Barnett, Lerner & Karsen, P.A.
WELCOME TO THE DBA NEWSLETTER, PREPARED BY BARNETT, LERNER & KARSEN, P.A. WE HOPE THIS WILL HELP YOU LEARN MORE ABOUT THE DEFENSE BASE ACT AND YOUR LEGAL RIGHTS.
RECENT ISSUES REGARDING THE CALCULATION OF THE AVERAGE WEEKLY WAGE
Samuel S. Frankel, Jr.
For several years the average weekly wage (“AWW”) for workers injured overseas was calculated based on several factors, including the contract for hire rate of pay, the length of the contract, and the intention of the worker to complete the contract and remain working overseas (as if the injury had not happened). The controlling case was K.S. v. SEII, 43 BRBS 18 (2008), and was based on the proposition that Employers paid a higher wage to entice workers into a dangerous job, and the best way to determine what a worker’s average weekly wage was would be to look forward, as if the contract was completed. This usually resulted in very high AWWs for workers, even workers who were injured soon after arriving overseas.
This case was on appeal, and based on recent rulings by the appellate courts, it is no longer controlling. Employer and Carriers are now urging the trial court to calculate a worker’s AWW based on a “blended” approach; in other words, the court should look at all earnings, domestic and international, for the year preceding the accident, blending, or combining, the wages for a weekly average.
Why is this important for you? An injured worker’s compensation rate is based on 2/3 of the AWW, subject to the maximum compensation rate for the date of accident. The higher the AWW, the higher the compensation rate – this is why your attorneys argue for the method that results in the highest AWW, and the Employer/Carriers’ attorneys argue for the method that results in the lowest calculation.
Take these two examples:
Under the former K.S. method of calculating the AWW, if a worker earning $6,000.00 a month was hurt in Afghanistan on October 1, 2013 – but had only been working there for two months before the injury, a judge could look at the contract rate of pay, including bonuses and uplifts, and calculate the AWW. Most overseas employment contracts are for a year, with uplifts usually 75% of the base pay, plus a completion bonus. In this example, looking forward as if the contract was completed, the worker would have made $72,000.00 a year base salary, plus an additional $54,000.00 in uplifts, and a $10,000.00 completion bonus (for our example), for a total projected gross income of $136,000.00. Divide that by 52 weeks a year, and you have an AWW of $2,615.38. The worker’s compensation rate would be: $2,615.38 x .6667% = $1,743.60, reduced to $1,346.68 (the maximum compensation rate for accidents occurring from October 1, 2013 to September 30, 2014).
Under a blended approach, the judge would look at the two months’ worth of overseas earnings (in our example, $12,000.00), and the prior 10 months of domestic earnings, and average that amount over 52 weeks. If our worker made $2,000.00 a month in his home country before deploying overseas, the judge may calculate the AWW by adding ten months of domestic earnings ($20,000.00) with two months of overseas earnings ($12,000.00), for a total yearly income of $32,000.00. Divided by 52 weeks, this is an AWW of $615.38, and the worker’s compensation rate would be: $615.38 x .66667 = $410.26. Quite a difference!
Keep in mind these are very basic examples, and in no way represent all the possible methods of calculating a worker’s AWW – and attorneys for injured workers and the Employer/Carriers argue very different methods, to best represent their clients’ interests.
Now, what happens if an injured worker only worked two months the previous year before going overseas? Should the judge still divide the total earnings by 12 months? Should the judge look at the past ten years of earnings, until the judge has enough earnings to fill a 12-month period? What if the worker was a housewife and mother, and did not work at all before going overseas? Now that K.S. no longer applies, can the Employer/Carrier ask a judge to go back and recalculate an existing K.S. AWW using a blended approach, and ask for the overpayment back from the worker?
These are some of the questions that will determine how each worker’s AWW is calculated – and it will take time before the courts, both at the trial and appellate levels, provide some guidance. You can help us prepare your case by sending us ALL of your earnings for at least the 12 months before your accident date – the more information you provide us, the better. This also includes any money received from rental properties, part time work, unemployment, or any other source.
V.H. v. GLS and Zurich American Ins. Co., 2013-LDA-00095 (July 22, 2014). On April 8, 2014 Brian Karsen, Esq. attended trial in Chicago in the matter ofV.H. v. GLS and Zurich American Ins. Co. The issues presented to the Court included whether our client was entitled to permanent partial disability benefits and, if so, the amount of those benefits. Previously, the insurance company was paying weekly benefits at the maximum compensation rate, but reduced the payments after retaining a vocational specialist and concluding our client had the capacity to earn nearly $1,400 per week. Mr. Karsen retained a vocational specialist to dispute the insurance company’s reduction in payments. Based on the vocational evidence, Mr. Karsen asserted our client had the capacity to earn only $450 per week, and that benefits should be increased accordingly. The Court agreed with Mr. Karsen, and ordered the insurance company to pay almost $80,000 in past compensation, as well as increase continuing permanent compensation benefits by more than $800 per week.
The insurance company also argued that it should not have to pay benefits because our client had failed to report rental income on Report of Earnings forms (which require disclosure of any and all income from employment or self-employment). Although rental income has been determined in certaincases to be income from self-employment, Mr. Karsen argued that our client’s rental income did not constitute income from self-employment in this particular case because it was, instead, passive investment income. The Court agreed, citing to the specific facts that established that our client’s involvement in rental properties did not rise to the level of self-employment. However, as there are instances where such income can be considered earnings from self-employment, it is important that you advise your lawyer of any and all sources of income, whether it be rental income, investment income, etc., when completing Report of Earnings (LS-200) forms.
Lesson Learned: Disclose ALL sources of money when requested, and do not make your own judgment calls on what is related or necessary for your case. DBA and Longshore cases can be very contentious, and the insurance company will do everything in its power to discredit you in front of the judge. Provide everything to your lawyers, and they will decide what to produce as evidence in your case.
Barnett, Lerner, Karsen & Frankel, P.A.
2860 Marina Mile Blvd., Suite 105
Ft. Lauderdale, FL 33312
(954) 920-9492 facsimile
(888) 732-7425 U.S. Toll Free