Builders and Contractors Exchange
Weekly Bulletin: 13 Dec 2004
Payment of Disability Benefits and The Impact On Workers' Compensation Benefits
By: Brian Sykes
When an injured employee is disabled from work, in many cases the employer may offer short or long term disability benefits. Often, the employee must request the disability benefits from the employer and/or it disability carrier.
Even when an employee is receiving disability benefits, the employee is entitled to file a claim for workers' compensation benefits, as workers' compensation liability and coverage cannot be waived. The employer is in the best position to know whether both disability and workers' compensation benefits are requested. The employer files the first report of accident with the Virginia Workers' Compensation Commission when an injury occurs at work and often processes the disability applications. If the workers' compensation injury is found to be compensable, then the employer's workers' compensation insurer is liable for payment of wage loss benefits related to the injury.
In certain cases, an injured worker has already received disability benefits from the employer when the worker is granted workers' compensation benefits. For instance, when a workers' compensation claim is initially denied and subsequently accepted, the injured worker could be receiving disability benefits from the employer pending resolution of the workers' compensation claim. In that case, an employer will want to prevent the employee from obtaining a double recovery.
When the disability payment is 100 percent employer-funded, the workers' compensation carrier is entitled to take a dollar for dollar credit against a workers' compensation award for all disability benefits paid by the disability provider. Alternatively, the employee is entitled to pay the disability benefits back to the disability provider, whereupon the employee is entitled to receive the full workers' compensation benefits to which he or she is entitled. This may occur when an employee has a limited amount of disability coverage, and the employee may wish to reserve the disability coverage for an event not covered by any other benefits.
However, there are certain cases in which the VWCC has found that an employee is entitled to keep both disability benefits and obtain workers' compensation coverage. This unfortunate situation occurs when the employer should have known that disability benefits were being paid, but failed to report this to the workers' compensation carrier. Therefore, it is imperative that the employer find out whether disability payments are being made to the injured worker and, if so, to inform the carrier.
In cases in which the disability benefits paid to the injured worker are not completely employer-funded, the workers' compensation carrier may not be entitled to take credit for benefits paid when issuing indemnity benefits. In this case, again, it is important to find out whether disability benefits have been paid; and the source of funding for those benefits.
Please feel free to consult attorneys in Vandeventer Black's workers' compensation department regarding any questions you have about the issues presented in this article.
Questions?
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.