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Workers Comp Settlement – Factors affecting settlement value

Workers comp settlement

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Maryland Workers Comp Settlement and factors that are often overlooked when determining a fair and equitable settlement

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Factors that may affect a workers comp settlement

Most lawyers familiar with workers comp are able to explain the process to clients and provide an explanation as to expectations when it comes to settlement.  These expectations can be managed by explaining the permanency process, ratings and evaluations, whether surgery or intrusive medical treatment has taken place, and the duration of medical treatment and the severity of the injury.  Explanation of these factors are often enough for the injured worker to make an informed decision regarding settlement and the end result is a just and fair compensation settlement.  In some instances a more detailed explanation and evaluation of the case is needed to truly determine the fair and equitable settlement amount.

For a complete explanation of workers compensation settlements follow this link , however if you wish to read about some of the often overlooked factors continuing reading.

At what stage of the case is settlement taking place?

The timing of a workers compensation settlement can be everything.  It is not unusual for two very similar workers comp cases to settle for two very different amounts based on the timing of the settlement.  This often occurs when the insurance company is interested in settling early on in the case in an attempt to avoid future and expected expenses they will inevitably pay.  When the future expenses are the concern the insurers are often willing to increase settlement offers to reflect some of their future expected expenses but ultimately still saving them some money.  For example: if the newly filed claim is expected to a winning case, with expected future medical treatment, lost wages, and a permanency determination, the insurer will often provide increased settlement funds to reflect these expenses.  In the alternative scenario the injured worker would have been provided the lost wages and permanency determination, medical treatment will have been paid by the workers comp insurer, and the settlement will not include money to reflect these expenses.

Some common times of settlement and in chronological order are:

  • at the time the claim has been filed and the insurer has not yet determined if they will accept the claim as compensable;
  • the claim has been ruled compensable by the Commission, or the insurer has accepted the claim as compensable but an Independent Medical Evaluation has determined that the injured worker no longer requires treatment;
  • an Independent Medical Evaluation has determined that the treatment being recommended by the treating doctor is not reasonable or related to the work place injury;
  • the injured worker has been evaluated for permanency by both the injured workers doctor as well as the insurance company doctor but has not yet had the permanency hearing;
  •  a permanency hearing has taken place and the parties agree to finalize the claim by settling the workers comp claim.

What is the status of treatment and medical bills?

Treatment in any given workers compensation case is often the most coveted benefit for injured workers because it allows them to be seek optimum health at no expense to their own but to the expense of their employer and the workers compensation insurer.  When considering a workers comp settlement this factor is often overlooked for the more obvious benefit in any workers compensation case- money.  The indemnity (money) portion of the workers compensation case is the more glaring factor when evaluating for a workers comp settlement; however considering the status of medical treatment and bills will often lead to a substantially increased settlement.

Has medical treatment been paid for by health insurance?

If the treatment the injured worker has received has for some reason been paid for by the employees’ health insurance then attorneys’ on both sides will often consider this a moot point during workers comp settlement negotiations.  While this is often common practice, and legitimate in many cases, an extra look at how medical expenses paid by health insurance can justify an increased workers comp settlement demand is justified.

It is good practice to leverage medical expenses that have been paid by health insurance because in many cases this is an expense that may eventually be requested paid back from the injured worker.  Not only do health insurers sometimes request injured workers pay this amount back from any workers comp settlement, but on occasion it is a legal requirement of the injured worker.  If a workers comp settlement is finalized and includes language that the workers comp insurer or employer is not responsible for medical bills after a certain date then the injured worker may soon face an unexpected expense for medical bills paid by health insurance after the date specified in the settlement agreement.  

To protect injured workers from these unexpected expenses it is diligent practice to consider unforeseen medical expenses. 

