SSDI budget cuts in Trump’s proposed budget

Wisconsin Workers’ Compensation Experts has a good blog post about the proposed cuts in Social Security Disability Income (“SSDI”) benefits in the proposed Trump budget.

The claimed cuts are allegedly about fraudulent SSDI claims by people who can supposedly work. Actual SSDI fraud is minuscule, however.

Furthermore, SSDI benefits represent crucial wages for disabled individuals based on their prior earnings. As the blog post explains:

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death. (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.) Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans. Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs. Without a college degree, benefits are not significant (averaging about $1,200 per month). However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income.

There is also already an existing and widespread program in place to encourage and facilitate SSDI benefit recipients returning to regular work. Ticket to work is a free and voluntary program by the Social Security Administration to assist SSDI benefit recipients with returning to the workforce. The employment support efforts available for SSDI benefit recipients are extensive. Presentations and training about the program are also available. The budget proposal from the current President appears to be little more than a massive cut to benefits and training and support without any acknowledgment of the difficulties disabled folk have in the workplace. Because of Ticket to Work efforts, many SSDI benefits recipients are already working limited jobs. They just cannot find the kind of full-time, regular work they once had prior to their disabilities.

Note as well that in Wisconsin, SSDI benefit recipients are prohibited from receiving unemployment benefits. Federal law, however, prohibits a similar disqualification for individuals receiving regular Social Security benefits.

NOTE: Because prohibitions on regular Social Security benefits are not allowed, the prohibition on unemployment benefits when receiving SSDI benefits also ends when an individual’s SSDI benefits become regular Social Security benefits — i.e., when the claimant reaches his or her Social Security retirement age.

Accordingly, Wisconsin employers have a financial incentive to hire SSDI benefits recipients, as these employees are prohibited from receiving unemployment benefits when laid off regardless of the layoff reason.

For those receiving SSDI benefits, however, the budget proposal represents a second strike: having already lost eligibility for unemployment benefits in Wisconsin, they are now slated to lose their SSDI benefits as well.

DWD/Advisory Council bill going forward

The official Advisory Council/DWD bill has just been introduced, AB819. So, here is a rundown of what has been happening with unemployment law over the last several months, organized by proposal.

Department Proposals

  • A second SSDI prohibition, D15-01, to replace the current prohibition was approved in April 2015 and back-dated in May 2015. But, after the Department started winning the court cases challenging the old SSDI prohibition (see this post for the details), this proposal disappeared from the Department’s legislative draft at the council’s September 2015 meeting. But, after the Labor and Industry Review Commission ruled in November 2015 that departmental error had occurred when appeal tribunals (but not the Commission) had originally ruled in favor of claimants regarding dual receipt of SSDI and UI benefits (and so no repayment of UI benefits previously received was proper), this proposal re-emerged at the November 2015 council meeting in the Department’s legislative drafts and is now part of AB819. Why? This second SSDI prohibition is back-dated to January 2014, the effective date of the original SSDI prohibition.
  • D15-02 is a house-keeping change that allows the Department to issue determinations against out-of-state employers in combined wage claims for being at fault for an erroneous benefit payment to a claimant. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86.
  • D15-03 applies the Treasury offset program to employers, as described previously in this post. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86. Because of this quick enactment, employers will be subject to treasury offsets for their 2015 tax returns for any unemployment taxes for which they have been found individually liable.
  • D15-04 sets up essentially a backup insurance program for reimbursable employers who get their unemployment accounts swindled by identity fraud (and so have little to no hope of ever recovering the stolen benefits). The final recommendation from the council was for reimbursable employers to be taxed initially in order to create a fund of $1 million for covering themselves against identity fraud, essentially the second option of the three presented. This proposal is part of AB819.
  • D15-05 corrects a hole in the statutes that accidentally left LLPs out of the definition of employer (see also this DWD memo on this issue). This proposal is part of AB819.
  • The Advisory Council approved the Department’s appeals modernization proposal, D15-06, at the 7 January 2016 meeting. LRB draft language was prepped soon thereafter. Perhaps the most significant change in this proposal — notice by Internet in place of postal mail — has NOT received any discussion of comment from council members, however. This proposal is now part of AB819.
  • A renewed work-share program, D15-07, is part of AB416 and has been enacted as 2015 Wisconsin Act 86.
  • Proposed changes to the definition of claimant concealment in D15-08 (described in this previous post and described in a Department memo (discussed in this post) are part of AB819. Additional criminal penalties for concealment in AB533 continue to advance in the legislature. To see what all the fuss is about, take a look at this January 21st Assembly Committee on Public Benefit Reform hearing regarding AB533 and other UI bills or read this LIRC memo on the proposed concealment changes.
  • Technical changes in D15-09 and included in AB819 will allow the Department to distinguish able and available determinations from separation determinations.
  • D15-10 eliminates the publication of the claimant benefit tables within the statutes and is included in AB819.
  • Major changes to the process for getting unemployment decisions reviewed in circuit court, set forth in D15-11, are part of AB819. These changes were previously described here and here.
  • D15-12 allows the same protocols for unemployment taxes in regards to fiscal agents in adult care to apply to fiscal agents in child care situations. This proposal is part of AB819.
  • D15-13 ends the sunset date in 2034 for the program integrity fund (i.e., the fund for receiving some of the monies from concealment enforcement) since the Department now expects concealment monies to continue in perpetuity. See the next two proposals for why.
  • The Department’s proposals for a program integrity slush fund, D15-14 and D15-15, are part of AB819.

