When should I settle my workers’ compensation claim?

I recently met with a client who had no intention of hiring an attorney until it was suggested by the insurer that he settle his claim.  He was still recovering from his injury, and in fact had not yet had the stitches removed.  It was obvious to me speaking to him on the phone that it would be drastically premature to settle the claim.

I believe that what prompted the settlement talk was that his permanent partial disability (PPD) rating for his injury was extraordinarily high.  In all likelihood, the claims handler felt that with a high PPD rating, she could throw a large number at him and he would settle the claim.  He was wise enough to know that he needed to know all of his rights before agreeing to extinguish any further recovery, but some aren’t so fortunate.  In this case, my client will need medical treatment for a very long time, and he is currently being paid temporary total disability (TTD) at the maximum compensation rate.  It is highly unlikely he will return to work in his prior job, since he is per se disqualified from that work due to his injury.  He cannot meet the licensing requirements of his former job.  In his particular case, any settlement offer would almost certainly be a third or less what his case is actually worth.  This is true even if his claim is non-catastrophic.  If the claim is designated catastrophic, the value of the claim is much higher (and therefore the relative value of any settlement is much lower).

There are a few signposts in a workers’ compensation claim that may indicate that your claim is ripe for settlement.

1.  You have reached maximum medical improvement (MMI):

If your doctor believes you have reached MMI, this is an indication that your current course of treatment has improved your condition as much as is reasonably expected.  Any further medical treatment would be expected to maintain the current condition rather than improve it, or provide pain relief or other palliative treatment.  When you are at MMI, your doctor reasonably believes you are “as good as you are going to get.”  In this case, a reasonable estimate of future medical expenses may be done, and your case can be settled without worrying as much about whether you will need a future surgery, or whether an additional course of treatment may improve your condition significantly.

2.  You have been released to work full duty with no restrictions, or with restrictions that indicate that you can return to a job you are actually capable of performing.

In the case I reference above, the client has been released to return to work, but his restrictions will not actually enable him to perform any job for which he is qualified.  That may change in the future, but for now, he is completely unable to work as a result of his work injury.  Combined with the fact that he is not yet at MMI, settling his case now could end up being very costly for him in the future.

Workers’ compensation is a compromise system to begin with.  Injured workers do not have to prove their work injury was caused by the negligence of the employer or any third party in order to recover benefits, and so their work injuries, barring certain exceptions, are usually compensable.  In exchange for this benefit, employers do not have to pay for the full measure of damages that might be recoverable if the same claim was brought against a negligent third party.  The end result of this is that workers’ compensation claimants who are seriously injured rarely recover sufficient benefits to render them whole.  It is likely they will have to pursue other benefits, such as Social Security Disability and Medicare or Medicaid, in order to make ends meet in the future.  Nearly every injured worker that comes into my office says something like “I’m not looking to get rich off of this injury.”  My usual response is “good, because you won’t.”  The simple fact is that workers’ compensation claims are nothing like personal injury claims, and it is rare that a severely injured worker ever recovers sufficient monetary compensation to make up for the lost wages, medical costs and diminished capacity the worker has suffered.

Why is this important when evaluating a return to work note from your treating physician?  Because if you have been released to return to work, but you are unable to actually find and do work, you will not be able to survive long on a settlement that assumes you are able to find and do work.  Even if you recover a couple of years’ worth of wage benefits and some expected future medical costs, and even if you have a significant PPD rating, you are unlikely to be able to survive on what you recover for very long if you cannot work.  Because the workers’ compensation system is designed to rapidly treat injured workers and, in the words of the Workers’ Compensation Act, “effect a cure, give relief, or restore the employee to suitable employment,” (O.C.G.A. § 34-9-200(a), its benefits are similarly designed to achieve those ends.

The Act contemplates the possibility of a catastrophic injury, which in part covers situations where the injured worker is never expected to return to any kind of work.  But if a settlement is being offered early, it is highly unlikely that it is a settlement that contemplates a catastrophic injury.  In fact, it is very likely that any settlement offered is being offered precisely to avoid catastrophic exposure.  If you have not been released to return to work doing a job you can actually find and do, your case is likely not ready to settle.

3.  Your injury is catastrophic, and has been designated as such either by agreement or Award.

In the event of a catastrophic injury, the employer and insurer have agreed (or a Judge has ordered) that you are entitled to medical benefits for the rest of your life, and TTD benefits at least until the age of retirement under the Social Security Act, and possibly for the rest of your life.  With catastrophic injuries, there are a couple of things to be aware of in order to ensure you receive fair value for your settlement.

A.  Rehabilitation benefits.

In the event your claim is designated catastrophic, you may be entitled to certain rehabilitation benefits.  This can be as complex as formal in-home care, vehicle modifications or home modifications, or as simple as help cleaning around the house or doing yard work.  It is important to ensure that any benefits reasonably expected are accounted for in the settlement.

B.  PPD rating.

A PPD rating is not due until such time as entitlement to temporary total or temporary partial benefits ceases.  In the case of a catastrophic injury, the employer and insurer are likely to argue that they get a presumption that the claim is no longer catastrophic at retirement age.  This presumption is codified in the statute, but it is a rebuttable presumption, and therefore not ironclad.  Even if your claim is designated as non-catastrophic at retirement age due to the presumption, you will be entitled to a PPD rating for each of your injuries on that date.  It is imperative to include this calculation when discussing settlement of a catastrophic claim, as it can often significantly bridge the gap between TTD benefits to retirement age and lifetime TTD benefits.

C.  Beware of Medicare

In catastrophic cases, injured workers frequently end up on Social Security Disability as a result of their work injury, and therefore become Medicare eligible.  While SSDI benefits are typically offset to account for workers’ compensation income benefits, Medicare benefits are not.  With Medicare, medical benefits are made through what is called a “conditional payment,” meaning Medicare will cover the expense of the treatment, but they will also expect to be paid back if the claim is ever settled.  Usually, the workers’ compensation insurer pays for medical treatment, but in the event a portion of the treatment is denied or otherwise not paid, there may be conditional payments for which Medicare will expect reimbursement.  You will want to deal with this before settling, not after, as conditional payments can significantly reduce the value of your settlement, and can usually be dealt with in advance of settlement if there is a dispute over who owes them.

In addition, Medicare eligible claimants usually must do a “Medicare Set Aside” agreement, where a portion of the settlement is “set aside” to cover expected Medicare-covered expenses arising out of the work injury.  If this is not done, Medicare may come back against you for not protecting their interests in the settlement.  Since the penalty for not protecting Medicare’s interests can be severe, it is best to ensure that all reasonable steps are taken to satisfy the Center for Medicare Services.  This would include having the Center for Medicare Services approve any proposed Medicare Set Aside agreement.

Conclusion

Settling a workers’ compensation case is a serious matter.  In a lump sum settlement, you are not simply receiving money for your injury, but you are also foreclosing the right to get any future money or, typically, future medical benefits for the injury (it is possible to settle a workers’ compensation claim with “open medical,” but this is unusual).  Know your rights before you agree to settle your claim to ensure you are making a good decision.

I will be speaking at the 6th Annual Workers’ Compensation Law and Practice seminar on May 29, 2014.  My topic will be Settlements and Return to Work Issues.

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