  • Injured workers should verify their last date of treatment with each provider from whom they sought treatment.
  • Workers comp lawyers should make it common negotiating practice to not specify an exact date medical expenses become the injured workers responsibility.  Including open ended language such as “all reasonable, necessary, and all medical expenses causally related to the date of accident” will provide protection from health insurers seeking reimbursement of medical expenses from the injured worker.
  • If the workers comp lawyer is able to determine, with certainty, the amount of outstanding medical bills, or the amount of medical bills paid by health insurance, it is good practice to increase the settlement demand by the amount of these medical bills. (Keeping in mind that some adjustments can be made to the bills as they may ultimately be reduced per workers comp fee schedule.)

Is there an outstanding recommendation for medical treatment?

Workers comp settlements can be finalized at almost any stage of the case as long as both sides are willing to come to negotiate and come to an agreement.  Often it is the desire for the parties to settle when there is an outstanding recommendation for medical treatment by one or more physicians.  In the scenario there are two forms of settlement that can take place.

Settlement leaving medical treatment open- If both parties agree, a workers comp settlement can close only the money portion (indemnity only settlement) of the case.  This leaves the right to seek medical treatment open and allows the injured worker to seek treatment and have the workers comp insurer or the employer pay for medical treatment.  It is important to note that this is no guarantee that the medical treatment will be approved, nor is it a guarantee the medical treatment will be obtained even after a hearing before the Workers Compensation Commission.

Workers Comp settlement with a medical allocation– It may be the desire of one or both parties to close the case completely despite there being a recommendation for medical treatment.  In this scenario a medical cost projection or Medicare set aside will be negotiated and included.  Similar to the medical open option, the parties will agree to a figure that will settle the money portion (indemnity) of the claim.  In addition the parties will project and set aside a sum of money that is to be used for the injured workers medical treatment after the workers comp settlement.  

  • A cost projection can be performed by a company specializing in the same.  The company will obtain medical records and guidelines to project what the expected course of treatment will be for the injured workers condition.  
  • Once the future medical expenses are projected the parties must then determine how the workers comp settlement cost projection will be set aside.  If the injured worker is the recipient of medicare or is expected to be a recipient of medicare in the near future (18 months) the Center for Medicare and Medicaid Services (CMS) has set up strict guidelines that must be adhered to.  If  CMS is not involved then the parties may freely negotiate whether the entire monies will be set aside for the injured worker to use freely as they need future medical treatment, or if the set aside will be paid in sums annually.

An injured employees’ wages WILL directly affect the workers comp settlement they receive!

There is a clear injustice in the Maryland Workers Compensation Laws when it comes to workers comp settlements.  Example: Two employees suffer catastrophic injuries while they are working in 2018.  Both cases are legitimate under the law.  They are both entitled to lost wages, paid medical treatment, reimbursement for out of pocket expenses, vocational rehabilitation and any and all other workers compensation benefits.  Both employees were hit by a moving motor vehicle and required multiple surgeries leaving them no longer to work in their occupation.  Both employees attended a workers comp permanency hearing and were awarded 40% impairment.

Employee 1: A crossing guard making $100 a week 

Employee 2: A construction worker making $1,000 a week

A 40% award is calculated at 200 weeks of payment.  This is a second tier award so the second tier rate of 66% (or max of $365) of their weekly wage is used to calculate the award.

Employee 1:  66% x 100 = $66.67  66.67 x 200 = $13,334

Employee 2: 66% x 900= $594 ( $365 max rate will apply)  365 x 200= $73,000

As you can see by the example above the crossing guard will receive substantially less compensation simply because she was earning less than the construction worker.  

 

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Workers Comp Settlement - Factors affecting settlement value
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Workers Comp Settlement - Factors affecting settlement value
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Some factors are overlooked when determining a fair and equitable workers comp settlement. A thorough review of the case chronology and unpaid medical bills can often increase settlement offers from workers comp. Maximizing a workers comp settlement requires review of the indemnity and medical portion of the case.
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Work Injury Maryland
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