Which Claims Should be Settled Early in the Course of a Claim?

When should a claim be settled early in the course of a claim … If you know an employee will never be able to return to work, you should settle the claim early. Why? The rationale is you are better off paying a fair settlement, or the statutory permanency/scarring award now rather than paying indemnity payments (lost wages) for 8 months then payingthe same settlement. An example, if you were to pay a $15,000 settlement plus 8 months of indemnity at $600/week which will be $19,200 for a total of $34,200. Whereas if you settled the claim after 4 weeks when it became apparent the employee would never be able to perform their original job, the cost would be $15,000 settlement (the same amount) plus 4 weeks of indemnity payments at $600 per week ($2,400) for a total of $17,400. So, the total savings is $16,800. So, once you know an employee can never return to their position, you are better off settling the claim as quickly as possible. Don't forget to include the Medicare Set-aside in every example you have to cover future medical payments if applicable. This is a general example to make the point that the savings can be the amount of many weekly lost wage payments. For more cost-saving tips go to WC Cost Reduction Tips. Show the REAL cost of workers' comp with the Real Cost Calculator. Workers' Comp Kit^® is a web-based online Assessment, Benchmarking and Cost Containment system for employers. It provides all the materials needed to reduce your costs significantly in 85% less time than if you designed a program from scratch. Do not use this information without independent verification. All state laws are different. Consult with your corporate legal counsel before implementing any cost containment programs. ©2008 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law. If you would like permission to reprint this material, contact I[email protected]