Got Paystubs? You May Need More When Navigating Time Loss and AWW Disputes in Oregon
You have done it! You have finally mastered calculating the worker’s average weekly wage calculation for both regular and irregular pay. Time loss payments are issuing, claim processing is moving along, and then, you see the dreaded piece of mail: a request for hearing generically marking the issue as “temporary disability” with no other notations. In our experience, this can mean the worker is also disputing the average weekly wage (AWW).
Temporary disability disputes are deceptively complex because of the rigorous standards the courts apply. When the trier of fact finds an insurer or self-insured employer underpaid temporary disability benefits, whether because it is found insurer offered payment for the wrong time period or a miscalculated the AWW, the courts have held that the miscalculation is an unreasonable claim processing action, which may result in a penalty. ORS 656.262(11)(a).
How can you mitigate such exposure and defend against temporary disability disputes? The first way to mitigate exposure is to make sure your initial calculation of the worker’s AWW is accurate. The best practice is to approach the process in two steps:
- What formula for AWW calculation do I apply?
- Do I have reliable information on which to base my AWW calculations?
As to step one, my colleague Sydney Klupar prepared a really helpful blog on how to calculate AWW. Check out Sydney’s post here.
As to step two, this is primarily about documentation. One of the first steps in calculating wages is to ask whether there are available paystubs. Paystubs should list all hours worked and all types of hours paid. This includes those tricky areas of pay involving overtime, bonus pay and even reveal pay rate increases. If paystubs are not available, I recommend documenting conversations with the employer-at-injury and the worker about the intent-at-hire, to include the hours to be worked, and the agreed upon hourly rate. This can be documented in your claim notes.
A second method of documentation early on is to use a third-party auditor to confirm the AWW before you start paying benefits. Alternatively, you can save this option of using the auditor to confirm your calculation only if the worker challenges the AWW. Using an auditor can mitigate any court costs and minimize attorney fees and avoid penalties because it can show the trier of fact that your initial AWW was reasonable based on the information you had at the time the calculation was made.
We also advise documenting your updated calculations to the AWW as you receive new information that would change the AWW. For example, if you first calculated the AWW using estimated wages, but later received actual paystubs, you would document this series of events and triggered actions. This receipt of actual pre-injury paystubs would prompt the new calculation and an audit to determine whether additional benefits were due.
We recommend documenting your efforts to confirm any change in the employment status of a worker, especially after the worker returns to modified work. OAR 436-060-0030(2). Generally speaking, the insurer must stop paying temporary total disability compensation and start paying temporary partial disability compensation from the date an injured worker returns to regular or modified employment, prior to claim closure. By documenting communications with the employer and/or the worker and their counsel to confirm return to work, you are keeping an accurate record and enabling timely implementation of the next steps minimize and mitigate additional temporary disability pay exposure. This would include whether it is appropriate to issue a modified duty job offer, or whether it is appropriate to send a “but for letter.” These next steps are entirely dependent on the specific facts of your case.
If applicable, it is also important to properly document termination for cause in the event of litigation. To prove a termination for cause has occurred, the insurer or self-insured employer should ensure they can produce documents related to the termination. These documents are found in the worker’s personnel file and can include discipline records such as a performance improvement plan, written warnings, and a termination letter confirming the reason for the worker’s release.
Overall, a worker’s temporary disability calculation is “not an exact science.” Poland v. SAIF, 303 Or App 665, 666 (2020). However, as litigation trends emerge and develop treating AWW and temporary disability increasingly like an exact calculation, it helps to be well prepared for any change in time loss circumstances. It is proving necessary to secure personnel records, including paystubs and any relevant change-of-circumstance documents (raise, hiring, and firing documents) at the earliest possible opportunity. We recommend to communicate changes in a worker’s employment status to your attorney if you are actively litigating a time loss or AWW dispute. Finally, do not be afraid to secure an audit if needed. Overall, being well prepared is the best defense.
If you have any questions involving a temporary disability or AWW rate dispute, please contact Kara at (971) 383-2844 or via email at .
Posted by Kara Greenaway.
