ALASKA WORKERS' COMPENSATION BOARD

P.O. Box 25512 Juneau, Alaska 99802-5512

 

 

 

FLOYD D. CORNELISON, 
Employee, 
Respondent
v. 
RAPPE, CRAIG,
Employer,
and 
TIG INSURANCE COMPANY,
Insurer,
Petitioners.
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FINAL 
DECISION AND ORDER
AWCB Case No. 199609785
AWCB Decision No. 00-0056
Filed with AWCB Anchorage, Alaska
on March 28, 2000

 

We heard the employer’s petition for a social security offset and for 100% withholding from future payments to recover an overpayment in Anchorage, Alaska on January 26, 1999. We also heard the employee’s petition to extend his time to file an answer to the employer’s September 23, 1999 and September 24, 1999 petitions. Attorney William Soule represented the employee. Attorney Shelby Nuenke-Davison represented the employer. We held the record open to receive additional documents and closed the record on March 10, 1999.

ISSUES

    1. Is the employer entitled to a social security offset under AS 23.30.225(b) based upon the employee’s receipt of Social Security Administration (SSA) disability benefits?
    2. Is the employer entitled to a greater than 20% withholding in order to recover overpayments pursuant to AS 23.30.155(j)?
    3. Is the employee entitled to an extension of time to file an answer to the employer’s petitions dated September 23, 1999 and September 24, 1999?

SUMMARY OF THE EVIDENCE

The employee suffered a low back industrial injury on May 20, 1996, while shoveling dirt. The employer accepted the injury as compensable, paying medical benefits and temporary total disability (TTD) benefits.1The employer recharacterized the employee’s time loss benefits to permanent partial impairment (PPI) benefits effective February 6, 1998 based upon a PPI rating of 20%. When the PPI benefits were exhausted, the employee began receiving $220.02 per week in stipend benefits pursuant to AS 23.30.041(k) effective November 13, 1999.2

On August 12, 1998, the employee was awarded SSA disability benefits retroactive to November of 1996. 3 In addition, the employee’s two sons, Forrest and Jesse, were awarded SSA benefits retroactive to November of 1996. The employer submitted a copy of the employee’s SSA file to the Board. A SSA printout dated January 27, 1999 indicated the payment history of the employee and his dependents. The January 27, 1999 printout shows the employee was entitled to monthly SSA disability benefits of $807.00 in November of 1996 but only received $135.00 due to a worker’s compensation offset of $672.00.4 In addition, the January 27, 1999 printout shows the employee’s dependents were each entitled to a monthly benefit of $201.00 in November of 1996.5 Further, a SSA letter to Jesse Cornelison dated September 17, 1999 stated, "Beginning November 1996, the full monthly Social Security benefit before any deductions is $201.90."6

The employer also submitted a letter dated January 3, 2000 from Janet Whetstone of employer’s counsel’s office to Traci Galster at the SSA. In the letter, Ms. Whetstone requested Ms. Galster verify the employee’s initial entitlement as $807.70 and his two dependents’ initial entitlements as $5.807each, all beginning in November of 1996. Ms. Whetstone asked Ms. Galster to make any corrections on the letter. Ms. Galster signed the letter on January 5, 2000, and the initial entitlement figures for the employee’s dependents were crossed out and corrected as $201.00.8 Additionally, in a letter to the Board dated February 18, 2000, Brenda Wright of the SSA confirmed the initial entitlements of $807.00 for the employee and $201.00 for each of his dependents. Ms. Wright also verified that a dependent’s entitlement to benefits ceases on the date he reaches eighteen, unless he is still attending high school.9

The employee submitted two pages out of five of an SSA award letter dated September 18, 1998, which indicated he would receive a lump sum ($2,704.50) for disability benefits for the period from November 1996 through August 1998 and, starting October 1998, monthly benefits of $175.00 per month. The award letter further indicated the employee’s social security benefits were reduced beginning November 1996 due to his worker’s compensation benefits.10 The employee also submitted Forrest’s award letter dated November 14, 1998 which did not specifically indicate his initial entitlement.11 At the hearing, the employee testified he searched for the award letters and submitted all the paperwork he could find.

