[Federal Register Volume 59, Number 233 (Tuesday, December 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29936]


[[Page Unknown]]

[Federal Register: December 6, 1994]


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FEDERAL RESERVE SYSTEM
Social Security Administration
[Social Security Ruling SSR 94-6]

 

Disability--Workers' Compensation Offset--Excluding Legal 
Expenses Incurred by Claimant in Connection With Initial Award of 
Workers' Compensation Benefits--Washington

AGENCY: Social Security Administration, HHS.

ACTION: Notice of Social Security Ruling.

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SUMMARY: In accordance with 20 CFR 422.406(b)(1), the Commissioner of 
Social Security gives notice of Social Security Ruling 94-6. The issue 
is whether legal expenses incurred by the claimant in connection with 
an initial workers' compensation (WC) award in the State of Washington 
were properly excluded by the Social Security Administration (SSA) from 
the WC offset calculation required by section 224 of the Social 
Security Act. SSA regulations provide that legal expenses paid or 
incurred in connection with a WC award or settlement are excluded to 
the extent such expenses are consonant with State law. Washington State 
law appears to permit an attorney who successfully represents a 
claimant in obtaining an initial award of WC benefits to charge a fee 
of up to 30 percent of the benefits awarded. Therefore, such attorney 
fees, if paid or incurred by the claimant, may be excluded from the WC 
offset provisions. Although this Ruling concerns the State of 
Washington, it clearly illustrates SSA's longstanding policy in these 
matters.

EFFECTIVE DATE: December 6, 1994.

FOR FURTHER INFORMATION CONTACT: Joanne K. Castello, Division of 
Regulations and Rulings, Social Security Administration, 6401 Security 
Boulevard, Baltimore, MD 21235, (410) 965-1711.

SUPPLEMENTARY INFORMATION: Although we are not required to do so 
pursuant to 5 U.S.C. 552 (a)(1) and (a)(2), we are publishing this 
Social Security Ruling in accordance with 20 CFR 422.406(b)(1).
    Social Security Rulings make available to the public precedential 
decisions relating to the Federal old-age, survivors, disability, 
supplemental security income, and black lung benefits programs. Social 
Security Rulings may be based on case decisions made at all 
administrative levels of adjudication, Federal court decisions, 
Commissioner's decisions, opinions of the Office of the General 
Counsel, and other policy interpretations of the law and regulations.
    Although Social Security Rulings do not have the force and effect 
of the law or regulations, they are binding on all components of the 
Social Security Administration, in accordance with 20 CFR 
422.406(b)(1), and are to be relied upon as precedents in adjudicating 
other cases.
    If this Social Security Ruling is later superseded, modified, or 
rescinded, we will publish a notice in the Federal Register to that 
effect.

(Catalog of Federal Domestic Assistance Programs Nos. 93.802 Social 
Security--Disability Insurance; 93.803 Social Security--Retirement 
Insurance; 93.805 Social Security--Survivors Insurance; 93.806 
Special Benefits for Disabled Coal Miners.)

    Dated: November 10, 1994.
Shirley S. Chater,
Commissioner of Social Security.
Section 224 of the Social Security Act (42 U.S.C. 424a) disability--
workers' compensation offset--excluding legal expenses incurred in 
connection with initial award of workers' compensation benefits--
Washington
20 CFR 404.408(d)

    Section 224 of the Social Security Act (the Act) requires an offset 
of title II disability insurance benefits if the worker is also 
entitled to workers' compensation (WC) benefits. Social Security 
Administration (SSA) regulations, 20 CFR 404.408(d), further provide 
that legal expenses paid or incurred in connection with a WC award or 
settlement are excluded from the computation of the WC offset to the 
extent such expenses are consonant with State law.
    Under the WC laws of the State of Washington, an attorney may 
charge a reasonable fee of not more than 30 percent of the increase in 
the award secured by the attorney's services. An ``increase'' in a 
Washington WC award can include initial awards that increase the amount 
of the WC from zero to the amount awarded. Therefore, such attorney 
fees, if paid or incurred by the worker, may be excluded from the WC 
offset provisions of section 224 of the Act.
    A question has arisen as to whether legal expenses incurred by the 
claimant in connection with an initial WC award in the State of 
Washington were properly excluded from SSA's offset calculation.
    Pursuant to SSA regulations at 20 CFR 404.408(d), legal expenses 
paid or incurred in connection with a WC settlement are excluded to the 
extent such expenses are consonant with State law. This regulation 
reflects Congress' intent that, since workers' compensation awards are 
generally understood to include compensation for legal expenses, for 
the purposes of offset, SSA would not include any part of the WC lump 
sum or benefit which is equal to the amount of such expenses paid or 
incurred by the worker. (See S. Rep. No. 404, 89th Cong., 1st Sess. 
(1965).) Under the WC laws of the State of Washington, an attorney may 
charge a reasonable fee of not more than 30 percent of the increase in 
the award secured by the attorney's services.
    We believe one could reasonably consider the initial award to be an 
increase in the workers' compensation award from nothing to the amount 
awarded. Under such an interpretation, the attorney who successfully 
represents a claimant in obtaining an initial award of workers' 
compensation benefits would be permitted to charge a fee of up to 30 
percent of the benefits awarded.
    There are three reasons supporting this interpretation.
    First, contact with the appropriate Washington State agencies 
revealed no prohibition on charging attorney fees in connection with 
establishing the initial award of benefits.
    Second, there have been a number of cases presented to SSA in which 
attorney fees were charged to the claimants for services in obtaining 
the initial award of WC benefits. We do not believe it would be 
appropriate to conclude, without compelling evidence, that these WC 
attorneys acted in direct contravention of the State's WC laws.
    Third, in Regnier v. Department of Labor and Industries, 749 P.2d 
1299, 1301 (Wash. 1988), Washington's highest court described R.C.W. 
51.52.120 as allowing the department ``to determine what is a 
reasonable fee for a lawyer to charge a claimant for assistance in 
establishing an industrial insurance claim,'' a description which would 
seem clearly to encompass the obtaining of an initial award of 
benefits. (Emphasis added.)
    Because Washington State law lacks a clear prohibition on the 
charging of attorney fees in connection with initial claims for WC 
benefits, other than the 30 percent cap, the amounts up to that limit 
paid by the claimants to their attorneys for services in the WC claims 
may be considered to be consonant with State law and thus are excluded 
for purposes of SSA's offset pursuant to 20 CFR 404.408(d).

[FR Doc. 94-29936 Filed 12-5-94; 8:45 am]
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