2024 TOTAL # Days (includes begin and end dates) , Bradford & Barthel, LLP 64 32

33 $ $ $ $ $ $ 6, $ $ $ 6, $ $ $ 6, $ $ $ 6, $ $ $ 7, $ $ $ 7, $ $ $ 7, $ $ $ 7, $ $ $ 7, $ $ $ 8, $ $ $ 8, $ $ $ 8, $ $ $ 8, $ $ $ 9, $ $ $ 9, $ $ $ 9, $ $ $ 10, $ $ $ 10, $ $ $ 7, Total $ $ 153, , Bradford & Barthel, LLP 65 Life Pension Example 75% PD Summary Life Pension projected from 12/4/2024 9/12/2043 LP rate begins 12/4/2024 at $115.96/ week LP rate 1/1/2025 = $ (3% increase) LP rate as of 1/1/2043 projected to be $203.34/ week Total LP projection = $153, [15% = $23,066.67] 2017, Bradford & Barthel, LLP 66 33

34 Life Pension Example 85% PPD Example # 2 85% PD: Injured worker: David Burbank (male) DOI: 2/2/2013 DOB: 2/7/1963 AWE: $1500 PPD Rate: $290/ week 85% = weeks at $290/week=$195, , Bradford & Barthel, LLP 67 Life Pension Example 85%PD Life Pension Benefit Calculation Life Expectancy (2012 US Life Tables) DOB 2/7/1963 as of 4/19/17 = 54 years old 54 year old male L/E = 26.4 years End date for PD 85% = weeks PD begins 2/2/2015 to 12/28/ , Bradford & Barthel, LLP 68 34

35 Life Pension Example 85%PD Life Pension begins 12/29/2027 Life Pension initial rate for 85% PD = $ (.85.60) x 1.5 x $ (max AWE for LP) First COLA application 1/1/2028 Project 3% annually 2017, Bradford & Barthel, LLP 69 DOB: 2/7/1963 DOI: 2/2/2013 P&S/ Initial PD date: 2/2/2015 AWW: $1,500 PPD Rate: $ PPD Amount (%): 85% PPD Rate $ # Weeks PPD Initial Life Pension Rate PPD end date: 12/28/2027 Life Pension Begin Date: 12/29/2027 Life Expectancy (from current Life Tables) 26.4 Projected End date (PTD or LP) based on L/E from 'A2': 9/12/43 Future COLA projection (Recommend 3%) 3.00% Date Calculators Begin Date: ex 08/11/ /29/2027 End Date: ex 12/31/ /31/2027 TOTAL # Days (includes begin and end dates) 3 Begin Date: ex 01/01/2035 1/1/2043 End Date: ex 05/28/2035 9/12/2043 TOTAL # Days (includes begin and end dates) , Bradford & Barthel, LLP 70 35

36 Year Days Weekly Rate Daily Rate Total TOTAL $ 204, , Bradford & Barthel, LLP 71 Life Pension Example 85% PD Summary Life Pension projected from 12/29/2027 9/12/2043 LP rate begins 12/29/2027 at $193.27/ week 1/1/2028 = $ LP rate as of 1/1/2043 projected to be $310.14/ week Total LP projection = $204, [15% = $30,686.34] 2017, Bradford & Barthel, LLP 72 36

37 Life Pension Example 99% PD Life Pension Benefit Calculation Life Expectancy (2012 US Life Tables) DOB 2/7/1963 as of 4/19/17 = 54 years old 54 year old male L/E = 26.4 years End date for PD 99% = weeks = $260, PD begins 2/2/2015 to 4/13/ , Bradford & Barthel, LLP 73 Life Pension Example 99%PD Life Pension begins 4/14/2032 Life Pension initial rate for 99% PD= $ (.99.60) x 1.5 x $ (max AWE for LP) First COLA application 1/1/2033 Project 3% annually 2017, Bradford & Barthel, LLP 74 37

38 DOB: 2/7/1963 DOI: 2/2/2013 P&S/ Initial PD date: 2/2/2015 AWW: $1,500 PPD Rate: $ PPD Amount (%): 99% PPD Rate $ # Weeks PPD Initial Life Pension Rate PPD end date: 4/13/2032 Life Pension Begin Date: 4/14/2032 Life Expectancy (from current Life Tables) 26.4 Projected End date (PTD or LP) based on L/E from 'A2': 9/12/2043 Future COLA projection (Recommend 3%) 3.00% Date Calculators Begin Date: ex 08/11/2029 4/14/2032 End Date: ex 12/31/ /31/2032 TOTAL # Days (includes begin and end dates) 262 Begin Date: ex 01/01/2035 1/1/2043 End Date: ex 05/28/2035 9/12/2043 TOTAL # Days (includes begin and end dates) , Bradford & Barthel, LLP 75 Year Days Weekly Rate Daily Rate Total $ $ $ 11, $ $ $ 16, $ $ $ 16, $ $ $ 17, $ $ $ 17, $ $ $ 18, $ $ $ 18, $ $ $ 19, $ $ $ 19, $ $ $ 20, $ $ $ 21, $ $ $ 15, TOTAL $ 212, , Bradford & Barthel, LLP 76 38

