Genest v. S.D. Warren Company

Decided: November 3, 2016

Topic: Average Weekly Wage Calculation with Fringe Benefits

It may be tempting to read this recent Appellate Division decision and choose to overlook it due too much math being involved to figure out what exactly has been decided and whether it matters. Luckily for you, I’ve done all the math and will just tell you now – the difference in the two arguments in dollars and cents could be astounding for similar lifetime cases. Plainly, the employer/insurer argued the benefit should be capped at $97.78, but the panel affirmed the Administrative Law Judge’s decision the employee is entitled to $156.05. Here are the facts that get us there…

The employee injured his neck, shoulder and upper back on June 6, 1987. Later in 1992, unrelated to the prior incident, he had a right arm injury. In 2002 a decree was issued, providing that these two injuries each accounted for 50% of the employee’s incapacity. Since the 1992 injury had paid out 520 weeks’ worth of benefits, those ceased to be paid in accordance with the durational cap. Thus the Administrative Law Judge reduced the employee’s benefit by 50% in accordance with the apportionment.

As of June 6, 2013, the employee’s pre-injury average weekly wage with respect to his 1987 work injury was $1,398.79 without fringe benefits. The ALJ also determined the adjusted cost of his pre-injury fringe benefit package was $394.33, yielding a total adjusted average weekly wage of $1,793.12.

The employee now earns $1,216.39 and fringe benefits valued at $108.60 per week, totaling $1,324.99. Due to the employee’s increases in earnings, the employer unilaterally reduced incapacity benefits and filed its petition for review pursuant to 39-A M.R.S.A. § 205(9)(B)(2). The ALJ concluded that the reduction was improper because section 205(9)(B)(2) applies to payments made under 39-A M.R.S.A §§ 212 and 213, but not under 39 M.R.S.A § 55-A.

The ALJ calculated the employee’s $156.05 benefit as follows:

  1. $1,793.12 – $1,324.99 = $468.13 (took the difference in AWW pre-injury and current)
  2. $468.13 x 2/3 = $312.09 (determined the compensation rate)
  3. $312.09 x .50% = $156.05 (apportioned 50%)
  4. 2/3 of SAWW at the time of injury = $195.55 > $156.05 (benefit is deemed appropriate)

The employer contends the ALJ improperly switched steps 3 and 4 and should have been calculated in the following manner:

  1. $1,793.12 – $1,324.99 = $468.13 (the difference in AWW pre-injury and current)
  2. $468.13 x 2/3 = $312.09 (determined the compensation rate)
  3. $195.55 (Reduce compensation rate to 2/3 of SAWW at the time of injury)
  4. $195.55 x .50% = $97.78 (apportioned 50%)

Thus, although the 2002 decree provided the 1987 injury was only 50% responsible for the employee’s incapacity, and the employee received everything he was statutorily entitled to pursuant to the 1992 injury, he now may recover under the earlier injury at an increased benefit. If both injuries’ insurers still were making payments, the most due for the insurer under the 1987 injury would be $97.78. However, in accordance with what the ALJ here has determined, this 1987 injury’s insurer may someday end up paying the full 2/3 of the SAWW despite their apportioned responsibility. It seems in order to reach this conclusion, the prior apportionment decree must be disregarded when a second partially incapacitating injury has capped out.

Also not to be overlooked is the ALJ’s sua sponte application of a cost adjustment to the fringe benefits in determining the applicable average weekly wage. To explain this more fully, the employee’s current employer provides him with a benefits package including medical, dental and life insurance. His previous employer additionally had provided accidental death and dismemberment insurance, accident and sickness insurance, and employer pension contributions. It would be interesting to look at the current value of Sappi’s benefit package to see whether someone who had continued to work there, and thus continued having their fringes paid through the employer and not included in this calculation, would have as much of a fringe value as the employee does here. Put another way, is the employee bestowed a benefit he’s not truly losing out on due to his injury?

This decision raises more questions than it answers!

For full text, visit:
http://www.maine.gov/wcb/Departments/appellate/2016decisions/16-36_Genest_v._S.D._Warren_11-3-16.pdf