There are times while engaged in a workers compensation file that you are better off just settling the file out, redeeming all costs for medical, wages, and future medical exposure. Some files will not necessarily call for a full settlement, maybe it is better to settle either wages or medical, or both, but it has to be done when the scenario calls for it. Some examples are below.
Note: These are general examples, and all actual claim situtations should be reviewed by your legal counsel.
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The injured worker has been terminated by the employer
The cause of a good percentage of litigated files comes when the employer terminates employment with the claimant during the course of their injury and subsequent rehabilitation. The claimant feels they were terminated unfairly due to their injury, and this will send them directly to a plaintiff attorney. This will open up significant exposure for ongoing wage loss, and it will extend the life of a claim.
On most occasions you are better off waiting to drop the axe on termination until the claimant has either reached their end of healing, or the end of the case. This way, if you want to settle the file, you can include the voluntary resignation of the claimant from the employment.Note: consult with legal counsel before settlement, having them review voluntary resignation to make sure it meets requirements of state law as “voluntary” and that it complies with all other requirements.
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The injured worker has no job to return to within their permanent medical restrictions
This scenario happens a lot when a major surgery or amputation is involved. The job the worker once did can no longer be done by that worker. You have the option of moving the employee to another department or position, but often with smaller companies the option is just not there.
This is a good time to settle the wage portion of a claim. If you know for sure the worker can no longer do the job they once did, and you do not want to spend the cost of vocational retraining or vocational job placement, then you should settle out the wage portion of their claim. Again it is best to wait until their medical situation stabilizes before you approach this topic. You do not want to pursue this too early, as the claimant may try to stretch out their medical recovery, further securing their wage loss benefits and adding to the cost of the claim’s wage loss.
Depending on the job, some claimants will know they have little to no hope of returning back to work at their old position. But not every injured worker is easy to deal with. Changing jobs or losing your job is a major roadblock in a claim, and it can be costly to settle out the wage portion of these claims. But in the long run, it is worth it. Vocational training and placement is not a guarantee, and you do not want to incur those costs and then also have to settle the wage portions out when you cannot find the injured worker a job.
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The injured worker still works for their employer, but their case is denied coverage under workers compensation
In this case you do not have to settle the wages and medical to include a voluntary resignation, unless you want to add it in. If the adjuster denied the case as being compensable, but the worker filed their claim under their disability coverage, and then filed for hearing after returning to work once released from medical care, this is a case to settle after all the exposure for wage loss and medical bills are gathered.
This case gives you the total exposure, since the lost wages are known, and the medical cost to full duty is known. This is known as a “closed period” settlement.
Typically the adjuster will have to negotiate a lien with the medical carrier, and a compromise will be made on the wage loss the worker incurred. Unless you have a fantastic denial and can take your defense all the way to trial, it is best to make the compromise and settle for a portion of the exposure. This is probably the most common litigation example in the world of workers compensation.
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The worker’s case was disputed by the comp board, and then they were laid off due to workforce reductions. The injured worker was paid unemployment, and their medical carrier paid the medical cost to full duty
Here we have an example of taking a wage loss offset, and negotiating a medical lien. This is a fairly simple case to settle. Most states will allow a claimant to get unemployment pay when they are laid off. Even when they are off on a medical leave. This is a “collateral source benefit” because the employee may be making more when not working than when working.
However, if this person files for litigation, the insurance company can offset what the full-wage loss would have been, so, in essence, they get a credit for the wage loss, and only have to deal with the medical lien from the carrier. These medical carriers are usually easy to negotiate with, and most liens can be settled for easily up to 50 percent of their cost.
Medical carriers will also get a better fee reduction than workers compensation insurance carriers, so not only does the workers compensation carrier get a credit for the unemployment pay the worker received, they also get cheaper medical cost for all the medical expenses the injured worker incurred during their treatment and recovery. These are also usually closed-period settlements, and can be redeemed for a relatively low legal cost.
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The injured worker files for an occupational injury claim, naming several employers as the defendants
Occupational injury claims are usually filed by seasoned workers who have spent their lives working for several employers. When their shoulder or back finally gives out and they need surgical repair, if they seek out an opinion at a plaintiff attorney’s office. The counsel will usually file a hearing for an occupational injury claim, and they will list all of the claimant’s past employers, since they will assert that each period of employment lead to the accelerated degeneration of the worker’s body, which lead to the ultimate injury they incurred.
In this case, each employer will contribute an amount towards a global settlement. The exposure of each employer will depend on the duration of employment, types of jobs the claimant performed, and the associated risk involved in relation to the injury. The hardest part about these claims is figuring out how much each adjuster should have to contribute. Once the adjuster takes all the past employers and the exposure into consideration, they will nominate a general amount for the represented employer’s exposure, and once all parties agree on all the amounts the case can be settled. It can take some time for all carriers and adjusters to agree, but they eventually get there and the case can be resolved.
Workers compensation claims are settled all the time, usually for one of the reasons outlined above. As you can see, you have a number of opportunities where a settlement is the best option, and you should discuss with your adjuster if this is the road you should explore, instead of incurring other costs to bring an injured worker back to work at your place of employment. This differs from my normal opinion of bringing every able employee back to work.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing, publishing, pharmaceuticals, retail, hospitality, and manufacturing. See www.LowerWC.com for more information. Contact: [email protected].
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