Wednesday, Sept. 18, 1996 | 11:59 a.m.
CARSON CITY -- A little-noticed decision by the Nevada Supreme Court last month means that as many as 600 permanently disabled workers could be shortchanged in their future benefits.
The 3-2 opinion has angered injured workers in the State Industrial Insurance System, who said they may carry their cases to the federal court.
"This is affecting people sitting home as quadriplegic or in wheelchairs," said John Taylor, president of the Southern Nevada Association for Injured Workers. "It's wrong what they're doing. It is not only morally wrong ... it avoids the law."
SIIS maintains that the court decision stops what would amount to bonuses for injured workers. The disabled employees, however, feel this SIIS policy is reaping "windfall profits" for the agency.
The case on which the Supreme Court ruled involved Ralph Miller, who injured his back in 1984 while working as an operator in the production department of Pacific Electrical & Engineering Co. in Henderson. The 37-year-old was rated as having a 23 percent permanent body disability. He had a choice to receive monthly payments of $281 until he reached age 68 or to take a lump sum payment of $45,236.
Miller opted for the lump sum. His condition worsened and another examination showed a 27 percent impairment of his body. That meant he could receive an additional $48 in monthly payments until the year 2017 or take a lump sum at $7,768. He again took the lump sum.
Later, Miller's status was judged to be a permanent total disability, enabling him to collect $1,360 per month.
The issue is over a formula to be used to recoup the $54,000 Miller received in the lump sum. Miller contends his future SIIS payments should be docked only enough to repay the $54,000.
SIIS says the law is clear that his periodic payments must be reduced by the amount he would have received if he opted for monthly benefits rather than taking a lump sum. It will mean that Miller will have to reimburse the system the $54,000, plus an additional $35,000 over the life of his benefits.
Shirley Lindsey, associate general counsel for SIIS, says Miller took the lump sum and had the ability to invest the money to gain interest. In effect, if Miller is required to only repay the $54,000, he will have enjoyed an interest-free loan.
If SIIS, on the other hand, had not had to pay out the $54,000 lump sum, it could have invested it and with a 3 percent interest rate could have boosted it to $100,000 over a 24-year period.
Justice Miriam Shearing, who wrote the majority decision in the 3-2 ruling, said Miller would be "unjustly enriched" if he had only to repay the $54,000. "This would amount to giving Miller an interest-free loan, i.e., it would have the same financial impact as if SIIS gave Miller a loan in 1985 and in 1988 and allowed him to repay it, without interest, over a multi-year period."
The 1995 law on repayments to SIIS, Shearing said, was "unambiguous." It permits the SIIS to deduct from Miller's monthly benefits the amount per month that Miller would have received had he elected to receive monthly installments.
Justices Charles Springer and Bob Rose dissented, arguing that this allows the SIIS to collect a "retroactive pawn charge." They said SIIS should be permitted under the law to reduce Miller's disability award only by the actual dollar amount received by him.
The majority's decision, Springer and Rose said, is "contrary to the fair treatment of injured workers, contrary to the common understanding by injured workers of disability awards and contrary to common fairness and common sense."
Taylor, of Las Vegas, said the court's decision "destroys a vested right" of the injured worker who is entitled to benefits. He said he may carry the suit to federal court on behalf of Miller, himself and other workers in the same boat.
In his case, Taylor received a $5,000 lump sum from SIIS for an eye injury. Under the policy adopted by SIIS, he will lose $60,000 in future payments to repay the $5,000.
Taylor said the 1995 law was supposed to protect the workers from this type of repayment schedule. But now it's been interpreted by the Supreme Court to favor SIIS.
"If they start taking more money away from me, I will move to federal court and get an injunction to cover everybody," Taylor said.
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