by Karl Voigt
Many of our clients have expressed an interest in settling their workers’ compensation case for a lump sum. And, statistically, most long-term workers’ compensation cases in Pennsylvania do indeed eventually settle for a lump sum. Sometimes a settlement is warranted. When it is, it’s important to know all about the process.
Historically, with our clients who have a long-term workers’ compensation cases, we don’t rush to settlement. Before we seriously discuss settling a case for a lump sum — which stops one’s weekly benefits — we like the assurance of our client’s medical status having plateaued. For example, it would be unwise to settle a case where an injured worker is facing a serious, injury-related surgery in the near future. Therefore, it is far better to settle after any major medical procedures are in the past. Once a client’s medical condition has plateaued, we want to make sure that they have a plan for what happens next. Do they plan on living off of the income generated by the lump sum? Are they going back to school? Have they applied for Social Security disability?
Once these conditions are met, it is usually the injured worker that places the initial demand to settle. Naturally, in some cases, the carrier has already put out an offer; most often, that offer is far too low and was made simply to initiate negotiations. Then the negotiations commence, usually between Claimant’s counsel and Insurer’s counsel or the adjuster. Nevertheless, the negotiation process can take as little as several days or weeks. Sometimes, however, months or even years. Patience is important during the process; we prefer a very methodical and deliberate approach to the process — this is the rest of your life we’re talking about.
Of course, there are two portions of your case generally that can be settled: wage loss and medical. That is to say, you can settle both, or simply settle the wage loss portion and preserve the insurer’s obligation to pay for any future work-related medical treatment. Is also possible to put a time limit on the latter portion. Namely, negotiations can result in an agreement that the carrier will pay medical bills for, say, two or three years following the settlement date.
There is absolutely no requirement that your case be settled. Particularly with cases involving very serious and worsening disability, it may be best for a case not to settle. If your attorney is confident that your benefits will continue without much challenge from the insurer, you can continue to receive weekly checks. However, due to inflation, you will find that the value of those weekly checks reduces over time. The cost of food and utilities goes up overtime. Rent increases over time. Unfortunately, there is no concomitant rise of Worker’s Compensation wage loss benefits.
Of course, the risk that the carrier will file future petitions against the injured worker is always there. However, we remain our clients’ lawyers and are also always there for our clients.
There are two primary factors in evaluating a case’s settlement value: degree of disability and amount of earnings loss. We generally say that assuming the same disability, the injured worker he used to make $50,000 a year settles for more than one who made $20,000 a year. On the other hand, assuming similar income, the worker who now uses a wheelchair to get around settles for more than the one who uses a cane. These are, of course, not the only factors in valuing the case, but they are the major determining factors.
Of course, if the worker was subject to an impairment rating evaluation and, as a result, is now limited to receipt of no more than 500 weeks of continued benefits, the insurer’s exposure to pay future wage loss is now limited.
If your case is in litigation, it will likely be subject to mandatory mediation. Since 2007 it has been mandatory that any cases entering litigation must engage in a mediation with a mediating Judge other than the presiding judge.
There is certainly no obligation to settle your case during the mediation; only your attendance at the mediation is mandatory. During that mediation, the mediating judge will sit down with you, your lawyer, and the insurers lawyer to determine if the parties can come to a “meeting of the minds”.
Once a settlement is reached, it must be approved by a judge, which means there is no check issued immediately, but rather only after a hearing is conducted. The injured worker will have to testify that he or she’s understands the agreement and, of course wishes for it to be approved. If the judge approves, and order will be issued by mail hopefully just several days later. Technically, the carrier has 30 days to comply with that order, although most do within 2 to 3 weeks. Naturally, as of the hearing, any and all weekly workers’ compensation wage loss checks cease.
As you can tell, the settlement process is full of potential pitfalls. When it’s time, however, it’s important that things be done methodically and comprehensively.