In workers’ compensation claims, we all want to obtain every credit entitlement that we can for our clients, and in accepted claims the main method of obtaining some form of credit is by timely filing a WC-243 form for Credit.
In workers’ compensation claims, we all want to obtain every credit entitlement that we can for our clients, and in accepted claims the main method of obtaining some form of credit is by timely filing a WC-243 form for Credit. Now, while the law clearly states that we can take credit for employer-funded portion of payments per a wage-continuation plan, disability insurance plan, or disability plan – it begs the question – what all plans constitute “wage-continuation plans.” Specifically, in this troubled economy, with all of the lay-offs occurring, we may find ourselves in a situation where we have a Claimant that received severance pay after they were laid-off. Are we allowed to take credit for the severance pay?
Unfortunately, it is a question with no clear cut answer. But first we need to examine the actual statute. The plain language of O.C.G.A. § 34-9-243(a) reads as follows:
The payment by the employer…to the employee or to any dependent of the employee of any benefits when not due or of salary or wages or any benefits paid under Chapter 8 of this title, the “Employment Security Law,” during the employee’s disability shall be credited against any weekly payments of weekly benefits due; provided, however, that such credit shall not exceed the aggregate amount of weekly benefits due under this chapter.
Further, per subsection (b) of the same statute, the employer’s obligation to pay shall be reduced by the employer-funded portion of payments per a wage-continuation plan, disability insurance plan, or disability plan. O.C.G.A. § 34-9-243(b).
However, based on the statutory law, there is no clear definition of a what a “wage-continuation plan” constitutes. It would appear that it could be argued that severance pay is a form of a wage-continuation plan.
Since the statute does not specifically address severance pay, we next turn to case law. Unfortunately, there is no “hard and fast” case law regarding severance pay, and it appears that courts address different forms of wage continuation on a case-by-case basis.
It is well-established that employers and insurers are entitled to take credit against income benefits for wages paid after a claimant has stopped working. See Walton County Board of Commissioners, et al. v. Williams, 320 S.E.2d 846; 171 Ga. App. 779 (1984). The WC-243 form itself even contains a field to identify credit for “wage-continuation” in the event that a claimant is receiving regular salary during a period when she may potentially be owed workers’ compensation benefits. While the Workers’ Compensation Act has always been liberally construed, the purpose of allowing credit is to prevent a claimant from “double-dipping” and simultaneously receive two types of benefits for the same period.
Further, the Court clarified that when considering whether to apply credit, the amount to consider is what a claimant receives, not merely what the Employer pays. See Georgia Forestry Commission et al., v. Taylor, 526 S.E.2d 373; 241 Ga. App. 151 (1999). In Taylor, the employer paid the claimant some disability benefits, which were subject to state and federal taxes, as well as a deduction for health-insurance premiums. Id. at 526 S.E.2d 373; 241 Ga. App 152. The employer and insurer argued that they were entitled to take credit for the gross amount paid, prior to deductions. Id. However, the Court ruled that the amount to be credited should be the amount the claimant actually receives, and further ruled that the net amount should be credited. Id. at 526 S.E.2d 374; 241 GA. App. 153. In arriving at its decision, the Court paid special attention to the plain language contained in O.C.G.A. § 34-9-243, which clearly reads that the employer’s obligation shall be reduced by the payments “received or being received by the employee.”
Thus, looking at the case law and applying it to our case of severance pay, as defense attorneys, we can certainly make the argument that our case is analogous to the Williams case because the Claimant continued to receive benefits, even after she stopped working. In essence, we can state that the Claimant’s severance pay is tantamount to continuing wages, if they received the payments, on a weekly basis after their lay-off, which was at the same time the workers’-compensation benefits were due. We would then make the argument that as part of continuing wages, the Employer is entitled to take credit for the severance pay per subsection (b) of O.C.G.A. § 34-9-243.
Further, as shown by the Taylor case, the operative phrase in determining how much credit to take is what a claimant “received or is receiving.” In our case, as long as there is no dispute that the Claimant received severance pay, we can argue that the Employer/Insurer should be allowed to take credit for the amount received, or the total amount of severance pay.
However, the biggest obstacle we may face in obtaining credit for severance pay may be if a Judge defines a “wage-continuation plan” as one designed to operate when an employee is entitled to income benefits for a compensable injury. This definition is one that came about in the relatively recent Glisson v. Rooms To Go,608 S.E.2d 50, 270 Ga. App. 689, SE (2004). Certainly, in our case, a Judge could conclude that severance pay is not a wage-continuation plan, if it was not designed to operate when a Claimant was entitled to benefits for a compensable injury, but was paid because of a lay-off without regard to a Claimant’s workers’ compensation benefits. Thus, based on the definition of a wage-continuation plan, potential differing Judges’ interpretations of this case, and each individual situation, it is definitely foreseeable that an Employer/Insurer will be denied credit for severance pay.
Thus, when the issue of severance pay and credit arises, it is prudent to file a WC-243 listing severance pay as wage continuation; especially it these difficult economic times. It does make sense to argue that the Employer/Insurer is entitled to credit for these payments. But be advised that Judges may certainly shoot down this argument and deny credit. Hopefully, in the foreseeable future, the Board will more clearly address this issue, so that employers and insurers will have clear guidance in different severance pay situations.