Workers’ Compensation Lump Sum Settlement
Dear Attorney Howayeck, two years ago, I was injured at work and have been receiving workers’ compensation benefits since my injury date, I have been offered a Lump Sum, how do I know if I should take it? Can I get Vocational Rehabilitation?
First, it is important for you to understand exactly what a lump sum is. A lump sum is a settlement or contract between you, your employer where applicable, and your employer’s workers’ compensation insurer. This one-time payment will be made in place of your weekly wage compensation checks, and in some cases, certain other benefits. You must consider whether a lump sum settlement of your claim is in your best interests.
It’s your choice, so how do you determine whether to lump sum?
Deciding whether to lump sum your case is very important. You must weigh the present value of your lump sum against potential future benefits.
If you were injured BEFORE November 1, 1986, and you elect to “lump sum”, you give up your rights to future weekly benefits to this injury, and you will probably also lose medical benefits relating to this injury, and any right to rehabilitation.
If you were injured ON OR AFTER November 1, 1986, you give up your rights to future weekly benefits, however, establishing liability for your case (meaning the insurer has agreed that it is responsible for payments, or a judge has ordered the insurer to pay benefits) will determine your eligibility for future medical and vocational rehabilitation benefits. If liability is established, the insurer remains liable for future medical and vocational rehabilitation expenses pertaining to your injury. The insurer has the right to dispute future medical bills before as well as after your lump sum.
Does signing a lump sum agreement mean you are also terminated from your job?
Your employer cannot tell you that by signing a lump sum agreement you are agreeing not to return to your employer. Signing a lump sum agreement does not prevent you from:
• Maintaining employment with the employer whose job you were hurt on;
• Gaining employment with any employer;
• Receiving any benefits owed to you by your employer;
• Bringing any future workers’ compensation claims for other work-related injuries; or
• Bringing any future claims of wrongful discharge or breach of contract claims.
If any employer, and/or insurer attempted to get you to sign any type of release such as those cited above, he or she would be subject to a $10,000 fine. Any release, either general or specific, would be considered null and void.
Does your employer have to approve your lump sum?
The workers’ compensation reform act, effective December 24, 1991, has brought many changes to the compensation system, among them the lump sum procedure. It is now required, in most cases, that an employer approve lump sum proposals. (Where the employer has approval authority and does not agree to approve the lump sum, then the proposal does not proceed. You would still receive weekly benefits if you were currently receiving them.)
What is vocational rehabilitation?
Vocational rehabilitation (VR) consists of non-medical services. These services assist an individual who has suffered a work-related injury that results in a permanent functional limitation which does not allow return to the same type of work performed before the injury. To receive VR, either the insurer may voluntarily provide performed services or the department’s Office of Education and Vocational Rehabilitation (OEVR) may determine that you are suitable for services.
Will vocational rehabilitation affect your lump sum?
If you have been approved for VR, your lump sum can not be approved unless one of the following requirements are met:
• You have returned to work for six or more months; or
• You have completed the approved vocational rehabilitation program; or
• You have received express written consent from the DIA’s Office of Education and Vocational Rehabilitation; or
• The judge overrides any of the above-mentioned requirements after appropriate notice and hearing.
You have 104 weeks from the date of your lump sum agreement is approved to get into a rehabilitation program, otherwise you forfeit any rights to rehabilitation you may have retained.
Does a lump sum agreement close your case forever?
Yes. The lump sum replaces future payments for that specific injury.
If you were injured ON OR AFTER November 1, 1986, establishing liability for your case will determine your eligibility for future medical and vocational rehabilitation benefits. If liability is established, the insurer remains liable for future medical treatment. The insurer has the right to dispute future medical bills before as well as after your lump sum.
How does this lump sum affect any other claims you may have?
A lump sum DOES NOT affect any other action or proceeding on any other separate and distinct injury whether the injury precedes or arises after your settlement date, and regardless of who the insurer and employer are. If you have a third party claim as part of your workers’ compensation claim, ask your attorney how it will affect your lump sum.
How soon can I return to work after my settlement?
Acceptance of a lump sum agreement by all parties creates the presumption that you are physically unable to return to work with your employer. Every $1,500 of your lump sum amount will equal one month for which you are presumed incapable of working with that employer. So, if you settle your case for $6,000, it’s presumed that you are not able to return to your employer for four months.
However, if you are not returning to the employer where you suffered your injury, then you may return to the workforce immediately.
How much of my lump sum is my attorney entitled to?
If you have engaged an attorney, he or she is entitled to a fee of 20% of the total lump sum amount if the insurer has accepted liability or been assigned liability by the DIA. If the insurer has not accepted liability nor been assigned liability, then your attorney’s fee is 15% of the total amount. The fee is lowered if your lump sum agreement includes money for a permanent loss of function and/or scarring. An attorney can not collect a fee on these benefits.
What should I consider when determining if I should lump sum my case?
Your considerations are certainly dependent on your particular circumstances; however, the following are some of the more common concerns:
• Are you able to return to work?
• Do you still have unresolved medical problems resulting from your injury?
• Will you be able to prove your injury is work-related? •What is your income now, if any?
• What are your expenses?
How will this affect your retirement and pension rights if you don’t return to work?
Only you can make the final decision about whether a settlement is in your best interests.