At the hearing, Ms. Whetstone admitted on cross-examination that the 1/27/99 SSA printout had a black X mark across it and that she did not know what the black X mark represented. There were no award letters contained in the SSA file. At the hearing, Ms. Whetstone testified Ms. Galster informed her that award letters are not maintained in the SSA file.

At the hearing, Jesse testified he received information from the SSA that he was entitled to a benefit of approximately $100.00 for his father’s disability, but he did not receive that benefit because he did not fill out the paperwork for it. Jesse further testified his date of birth is July 23, 1979.

At the hearing, the employer’s counsel questioned the employee regarding his wife's entitlement to social security benefits for his disability. The employee testified he was not aware his wife was entitled to benefits. After the hearing, the employer submitted a document from the SSA indicating a claimant’s spouse may be eligible for SSA benefits, if he or she is caring for a child under the age of 16.12

In a petition dated September 23, 1999, the employer sought an offset of its weekly compensation payments under AS 23.30.225(b) based on the employee and his dependents’ receipt of SSA disability benefits. In a petition dated September 24, 1999, the employer again sought the offset and attached a calculation page to the petition. In response to the above petitions, on October 20, 1999, the employee filed an answer dated October 19, 1999 with the Board. On October 26, 1999, the employer objected to the employee’s answer on the grounds it was not filed with the Board within 20 days of the employer’s September 23rd and 24th petitions. Thereafter, in a petition dated November 11, 1999, the employee requested that the Board retroactively extend his time to answer per 8 AAC 45.050(c)(6).

In addition, on December 7, 1999, the employer filed an amended petition for a social security offset, attaching an amended calculation sheet. The employee filed an answer to the employer’s December 7, 1999 petition with the Board on December 27, 1999.

Employer’s Argument

The employer argues it is entitled to a social security offset pursuant to AS 23.30.225(b). The employer asserts the SSA decision dated August 12, 1998 demonstrates the employee was awarded disability benefits for the May 20, 1996 injury. In addition, according to the employer, documents relied upon in the SSA file show the initial entitlements of both the employee ($807.00) and his dependents ($201.00 each). Moreover, the employer argues Ms. Galster verified the amount, month and year of those initial entitlements in a signed statement. Further, the employer contends the SSA award letters also confirm the entitlement figures. In short, the employer argues it has met its burden by supporting the offset calculations with reliable and consistent documentation. According to the employer, the lack of complete SSA award letters is a red herring because the award letters in this case would not show the initial entitlements anyway, as the SSA was already taking a worker’s compensation offset when they issued the award letters. The employer asserts the real issue is the initial entitlements, not the award letters, and that information has been produced and verified.

The employer further argues the onus is on the employee to forward SSA award letters to the employer pursuant to 8 AAC 225(d)(1), and the employee failed to do so. The employer asserts while the employee failed to meet his burden, the employer nevertheless met its.

Having met its burden, the employer argues it is entitled to a weekly social security offset. The employer argued it is entitled to an offset based upon the employee and both his dependents’ entitlements, even if one of the dependents never actually received those benefits. In its hearing brief, the employer claimed it is entitled to a weekly offset of $242.76 based upon the following calculations:

A. Gross Weekly Earnings: $ 412.00

B. Weekly Work Comp Rate (WC) $ 293.36

    1. Monthly SSA Disability Benefit $1,209.00

(including dependents’ benefits)

D. Weekly SSA Disability Benefit [C x 12 ÷ 52] $ 279.00

E. Combined SSA and WC [B+D] $ 572.36

F. Maximum Combined Weekly Benefit [A x 80%] $ 329.60 G. Weekly Offset [E – F]: $ 242.76

H. Weekly Comp Rate With Offset [B-G]: $ 50.6013

Moreover, the employer requests a 100% withholding of future payments in order to recoup an overpayment pursuant to AS 23.30.155(j). According to the employer, applying the above offset retroactively, there has been a significant overpayment of TTD benefits ($16,022.16) paid to the employee since November of 1996. Further, the employer asserts $21,838.80 of the PPI benefits paid to the employee were advanced payments, since only $5,161.00 in PPI benefits would have been paid through January 21, 2000 at the offset compensation rate. The employer further claims all of the stipend benefits paid to the employee since November 13, 1999 constitute an overpayment because the employer would still be paying the employee PPI benefits had the offset been in place.

