Lester A. Pines
Cullen Weston Pines & Bach LLP
Section 40.65 of the Wisconsin Statutes sets out a unique benefit for law enforcement officers and other participants in the Wisconsin Retirement System who come under the definition of “protective occupation participants.” In a nutshell, sec. 40.65 provides for payment to a law enforcement officer who (1) has suffered a work related injury that (2) is likely to be permanent and which (3) causes that person (a) to retire; (b) to be assigned to a permanent light duty position or (c) by rule of the employer be limited in promotional opportunities. The payment in most cases is 75% of salary, including the average of three years’ overtime, shift differentials and the like. The benefit is tax free and is not static. It rises yearly according to the general index of wage increases for the North Central Region of the United States as determined by the U.S. Department of Labor.
Some Sources of Income Are Set-Off Against the 40.65 Benefit
Section 40.65(5)(b) provides that numerous sources of income, called “set-offs,” can be used to substitute for part of the 40.65 benefit:
1. Social security benefits,
2. Unemployment compensation benefits,
3. Workers compensation benefits payable,
4. Regular retirement and disability (sec. 40.63) benefits,
5. Earnings from the employee’s current employer,
6. Earnings from a different employer or from self-employment according to the following schedule:
a. For the amount of the total that is less than 40% of the participant’s monthly salary, one-third of such amount;
b. For the amount of the total that is from 40% to 80% of the participant’s monthly salary, one-half of such amount; and,
c. For the amount of the total that is more than 80% of the participant’s monthly salary, two-thirds of such amount.
The set-offs do not reduce the benefit below 75% of salary. They merely substitute different sources which comprise the 75%.
When an officer receiving 40.65 benefits reaches the normal retirement age of 55, the Department of Employee Trust Funds automatically begins to pay the employee’s regular retirement benefit. Normal retirement benefits are taxed but they are not subject to the set-offs. Usually, the normal retirement benefit does not equal the amount of the 40.65 benefit. But, over time, because the increases in retirement benefits based on the performance of the retirement trust fund usually outpace wage growth, eventually the difference between an employee’s regular retirement and the 40.65 amount will be eliminated by set-offs. This is almost a certainty once the officer starts to draw social security.
The Relationship of Duty Disability Benefits and Workers’ Compensation Benefits
The most problematic of the set-offs found in sec. 40.65(5) is “workers’ compensation benefits” that are “payable.” Benefits are “payable” when they have not yet been paid. It took the Wisconsin Supreme Court in the case of Counts v. Wisconsin Retirement Board, 209 Wis. 2d 655 (1997), also know as DesJarlais v. Wisconsin Retirement Board, which I argued before the Court, to explain to the State Retirement Fund that “payable” and “paid” do not mean the same thing.
Workers’ compensation benefits are tax-free benefits paid to any employee who suffers a work related injury. Sometimes an injury is temporary and the employee receives payment for medical expenses and for the loss of wages during the healing period. Those payments are called total temporary disability payments or TTD.
If an employee suffers a permanent injury, that employee will receive payment for a permanent partial disability or PPD. If the employee is totally disabled, he or she will receive workers’ compensation for permanent total disability.
An injured law enforcement officer will not know that he or she cannot return to work until his or her physicians have determined that his or her injuries are permanent and that the officer cannot return to law enforcement. Once that decision has been made, the officer is eligible for PPD and sec. 40.65 duty disability benefits.
If an officer is able to get the PPD paid before he or she applies for duty disability benefits, that puts extra money in the officer’s pocket because the workers’ compensation payment will not be “set-off” against the 40.65 payment. The process by which this is done is complicated and involves strategic choices about when to apply for 40.65 benefits and when to settle a workers’ compensation claim for PPD. Every officer who is contemplating applying for duty disability benefits who has not already received payment for PPD should consult with a lawyer who is familiar with these statutes.
Unfortunately, our experience at Cullen Weston Pines & Bach has been that many officers consult with us after they have already applied for 40.65 benefits but have not yet received their PPD. That is too late. Likewise, our experience also is that officers who are injured in work-related traffic accidents have lawyers prosecuting those claims who are not familiar with 40.65 benefits and who are unaware of the importance of processing the workers’ compensation claim promptly.
The Relationship Between 40.65 Benefits and 40.63 Benefits
Section 40.63(1) provides benefits to any person who is a participant in the Wisconsin Retirement System who becomes disabled from any cause (not just from a work related injury or illness) and who, as a result of the disability, is “unable to engage in any substantial gainful activity;” that is, totally disabled from any work. However, sec. 40.63(4) provides that a law enforcement officer who has been in the Wisconsin Retirement System for 15 years, who is 50 years old or more, who becomes permanently disabled and whose disability keeps the officer from efficiently and safely performing the duties required by the officer’s position, is eligible for 40.63 benefits.
That is essentially the same standard that applies to sec. 40.65 benefits. Consequently, an officer over age 50 with 15 years on the job who qualifies for 40.65 benefits will also qualify for 40.63 benefits. Benefits paid under section 40.63 are approximately 66% of salary and are taxable. 40.63 benefits are also a set-off against 40.65 benefits.
Many officers who are 50 and who qualify for 40.65 benefits think that they are being penalized because 40.65 benefits are tax free while 40.63 benefits are taxed. However, wages earned from employment are partially set off against 40.65 benefits, but they are not set off against 40.63 payments. That means, for an officer who is capable of working outside of law enforcement, his or her total income while receiving 40.63 benefits can exceed that which he or she would have made if receiving only 40.65 benefits.
40.65 Claims Based on Mental Illness Can Sometimes Be Difficult
We all know that law enforcement work is inherently stressful. And, for some officers, the stress leads to serious depression or other mental disorders which can sometimes disable the officer from continuing to work in law enforcement. However, the law in Wisconsin will not allow an officer to claim 40.65 benefits successfully (or any employee to claim workers’ compensation benefits) based on mental illness, unless one of two things has happened: (1) the officer has suffered extraordinary stress, which is defined as stress beyond the stress normally associated with law enforcement work; or (2)the officer suffered a physical injury and his or her mental health problem arose along with or was related to that injury.
Extraordinary stress is very difficult to prove without an associated physical injury. In the past we have been successful in some cases involving officers who have had to kill people or who were exposed to particularly gruesome crime or accident scenes. But even in those cases, the claims were not easy.
It is quite important to get prompt treatment for mental health issues. There are very effective treatments for trauma that can minimize or prevent the development of post-traumatic stress disorder, in particular. And, treatment for depression is constantly improving. In light of the difficulty in getting compensation for stress related mental health claims that are not related to a physical injury, law enforcement officers should seek mental health professionals to treat them when such illnesses are developing.
If you have questions about duty disability, workers’ compensation, or personal injury claims, please contact Genny Gibbs-Benesh, who is a paralegal at Cullen Weston Pines & Bach. She has extensive training in all of those areas. She will interview you, gather the pertinent facts, and then make sure that one of our lawyers who handles these cases promptly responds to you. Our telephone number is (608) 251-0101. You can also visit our web site at www.cwpb.com.