Board Explains Use of LS-200, Denies Credit for EDD Benefits

A claimant who fails to report post-accident earnings to an employer may forfeit his right to compensation.  Section 8(j) of the Act provides that “the employer may inform a disabled employee of his obligation to report to the employer not less than semiannually any earnings from employment or self-employment, on such forms as the Secretary shall specify in regulations.”  Under the regulations, an employer may provide the claimant with an LS-200 form for use in reporting earnings.  Section 8(j) also specifies that a claimant forfeits his right to compensation during any period in which he (A) fails to report his earnings when requested, or (B) knowingly and willfully omits or understates any part of such earnings.  The Board recently held that these two provisions of Section 8(j)(2) set forth distinct situations when compensation may be forfeited.  The Board explained that “Section 8(j)(2)(A) applies when the claimant ‘fails to submit the report on earnings’ when requested to do so, whereas Section 8(j)(2)(B) applies when claimant files the report but ‘knowingly and willfully omits or understates any part of such earnings’ in that filing. 

In this case, the claimant earned income from rental properties following his injury.  After considering the claimant’s testimony and surveillance evidence, the ALJ determined that the claimant played a significant role in managing his property to the extent that he engaged in self-employment.  The employer had issued an LS-200 to the claimant.  The claimant completed the form, but failed to report this rental income as earnings from self-employment.  Because the claimant returned the form, the Board held he did not fail to “submit” the form as required by Section 8(j)(2)(A), so the question then became only whether the claimant knowingly and willfully omitted his earnings from his rental property.  The Board remanded the claim to the ALJ for a determination on this issue. 

On another issue, the Board held that an employer is not entitled under Section 3(e) to a credit for California Employment Development Department (“EDD”) benefits paid to a claimant .  As the Board explained, EDD benefits provide “short-term disability payments to disabled workers. …  This program is state-mandated and funded, in part, through employee payroll deductions.”  Under California law, an employee cannot receive EDD benefits if he is entitled to workers’ compensation benefits, and the EDD can file a lien to recover any overpayments.  In this case, the employer paid compensation benefits, and reimbursed the EDD its lien.  The Board refused a credit to the employer, noting that Section 3(e) only allows a credit for payments made pursuant to “any other workers’ compensation law.”  The Board found “on the facts of this case” that the employer failed to demonstrate that EDD benefits are paid pursuant to a workers’ compensation law.  In limiting its decision to the specific facts of the case, the Board seemed to leave open the possibility that it could reach a different conclusion if presented with a different record.

Cutietta v. National Steel and Shipbuilding, BRB No. 14-0335 (7/8/15)