In a supplemental hearing brief, the employer argues all benefits, including PPI and stipend benefits, should be subject to the social security offset. The employer cites Gazcon v. Peter Pan Seafoods AWCB Decision No. 99-0069 (April 1, 1999) in support of its position that stipend benefits should be offset. Moreover, the employer cites Tindera v. Qwick Construction Co., Inc., AWCB Decision No. 90-0056 (March 27, 1990) in support of its assertion that PPI benefits are disability benefits and are therefore subject to the offset.

Calculating all of the retroactive offsets, the employer argues it is entitled to reimbursement of an overpayment of approximately $42,921.42, which would take over 80 years to recoup with a withholding of only 20% of future payments. Relying on Green v. Kake Tribal Corp., 816 P.2d 1363, the employer argues it should be permitted to withhold 100% of its future payments in order to recoup the significant overpayment. According to the employer, even with a 100% withholding, it will still take 16 years to recoup the overpayment.

Additionally, the employer contends the employee failed to timely file an answer to the September 23, 1999 and September 24, 1999 petitions under 8 AAC 45.050(c)(1). The employer argues the September petitions should therefore be considered "unopposed."

Employee’s Argument

The employee argues the employer’s petition for an offset is premature. The employee agrees the employer is entitled to an offset but asserts the employer failed to file with the Board a copy of the SSA award letters pursuant to 8 AAC 45.225(b). According to the employee, those portions of award letters submitted by the employee show different numbers than those used by the employer in their calculations. The employee claims the employer supported its petition for a social security offset with unreliable and inadequate information, and the petitions for an offset should be denied. Additionally, the employee argues the employer should not be able to include Jesse’s entitlement to SSA benefits in the offset because Jesse never actually received those benefits.

In a supplemental hearing brief, the employee argued PPI and stipend benefits should not be subject to the social security offset, as they are not disability benefits.

Furthermore, the employee argues if the Board does order an offset, the employer should not be permitted to withhold more than 20% from future payments. The employee argues it would be a financial hardship to reduce his worker’s compensation benefits to zero.

Additionally, the employee argues that his time to file an answer to the September 23, 1999 and September 24, 1999 petitions with the Board should be extended. The employee asserts there was no harm done because he timely served the employer with his answer. Moreover, the employer contends there is no provision for default under 8 AAC 45.050(c)(2), and the Board can extend his time to answer under 8 AAC 45.050(c)(6) and 8 AAC 45.063(b).

FINDINGS OF FACT AND CONCLUSIONS OF LAW

  1. SOCIAL SECURITY OFFSET

A. The Employer Has Met Its Burden To Obtain A Social Security Offset

AS 23.30.225(b) provides:

When it is determined that, in accordance with 42 U.S.C. 401 et seq., periodic disability benefits are payable to an employee or his dependents for an injury for which a claim has been filed under this chapter, weekly disability benefits payable under this chapter shall be offset by an amount by which the sum of (1) weekly benefits to which the employee is entitled under 42 U.S.C. 401 et seq. And (2) weekly disability benefits to which the employee would otherwise be entitled under this chapter, exceeds 80 percent of the employee’s average weekly wage at the time of injury.

Our regulation 8 AAC 45.225 provides, in part:

(b) An employer may reduce an employee’s weekly compensation under AS 23.30.225(b) by

    1. getting a copy of the Social Security Administration’s award showing the

      1. employee is being paid disability benefits;
      2. disability for which the benefits are paid;
      3. amount, month and year of the employee’s initial entitlement; and
      4. amount, month and year of each dependent’s initial entitlement;

    1. computing the reduction using the employee or beneficiary’s initial entitlement, excluding any cost-of-living adjustments;
    2. completing, filing with the board, and serving upon the employee a petition requesting a board determination that the Social Security Administration is paying benefits as a result of the on-the-job injury; the petition must show how the reduction will be computed and be filed together with a copy of the Social Security Administration’s award letter.