Labor and Management Proposals
At the Advisory Council’s 19 January 2016 meeting, the council took action on various management and labor proposals and the agreed-to changes have been incorporated in AB819.

The management proposals that the council agreed to include significant changes to what will be considered suitable work:

  • During the first six weeks of a job search, suitable work that a claimant MUST accept will be those jobs that (1) do not have a lower grade of skill than one or more of his or her most recent jobs and (2) have had an hourly wage that is 75 percent or more of what the claimant previously earned in his or her most recent, highest paying job.
  • After the first six weeks, suitable work means any work the claimant is capable of performing regardless of prior experience, skills, or training, as long as the wages for that job are above the lowest quartile wage-level in the claimant’s relevant labor market.

Once a job offer is considered suitable work for a claimant, then the claimant only has good cause for declining the job offer if the claimant’s personal safety is at risk, the claimant’s sincerely held religious beliefs conflict with the work, the work entails an unreasonable commuting distance, or some other compelling reason makes accepting the offer unreasonable. These changes to what will be considered suitable work will also apply to those who tentatively accept a job and then quit within the first thirty days.

In addition, this accepted management proposal will either eliminate unemployment eligibility entirely for anyone receiving temporary or partial workers’ compensation benefits or mandate offsets against UI benefits for those receiving these kind of workers’ compensation benefits (the specific type of workers’ compensation benefit being received leads to the different kinds of treatment). In other words, the SSDI prohibition is being expanded to workers’ compensation benefits. Also, anyone making a mistake in how they report their specific workers’ compensation benefits will, under the new on-line filing system, likely face a concealment charge for his or her mistake in reporting the kind of workers’ compensation benefits he or she is receiving.

These management-sponsored changes will take effect four weeks after enactment.

The labor proposals that the council agreed to include:

  • repealing the mis-classification prohibitions in workers’ compensation and fair employment law,
  • creating an administrative penalty for mis-classification for unemployment purposes of $500 per employee (capped at $7,500) when construction employers (and only construction employers) knowingly and intentionally provide false information to the Department (NOTE: compare this definition with the proposed changes to claimant concealment) for the purpose of misclassifying or attempting to mis-classify an employee,
  • fining employers in painting and sheetrock work $1,000 per incident (capped at $10,000 per calendar year) when coercing employees into accepting non-employee status for unemployment purposes, and
  • fining construction employers $1,000 per employee (with a maximum of $25,000) for subsequent violations as well as possible referral for criminal prosecution.

These mis-classification changes will take effect six months after passage.

Budget Bill Fixes
The LIRC funding fix bill, discussed here, is also right now being considered by the legislature.

The call in the budget bill for the Department to create suitable work rules for claimants has been eliminated by the management-sponsored changes to suitable work described above.

