                                 ___________

                                 No. 96-1959
                                 ___________

Ronald Herrley                         *
                                       *
           Appellant,                  *
                                       *    Appeal from the United States
      v.                               *    District Court for the
                                       *    District of Minnesota
Shirley S. Chater,                     *
Commissioner of                        *           [UNPUBLISHED]
Social Security Administration,        *
                                       *
           Appellee.                   *

                                 ___________

                        Submitted: November 22, 1996

                            Filed: March 4, 1997
                                 ___________

Before BEAM and LOKEN, Circuit Judges, and MOODY, District Judge.1
                                ___________

MOODY, United States District Judge.


      Ronald     Herrley    appeals   the     district     court’s2     judgment
affirming the decision of      the Social Security Administration (SSA)
to reduce, pursuant to 42 U.S.C. § 424a(b), Herrley’s                     social
security disability        benefits   in   order    to   offset    an   award   of
permanent partial disability made to him pursuant to                Minnesota’s
workers’ compensation law.


      As a result of an accident in 1985, Ronald Herrley received
weekly periodic workers’ compensation benefits from the state of
Minnesota, and social security disability benefits from the SSA.




  1
   The Honorable James M. Moody, United States District Judge for
the Eastern District of Arkansas, sitting by designation.
  2
   The Honorable Michael J. Davis, United States District Judge
for the District of Minnesota.
In addition, Herrley received a lump sum payment of $274,876.00 for
permanent    partial      disability       pursuant   to    Minnesota     workers’
compensation law. See Minn. Stat. § 176.101, subd.3b (1993),
(amended 1995).


      The Social Security Act places a ceiling on an individual’s
combined social security benefits and state workers’ compensation
benefits if the workers’ compensation benefits are periodic.                    See
42 U.S.C. § 424a (1996).               Minnesota has a similar law, and will
reduce, after an individual has received $25,000.00 in weekly
workers’ compensation benefits, such workers’ compensation benefits
to offset any social security benefits. See Minn. Stat. § 176.101,
subd.4 (1993 & Supp.1997) (reverse offset).


      In order to prevent an individual from being subjected to
offsets from both the state and federal agencies, the Social
Security Act provides that an individual’s workers’ compensation
benefits are saved from offset by the SSA if the state is executing
a “reverse offset.”        See 42 U.S.C. § 424a(d) (exception to offset
if   state   law    or   plan   calls     for   reduction    of   state   workers’
compensation       benefits     when    individual    is    entitled    to   social
security disability benefits).                   In Herrley’s case, the SSA
determined that the lump sum payment of $274,816.00 is subject to
the offset as it represents a commutation of periodic payments.
The SSA also determined that while a lump sum payment for permanent
total disability is subject to a “reverse offset”, a lump sum
payment for permanent partial disability is not subject to a
“reverse offset” under Minnesota law which in Herrley’s case
negates the saving provision of 42 U.S.C. § 424a(d).


      Herrley appeals this determination arguing that the lump sum
payment is not a periodic payment because it was a scheduled


                                           2
payment for a permanent impairment, and            that the saving provisions
of § 424a(d) is applicable as this lump sum payment is subjected to
a “reverse offset” by the state of Minnesota.


     It is true that 42 U.S.C. § 424a(a) provides that when a
worker    receives a lump sum workers’ compensation award, there will
be no offset by Social Security.         Herrley’s claim is that his award
was a lump sum intended to compensate him for a functional loss of
his body and not for any lost periodic economic opportunities.


     Federal law is controlling on whether there is a distinction
between    functional    loss    and    economic     opportunity   loss.     See
Munsinger v. Schweiker, 709 F.2d 1212, 1217 (8th Cir. 1983).
Herrley’s argument that there is such a distinction must fail.               The
applicable statute makes no such distinction between loss of
function benefits and loss of income benefits.                See 42 U.S.C. §
424(a);   Hodge v. Shalala, 27 F.3d 430 (9th Cir. 1994); Davidson v.
Sullivan, 942 F.2d 90, 92-96 (1st Cir. 1991); Grant v. Weinberger,
482 F.2d 1290, 1292 (6th Cir. 1973).


     Plaintiff also argues that the $274,816.00 is a lump sum
payment because it is not a commutation of a weekly benefit.                 The
Minnesota statute provides that impairment compensation may be paid
on a periodic basis.           See Minn. Stat. § 176.021, subd.3.            The
Minnesota legislature defines “non-periodic” workers’ compensation
benefits as medical and burial costs. Id.               The permanent partial
disability    payments    at    issue    in   this   case   fall   outside   the
definition of non-periodic payments and are subject to the offset
mandated by 42 U.S.C. § 424(a).          These payments are a commutation
of the weekly permanent partial disability to which Herrley was
entitled.    See Minn. Stat. § 176.101.



                                        3
4
     Finally, regardless of whether Minnesota has offset Herrley’s
permanent   partial    disability   as   if   it   were   permanent   total
disability pursuant to the “reverse offset” provisions of Minnesota
statute § 176.101, subd.4, the SSA actions are governed by 42
U.S.C. § 424(a), which requires an offset.


     We have carefully considered Herrley’s arguments and have
thoroughly reviewed the parties’ briefs and submissions.        Upon such
examination, we are convinced the district court’s ruling was
correct.     Herrley’s permanent partial disability benefits are
encompassed in the benefits which are subject to offset under 42
U.S.C. § 424(a).      Accordingly, we affirm.


     A true copy.


            Attest:


                 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT




                                    5
