An offset is money deducted from EEOICPA benefits, including lump-sum, healthcare, and impairment, due to payment received from a settlement for the same toxic exposure for which the claim is being accepted. When applying for an EEOICPA claim, a claimant must disclose any payments they received before the issuance of a final EEOICPA decision. If any payment was made as a result of a tort/lawsuit for an illness for which benefits are payable under EEOICPA, the claims examiner may subtract the amount of the tort/lawsuit payment from the EEOICPA benefits. These benefits are offset to prevent a double recovery resulting from an employee’s compensable illness or death.
If the compensation a claimant receives from a civil lawsuit or a workers’ compensation program for the same covered illness exceeds the amount awarded under the EEOICPA and RECA, DOL offsets the remainder from the claimant’s medical coverage. In such cases, the Office of Workers’ Compensation Programs may reduce or freeze EEOICPA health benefits until the excess is fully offset.
How offsets affect healthcare benefits
The DOL always subtracts the offset amount from the claimant’s unpaid Part B or Part E cash payouts first. If the offset amount exceeds the claimant’s cash award, the remaining balance is designated as a “surplus,” and the healthcare may be suspended. As a result, the DOL stops paying for the claimant’s healthcare benefits, including prescription medications, doctor visits, home health aides, and medical equipment, until the claimant has paid out of pocket the exact dollar amount of the remaining surplus.
The DOL explicitly refuses to be the first payer for any medical expenses covered by a final legal judgment or settlement. For instance, if a claimant is awarded $200,000 for a breast cancer claim in a lawsuit settlement and $150,000 under part B of the EEOICPA for the same illness, the EEOICPA will offset the $200,000 award, resulting in a $50,000 surplus. In this case, the EEOICPA will offset the surplus from the claimant’s medical benefits by suspending his or her medical benefits until the claimant pays an equivalent amount out of pocket for medical bills related to the covered illness. The EEOICPA medical coverage is fully restored once the surplus has been fully offset. For healthcare benefits to be restored, the claimant must provide out-of-pocket receipts showing that he or she personally spent the exact amount of the calculated surplus on his or her illness.
The EEOICPA can only offset healthcare benefits for the specific illness associated with the civil lawsuit settlement or state workers’ compensation claim. Where the claimant has more than one accepted condition, the treatment for any other accepted EEOICPA condition continues completely uninterrupted.
How do offsets work under the EEOICPA?
Lump-sum payments and/or medical benefits awarded for an EEOICPA-covered occupational illness under Part B and E are “offset” or reduced to reflect the amount of any settlement or final judgment payment for injuries resulting from exposure to the same toxic substance for which EEOICPA payments are payable.
Offset does not apply to the payments for injuries due to exposure to different toxic substances. For example, a lung cancer claim awarded compensation under Part B due to radiation exposure, resulting in an “automatic” Part E award for the same condition, is not offset to reflect a settlement or final judgment payment in a lawsuit alleging asbestos fiber exposure since the two involve different toxic substances.
Also, offset is not applied where a tort complaint alleges exposure outside the time frame and/or location of exposure awarded under the EEOICPA. However, an offset is required if the claim involves multiple exposures and one of the exposures was awarded through a workers’ compensation program or tort settlement, even if the tort suit has several other exposures. Thus, claim examiners determine whether an offset will be necessary, based on the alleged exposure that caused the alleged injuries.
For lawsuits involving multiple defendants and multiple settlement or final judgment payments, such as those related to asbestos exposure, EEOICPA benefits currently payable are reduced to reflect the total settlement or final judgment payments received. Payments received at a later date are offset against any future EEOICPA lump-sum benefits or medical benefits. EEOICPA benefits are not offset to reflect the amount of any payment for medical treatment provided before the date an employee files a claim.
EEOICPA considers certain expenses paid by the claimant when determining the amount to be offset. These include payment of reasonable out-of-pocket costs and expenses involved in bringing a lawsuit. Reasonable costs that may be deducted from an offset amount include filing fees, travel expenses, record-copying services, witness fees, court reporter costs for transcripts of hearings and depositions, postage, and long-distance telephone calls. The allowable costs are calculated by dividing the total costs by the gross compensation amount to determine the percentage of the payment represented by the allowable costs. The value is then rounded up to the next highest tenth. Generally, any fees that exceed 40% are considered unreasonable, including attorney fees. When determining the reasonableness of attorney fees for the purpose of offsetting EEOICPA benefits, the claim examiner considers prevailing local fees, cases of similar complexity, and the gross settlement or final judgment amount at issue, among other factors.
EEOICPA does not allow costs related to normal office expenses or overhead costs, such as in-house record copying costs, as well as expenses that have been shared among multiple plaintiffs and are not otherwise attributable to specific costs in an employee’s own tort suit. Expenses related to fees paid to co-counsel or normal office expenses, such as secretary or paralegal services or in-house record-copying costs, are also not allowed.
EEOICPA offsets on asbestos trust funds compensation
Compensation from asbestos bankruptcy trusts and lawsuits is treated like any other tort settlements for offset determination. The DEEOIC uses administrative claim forms submitted to an asbestos bankruptcy trust or other relevant evidence to compare the pertinent exposure paid for by the trust with the exposure supporting the award of EEOICPA benefits. An offset is applied only if the asbestos trust fund payout is for the same medical condition claimed under the EEOICPA. For instance, an offset is required if a claimant is awarded trust fund compensation for mesothelioma and then files an EEOICPA Part B or E claim for that exact same illness. However, if the payments are issued for entirely different, separate medical conditions, no deduction occurs.