39 Life Pension Example 99% PD Summary Life Pension projected from 4/14/2032 9/12/2043 LP rate begins 4/14/2032 $301.50/ week 1/1/2033 = $ LP rate as of 1/1/2043 projected to be $417.36/ week Total LP projection = $212, o15% = $31, , Bradford & Barthel, LLP 77 Lifetime Benefit Comparisons DOI 2/2/2013; AWE $1500; L/E 26.4 [benefits calculated as of 4/19/2017] 75% PD: PPD wks@ $290/wk + LP = $302, /2/ /3/2024 = $148, Life Pension 12/4/2024 9/12/2043 = $153, % PD: PPD wks@ $290/wk+ LP= $399, /2/ /28/2027 = $195, Life Pension 12/29/2027 9/12/2043 = $204, % PD: PPD wks@ $290/wk+ LP = $472, /2/2105 4/13/2032 = $260, Life Pension 4/14/2032 9/12/2043 = $212, % PTD: 2/2/2015 9/12/2043 = $2,322, , Bradford & Barthel, LLP 78 39

40 Attorney Fees Based on calculation of benefits COLA projections used to calculate total benefits Case law indicates that benefit increases should be projected at no more than 3% when used to evaluate attorney fees 2017, Bradford & Barthel, LLP 79 Attorney Fees Lifetime Benefits Attorney Fees LC 4906 (d) In establishing a reasonable attorney s fee, consideration shall be given to the responsibility assumed by the attorney, the care exercised in representing the applicant, the time involved, and the results obtained. DEU 2015 Educational Conference Topic of SAWW: Default Calculation Attorney Fees = PV of Future Benefits x 15% 2017, Bradford & Barthel, LLP 80 40

41 Summary COLA is calculated using Dept of Labor average weekly wage reported in 1 st quarter, compared to prior year first quarter. COLA increases payment on January 1 of the year after the beginning of PTDor Life Pension, and every January 1 thereafter, for dates of injury Jan 1, 2003 and later. Projected COLA rate needed to estimate future increases (3%). Calculate beginning/ ending dates. Use correct Life Expectancy (Male/ Female). 2017, Bradford & Barthel, LLP 81 Commutations Commutation of attorney fees is the most common application. for lifetime benefits, attorney fee is probably not a flat 15%. The following link is to the DIR page with Commutation templates and instructions: Disability Evaluation Unit forms Commutation templates and instructions.zip file The next link is to the DIR and 3 PV tables that are needed for the commutations. (PV is calculated using 3%) , Bradford & Barthel, LLP 82 41

42 Commutations section and of Title 8, California Code of Regulations. Commutation Instructions Table 1 Table 2 Table 3 Table 1 ( Present Value of Permanent Disability at 3% Interest ) as issued in January 2001, Table 2 ( Present Value of Life Pension at 3% Interest for a Male ) as issued in July 2001, Table 3 ( Present Value of Life Pension at 3% Interest for a Female ) as issued in July 2001, and Commutation Instructions as issued in January 2001, are hereby incorporated by reference in their entirety as though they were set forth below. The tables and instructions are available from any office of the Division of Workers' Compensation and may be accessed and printed from the Division's homepage at , Bradford & Barthel, LLP 83 Commutations Methods of Commutation A -Commutation of all remaining PD B -Commutation of PD Off the Far End C -Commutation of PD by Uniform Reduction D -Commutation of all remaining Life Pension after commencement of LP E -Commutation of all remaining Life Pension before commencement of LP F -Commutation of portion of remaining Life by uniform reduction of LP G - Uniform reduction of deferred Life Pension 2017, Bradford & Barthel, LLP 84 42

43 Commutations The two most common commutations requested/ approved are: Off the far end Uniform reduction There may be separate commutations for a Life Pension case one for PD, one for LP. If commutation of PD is off the far end, it results in a gap in benefits between the end of PD and beginning of Life pension If PPD and LP are each commuted by uniform reduction there is not a gap in benefits 2017, Bradford & Barthel, LLP 85 Commutations Which Commutation template Ex A, B, C, D, E, F, G Life Expectancy Tables (needed for lifetime benefit projections - PTD and Life Pension , Bradford & Barthel, LLP 86 43

44 Commutations Preview April Webinar Commutations lump sum payment of benefits Used to pay applicant attorney fees DEU default calculation on lifetime benefits includes PV calculation off the far end leaves a gap before LP Uniform reduction method provides continuing, although reduced benefits 2017, Bradford & Barthel, LLP 87 Tim Mussack (916) tmussack@bradfordbarthel.com 44