Opinion ID: 1838305
Heading Depth: 1
Heading Rank: 3

Heading: Reconsideration of Garrett Decision

Text: Pitre first requests that this court reconsider the critical holding in Garrett that an employer is entitled under Section 1225 C(1)(c) to an offset of Social Security disability benefits, although Section 1225 C(1)(c) does not mention Social Security benefits. In Garrett, we concluded that the Legislature, by not expressly qualifying the term disability benefits plans either as limited to private disability benefit plans or as including Social Security disability benefits, intended to provide an offset for benefits received under any disability plan. Id., 95-0017 at 10, 660 So.2d at 846. We also observed that disability benefits under the Social Security Act are benefits under a disability benefit plan. Id. We further reasoned that construing Section 1225 C(1) as excluding an offset for Social Security disability benefits would permit the exact duplication of benefits that wage-loss benefit coordination statutes such as Section 1225 C(1) are designed to preclude. Id., 95-0017 at 11, 660 So.2d at 847. On reconsideration, we conclude that Garrett was wrongly decided. [5] We were motivated in Garrett in large part by the objective of preventing double recovery, perhaps in excess of actual wages, from two sources of wage-loss benefits. We now recognize that federal law prevents any such double recovery from Social Security funds, irrespective of whether Section 1225 C(1)(c) was intended to include Social Security disability benefits. We therefore reinitiate our analysis of the entirety of Section 1225 C(1). The present federal statute, under the 1965 re-enactment as part of the major revision of the Social Security Act, requires that the amount of Social Security benefits be reduced when the combined amounts of Social Security disability benefits and state workers' compensation benefits exceeds eighty percent of the employee's average current earnings. [6] 42 U.S.C. § 424a(a) (1991). This offset of state benefits against federal benefits prevents a disabled employee who is receiving both types of disability benefits from receiving more than eighty percent of his pre-injury wages, while at the same time allowing a supplement to the generally inadequate state workers' compensation benefits. For a limited period of time, the federal offset statute provided that the federal offset was not applicable when a state law provided for an offset of Social Security disability benefits against overlapping state workers' compensation benefits. [7] This reverse offset provision allowed state legislatures to bestow an advantage on local employers, since state employers, instead of Social Security, could take the offset that Social Security otherwise would have alone been authorized to take. If the state legislature acted under this authorization, the single offset was a reduction in overall benefits that accrued to the benefit of employers on the state workers' compensation side of the equation, at the expense of Social Security. There was no corresponding disadvantage to employees, since either the state or the federal system, but not both, would receive the benefit of the reduction to the eighty percent ceiling on the total benefits. In 1978, the Louisiana Legislature took advantage, to some extent, of this Congressional beneficence by enacting the reverse offset provision now included in La. Rev.Stat. 23:1225 A. [8] However, the Legislature for some reason chose to make the reverse offset applicable only in cases of permanent total disability, and the reverse offset therefore does not apply in the present case. [9] Nevertheless, in the cases in which the reverse offset applied, the state's reduction took precedence over the federal reduction and precluded application of a second offset. Sciarotta v. Bowen, 837 F.2d 135 (3d Cir.1988). The Louisiana Legislature took no further action to extend the reverse offset to cases other than those involving permanent total disability. After the cutoff date of February 18, 1981, states could no longer enact reverse offset provisions, or add to or alter the scope of an existing state reverse offset statute. The result is that while federal law provides for a reduction in overall benefits in all cases in which a disabled employee is receiving Social Security disability benefits and state workers' compensation benefits, Louisiana employers receive the advantage of the reverse offset reduction only when the employee is permanently totally disabled. In 1983, as part of a comprehensive revision of the workers' compensation laws, the Legislature enacted La.Rev.Stat. 23:1225 C, which this court considered in Garrett. The present case, like Garrett, involves temporary total disability, and Section 1225 A does not apply. As noted, our principal motivation in Garrett was to prevent a duplication of benefits that wage-loss benefit coordination statutes are designed to preclude. [10] Perhaps because the calculation of the offset was not at issue in Garrett, we failed to recognize that federal laws prevented recovery of duplicate benefits in excess of eighty percent of prior earnings in any case in which the employee was receiving both federal Social Security and state workers' compensation benefits. Section 1225 C(1)(c) therefore was not necessary to prevent recovery of excessive duplicative benefits from both sources. Irrespective of Section 1225 C(1), federal laws placed a ceiling on combined Social Security and state workers' compensation benefits of eighty percent of average current earnings. Thus, disabled employees could never recover in total disability benefits more than their actual earnings prior to the accident. This reduction in total benefits also worked to the advantage of employers whose state legislatures enacted comprehensive reverse offset provisions. Because the Louisiana Legislature chose only to take partial advantage of this opportunity for Louisiana employers to reduce their workers' compensation obligations, and because federal law in all cases prevents double recovery beyond eighty percent of average current earnings, we erred in construing the legislative intent of Section 1225 C to include Social Security disability benefits in the term [b]enefits under disability benefit plans. Such an interpretation was not dictated by the dual purpose of wage-loss benefit coordination laws to assure continuation of a minimum portion of an employee's actual wages in the event of disability or death while precluding the employee from contemporaneously recovering duplicative benefits under different parts of an overall scheme of wage-loss benefits. In summary, a disabled employee receiving both Social Security disability benefits and state workers' compensation benefits is limited by federal law to total benefits from both sources of eighty percent of his or her average current earnings, and there is no duplicative recovery of benefits beyond that amount. When the employee is permanently totally disabled, however, the employer receives under Section 1225 A the advantage in the reduction of total benefits to the federal ceiling. When the employee is temporarily totally disabled, however, the federal authorities take the reduction of total benefits to the federal ceiling, and this court's decision in Garrett apparently had the effect of allowing state employers to reduce their compensation obligation (in addition to the reduction already taken by the federal authorities) from eighty percent of the employee's average current earnings to sixty-six and two-thirds percent of average weekly wage. From the standpoint of the temporarily totally disabled employee, the result of Garrett was to reduce total benefits to below the federal ceiling, which was different treatment than that accorded an employee with permanent total disability. We now recognize that the Legislature, in enacting Section 1225 C(1), hardly contemplated this disparate treatment. Accordingly, we overrule our prior decision in Garrett v. Seventh Ward General Hosp., 95-0017 (La.9/22/95), 660 So.2d 841. We now hold that the term [b]enefits under disability benefit plans in La.Rev. Stat. 23:1225 C(1)(c) does not include Social Security Disability benefits.