Exceptions to the offset requirement
- If the lawsuit alleges an exposure outside the time frame or location of exposure awarded under EEOICPA or if the lawsuit and EEOICPA claim involve two different toxic substances.
- If the lawsuit involves non-employment exposures
- If an employee and their spouse were plaintiffs with causes of action in a lawsuit they brought together and signed releases to settle their case, but only the spouse received tort payment.
Offset of VCF Claims and Collateral Source Payments
Collateral source payments are payments that a victim, or a victim’s estate or beneficiaries, are entitled to receive or have received as a result of the victim’s injury or death in the terrorist-related aircraft crashes of September 11 or from debris removal in the immediate aftermath of the crashes. The EEOICPA will offset amounts received from the September 11th Victim Compensation Fund (VCF), but only if both claims are based on the same medical condition or toxic exposure.
Also, the VCF subtracts any public or private compensation a claimant has received or is entitled to receive for his or her certified 9/11 physical illness from the individual’s compensation. Consequently, when filing a September 11th Victim Compensation Fund claim, the claimant must inform the VCF of any new collateral source payments the claimant receives or becomes entitled to receive after the claimant’s claim has been filed, including after any award has been determined or paid. Collateral source payments that must be offset from the VCF payments include:
- Social Security Benefits, including Disability Insurance (SSDI) or survivor benefits linked to the 9/11 claimed condition.
- Workers’ Compensation, including state and federal payments, compensating for the same injury.
- Disability benefits from programs like NYCERS, the VA, or private long-term disability insurers.
- Life Insurance specifically related to wrongful death claims
- Recoveries from civil lawsuits for damages related to the 9/11 attacks or debris removal.
- Any payouts authorized by the U.S. Victims of State-Sponsored Terrorism Fund (USVSST Fund) for the same direct victim.
Certain payments do not require an offset. They include:
- Donations from privately funded non-profit organizations or disaster relief funds, charitable gifts such as the provision of emergency housing, food, or clothing
- Tax relief benefits such as tax exemptions granted under the federal Victims of Terrorism Tax Relief Act.
- Payments for medical conditions not certified as 9/11-related by the WTC Health Program.
The Special Master, responsible for adjudicating VCF claims, may reduce an offset to match a pension or life insurance deduction against the victim’s actual contributions to the fund while working. A claimant must file an official claim amendment requesting a review of his or her original award amount if collateral benefits increase or decrease after a payout.
Coordination of State Workers’ Compensation (SWC) Benefits
SWC programs are no-fault systems that compensate injured workers or survivors for work-related injuries or illnesses. SWC benefits may include medical and vocational services, cash payments to the injured worker for wage loss or reduction in earning capacity, and death and funeral benefits to the worker’s survivor(s).
Compensation payable under EEOICPA Part E may be reduced to reflect certain benefits previously received by the claimant for the same covered illness under a SWC program. Coordination does not apply to Part B benefits. OWCP coordinates the Part E award(s) with the amount received from a SWC program for the same covered illness after deducting costs incurred by the claimant in obtaining those benefits.
Exceptions to the coordination requirement:
- If the claimant receives SWC benefits for a non-covered illness or a covered and non-covered illness arising from the same work-related exposure.
- A “covered illness” is an illness resulting from exposure to a toxic substance. The same medical condition accepted by DEEOIC and an SWC program may not result from the same toxic exposure. If a claimant settles an SWC claim in a non-DOE facility and is entitled to Part E benefits based on a separate and distinct exposure at a DOE facility, coordination of the Part E benefits is not required because the covered illness is different.
- Coordination of Part E benefits with benefits paid under a SWC program may be waived if the total SWC benefits the claimant received is under $200.
- Medical or vocational benefits paid by a SWC program are not coordinated.
- Generally, survivor claims do not require coordination, even if the employee or the deceased employee’s estate received SWC benefits based on the same covered illness as the survivor’s Part E claim. Coordination occurs only if the survivor received SWC benefits.
Wrap up
In summary, EEOICPA offsets occur on compensation issued for tort Lawsuits and settlements. Part E benefits may also be offset when a claimant receives state workers’ compensation for the same occupational illness (coordination of benefits. Under the EEOICPA, offsets or coordination of benefits are mandatory to avoid “double recovery” by reducing EEOICPA lump-sum payments and medical coverage until the previously received recovery amount, minus allowable legal expenses, is fully absorbed. An offset is required if there is one compensable exposure, even if the lawsuit or EEOICPA claim is based on several other exposures. Offsets only occur if the prior payment was for exposure to the same toxic substance that qualifies the claimant for EEOICPA benefits. Filing for compensation from multiple sources may affect a claimant’s EEOICPA healthcare benefits, particularly when the claimant has already received a settlement, final judgment, or State Workers’ Compensation (SWC) award for the same toxic exposure. It is therefore important to seek the advice of our experienced SWC, EEOICPA, or RECA attorney, Hugh Stephens, when filing for compensation under any state, federal, or workers’ compensation program. You can contact Mr. Stephens on his cell phone at 716-208-3525.