Retroactive SSDI

The Department of Workforce Development continues to pursue its cause celebré of keeping recipients of Social Security Disability Income (“SSDI”) from receiving unemployment benefits based on their work. As noted previously, the number of claimants affected by this issue keeps increasing (originally 50 and now numbering around 3,500 claimants), a recent court case agreed with the Department about the prohibition on receiving all unemployment benefits allegedly set forth in current unemployment law, and new legislation accomplishing this complete ban on unemployment benefits that will be retroactive to 5 January 2014 has been adopted by the Advisory Council and the Department.

At the 18 June 2015 Advisory Council meeting, a draft of Department-sponsored legislation (see pp. 7-9) was distributed. In this draft legislation, Wis. Stat. § 108.04(12)(f)1 is re-numbered (f)3 and amended to read:

(f)3. a. Any Except as provided in Subd. 3. b. to d., an individual who actually receives social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week is ineligible for benefits paid or payable in that same week under this chapter for each week in the entire month in which a social security disability insurance payment is issued to the individual.

Wis. Stat. § 108.04(12)(f)1m is created and reads:

The intent of the legislature in enacting this paragraph is to prevent the payment of duplicative government benefits for the replacement of lost earnings or income, regardless of an individual’s ability to work.

Wis. Stat. § 108.04(12)(f)2 is re-numbered (f)4 and amended to read:

Information that the department receives or acquires from the federal social security administration that an individual is receiving regarding the issuance of social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week payments is considered conclusive, absent clear and convincing evidence that the information was erroneous.

Wis. Stat. § 108.04(12)(f)2m is created and reads:

In this paragraph,”social security disability insurance payment” means a payment of social security disability insurance benefits under 42 USC ch. 7 subch. II.

Wis. Stat. § 108.04(12)(f)3, with sub-sections b, c, and d, are created and read:

b. In the first month a social security disability insurance payment is first issued to an individual, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

c. Following a cessation of social security disability insurance payments to an individual and upon the individual again being issued a social security disability insurance payment, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

d. Following cessation of social security disability insurance payments, an individual may be eligible for benefits under this chapter, if otherwise qualified, beginning with the week following the last Saturday of the month in which the individual is issued his or her final social security disability insurance payment.

As evident in this draft language, the general prohibition current set forth in unemployment law and based on “receiving” SSDI benefits (see Kluczynski) is replaced with specific language that applies SSDI monthly benefits across all weeks of unemployment eligibility. While not the most artful , this proposed language most likely will accomplish its goal of making SSDI recipients ineligible for any unemployment benefits for as long as they are receiving monthly SSDI checks.

NOTE: Obviously, this proposal still does nothing to address the problem on the employer end that will make them immune to any unemployment-related consequences — i.e., changes to their experience ratings — when laying off SSDI recipients. Moreover, this change is still making an artificial distinction between SSDI benefits and regular social security benefits. For instance, SSDI recipients have their SSDI benefits become regular social security benefits upon reaching retirement age and no longer receive “SSDI” benefits.

Finally, this draft language contains the startlingly retroactive application to 5 January 2014 of this prohibition (see pp.14 and 13):

(1) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes and SECTION 27(2) of this act take effect retroactively to January 5, 2014.

[SECTION 27] (2) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes first applies retroactively to determinations issued under section 108.09 of the statutes on the effective date of this subsection.

SSDI and unemployment: recent developments

A previous post in April 2015 described how the Department of Workforce Development is attempting to get around the Labor and Industry Review Commission’s decision in Kluczynski.

Since that post, there has been a series of new developments.

The number of SSDI claimants keeps increasing

When the Department first proposed eliminating eligibility for unemployment benefits for all those receiving SSDI benefits, the Department indicated that the prohibition was likely to affect no more than fifty claimants.

In February 2015, the Department informed the Advisory Council that the SSDI ban affected 687 claimants in January 2014 when enforcement began.

In May 2015, this number has increased even further. The Advisory Council’s 2015 report at p.8 has the following update on the SSDI prohibition:

SSDI and UI Payments

2013 Wisconsin Act 36 provides a claimant cannot simultaneously collect both Social Security Disability Insurance (SSDI) benefits and UI benefits.

Primary Statute Created: Wis. Stat. §§108.04 (2) (h) and 108.04 (12)(f).

The ban on simultaneously collecting both Social Security Disability Insurance (SSDI) benefits and UI benefits saved hundreds of thousands of dollars for the UI Trust Fund as close to 3,500 UI claims have been denied through early May 2015.

