The new year of 2022 began with the largest COLA increase – 13.5213% – since LC 4659 (c) took effect on 1/1/2003.
This COLA update provides a significant increase in TTD rates, as well as significant increases for lifetime benefits (PD of 70% or more) that accrue during 2022.
Coincidentally, during 2021, the WCAB was asked to review whether COLA applies to death benefits.
In the panel decision of Douglas Mierczynski (Deceased), Applicant v. City of Fullerton, the WCAB ruled that COLA does not apply directly to death benefits. The 4th District Court of Appeal denied review to the panel decision as of 12/15/21.
So what happened in the panel decision? In Mierczynski, the WCAB determined that COLA does not apply directly to death benefits.
The commissioners cited to a 1998 en banc decision in Phillips v Sacramento Municipal Utility District (1998) 63 Cal Comp Cases 585, which addressed whether death benefits could increase. That decision (majority opinion) ruled that LC 4661.5 (the “two year rule”) should apply to death benefits, and that ruling remains in effect.
Average weekly earnings at time of injury are relevant, and serve to set the final cap for death benefit rates. Both TTD and death benefits are 2/3 of average weekly earnings, subject to maximums and minimums that do increase based on COLA changes.
However, the court concluded that COLA can affect death benefits indirectly with increasing AWE/TTD Rates, but COLA is not directly applied. The following statutes help lay the groundwork for that train of thought:
LC 4702 (b) states that:
“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…”
LC 4661.5 states that:
“…when any temporary total disability indemnity payment is made two years or more from the date of injury, the amount of this payment shall be computed in accordance with the [TTD AWE] in effect on the date each…payment is made…”
Sometimes these are best explained by a hypothetical. Here is an example.
- 7/8/2016 injury and Death. AWE = $2100.
- Maximum TTD/Death Benefit in 2016 = $1128.43
- Payments made 2 years from DOI = 7/8/2018, would signal the first potential increase.
- Maximum TTD/Death Benefit = $1215.27 effective 1/1/2018, in this case beginning with payments made 7/8/2018 (2 years from date of injury).
- 1/1/2019, maximum TTD/Death benefit again increases to $1251.38
As TTD maximum and minimum rates are reevaluated every subsequent Jan. 1st, so death benefits will be reevaluated as well.
Maximum Death Benefit in this example, with AWE $2100 x 2/3 = $1400
|Year||Max AWE||Max TTD||Death Benefit|
|2017||1758.86||1172.57||$1128.43 – no change for benefits paid during 2017|
|2018||1822.91||1215.27||$1215.17 – payments made 7/8/18 through 12/31/18|
|2019||1877.07||1251.38||$1251.38 – payments made 1/1/19 through 12/31/19|
|2020||1949.15||1299.43||$1299.43 – payments made 1/1/20 through 12/31/20|
|2021||2034.47||1356.31||$1356.31 – payments made 1/1/21 through 12/31/21|
|2022||2309.56||1539.71||$1400.00 – all payments made on or after 1/1/22|
|2023||+ COLA||AWE x 2/3||$1400.00 – based on AWE of $2100 for this example|
Although COLA does not apply directly to death benefits, we recommend reviewing all benefits that might be affected directly or indirectly by updated SAWW/COLA effective 1/1/2022.
The following benefits are impacted directly and indirectly by COLA changes:
- Direct Effect
- LC 4453 (a) (10)
- New TTD Maximum and Minimum Rates
- DOI 1/1/2022
- LC 4650 (c)
- Life Pension (DOI on or after 1/1/2003)
- PTD (DOI on or after 1/1/2003)
- Indirect Effect
- Ongoing or Accrued Death Benefits – LC 4702 (b)
- 2 Year Rule – LC 4661.5
- Ongoing or Accrued TTD
Tim Mussack, the author of this blog post, manages Bradford & Barthel’s AMA Guides & Ratings Department. This division analyzes doctor reports to determine whether the physician has properly applied the AMA Guides. Mr. Mussack and his associates have analyzed over 20,000 reports and identified tens of millions of dollars in potential savings for clients. For further information, see https://bradfordbarthel.com/areas-of-practice/bb-ratings/. If you have any questions about rating PD, please feel free to reach out to Tim at email@example.com or 916.569.0790.
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