(d) An employee or beneficiary who is receiving weekly compensation benefits shall

(1) send the employer a copy of the award letter from the Social Security Administration...

Our regulation 8 AAC 45.195 provides:

A procedural requirement in this chapter may be waived or modified by order of the board if manifest injustice to a party would result from a strict application of the regulation. However, a waiver may not be employed merely to excuse a party from failing to comply with the requirements of law or to permit a party to disregard the requirements of law.

Based on the documents in the Board’s file and accompanying the employer’s petitions, we find the employee is entitled to SSA disability benefits since November of 1996 due to his May 20, 1996 injury. We further find the employee’s son Forrest is entitled to SSA benefits as a result of his father’s injury since November of 1996. Finally, we find the employee’s son Jesse is entitled to SSA benefits from November of 1996 until July 23, 1997, the date he reached majority age.

We find the employer has also established the amount, month and year of the employee’s initial entitlement ($807.00 in 11/96) and each dependent’s initial entitlement ($201.00 in 11/96). We find the SSA printout dated January 27, 1999 establishes these initial entitlements. We also find the letter from the SSA dated September 17, 1999 confirms Jesse’s initial entitlement. We find the two pages of the employee’s award letter dated September 18, 1998 reflect the actual amounts paid out by the SSA, after the SSA took a worker’s compensation offset. We find the award letter corroborates the employee’s initial entitlement in that the amount actually paid added to the worker’s compensation offset equals the initial entitlement. Moreover, we find Ms. Galster confirmed the amount, month and year of the employee’s initial entitlement and each dependent’s initial entitlement in her signed statement dated January 5, 2000. Finally, we find Brenda Wright’s letter dated February 18, 2000 provides further verification from the SSA of the initial entitlements.

The employee asserts there is contradictory evidence in this case regarding the initial entitlements. Specifically, the employee claims the employee’s SSA award letter dated September 18, 1998 shows an initial entitlement of $175.00 per month. However, upon reviewing that award letter, we find the monthly payment of $175.00 represents a payment due after a worker’s compensation offset is taken, not an initial entitlement. In summary, we find the employer supported their petition for a social security offset with reliable and consistent documentation from the SSA and verified its proposed entitlement figures with the SSA.

Moreover, we find that while the employer has not complied with the form requirements of 8 AAC 45.225(b) in that it did not file with the Board the SSA award letters, it has complied with all of the substantive requirements of this regulation. We find no merit to the employee’s assertion that the employer’s petition for an offset is premature because it did not file with the Board the SSA award letters per 8 AAC 45.255(b). We note the employee did not comply with 8 AAC 45.225(d)(1) by failing to forward complete copies of his award letters to the employer. We also find it interesting that the only complete SSA award letter in our file, Forrest’s, does not state his initial entitlement. Moreover, the first two pages of the employee’s award letter also do not specifically indicate an initial entitlement. Consequently, we find it unlikely that any outstanding portions of award letters would contain the needed entitlement information, even if they were located. Therefore, we exercise our discretion under 8 AAC 45.195 and waive the procedural requirement under 8 AAC 45.225(b) that the employer file SSA award letters with the Board. We find a manifest injustice would occur were we to deny the employer’s petition for an offset based on its failure to strictly comply with the 8 AAC 45.225(b), since the employee failed to comply with 8 AAC 45.225(d)(1) and since the employer has complied with the substantive elements of the regulation.