DWD wants to back-date its new SSDI legislation to 4 January 2014

As previously noted, in April 2015 the Advisory Council approved a new prohibition on SSDI benefits intended to fix the poor drafting of the original SSDI prohibition.

At the May 19th council meeting, the Department announced that this new SSDI prohibition would be back-dated to 4 January 2014, the date of the original SSDI prohibition. This back-dating is already included in the DWD-sponsored bill being drafted.

A recent court case found in favor of the Department

A few cases continue to be appealed concerning claimants receiving SSDI benefits who still want their unemployment benefits because of their prior work. Here is an excerpt from a recent letter I sent the Commission in one of those cases. In this letter, I describe a circuit court decision that found Kluczynski unpersuasive.

This appeal to the Commission concerns the Commission’s understanding of Wis. Stat. § 108.04(12)(f)(1), enacted pursuant to 2013 Wis. Act 36, and as detailed in Kluczynski, UI Hearing No. 14400214AP (30 May 2014).

In Kluczynski, the Commission held that this statute unambiguously restricted receipt of unemployment benefits to the “given week” a claimant “actually receives” his or her SSDI benefits. In other weeks where unemployment benefits can be received and for which no disability benefits are actually received, claimants are still eligible for their unemployment benefits.

As the Commission and the Department are aware, Judge Neiss recently held in DWD v. LIRC, Dane County Circuit Court Case No. 2014-CV-3249 (27 May 2015) that the statutory text at issue here was ambiguous because two state agencies — the Commission and the Department — offered opposing interpretations of the statute. The court then goes on to observe that an intransitive definition of “receives” means the act of receiving, and so a person who “actually receives [SSDI benefits] in a given week” is, pursuant to Wis. Stat. § 108.04(12)(f)(1), someone who is identified as an SSDI recipient for each week of their unemployment eligibility. As a result, Judge Neiss concluded, this prohibition on receiving unemployment benefits applied constructively to all the weeks in a month despite the modifiers “actually . . . in a given week” in the statute about “receiving” SSDI benefits. In reaching this conclusion, Judge Neiss has seemingly stretched statutory text to create an ambiguity and reach an intended outcome rather than first reading the text itself as part of the state’s unemployment law as a whole.

NOTE: As noted in Kluczynski, constructive receipt of one-time payment across several weeks in order to determine eligibility for unemployment benefits is provided for in Wis. Stat. § 108.05(7)(d) regarding pension payments. So, there is no need to find ambiguity in one provision of unemployment law to reach a result for which another provision of unemployment already offers unambiguous language regarding the constructive receipt of payments. As proffered by the Commission in Kluczynski, this language could have accomplished the intended result simply by replacing “shall allocate and attribute” with “shall deem and attribute” in this constructive receipt language.

The Commission should not adopt this outcome in this appeal but instead affirm its analysis in Kluczynski. The Commission’s explanation of its analysis in Kluczynski did NOT imply that this statutory text was actually ambiguous, as Judge Neiss holds. Rather, the Commission explained in its memorandum opinion in Kluczynski why the Department’s arguments for its proffered interpretation of unambiguous text are mistaken and why its arguments about the statute being ambiguous were insufficient. Because the statutory text as written does not accomplish its intended result, it should not be rewritten by the Commission or the courts to do so.

JFC (really DWD) targets LIRC

Workers compensation administration is NOT being transferred from DWD. The workers compensation ALJs are being moved to the Division of Hearings and Appeals, however.

In unemployment, the Joint Finance Committee is approving an increase in the concealment surcharge to 40%. At present, this surcharge is 15%. The additional 25% will be used for program integrity purposes — i.e., auditing claimants. Additional criminal penalties for concealment are being deleted.

