Retirement and Termination of Benefits

In today’s aging workforce, an injured worker’s retirement will likely arise often in workers’ compensation claims. How does an injured worker’s voluntary retirement impact their workers’ compensation benefits? Is the employer still responsible for wage loss, when an injured worker retires?

Under the Virginia Workers’ Compensation Act, the employer and carrier are only responsible for a claimant’s wage loss that is attributable to his or her work injury. In the case of a claimant’s retirement, the claimant’s economic loss is related to his retirement, and not his injury. His or her retirement is the cause of his loss of compensation, and thus the employer and carrier are not obligated to continue to pay benefits. Conversely, injured workers who leave the workforce for reasons unrelated to their injuries are nonetheless entitled to temporary total disability compensation when they are totally incapacitated from any work. Their economic loss continues to be related to their work injury, and not a refusal, when they are unable to work in any capacity.

However, consider when a claimant voluntarily resigns from his employment with his employer, where he had light duty work, and then files a claim for benefits for temporary total benefits, after marketing his residual work capacity. Is the claimant entitled to benefits? The Commission has held that there is a distinction between a partially disabled retiree who can seek other employment and a totally incapacitated retiree who cannot work. A partially disabled retiree can supplement his retirement income. A totally incapacitated retiree cannot. Thus, the Commission has held that when an injured retiree effectively refuses light duty employment by retiring, marketing evidence is of no consequence.

The same result would occur if an injured worker, is offered a severance package and voluntarily accepts, resigning from his light duty position. The Commission has held on several occasions that when light duty is offered to the injured worker, and the claimant subsequently resigns or excepts a severance package, such an event also constitutes an unjustified refusal of selective employment. In both instances, retirement and severance, the wage loss by the injured worker is due to his or her refusal, and not his or her work injury, and thus he or she must cure the refusal.

The Commission has held that when an injured worker voluntarily separates from his employer while working light duty with the employer, he must find alternate employment to be entitled to additional partial benefits. If the cure involves returning to work at a wage less than what would have been earned in the job that was refused, the employee’s lost-wage benefit is based on the difference between what the employee earns in the new job and what the employer would have earned in the job that was refused. Code § 65.2-510(B). The Commission has similarly held that a partially disabled employee who voluntarily resigned from employment within his physical capacity offered by his employer cannot cure the unjustified abandonment of selective employment by simply seeking reinstatement at the same position. The Commission has also held that a Claimant marketing his or her a residual capacity cannot serve as a basis to reinstate temporary total disability benefits. The Commission has declined to hold an employer liable for such benefits when the claimant was provided work suitable to his capacity prior to his refusal.

From a pragmatic perspective, an employer and carrier must file an application for benefits at the time of the refusal in order to terminate that award. An application to terminate benefits would require evidence that light duty work was available and that the claimant declined such work upon his retirement. The position must be a bona fide job offer that is suitable for the employee given his or her restrictions. Frequently, such evidence can be proven with testimony by the employer that work was available, and the circumstances of the abandonment of the position. Further, the injured worker must cure the refusal, within six months from the date compensation was last paid, not from the date of the refusal. Of course, medical benefits continue pursuant to Section 65.2-603 of the Act.

To recap, termination of benefits is appropriate when:

1. The Claimant is capable of light duty work.
2. Light duty work available by the employer to the Claimant when the Claimant retires.
3. The separation from the employer is voluntary.
4. The carrier has evidence of the refusal, i.e., evidence of light duty work earnings, job description, and a letter from the employer detailing the work performed and details of retirement.

Should you have any questions about the issues discussed here or other legal issues, please do not hesitate to contact the lawyers at Ford Richardson.

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