Important Change in the Rules of the Virginia Workers’ Compensation Commission and Its Primary Effect(s) on the Employer/Carrier
Effective January 4, 2024, the Rules of the Virginia Workers’ Compensation Commission were amended and published. Of particular importance to the Employer/Carrier is the amendment of Rule 4.1 which now creates a penalty that will be assessed against the Employer/Carrier in certain circumstances.
Rule 4.1 now states the following:
“All agreements as to payment of compensation shall be reduced to writing by the employer and promptly filed with the Commission. If the claim is denied, the employer shall notify the employee and the Commission promptly in writing.
If an agreement is offered to a claimant by the carrier and it is signed and returned unchanged to the carrier within fourteen (14) days, then the carrier must either reject the agreement in writing or sign and file the agreement with the Commission within fourteen (14) days of its receipt or be subject to the penalties from Code § 65.2-701(B).”
(emphasis added).
The main points to take away from this Rule change are the time deadlines of 14 days, the language of “unchanged, and the fact that failure to comply with the Rule makes the Employer/Carrier now subject to penalties, whereas before none of these requirements existed. While we do not know the extent to which the Commission will enforce this Rule or assess penalties, the statute cited allows a fine of up to $1,000.
Recommendations
Going forward, we recommend strict compliance with the 14-day response period laid out in Rule 4.1 if and when a claimant signs and returns an unchanged agreement form. Additionally, carriers often run into circumstances in which both an Award Agreement form and Termination of Wage Loss Award form are sent to the claimant at the same time to create a closed period of disability. Claimants frequently sign and return the Award Agreement while not signing the Termination of Wage Loss Award form. Prior to the revision of Rule 4.1, it was common for carriers to send these forms separately, or to send them together with a generic cover letter.
With the new risk of penalty from Rule 4.1, if you intend to send multiple agreement forms to a claimant, we highly recommend preparing a cover letter for the forms explicitly stating that both an Award Agreement and Termination of Wage Loss Award are being sent to the claimant. If a claimant then returns only the Award Agreement, the carrier can argue that the “agreement” was not signed and returned unchanged, pointing to the cover letter as proof of what the “agreement” was, and using it to establish why returning only the Award Agreement is a change from the “agreement” proposed.
We will keep you advised as we see how the VWC enforces this new Rule.