27 Mar. 2018

S&G Attorney Argues Worker's Comp Benefits Should Be Paid Electronically Via Direct Deposit

Posted By Shaheen & Gordon, P.A.

Attorney Jared O’Connor will be testifying in support of Senate Bill 84 this Wednesday at the Legislative Office Building. The act is regarding payment of weekly Workers' Compensation benefits by direct deposit. Attorney O’Connor lays out the reasons why workers would benefit from such a change.

What does this bill do?

It requires Workers’ Compensation insurance carriers to pay injured workers their weekly benefits by electronic direct deposit, rather than by mailing paper checks.

You mean, they don’t do that already?

No. Current Department of Labor regulations do allow carriers to pay by direct deposit, but in practice this virtually never happens. In almost 15 years of practice, I can count on one hand the number of clients who have been given this option. Almost the whole universe of WC payments in New Hampshire still occur by paper check.

Well, so what? Is payment by paper check a problem that needs legislative attention?

Yes, for two reasons:

1. Even the mighty U.S. mail isn’t always 100 percent reliable, as when injured workers live in marginal inner city or rural areas; or the worker may not even have a fixed mailing address or P.O. Box; or their injury may give them difficulty walking to the mailbox and then driving to deposit their check.

2. Most importantly, the weekly paper checks don’t always issue from the carriers as reliably as when one is getting a paycheck from an employer, and this can lead to immediate severe financial hardship for injured workers who were often living paycheck to paycheck even before their injury. Now they find themselves trying to do the same on just 60 percent of their average weekly wage – these people have car payments and mortgages, often with automatic withdrawals set up from their accounts, and if the paper check arrives four days late they can be assessed with default or late fees for which they will NOT be reimbursed under WC law.

So why aren’t the weekly paper checks reliably showing up every (let’s say) Wednesday?

This requires a bit more explanation.

Once an injured worker is considered temporarily totally disabled from work, if the insurance carrier believes there is evidence to reduce/terminate the injured workers’ weekly benefits, it either needs to get administrative permission from the Labor Department to do that, or it needs to ask for a hearing. Either way, the point is that the carrier can’t do anything unilaterally – it needs to go through the Department. This gives the injured worker some measure of reliability and stability. No change without advance notice, so s/he can rely on the weekly check and budget accordingly.

But in practice, administrative hiccups happen with some frequency. The paper check is being issued from some central processing unit in Nebraska, and so some snafu means it shows up on the following Monday. Or it shows up not at all, and then the carrier needs to make sure the paper check hasn’t been cashed, issue a stop payment, then try to get caught up with a double paper check the next week. In the meantime, the injured worker has no money and no recourse.

What do you mean, no recourse?

The law currently says the carrier must pay “weekly”, so the Labor Department takes the position that the carrier isn’t in violation unless the normal Wednesday check doesn’t show up until after the following Wednesday. Then it can pressure and/or collect a fine from the carrier payable to the Department itself, but there’s no additional compensation for the hardship experienced by the injured worker.

But you’re saying the problem with paper check delivery are mishaps with the U.S. Postal Service itself?

Sometimes, but the most common scenario seems to be this: once it’s agreed that an injured worker is on long-term disability (or is held to be so by the Department after a hearing), their file comes up in the carrier’s office for review and payment re-authorization every 6 weeks, or maybe it’s every two months. When the adjuster clicks the button to confirm the injured worker should still be on benefit, the payment machinery in Omaha shudders to life again and spits out a few more months of regular payments, but this time, on Tuesday; then on later re-up it changes to a round of Thursday payments, etc. Hardship and frustration ensues for the injured worker.

At minimum, this is like a pebble in the shoe of injured workers, and it needn’t be.

What’s the reasoned argument against the bill?

There is some administrative cost to the carriers in having to set up a direct deposit system, although it’s likely offset by the elimination of the threat of any Department fines for late paper checks, and/or the cost in wasted time their adjusters spend in addressing these complaints about delayed paper checks from injured workers and their counsel. I’ve not heard much objection from carriers or their counsel on this point.

However, it would be an administrative hassle and unnecessarily costly for insurance carriers to set up electronic weekly payments for individual, small-change workers comp injuries - cases where the injured worker will only be out for a few days or weeks. And remember that carriers have three weeks from the date they are notified of a claim to decide whether to accept or deny the claim. In these minor cases, the injured worked might even be back to work already by the time the claim is accepted – at that point, it’s just easier for everyone if the carrier cuts a single paper check to retroactively cover the closed-period time spent out of work. No direct deposit necessary.

Maybe there should be a legislative carve-out for these minor cases.

There is! The electronic payment option in this bill only applies to those cases where the injured worker is out of work for at least six weeks.

So this bill is really intended for the long-term disabled who come to rely on the weekly checks.

Right. It doesn’t cost the state any additional money, it does not affect insurance companies or employers negatively, and most importantly, it eases the burden of being injured for New Hampshire citizens.

Read the bill here

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