B. Calculating The Social Security Offset

In Stanley v. Wright-Harbor, AWCB Decision No. 82-0039 (February 19, 1982) aff’d, 3 AN-82-2170 Civil (Alaska Super. Ct. May 19, 1983), we established guidelines for calculating the social security offset under §225(b). We have consistently held the offset is to be based upon the initial entitlement of the employee and the employee’s dependents. Id We find no merit to the employee’s argument that Jesse’s entitlement to benefits should not be included in any offset calculation because he never actually received that benefit. We find an offset under §225(b) is based upon benefits payable, not upon those benefits actually received. AS 23.30.225(b) provides in pertinent part,

"when it is determined that, in accordance with 42 U.S.C. 401-433, periodic disability benefits are payable to an employee or the employee’s dependents...benefits under this chapter shall be offset by an amount by which the sum of (1) weekly benefits to which the employee is entitled under 42 U.S.C. 401-433..." (Emphasis added).

Moreover, we have consistently held that a dependent’s entitlement to benefits should be included in the employee’s entitlement, even if the SSA made no actual payments on the dependent’s entitlement. See, Green v. Kake Tribal Corp, AWCB Decision No. 88-0154 (June 10, 1988). We find the evidence shows benefits were payable to Jesse, though he chose not to fill out the paperwork to receive those benefits. At the same time, we have determined that worker’s compensation benefits shall be adjusted when a dependent’s entitlement to SSA benefits ceases. See, Lile v. Long Island Development, AWCB Decision No. 90-0213 (August 30, 1990) and Mulac v. City of Anchorage, AWCB Decision No. 81-0353 (December 4, 1981).

We further find no evidence of SSA disability benefits payable to the employee’s spouse. While a claimant’s spouse may be entitled to SSA benefits under certain circumstances, there is no evidence the employee’s spouse in this case is entitled to benefits. While Jesse received a letter from the SSA informing him of his entitlement to benefits and while SSA printouts indicate Jesse’s and Forrest’s entitlements to benefits, we find no corresponding evidence pertaining to the employee’s spouse.

Therefore, we find the offset for the period from November 1, 1996 until July 22, 1997 should be calculated as follows:

Gross Weekly Earnings (GWE) = $412.00

Weekly Compensation(WC) Rate = $293.36

Monthly SSA Benefit = $1,209.00 (emp. + 2 dep.)

Weekly SSA Benefit = $279.00 ($1,209.00 x 12 ÷ 52)

Weekly WC + SSA Benefit = $572.36

80% of GWE = $329.60

Weekly WC + SSA Benefit – 80% of GWE = $242.76

Accordingly, we conclude under AS 23.30.225(b), the employer is entitled to an offset of $242.76 per week for the period from November 1, 1996 until July 22, 1997. On July 23, 1997, Jesse reached majority age, and his entitlement to benefits ceased. Therefore, from July 23, 1997 until February 5, 1998, an offset under AS 23.30.225 should be calculated as follows:

Gross Weekly Earnings (GWE) = $412.00

Weekly Compensation(WC) Rate = $293.36

Monthly SSA Benefit = $1,008.00 (emp. + 1 dep.)

Weekly SSA Benefit = $232.00 ($1,008.00 x 12 ÷ 52)

Weekly WC + SSA Benefit = $525.36

80% of GWE = $329.60

Weekly WC + SSA Benefit – 80% of GWE = $195.76

Accordingly, we conclude under AS 23.30.225(b), the employer is entitled to an offset of $195.76 per week for the period from July 23, 1997 to February 5, 1998. On February 6, 1998, the employee ceased receiving TTD benefits and began receiving PPI benefits. On November 13, 1999, the employee’s PPI benefits were exhausted, and he began receiving stipend benefits pursuant to AS 23.30.041(k). We further find a review of the file demonstrates the employee is currently receiving stipend benefits from the employer. Based on the following, we find the employer is not entitled to take a social security offset against PPI paid to the employee. Additionally, we find the employer is not entitled to a social security offset against stipend benefits it paid and continues to pay to the employee. Beginning with the stipend benefits, AS 23.30.041(k) provides in part:

...If the employee’s permanent impairment benefits are exhausted before the completion or termination of the reemployment plan, the employer shall provide wages equal to 60 percent of the employee’s spendable weekly wages but not to exceed $525, until the completion or termination of the plan.

