Workers’ compensation, unemployment compensation, nonoccupational sickness and disability insurance, and old age and survivors’ and disability insurance are all based upon a common principle and a common operative fact: wage loss. Generally, the cause of the wage loss dictates the category of legislation applicable. Ordinarily, a worker may not receive three sets of benefits simultaneously and thereby recover more than his or her actual wage. The worker experiences but one wage loss and should receive only one wage-loss benefit [see Larson’s Workers’ Compensation Law, § 157.01, et seq].
There are some exceptions, however, particularly if, because of the age of the worker, he or she would otherwise have contemporaneously qualified for private retirement benefits had there been no injury at all. The issue is illustrated in a recent Arkansas decision, Mills v. Arkansas State Hwy & Transp. Dep’t, 2012 Ark. App. 395, 2012 Ark. App. LEXIS 514 (June 20, 2012), in which a state appellate court reversed a decision by the state’s Workers’ Compensation Commission that found that the claimant’s wage loss benefits should be offset, on a dollar-for-dollar basis, by all her retirement benefits.
It had been determined that Mills was entitled to permanent disability benefits for a 30 percent disability rating. The relevant statutory subsection relied on by the Commission provided:
Any benefits payable to an injured worker under this chapter shall be reduced in an amount equal to, dollar-for-dollar, the amount of benefits the injured worker has previously received for the same medical services or period of disability, whether those benefits were paid under a group health care service plan of whatever form or nature, a group disability policy, a group loss of income policy, a group accident, health, or accident and health policy, a self-insured employee health or welfare benefit plan, or a group hospital or medical service contract.
Ark. Code Ann. § 11-9-411(a)(1) (Supp. 2011).
Mills argued that rather than offsetting her wage-loss benefits with the entire amount of her retirement benefits, only that amount she received as a result of her disability-retirement benefits over and above her early-retirement benefits should offset her wage-loss benefits. The appellate court agreed. The court noted that the administrative law judge cited Henson v. General Electric, 99 Ark. App. 129, 257 S.W.3d 908 (2007), in which the Commission approved a dollar-for-dollar credit for disability-retirement benefits from the Second Injury Fund’s obligation to pay permanent-disability benefits. The court acknowledged that in Henson, it had held that “the Commission did not err in finding that Ark. Code Ann. § 11–9–411 applies to retirement-disability benefits, as the overriding purpose of § 411 is to prevent a double recovery by a claimant for the same period of disability.”
The court continued that unlike the claimant in Henson, Mills presented to the Commission documents from the Arkansas State Highway Employees Retirement System showing that upon her retirement, she received $1792.50 each month of what was described as “Duty Related Disability Retirement” benefits and that on that same date with an early-reduction factor she would have received either $1615.22 or $1659.10 each month of what was described as “Early Retirement” benefits (depending upon whether she opted to have her surviving beneficiary also receive benefits).
The court added that Mills’s uncontradicted proof established what she would have received if she had retired with an early-reduction factor instead of applying for disability benefits. The increase in retirement benefits resulting from her retirement on disability rather than early retirement amounted to, at most, $133.40. Because the purpose of the statute was to prevent a double recovery, then the only double recovery would have been, at most, in that amount. Rather than offsetting her wage-loss benefits with the entire amount of her retirement benefits, only the amount that Mills received as a result of her disability over and above her early-retirement benefits should offset her wage-loss benefits.