And, for the Labor and Industry Review Commission, a budget cut of $434,900 (out of a total budget of $3,612,000 and a sizable chunk of the Commission’s UI budget), transferring the cut funds to DWD for additional “program integrity,” and making the general counsel a political appointment by the governor:

18. Labor and Industry Review Commission (LIRC). Transfer the limited administrative attachment for LIRC from the Department of Workforce Development (DWD) to the Department of Administration (DOA). Further, transfer LIRC’s appropriations to be budgeted separately under Chapter 20 of the appropriation schedule. Reduce LIRC federal unemployment administration funding by $434,900 FED annually and, to the extent allowable under federal unemployment insurance (UI) law, provide these funds for UI program integrity purposes. DWD’s UI administration appropriation would be increased by $434,900 annually to reflect this provision. [Under the motion, LIRC would be attached to DOA under s.15.03 for limited administrative purposes, but would have its own appropriation schedule (currently LIRC is budgeted as a program under DWD). The provision that the Department (currently DWD, DOA under the motion) submit LIRC’s budget to the Governor without change would remain] Additionally, convert 1.0 position from classified to unclassified, and specify the Governor appoint the LIRC general counsel position.

Apparently, this provision is payback for the Commission’s red-flag memos about SSDI and concealment. These budget shenanigans raise obvious questions about how independent the Commission can really be.

SSDI benefits and unemployment

In 2012, the Department of Workforce Development introduced numerous proposed changes to unemployment law, and one of those proposals, D12-05, sought to ban recipients of Social Security Disability Income (SSDI) from receiving unemployment benefits.

After back and forth between the members of the Advisory Council and the Department, a new version of the Department’s proposed ban on unemployment benefits when receiving SSDI benefits was drafted, supported by the council, and passed by the legislature.

In 2014, however, the Labor and Industry Review Commission found that the actual statutory language did not accomplish what the Department intended and held that the ban on receiving unemployment benefits only applied for the week in which a person’s monthly SSDI benefits were paid. Since then, the Department has appealed each and every Commission decision allowing claimants receiving SSDI benefits to continue receiving some unemployment benefits (about eleven such cases in total). An amicus brief being filed in some of these circuit court cases has the details about these events and issues.

This amicus brief also demonstrates the fundamental flaw in the Department’s push to keep SSDI recipients from receiving unemployment benefits, namely the Department’s presumption that SSDI recipients do not work and leave the labor market. As detailed in this amicus brief, not only do folks receiving SSDI benefits continue to work in numerous kinds of jobs, they are also encouraged to do so.

Undeterred, the Department explained at the 19 February 2015 Advisory Council meeting that a proposal for eliminating all unemployment eligibility for those receiving SSDI benefits was being developed. At the 19 March 2015 council meeting, the Department presented this new language in D15-01 to make the ban on unemployment eligibility apply to all weeks SSDI recipients receive unemployment benefits.

To establish why this new and total ban was needed, the Department informed council members that in January 2014, when the first ban on unemployment eligibility for SSDI recipients was instituted, 687 claimants were immediately disqualified because they notified the Department that month that they were receiving SSDI benefits. This 687 number bears repeating: the SSDI ban as implemented by the Department stopped unemployment benefits for nearly 700 claimants. And, only eleven or so claimants who appealed their cases to the Commission managed to retain some eligibility.

The Department’s recently released Financial Outlook Report at p.34 shows the financial impact this ban on unemployment benefits for SSDI recipients has had: nearly $1.5 million annually is not being paid to claimants based on the work they have performed the previous year.

Staffers in the Secretary’s office of DWD recently asked the Commission to identify possible legal problems in the Department’s unemployment proposals. The Commission did so, and reported to the Advisory Council the problems with the Department’s SSDI proposals arising from the Commission’s legal analysis. The Commission’s memo reveals three basic problems with the Department’s SSDI efforts:

  • a total ban on unemployment eligibility discriminates against the disabled
  • a ban on unemployment eligibility because of disability is inconsistent with other provisions of unemployment law
  • a complete ban on unemployment eligibility is far too broad relative to the income and eligibility of many if not most individual claimants

In response, at the April 2015 council meeting the Department lambasted the Commission’s memorandum as driven by a political agenda rather than legal analysis. Scott Manley, WMC vice-president, chimed in to endorse the Department’s criticism of the Commission’s “political” opinions. These conclusions were especially remarkable when the Commission’s memorandum represents the first time that council members were presented with the Kluczynski decision at issue in these SSDI cases.

The Advisory Council, however, apparently accepted the Department’s conclusion about SSDI benefits. After the members caucused, they indicated that they approved of the newly proposed statutory language in D15-01 and that the Department could go ahead and present this proposal to the legislature.