Thursday, February 21, 2013

What the Heck is LWEC?

LWEC is Loss of Wage-Earning Capacity and is found in the Federal Employees’ Compensation Act, (FECA) Manual part two at 2-0901-15.

Here’s the link to part two of the FECA Manual: http://www.dol.gov/owcp/dfec/regs/compliance/DFECfolio/FECA-Part2.pdf

A claimant is entitled to compensation for Partial Disability.  Where injury-related impairments prohibit the claimant from returning to the employment held at the time of injury, or from earning equivalent wages, but do not render the claimant Totally Disabled for all gainful employment, the claimant is considered Partially Disabled and is entitled to compensation for LWEC.

The FECA provides for a reduction in compensation to reflect a LWEC when the disability for work is partial (some ability to work).  The employee's actual earnings may be used to calculate reduced compensation if these earnings are found to fairly and reasonably reflect his or her earning capacity. 

The method of computing compensation for wage loss due to partial disability is set forth in the FECA at Section 8106(a) and states:

If the disability is partial, the United States shall pay the claimant during the disability monthly monetary compensation equal to 66 2/3% (or 75% if there are dependents) of the difference between the claimant’s monthly pay and the claimant’s monthly wage-earning capacity.

In the case of Albert Shadrick, 5 ECAB 376, issued March 23, 1953, the Employees' Compensation Appeals Board (ECAB) established a principle to eliminate economic factors such as inflation or recession when computing the amount of monetary compensation due for partial disability. This is known as the Shadrick Formula.

According to this 'formula', the injured worker would be paid compensation based on the difference between the pay which had been determined to be his or her post-injury WEC, and the contemporaneous pay of the date of injury job.  OWCP established the "Shadrick Formula" as the method of computing compensation when determining an injured worker's WEC. (See FECA Manual part two at 2-900.16).

There are three ways a LWEC can be put in place:

1). If the claimant returns to a new position or a modified version of the date of injury position with the previous employer (the Agency you were working for when you were injured) and is earning less than the current pay rate of the job held when injured, the claimant has sustained a loss in wage earning capacity as a result of the injury. 

Once the claimant has satisfactorily performed the position for a period of at least 60 days, the Claims Examiner, (CE) should review the case to determine whether the medical evidence establishes permanent restrictions and whether the position fairly and reasonably represents the claimant’s wage earning capacity.  If so, the CE should prepare a formal decision making this finding.  

If the position does not fairly and reasonably represent the claimant’s wage earning capacity, no decision can be issued.

2). If the claimant returns to work with a new employer and is earning less than the current pay rate of the job held when injured, the claimant has sustained a loss in wage earning capacity as a result of the injury.

Once the claimant has satisfactorily performed the position with the new employer for a period of at least 60 days and the medical evidence establishes permanent restrictions, the CE should prepare a formal decision addressing whether the earnings fairly and reasonably represent the claimant’s wage earning capacity.

If the position does not fairly and reasonably represent the claimant’s wage earning capacity, no decision can be issued.

3). Determination of LWEC without actual job placement: 
In these cases, the claimant has been notified that the OWCP will provide Vocational Rehabilitation assistance leading to re-employment.  The claimant is able to return to work and the file contains documentation that establishes appropriate work is reasonably available in the local labor market and benefits are adjusted to reflect any loss in wage earning capacity. 

This type of decision can be issued after the OWCP has made reasonable efforts to return the claimant to work and has advised the claimant of his or her rights and responsibilities. 

OWCP issues a formal decision based on the selected jobs, regardless of whether the claimant is working or not. In this instance, the CE will prepare a pre-reduction notice, addressing the claimant's loss of wage earning capacity based on a suitable position for which the claimant received training and/or placement efforts.  After the notice period ends, a formal decision establishing the claimant’s wage earning capacity will be issued, taking into account any evidence or arguments submitted by the claimant during the notice period.

A finding by OWCP that the claimant has no wage earning capacity or the claimant has no re-employment potential for the indefinite future can be made on the basis of a medical or vocational determination.

If no rehabilitation plan can be developed due to the severity of the claimant's medical condition and/or the limited job market in the claimant's commuting area, the CE may determine that the claimant has no wage earning capacity.  

If there is no expectation of further recovery or a change in the vocational determination or medical condition, the case can be placed in PN status with the concurrence of the Supervisory Claims Examiner. 
(*PN:  Entitled to payment on periodic roll; formally determined to have no wage earning-capacity or re-employment potential for indefinite future).

See more about Vocational Rehabilitation at the Vocational Rehab tab.

The FECA provides that a partially disabled employee shall be paid compensation equal to 66 2/3% (or 75% with dependents) of the difference between the claimant’s pay and his or her wage-earning capacity. 

