8th Circ: SSDI claimant may not adjust time attorney fees are paid to avoid Worker Comp Offset

Minnesota Worker Comp law provides benefit reduction after injured worker's disability benefits exceed $25000 when worker is on SSDI; Injured worker concurrently on SSDI sought to allocate attorney fees to period of time that would reduce this offset and employer agreed; 8th Circ upholds social security administration refusal to time date of fees to a time other than when the claimant paid atty fees Sunde v. Barnhart 08/15/05 U.S. Court of Appeals Case No. 04-3164 District of Minnesota Claimant and employer could not allocate attorneys' fees to a period of time other that the period when they were incurred so as to maximize disability benefits, and the Commissioner did not err in rejecting the stipulation as inconsistent with 42 U.S.C. Sec.424a and 20 C.F.R. Sec. 404.408(d)."The (Social security) Act limits the amount of DIB an individual may receive when simultaneously receiving Workers’ Compensation (WC) benefits. See 42 U.S.C. § 424a(a); 20 C.F.R. § 404.408(a). When an individual’s combined DIB and WC benefits exceed eighty percent of the individual’s pre-disability earnings, the Actrequires a reduction in DIB – called a DIB “offset.” See 42 U.S.C. § 424a(a); Berger v. Apfel, 200 F.3d 1157, 1159 (8th Cir. 2000)."Amounts paid or incurred, or to be incurred, by the individual for legal expenses in connection with the claim foror the injury or occupational disease on which the public disability award or settlement agreement is based, are excluded in computing the reduction under paragraph (a) of this section [i.e., 42 U.S.C. § 424a(a)]20 C.F.R. § 404.408(d)The federal offset does not apply where state law allows an employer to take a “reverse offset.” See 42 U.S.C. § 424a(d). Minnesota is one such state. See Minn.Stat. Ann. § 176.101 sub. 4 (West 1993 & Supp.). After a Minnesota worker receives $25,000 in weekly permanent total disability WC benefits, the Social Security Administration (SSA) pays the full DIB amount while the employer reduces its WC payments to the injured employee, paying only enough to meet the eighty percentceiling. In this way, the federal “offset” is “reversed.”"from January 1, 1996 through November 19, 1996 became the only period during which Sunde’s DIB could possibly be vulnerable to a federal offset due to his concurrent receipt of federal DIB and state WC benefits."the Pl Sunde and his employer worker comp insurer stipulated had incurred $6,500 in attorney’s fees as a result of pursuing his WC claim. They agreed to allocate the fees to the period dated January 1 through November 19, 1996,; "Neither the text of§ 404.408(d) nor the POMS(social security program manual) actually address whether Sunde may allocate legal feesalready paid to an illusory date.""Wesee no basis for binding the SSA to the terms of an original stipulation that essentiallyincreases an individual’s maximum allowable DIB by creating an illusory payment period for attorney’s fees.""In Sunde’s case, evidence of a bare intent to evade the offset is clear. The stipulation stated unequivocally that the “settlement [was] intended to maximize the employee’s entitlement to Social Security disability benefits.”