AS 23.30.225(b) provides, in part:

When it is determined that, in accordance with 42 U.S.C. 401 et seq., periodic disability benefits are payable to an employee or his dependents for an injury for which a claim has been filed under this chapter, weekly disability benefits payable under this chapter shall be offset by an amount by which the sum of (1) weekly benefits to which the employee is entitled under 42 U.S.C. 401 et seq. And (2) weekly disability benefits to which the employee would otherwise be entitled under this chapter, exceeds 80 percent of the employee’s average weekly wages at the time of injury. (Emphasis added)

We find AS 23.30.225(b) specifically limits the social security offset to weekly disability benefits. According to Larson’s Workers’ Compensation Law:

Seventeen states and the District of Columbia apply some kind of deduction to compensation benefits for Social Security benefits. These offset provisions vary widely in their scope and method of operation and, accordingly, the ensuing discussion must be accompanied by a caveat that particular details may be controlled by express statutory language in an individual state statute. Chapter 18, §97.35(a) (1999).

Moreover, we find no Alaska authority specifically interpreting "weekly disability benefits" under AS 23.30.225(b). However, other states have held only benefits explicitly included in the statute may be subject to a social security offset. See, McClish v Pan-O-Gold Baking Co., 336 N.W. 2d 538 (Minn. 1983) and Good Housekeeping Gas Co. v. Kitler, 492 So.2d 700 (Fla. Dist. Ct. App. 1986). In Good Housekeeping Gas Co. v. Kitler, the Court found since the claimant’s wage-loss benefits were paid monthly, the statutory offset provision was inapplicable because it specifically applied the offset to weekly benefits.

Based on the above, we find no authority upon which to expand the social security offset provision under AS 23.30.225(b) beyond its express language. Consequently, we find we must adhere to the express language which specifically applies the social security offset to weekly disability benefits. We find the stipend benefits the employee began receiving on November 13, 1999 are not weekly disability benefits under AS 23.30.225(b), but rather bi-weekly wage replacement benefits. As such, we conclude the employer is not entitled to apply a social security offset to the employee’s receipt of stipend benefits.

We note the purpose of §225(b) is to afford employers the benefit of an offset, rather than the SSA, when the employee’s combined disability benefits exceed 80% of his average weekly wages. We further note the thrust of §225(b) is not to deprive the employee of benefits due, but rather to shift some of the burden of payment from the employer to the SSA. To that end, we find the application of an offset to stipend benefit is consistent with the purpose of §225(b). However, as stated above, we find no authority to expand §225(b) beyond its express language absent statutory revision.14

Furthermore, we conclude, under a similar analysis, PPI benefits are not subject to the offset under AS 23.30.225(b).

AS 23.30.190(a) provides, in part:

In case of impairment partial in character but permanent in quality, and not resulting in permanent total disability, the compensation is $135,000 multiplied by the employee’s percentage of permanent impairment of the whole person. The percentage of impairment to the whole person is the percentage of impairment to the particular body part, system, or function converted to the percentage of impairment to the whole person as provided under (b) of this section. The compensation is payable in a single lump sum, except as otherwise provided in AS 23.30.041, but the compensation may not be discounted for any present value considerations. (Emphasis added).

We find PPI benefits are paid to an employee either in a lump sum or on a bi-weekly basis under AS 23.30.041. Applying the above analysis, we find we must apply the express statutory language in §225(b) and cannot expand "weekly disability benefits" to include PPI benefits.

Additionally, the Alaska Supreme Court has consistently distinguished the "whole person" and "earning capacity" theories of disability. In Hewing v. Alaska Workmen’s Compensation Board, et. al., 512 P.2d 896 (Alaska 1973), the Alaska Supreme Court, stated

Serious conceptual differences exist between the ‘whole man’ and ‘earning capacity’ theories of disability. Under the whole man theory, the primary criteria governing disability awards are physiological and psychiatric. This theory challenges the concept, basic to Alaska’s Workmen’s Compensation law that unscheduled partial disability awards should be made for economic loss, not for physical injury as such. (citing 2 A. Larson, Workmen’s Compensation Laws 57.10 (1970))

Moreover, the Alaska Supreme Court found in Vetter v. Alaska Workmen’s Compensation Board, 524 P.2d 264 (Alaska 1974):

The concept of disability compensation rests on the premise that the primary consideration is not medical impairment as such, but rather loss of earning capacity related to that impairment.

