You asked whether the Social Security Administration (SSA) may use workers' compensation
benefits for disfigurement in South Carolina to offset Social Security disability
SSA may use disfigurement payments under South Carolina workers' compensation law
to offset Social Security disability insurance benefits.
An Office of Disability Programs/Office of Process Policy (ODP/OPP) workgroup is redrafting
the Program Operations Manual System (POMS) sections related to workers' compensation.
While SSA generally must in some cases reduce disability benefits by an amount equal
to a portion of the beneficiary's state workers' compensation payments, the workgroup
identified some states where this offset is inappropriate when the workers' compensation
payments are based on a worker's disfigurement. The current POMS indicates Hawaii's
workers' compensation payments for disfigurement do not offset SSA disability benefits.
POMS DI 52120.070. A Program Circular indicates a similar exception to the general offset rule for
South Carolina disfigurement payments. See Gen. Series Program Circular No. 03-0042 (Feb. 4, 2003). The Program Circular states
South Carolina disfigurement payments are "taken off the top" of a lump sum award
before the amount is prorated and offset against Social Security disability insurance
payments. We cannot verify the legal basis for the Program Circular conclusion that
South Carolina disfigurement payments do not offset Social Security disability insurance
payments. However, we strongly suspect the exception is based on a South Carolina
statute that has been superseded.
Until 2002, SSA included Oklahoma among the states where offset for disfigurement
payments should not occur. In 2002, the Office of the Regional Chief Counsel (ORCC),
Region V, drafted an opinion indicating that Oklahoma disfigurement payments could
offset SSA disability benefits. The ORCC said "any exceptions to the rule [need to]
be specifically citable. In the absence of citable authority for the Hawaii exception,
the POMS [for Oklahoma] might need to be adjusted to reflect Agency policy. . . ."
SSA removed from the Oklahoma POMS section language indicating workers' compensation
benefits for disfigurement in Oklahoma could not offset SSA benefits. See POMS DI 52120.200 (currently silent as to offset). The background we were provided indicates that the
Office of Program Law concurred with Region V ORCC that disfigurement payments may
offset disability insurance benefits unless a "specifically citable" legal authority
indicates the contrary position. The ODP/OPP workgroup referred this matter to us
to determine the legal authority for the current position for South Carolina.
The Social Security Act ("Act") provides certain individuals are eligible for federal
disability benefits. See Act § 223(a), 42 U.S.C. § 423(a). Where an individual receives both Social Security
disability insurance benefits and state payments for disability, however, the Act
limits the amount of benefits the individual may collect. See Act § 224, 42 U.S.C. § 424a. Specifically, SSA must in some cases reduce the disability
benefits otherwise due an individual who is entitled to "periodic benefits on account
of his or her total or partial disability" under a state workers' compensation law.
Act § 224(a)(2); see 20 C.F.R. §§ 404.401(a)(4), 404.408(a) (2007). SSA reduces the beneficiary's benefits
to the extent the combined monthly benefits under the Act and the state workers' compensation
program exceed eighty percent of the recipient's average pre-disability earnings.
See 42 U.S.C. § 424a(a)(5); 20 C.F.R. § 404.408(c) (2007). Congress instituted this "offset"
provision to ensure claimants did not receive income in excess of their pre-disability
earnings, and thereby reduce their incentive to return to work. See Richardson v. Belcher, 404 U.S. 78, 83-84 (1971); Laurenco v. Bowen, 867 F.2d 609 (Table), No. 88-2170, 1989 WL 5430, at *1 (4th Cir. Jan. 21, 1989).
The Act contemplates that periodic workers' compensation payments, as well as periodic
payments that have been commuted to a lump sum award, are subject to the offset provision.
See Act § 224(a), (b).
The only exception to offsetting workers' compensation specified in the Act or regulations
applies where the involved state offsets disability insurance benefits paid under
our program against its workers' compensation award. See Act § 224(d); 20 C.F.R. § 404.408(b) (2007). Workers' compensation disfigurement
payments in South Carolina (and the other states mentioned) do not fall within this
explicit exception. We surmise, therefore, that the disfigurement-payment exception
derived from the Act's definition of workers' compensation payments subject to offset.
See Act 224(a)(2). A review of the history of South Carolina's law regarding disfigurement
suggests that such payments were originally not based on total or partial disability.