The method for computing the compensation payable where an employee has actual earnings (is working) or a wage-earning capacity (is able to work) is called the Shadrick formula, as it reflects the principles set forth in Albert C. Shadrick, 5 ECAB 376.  In that decision the ECAB found that section 5 U.S.C. 8106(a) does not state that compensation is to be based on the difference between the employee's earnings at the time of injury and whatever variable dollar income the employee may have in the future.  Rather, it is to be based upon the loss of capacity to earn wages. 

The Shadrick formula:

(1)      Pay rate when:
(a)  Injured                                                        $_________
(b)  Disability began                                           $_________
(c)  Compensable disability recurred (if any)       $_________

(2)  Current pay rate for job and step when injured      $_________
(3)    (a) Is capable of earning                                      $_________
        (b) Has actual earnings of                                    $_________
(4) WEC [item (3) divided by item (2)]                          $________%
(5) WEC [item (4) x item (1)]                                        $_________
(6) Loss of WEC [item (1) minus item (5)]                      $_________
(7) Compensation [item (6) x 66 2/3% or 75%]                $_________
(8) CPI (expressed in decimal terms)
            (a)   Item (7) x 1                                    $________ (rounded)
*CPI: Consumer Price Index; periodic adjustments to compensation payments which are made to reflect increases in the cost of living.
(b)   Item (8a) x 1                                               $________ (rounded)
(c)   Item (8b) x 1                                               $________ (rounded)

In calculating LWEC, the direct comparison of wages in lines 2 and 3 of the formula above is always based on the current salary of the job when injured, not that held at the time disability began or the date disability recurred.

*Rural Letter Carriers Only: 
While the salaries for Rural Letter Carriers may vary over the life of the claim due to reevaluations of the route, the only salaries that affect the pay rate for compensation purposes is the pay rate on the date of injury, when disability began, or at the time of a qualifying recurrence.  The highest of the three is used to compute compensation.

Changes in route evaluations which occur after a final LWEC decision is issued do not alter that decision.

A Rural Carrier who returns to work but whose hours are restricted due to the effects of the job-related injury is entitled to compensation for any LWEC.

A Rural Carrier who returns to full duty but whose route was reduced during the period compensation was received is not entitled to continuing compensation, since the reduction is not due to injury-related disability.

The "current pay of job held when injured" is defined according to whether the boundaries of the carrier’s route have changed: If not, the hourly rate for the employee's grade and step when injured is multiplied by the number of hours representing the route's current evaluation.

If so, the date-of-injury job when injured no longer exists.  Therefore, the current pay for the grade and step when injured should be multiplied by the number of hours representing the route's evaluation at the time of injury.

Wednesday, February 20, 2013


Under the General Provisions of the Federal Employees Compensation Act, (FECA) part two at 2-0200-2, the definition of an "injury" includes all injuries/diseases proximately caused by the employment as well as damage to or destruction of medical braces, artificial limbs and other prosthetic appliances. Aggravation of a preexisting condition by the employment is also compensable. 

You must provide medical evidence that an injury or disease may be related to your employment factors. Types of casual relationship:

1. Direct Causation. This type of relationship is shown when the injury or factors of employment, through a natural and unbroken sequence, result in the condition claimed. A fractured arm sustained in a fall would be considered a direct result of the fall, and a sensor neural hearing loss might likewise be caused directly by occupational noise exposure over a period of time.

In occupational disease claims, however, the medical evidence needed to support the relationship will require greater rationale than in traumatic injury claims. The phrase "proximately caused" is used also to designate this kind of relationship.

2. Aggravation: OWCP defines an Aggravation as a documented physiological process by which a single occupational act or series of acts over a period of time intensified the severity of a physical or mental problem which preexisted the occupational disease.

This kind of relationship occurs if a preexisting condition is worsened, either temporarily or permanently, by an injury arising in the course of employment. For instance, a traumatic back injury may aggravate a claimant's preexisting degenerative disc disease, and compensation would be payable for the duration of the aggravation as medically determined.

Evidence Needed if an Underlying Condition Exists. When the issue of causal relationship involves aggravation, acceleration, or precipitation of a preexisting condition, the CE must ensure that the file reflects a full and accurate history of that condition.

If there is an aggravation to an underlying condition, from the claimant, the CE should obtain:

Full details of the preexisting condition, including the approximate date it first appeared, the names and addresses of all physicians who examined or treated the claimant for this condition, and the approximate dates of such examinations and treatment.

Reports and test results, if any, from all physicians who examined and/or treated the claimant for the preexisting condition.

From the employing agency, the CE should obtain a copy of the pre-employment physical examination, if one was performed.