We interpret the above case law to clearly distinguish the "whole person" theory of disability from the "earning capacity" theory of disability. Further, other states have placed permanent partial benefits in a separate category when calculating a social security offset. See, Norman v. Goldfines, 270 N.W.2d 766 (Minn. 1978). Moreover, a review of the SSA file and the award notices reveals no benefits paid to the employee by the SSA on the basis of a "whole person" rather than an "earning capacity" theory of disability. In other words, we find no benefits paid by the SSA comparable to the "whole person" PPI benefits paid by the employer. Consequently, based on the above, we find PPI benefits paid to the employee are not subject to a §225(b) offset.

  1. RECOUPMENT OF OVERPAYMENT
  2. We find, as above, the employee became entitled to SSA disability benefits in November of 1996. As such, while the employer is not entitled to a current offset, it is entitled to a retroactive offset since November of 1996 in accordance with the above. The employer’s exclusive remedy to recover overpayments is under AS 23.30.155(j) which provides:

    If an employer has made advance payments or overpayments of compensation, the employer is entitled to be reimbursed by withholding up to 20% out of each unpaid installment or installments of compensation due. More that 20 percent of unpaid installments of compensation due may be withheld from an employee only on approval of the board.

    Because we authorize a retroactive offset to November of 1996, an overpayment will be created.15 Therefore, we find the employer is entitled to recoup its overpayment by withholding up to 20% of the employee’s unpaid installments of compensation pursuant to AS 23.30.155(j). While we find no authority to support a social security offset against stipend benefits, we conclude the employer may withhold up to 20% of future installments of stipend benefits in order to recoup its overpayment. The Board in Gazcon v. Peter Pan Seafoods, AWCB Decision No. 99-0069 (April 1, 1999) concluded §41(k) "wages" are "compensation" for the purposes of an employer’s recoupment of an overpayment under AS 23.30.155(j).

    We want to give the employee the opportunity to notify the SSA that the employer will be asserting a retroactive offset. Therefore, we will exercise our discretion under AS 23.30.155(h) and stay our withholding order for 60 days.

    Upon receipt of this decision and order, we instruct the employee to deliver a copy of it to the SSA. We further instruct the employee to promptly notify the employer, if and when, he receives notice of the adjustment to his social security benefits. Specifically, we order the employee to deliver a copy of the SSA written notice of a lump sum payment to the employer within 10 days after it is received.

    Finally, at this time, we decline to exercise our discretion and approve the employer’s request for 100% withholding rate. Given the rather involved offset calculations in this case, we await the employee’s receipt of a lump sum adjustment from the SSA.16 We retain jurisdiction to consider the employer’s request to withhold an amount greater than 20% from future installments of stipend benefits.

  3. EXTENSION OF TIME FOR ANSWER

Our regulation 8 AAC 45.050(2) provides:

An answer to a petition must be filed within 20 days after the date of service of the petition and must be served upon all parties.

Our regulation 8 AAC 45.050(6) provides:

Upon a verified petition of a party or upon its own motion, the board will, in its discretion, extend or postpone the time for filing an answer or otherwise continue the proceedings under such terms as may be reasonable.

Our regulation 8 AAC 45.063(b) provides:

Upon petition by a party and for good cause, the board will, in its discretion, extend any time period prescribed by this chapter.

We find the employee’s answer to the employer’s September 23, 1999 and September 24, 1999 petitions for a social security offset was not timely. However, we exercise our discretion under 8 AAC 45.050(6) and 8 AAC 45.063(b) to extend the employee’s time to answer the petitions. Moreover, we note there is no default provision under 8 AAC 45.050(2) for failure to timely file and answer to a petition.

ORDER

Dated at Anchorage, Alaska this 28, day of March, 2000.

