DAR File No. 40804

Labor Commission, Industrial Accidents

Section R612-200-2

Payment of Benefits, Interest and Attorney Fees

Notice of Proposed Rule

(Amendment)

DAR File No.: 40804
Filed: 09/20/2016 09:10:16 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this filing is to remove the provisions regarding attorney fees.

Summary of the rule or change:

This rule change strikes the provisions regulating the payment of attorney fees in workers' compensation cases.

Statutory or constitutional authorization for this rule:

• Section 34A-1-104
• Section 34A-2-101 et seq.
• Section 34A-3-101 et seq.

Anticipated cost or savings to:

the state budget:

There should be no cost or savings to the state budget because attorney fees are paid out of injured workers' benefits.

local governments:

There should be no cost or savings to local government because attorney fees are paid out of injured workers' benefits.

small businesses:

There should be no cost or savings to small businesses because attorney fees are paid out of injured workers' benefits.

persons other than small businesses, businesses, or local governmental entities:

There may be an increased cost to injured workers. Attorney fees are paid out of injured workers' benefits. Given that the Supreme Court found the Commission's regulation of attorney fees to be unconstitutional, injured workers may pay more of their award in attorney fees. The exact cost to injured workers is unknown as each injured worker will pay the injured worker's attorney pursuant to the individual fee agreement between the injured worker and the attorney. The cost will vary in each case.

Compliance costs for affected persons:

There should be no compliance costs for affected persons because attorney fees are paid out of injured workers' benefits.

Comments by the department head on the fiscal impact the rule may have on businesses:

The Utah Supreme Court issued its decision in Injured Workers Assoc. of Utah v. State of Utah, 2016 UT 21, on 05/18/2016. The Court found Utah Code Section 34A-1-309, the statutory provision that required the Utah Labor Commission to regulate attorney fees in workers' compensation cases, to be unconstitutional. The Court also found Subsection R602-2-4(C)(3), the administrative rule subsection that governs and regulates the payment of attorney fees, to be unconstitutional. The Commission's sole authority to regulate attorney fees comes from Section 34A-1-309. As such, the provisions of the Utah Administrative Code that allow the Commission to regulate attorney fees, including the payment of attorney fees, need to be removed as they conflict with the Court's decision. Subsection R612-200-2(B) specifically references the statue and administrative rule the Court found to be unconstitutional. Subsection R612-200-2(B) requires the issuance of a separate check for attorney fees to an injured worker's attorney in an amount approved or ordered by the Commission. The rule also prohibits two-party checks issued jointly to an attorney and the injured worker. The Commission lacks the authority to require a separate check for an injured worker's attorney and to approve or order the amount of the check. The Commission also lacks the authority to prohibit checks issued jointly to an attorney and the injured worker. Relevant portions of Subsection R612-200-2(A)(3) also place the Commission in violation of the decision in that the rule requires payments to be made directly and solely to injured workers. This rule would likely interfere with agreements between injured workers and their attorneys regarding the payment of attorney fees.

Jaceson R Maughan, Acting Commissioner

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Labor Commission
Industrial Accidents
HEBER M WELLS BLDG
160 E 300 S
SALT LAKE CITY, UT 84111-2316

Direct questions regarding this rule to:

• Ron Dressler at the above address, by phone at 801-530-6841, by FAX at 801-530-6804, or by Internet E-mail at [email protected]
• Jaceson Maughan at the above address, by phone at 801-530-6036, by FAX at 801-530-6390, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

11/15/2016

This rule may become effective on:

11/22/2016

Authorized by:

Jaceson Maughan, Acting Commissioner/General Counsel

R612. Labor Commission, Industrial Accidents.

R612-200. Workers' Compensation Rules - Filing and Paying Claims.

R612-200-2. Payment of Benefits, Interest and Attorney Fees.

A. Timing and payment of benefits. A workers' compensation benefit is due and payable when the claimant has satisfied all legal requirements applicable to that benefit.

1. Payment intervals for compensation. After entitlement to disability compensation or dependent's benefits has been established, such compensation shall be paid in regular intervals of at least once a month, except that TTD and TPD benefits shall be paid twice monthly.

2. Form of payment. A payor may choose to pay benefits by check, debit card or electronic fund transfer, provided that the form of payment allows a claimant to access the full amount of the benefit on the date the payment is due. No fee or charge of any kind may be assessed against the claimant.

3. [Payment to be made directly to claimant. Workers' compensation disability benefits and dependents' benefits shall be paid solely and directly to the claimant.]Employer coordination of employee benefits. Benefits may be paid "in care of" the employer if the employer coordinates employee benefits.[If payment of such benefits is made by check, the check shall be personally delivered to the claimant or mailed to the claimant's home address.

B. Deduction and payment of attorney fee. The computation and payment of fees for claimants' attorneys is governed by 34A-1-309 and Section R602-2-4, "Attorney Fees." A separate check should be issued to the worker's attorney in the amount approved or ordered by the Commission, unless otherwise directed by the Commission. Payment of the worker's attorney by issuing a check payable to the worker and his attorney jointly constitutes a violation of this rule.]

[C]B. Interest. As required by Subsection 34A-2-420(3) of the Utah Workers' Compensation Act, any final order of the Commission awarding benefits will include interest on the principal amount of the benefits at the rate of 8% per annum from the date the benefit or any part thereof was due and payable.

[D]C. Discounting of lump sum payments. Any proposal to pay all or part of a claimant's future workers' compensation benefits in a present lump sum must be submitted to the Adjudication Division for review and approval. A discount rate of eight percent per annum shall be used to determine the present value of such benefits. The following table may be used to determine a benefit's present value by interpolating, when necessary, the weeks to be discounted between the weeks listed on the table.

 

TABLE

Unaccrued  X  Weekly     X  Cumulative  =  Discount $

Weeks         Benefit $     Discount



     1                       .001475

    10                       .008076

    20                       .015343

    30                       .022538

    40                       .029663

    50                       .036719

    60                       .043706

    70                       .050626

    80                       .057478

    90                       .064264

   100                       .070984

   110                       .077639

   120                       .084229

   130                       .090756

   140                       .097221

   150                       .103623

   160                       .109963

   170                       .116243

   180                       .122463

   190                       .128623

   200                       .134724

   210                       .140767

   220                       .146752

   230                       .152680

   240                       .158552

   250                       .164368

   260                       .170129

   270                       .175835

   280                       .181488

   290                       .187087

   300                       .192633

   312                       .199219

 

KEY: workers' compensation, filing deadlines, time, administrative proceedings

Date of Enactment or Last Substantive Amendment: [December 8, 2015]2016

Authorizing, and Implemented or Interpreted Law: 34A-2-101 et seq.; 34A-3-101 et seq.; 34A-1-104