A claimant should also request a copy of his/her pre-employment physical examination if one exists as this will more than likely show the employee was in good physical and/or mental condition at the date of hire. When compared to the current medical condition, it can help prove your claim.

Copies of any other pertinent medical records held by the employing agency.

A statement from the immediate superior describing the preexisting condition, the nature of any complaints made by the claimant, and any handicap suffered by the claimant in performing his or her duties because of this condition.

Lack of Evidence or Negative Evidence:

When the attending physician negates causal relationship between the condition and the employment and no medical evidence to the contrary appears in the file, the case may properly be disallowed. No other medical opinion is required to support the denial.

When the attending physician is silent with respect to causal relationship in a primary case, the claim may be denied without further development. 

Aggravation: A Claimant may sustain an aggravation of a preexisting condition due to an injury arising in the course of employment. This could result from a traumatic event or exposure to hazardous conditions.

Aggravation occurs if a preexisting condition is worsened, either temporarily or permanently, by an injury arising in the course of employment.
In determining whether a preexisting medical condition has been aggravated by an injury or by job duties, causal relationship can only be established by medical evidence. Where medical evidence establishes that a preexisting condition was aggravated, an aggravation will be accepted, not the underlying condition. A permanent aggravation will only be accepted after careful evaluation of the weight of the medical evidence of record, as discussed in FECA PM 2-0805.

Although a CE makes the final decisions in a claim, a CE can neither diagnose nor medically determine the extent and duration of an aggravation or any disability associated with the aggravation. This determination must be made based on the medical evidence. The extent and duration of work-related aggravation is one of the critical areas that should always be developed when an aggravation is diagnosed.
There are two kinds of aggravation:

Temporary Aggravation: The preexisting condition is worsened or made more severe for a period of time with no residual alteration of the underlying condition and without leaving any continuing impairment beyond that time.

Temporary aggravation involves a limited period of medical treatment and/or disability, after which the employee returns to his or her previous physical status. Compensation is payable only for the period of aggravation established by the weight of the medical evidence, and not for any disability caused by the underlying disease. This is true even if the claimant cannot return to the job held at time of injury because the preexisting condition will worsen if he or she does so. 

Temporary aggravations may involve either symptoms or short-term worsening of a condition. For instance, a claim may be accepted for angina, which is essentially a symptom, in which case medical treatment and compensation would be limited to the period of work-related angina and would not encompass treatment or disability due to the underlying condition.

Likewise, a claimant with a psychiatric condition may suffer a short-term worsening of the condition which then reverts to its prior state. Both of these situations qualify as temporary aggravation. 

Permanent Aggravation: There is continuing and irreversible change in the underlying condition, thus adversely altering the course of the condition or disease process.

Permanent aggravation occurs when a condition will persist indefinitely due to the effects of the work-related injury or when a condition is materially worsened such that it will not revert to its previous level of severity. For instance, an allergy which would have persisted in any event may be permanently aggravated by exposure to dust and fumes in the workplace such that subsequent episodes are more severe than they otherwise would have been.

In order to establish that permanent aggravation has occurred in a physical disability case, there should be objective evidence of a physiological change in the claimant's preexisting condition.

Federal Employees Compensation Act, (FECA) definitions:

Medical Rationale: A logical explanation for the physician's underlying opinions, fundamental reasons and beliefs concerning causal relationship.

Proximate Cause: That which produces the injury in a natural and continuous sequence, unbroken by an intervening cause and without which the resulting injury would not have occurred.

Acceleration: A documented physiological process by which a single occupational act, or series of acts, can be shown to have increased the expected speed of progression in a preexisting condition documented to be progressive in nature.

An employment-related injury or illness may hasten the development of an underlying condition, and acceleration is said to occur when the ordinary course of the disease does not account for the speed with which a condition develops. For example, a claimant's diabetes may be accelerated by a work schedule which is so erratic that it prohibits the regular food intake required by persons with this condition. An acceptance for acceleration of a condition carries the same force as an acceptance for direct causation. That is, the condition has been accepted with no limitation on its duration or severity.

Precipitation: Hastening the occurrence of an event or causing to happen or come to crisis suddenly, unexpectedly, or too soon.

A latent condition which would not have become evident but for the employment is said to have been precipitated by factors of the employment. For instance, tuberculosis may be latent for a number of years, and then become manifest due to renewed exposure in the workplace. The claim would be accepted for precipitation, but the acceptance would be limited to the period of work-related tuberculosis and OWCP’s responsibility for the condition would cease once the person recovered.

Any ensuing episode of the disease would be considered work-related only if medical evidence supported such a continued relationship. In this way acceptance for precipitation may resemble acceptance for temporary aggravation. A claim can also be accepted for precipitation of a condition with no limit on the duration of the acceptance.