Rehabilitation Bonus in Arizona Workers' Compensation

Understanding Arizona's Rehab Bonus in Workers' Compensation

The Arizona Workers' Compensation system includes a provision for a "vocational rehabilitation bonus" under certain circumstances. This post will explore what a rehab bonus is and when it applies.

• Scheduled vs. Unscheduled Injuries: The Arizona Workers' Compensation system classifies injuries as either "scheduled" or "unscheduled." Scheduled injuries involve specific body parts listed in the statute, such as the loss of a finger or a hand. Unscheduled injuries involve body parts not listed or involve more generalized injuries.

• Permanent Impairment and Loss of Earning Capacity: When an employee reaches maximum medical improvement after a work-related injury, the extent of their permanent impairment is assessed. This impairment may or may not result in a loss of earning capacity (LEC). LEC refers to the employee's reduced ability to earn wages due to their work-related injury.

• Rehab Bonus Trigger: The rehab bonus comes into play when an employee has a prior industrially related scheduled injury, and subsequently suffers another scheduled injury that, due to the combination of impairments, is now considered an unscheduled injury. However, if the Industrial Commission of Arizona (ICA) determines that the employee did not experience a loss of earning capacity (a "No LEC Award"), they are entitled to the rehab bonus.

• Calculation and Purpose: This rehab bonus is calculated based on the current injury's scheduled impairment rating. It is intended to compensate the employee for the fact that their injury, while not currently impacting their ability to earn in their job, is now classified as unscheduled.

• Lump-Sum Payment and Credit: The rehab bonus is paid in a lump sum and serves as a credit against any permanent disability compensation benefits awarded in a future proceeding.

Example:

An employee previously suffered a 20% scheduled permanent impairment of their left arm. They later sustain a 15% scheduled impairment to their left leg. The ICA finds that neither injury individually or combined impacts their earning capacity in their current job (a "No LEC Award"). Because this employee had a prior scheduled injury and the combination of injuries could now be considered an unscheduled injury, they are entitled to a rehab bonus.