One might have concluded, therefore, that they were not "periodic benefits on account
of [a beneficiary's] total or partial disability" under a state workers' compensation
law. See id.
South Carolina's current Compensation Act provides for three methods to obtain workers'
compensation payments: 1) total disability, S.C. CODE ANN. § 42-9-10 (1976); 2) partial
disability, S.C. CODE ANN. § 42-9-20 (1976); and 3) scheduled disability, S.C. CODE
ANN. § 42-9-30 (1976). South Carolina reveals an evolution in its concept of disfigurement
payments. See S.C. COMPENSATION ACT § 31(t), 39 S.C. STAT. AT LARGE, p. 1247 (1935); S.C. CODE
§ 7035-34(t) (1942); S.C. CODE § 72-153 (1952); S.C. CODE § 72-153 (1962). Originally,
South Carolina law provided for compensation for "serious facial disfigurement." S.C.
COMPENSATION ACT § 31(t), 39 S.C. STAT. AT LARGE, p. 1247 (1935). "Disfigurement"
was defined as "that which impairs or injures the beauty, symmetry, or appearance
of a person or thing; that which renders unsightly, misshapen, or imperfect, or deforms
in some manner." Poole v. Saxon Mills, 6 S.E. 2d 761, 764 (S.C. 1940). The word "serious" was "[u]sed in the sense that
the disfigurement should be much more than slight, and partaking of permanency." Id.
In 1941, the South Carolina legislature expanded disfigurement recovery in its Compensation
Act to include "serious bodily disfigurement." S.C. COMPENSATION ACT § 31(t), 42 S.C.
STAT. AT LARGE, p. 221, § 1 (1941), codified at S.C. CODE § 7035-34(t) (1942). Despite
this extension, the Supreme Court of South Carolina found that "[t]he right to compensation
for serious facial or head disfigurement was not dependant on diminution of earning
capacity, as in serious bodily disfigurement. If the condition exists, compensation
under the [South Carolina Compensation] Act is mandatory." Ferguson v. State Hwy. Dept., 15 S.E. 2d 775, 778 (S.C. 1941). Although less than fully clear, the Ferguson decision
suggested that a claimant must show a loss of earnings capacity to recover for bodily
disfigurement. See 15 S.E. 2d at 778.
South Carolina law remained relatively unchanged through subsequent revisions. See S.C. CODE § 72-153 (1952); S.C. CODE § 72-153 (1962). Through the years, the South
Carolina Supreme Court held in 1949 that an award for body disfigurement, that is
for loss of or serious or permanent injury to an organ or body member, need not impair
the appearance of the claimant. See Cagle v. Clinton Cotton Mills, 56 S.E. 2d 747, 748 (S.C. 1949). However, the South Carolina Supreme Court reversed
its holding in C~ by finding that disfigurement of the body connoted appearance. See Bowen v. Chiquola Mfg. Co., 120 S.E. 2d 99, 104 (S.C. 1961) (concurring with the result in C~ but finding that
its basis should have been facial disfigurement rather than because of loss of a member
or organ of the body); accord Smith v. Daniel Const. Co., 169 S.E.2d 767, 769 (S.C. 1969) (confirming that B~ "rejected and overruled" the holding in C~ while also holding that an award for loss of spleen and a second award for disfiguring
scar at the surgical site was incorrect -- the award for disfigurement necessarily
encompassed all disfigurement from the injury). Moreover, under the 1952 South Carolina
Workers' Compensation Act, a claimant's recovery is limited to the scheduled amount,
even if that injury results in his total and permanent incapacitation from labor.
See Singleton v. Young Lumber Co., 114 S.E.2d 837, 846 (S.C. 1960) (holding that the Industrial Commission was incorrect
in awarding compensation under section 72-151 for a total disability, when the claimant's
injury affected only his leg). In such an instance, the correct award should have
been under section 72-153, for a scheduled injury. See id. However, the Singleton court recognized that if a claimant's injury and recovery
to one limb was compounded by another injury, he or she could recover under the permanent-total-disability
section. See id. (citing Globe Indem. Co. v. Brooks, 67 S.E.2d 176, 178 (Ga. App. 1951) (holding that although the claimant suffered
disability to a specific limb, which would have entitled him to compensation for a
lesser maximum period, that injury was superadded so as to affect other portions of
his body and entitle him to an award for total disability). In such a case, the S~ court noted with favor that a claimant may obtain an award for total disability, even
though one or more of his or her injuries was ordinarily recoverable as a scheduled
loss. See S~, 114 S.E.2d at 845-46.