    1. The employer’s petition for a social security offset under AS 23.30.225(b) is granted retroactive from November 1, 1996 until February 5, 1998.
    2. The employer is also entitled to withhold 20% of future installments of compensation until it has recouped overpayments it has made since November 1, 1996.
    3. The employer may begin withholding up to 20% of future installments of compensation 60 days after the date of this order.
    4. The employee shall forward a copy of this decision and order to the SSA by certified mail, return receipt requested within 10 days of this order.
    5. Within 10 days of receiving notice from the SSA of an adjustment to his payments or a lump sum payment, the employee shall forward a copy of such notice to the employer by certified mail, return receipt requested.
    6. We retain jurisdiction to consider the employer’s request to withhold an amount greater than 20% from future installments of compensation. The employer may file a petition to bring this matter properly before the Board with notice to the employee.
    7. The employee’s request for an extension of time to file an answer to the employer’s petitions dated September 23, 1999 and September 24, 1999 is granted.

ALASKA WORKERS' COMPENSATION BOARD

/s/ Kathleen M. Snow
Kathleen M. Snow
Designated Chairperson

/s/ Andrew J. Piekarski
Andrew Piekarski, Member

/s Marc D. Stemp
Marc D. Stemp, Member

APPEAL PROCEDURES

This compensation order is a final decision. It becomes effective when filed in the office of the Board unless proceedings to appeal it are instituted. Proceedings to appeal must be instituted in Superior Court within 30 days of the filing of this decision and be brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska.

RECONSIDERATION

A party may ask the Board to reconsider this decision by filing a petition for reconsideration under AS 44.62.540 and in accordance with 8 AAC 45.050. The petition requesting reconsideration must be filed with the Board within 15 days after delivery or mailing of this decision.

MODIFICATION

Within one year after the rejection of a claim or within one year after the last payment of benefits under AS 23.30.180, 23.30.185, 23.30.190, 23.30.200 or 23.30.215 a party may ask the Board to modify this decision under AS 23.30.130 by filing a petition in accordance with 8 AAC 45.150 and 8 AAC 45.050.

CERTIFICATION

I hereby certify that the foregoing is a full, true and correct copy of the Final Decision and Order in the matter of FLOYD D. CORNELISON employee/respondent; v. RAPPE, CRAIG, employer; TIG INSURANCE COMPANY, insurer/petitioners; Case No. 199609785; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this day of March 28, 2000.

Brady D. Jackson, III, Clerk

1 The Compensation Reports dated July 17, 1996 and March 3, 1999 demonstrate the employee’s weekly compensation was initially set at $287.48 per week and then changed to $293.36 per week.

2 Compensation Report dated November 29, 1999.

3 SSA Decision dated August 12, 1998.

4 The SSA printout also indicates the employee received $175.00 in monthly benefits in October of 1998.

5 See SSA printouts Bate stamped SSA 00028, SSA 00029, SSA 000350.

6 The SSA rounds down to the whole dollar as indicated in their letter of September 17, 1999, making the actual monthly benefit $201.00.

7 Ms.Whetstone testified at the hearing she initially believed that the $201.00 amounts payable in 11/96 represented lump sums for back payments due and that the dependents’ initial entitlements were actually $5.80 each.

8 Letter from Janet Whetstone to Traci Galster dated January 3, 2000 and also signed by Traci Galster on January 5, 2000.

9 Letter from Brenda Wright dated February 18, 2000.

10 Employee’s Notice of Award dated September 18, 1998.

11 Notice of Award for Forrest Cornelison dated November 14, 1998.

12 See, SSA documents filed with the Board on March 3, 2000.

13 In its supplemental brief, the employer calculated the monthly SSA Disability Benefit as $1,211.00 and included calculations for when both dependents cease their entitlements.

14 We note the Colorado legislature revised its offset statute in 1973 specifically to expand its application from "weekly benefits payable" to "aggregate benefits payable." Colo. Rev. Stat. Ann. § 8-51-101(1)(c) (1973).

15 Fleck v. Industrial Indemnity, AWCB Decision No. 99-0137 (June 22, 1999).

16 See, Green v. Kake Tribal Corporation, AWCB Decision No. 88-0154 (June 10, 1988).

SNO