Attorney Perspective on Lump Sum Settlements, You Know Outcome Before Papers Are Filed

WCRI Study Diligently Done, Missed the Point

Workers Compensation Research Institute (WCRI) has recently published a study of post-settlement lump sums and return to work. With all due respect to a diligent study, it must be said that WCRI was given the task of analyzing the engine of a vehicle by commenting on the paint job and the tires – which is no substitute for a look under the hood.

Attorneys, however, see and hear far more than they feel comfortable with discussing. Nothing they can’t discuss, of course, but the discussion would be too much “inside baseball”, and would reveal the insider’s view of “disability”.

Attorney’s Can Tell You Age & Attitude Have Significant Influence

WCRI looked at overall RTW patterns. An attorney quickly learns that age and attitude have far more to do with RTW than levels of disability. The group that receives lump sum settlements to close extended disability claims is actually composed of three groups.

3 Groups: Older Workers, Younger Workers with History, Motivated Workers

One is composed of older workers, near retirement, with concurrent degenerative medical conditions. A second is composed of younger workers who have already established a pattern of instability with employment situations and will, in all likelihood, continue that pattern. A third group is workers who truly want to work and have been sidelined more by comp procedures than disability.

Unfortunately, an outside researcher is unlikely to be able to sort the groups out, although a comp lawyer could indentify most as they walk into the office for the first time.

Statistics fail when they average performances of groups that are truly separate; the conclusion will be either too high or too low for the individual groups. Success will only come when the ability to recognize discrete groups is achieved.

Greed Rarely Major Factor

When the author worked on SIU matters, the question was always how to deal with “fraud” as though that was always synonymous with “greed”. Results in suppressing fraud soared when it was realized that pure greed was almost never the major factor. Instead, anti-social rage, whether or not it produced much money, was the principal motive, followed by short-sighted methods to deal with a plunge in family income coming in second. Neither could be described as “greed”.

Lawyers, employers and carriers needn’t have near-psychic levels of skills to predict results in lump-sum settlement situations. Practically speaking, there isn’t an infinite, or even a very large, range of possible outcomes. But the skill at recognizing them can only come from up close and personal interactions with workers. Lawyers can make a prediction quickly, but the employer already knew the outcome before the first papers were filed.

Employers to Share as Much Information as Possible

The lesson for employers is to share as much information with the carrier as soon as possible. The lesson for carriers is to pose the right questions to the right people. The right questions lead to the right claims solutions. There are few surprises.

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100.

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com.

Contact: mstack@reduceyourworkerscomp.com.

WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.