Disfigurement is currently among the subsections of South Carolina's scheduled disability
provisions. See S.C. CODE ANN. § 42-9-30(23) (1976). An individual claiming loss under South Carolina's
"schedule of period of disability and compensation, [including disfigurement,] S.C.
CODE ANN. § 42-9-30 (1976), did not need to show loss of earnings, as is required
for loss under the general disability statutes." Bateman v. Town & Country Furniture Co., 336 S.E.2d 890, 891 (S.C. App. 1985) (citing cases). In such cases, a claimant need
not "show" a loss of earnings when claiming a scheduled loss because the legislature
presumed the claimant has a loss of earnings capacity corresponding to the scheduled
amount and based on the degree of loss. See Lyles v. Quantum Chem. Co., 434 S.E.2d 292, 295 (S.C. App. 1993) (citing B~); see also W~, 580 S.E.2d at 102 (stating that loss of earnings is presumed for scheduled losses).
South Carolina's current law on disfigurement compensation states "[i]n cases included
in the following schedule, the disability in each case is considered to continue for
the period specified and the compensation paid for the injury as specified: . . ."
(23) proper and equitable benefits must be paid for serious permanent disfigurement
of the face, head, neck, or other area normally exposed in employment, not to exceed
fifty weeks. Where benefits are paid or payable for injury to or loss of a particular
member or organ under other provisions of this title, additional payments must not
be paid under this item, except that disfigurement also includes compensation for
serious burn scar or keloid scars on the body resulting from injuries, in addition
to any other compensation.
S.C. CODE ANN. § 42-9-30(23) (1976). The last sentence of this provision disallows,
except in very limited circumstances, collecting both for disfigurement and another
scheduled loss. See S.C. CODE ANN. § 42-9-30(23) (1976).
This history of South Carolina's law on disfigurement payments within its Compensation
Act suggests the basis underlying the earlier SSA finding that such payments in South
Carolina would not offset Social Security disability insurance benefits. Historically,
disfigurement payments were distinct from payments for partial or total disability.
However, because facial disfigurement payments are now combined with bodily disfigurement
and organ loss into one of many provisions within South Carolina's scheduled losses
for which loss of earnings capacity is presumed, these payments can result in an offset
against SSA disability benefits. Indeed, dicta in the L~ and W~ decisions suggest that while a claimant need not prove a loss of earnings capacity
for a scheduled loss, the legislature has presumed scheduled losses include a component
for loss of earnings capacity. See W~, 580 S.E.2d at 102; L~, 434 S.E. 2d at 295. While a claimant is not required to "show" a loss of earnings
when claiming a scheduled loss, the payment indicated on the schedule would include,
at least in part, payment for lost earnings capacity. Furthermore, no distinction
has been made after 1976 that this presumption of lost earnings capacity applies only
to bodily disfigurement or other scheduled bodily loss. South Carolina appears to
presume lost earnings capacity as a component of all scheduled losses, including disfigurement
losses. The L~ and W~ decisions were subsequent to F~, which suggested that a claimant must show diminution of earning capacity when claiming
serious bodily disfigurement. See 15 S.E.2d at 778. In light of these later decisions, it seems that this dicta in
F~ is no longer indicative of South Carolina's law on this issue.
We conclude that South Carolina payments for disfigurement should be offset against
SSA disability payments. The same should hold true for any compensation award in South
Carolina under its scheduled loss provisions. This offset is consistent with the plain
language of the Act requiring reduction of an individual's Social Security disability
insurance benefits where he or she is entitled to "periodic benefits on account of
his or her total or partial disability" under a state workers' compensation law. See Act 224(a)(2).
For the reasons stated above, we believe SSA should consider South Carolina among
the majority of the states and should generally offset disfigurement and other scheduled
loss workers' compensation payments.
Very truly yours,
Mary A. S~
Regional Chief Counsel
Jerome M. A~
Assistant Regional Counsel