Settlement Value of Your Workers' Comp Claim

Valuing and Settling Your Workers’ Compensation Case I. Introduction

third party comp claimsHow to value and whether to settle your workers’ compensation case are two critically important questions that you will undoubtedly consider while recovering from your injuries. The answers to these questions of course to some extent depend on the specific facts of each case. But the value of your workers’ compensation case generally depends on what cash and medical benefits you have already received, and can also expect to receive or need in the future. After valuing your case, you must then decide whether to settle. This page includes some factors you should consider before deciding to do so.

You need an experienced attorney to help you value your case and decide whether to settle. That is especially true since you must find the answers to these questions at a time when all you want to do is focus on your recovery. The attorneys at Miller & Zois LLC can help you answer these questions so that you can concentrate on your recovery, and also receive the largest possible settlement.

II. Valuing Your Workers’ Compensation Case

Temporary partial and temporary total disability benefits

Injured workers are initially entitled to either temporary partial or temporary total disability benefits. The amount of benefits is based on a combination of the injured worker’s average weekly wage and the state average weekly wage. For the fiscal year ending June 30, 2017, the state average weekly wage is $1,094.

  • Temporary partial disability benefits are paid to injured workers who can nonetheless still work part time. These workers receive 50% of the difference between their pre and post injury average weekly wage, up to a maximum of 50% of the state average weekly wage.

  • Temporary total disability benefits are paid to injured workers who cannot work because they are completely disabled. These workers receive two-thirds of their average weekly wage up to a maximum of the state average weekly wage. They can also receive vocational rehabilitation and retraining for up to two years if they cannot return to their former job because of their injury. They receive Vocational Rehabilitation Benefits at their temporary total disability rate during this time.

    If a temporary total disability lasts for 14 days or less, compensation may not be allowed for the first three days of the disability. This limitation does not apply if the disability lasts more than 14 days, or to medical benefits and funeral expenses.

    For claims that are reopened, injured workers receive two-thirds of their average weekly wage up to a maximum of the lesser of: (1) the state average weekly wage on the date the claim is reopened, or (2) 150% of the initial award. Any new award must also not be less than the original award.

Permanent Partial Disability Benefits

Temporary partial and total disability benefits end when an injured worker reaches Maximum Medical Improvement (MMI). MMI essentially means that you have healed and improved as much as can be reasonably expected considering the current state of medical knowledge and technology. After reaching MMI, injured workers who have not completely recovered are eligible for either permanent partial or permanent total disability benefits. There are three tiers of permanent partial disability benefits:

  • The first tier applies to awards of less than 75 weeks, for injuries that occur after January 1, 2018, but before January 1, 2019. Injured workers in this category are entitled to one-third of their average weekly wage, up to a maximum of 16.7% of the state average weekly wage.

  • The second tier applies to awards between 75 and 250 weeks, for injuries that occur after January 1, 2018, but before January 1, 2019. Injured workers in this category are entitled to two-thirds of their average weekly wage, up to a maximum of one-third of the state average weekly wage.

  • The third tier applies to awards that exceed 250 weeks, and are also known as “serious disability” benefits. Injured workers in this category are entitled to two- thirds of their average weekly wage, up to a maximum of 75% of the state average weekly wage. The total number of weeks of benefits awarded to these injured workers is also increased by one-third, except that awards for disfigurement or mutilation “may not be used to make up the 250 weeks.”

The law specifies the duration of many different permanent partial disabilities (“scheduled injuries”), including the following:

Type of InjuryMaximum Weeks of Compensation
Index finger40
Second finger35
Third finger30
Fourth finger25
Great toe40
Any other toe10
Total loss of hearing in one ear125
Total loss of hearing in both ears250
Perforated nasal septum20
Mutilations and disfigurements156
  • The permanent loss of use of a hand, arm, foot, leg, or eye, is considered equivalent to the actual loss of any of these body parts.

  • Compensation for partial vision loss is paid without regard “to the effect that a correcting lens may have on the eye.”

  • “An amputation at or above the wrist or ankle may be apportioned to the loss of the use of the arm or leg, but may not be less than the compensation for the loss or loss of use of a hand or foot. Amputation at or above the elbow shall be considered the loss of an arm. Amputation at or above the knee shall be considered the loss of a leg.”

  • Awards less than 75 weeks for a thumb, any of the fingers, or great toe, shall be paid at the second tier rate.

  • For awards less than 75 weeks for a thumb, any of the fingers, or great toe, the Workers’ Compensation Commission (WCC) “may determine that the disability results in an industrial loss.” In that case, the WCC may award additional weeks of compensation, not to exceed a total of 75.

All other permanent partial disabilities are considered “unscheduled.” In these “other cases,” the WCC determines the percentage of impairment. The maximum number of weeks of compensation is 500.

Permanent Total Disability Benefits

Injured workers are permanently totally disabled if they “can perform no service other than those which are so limited in quality, dependability, or quantity that a reasonably stable market for them does not exist.” The loss of both arms, eyes, feet, hands, or legs creates a presumption of permanent total disability, “absent conclusive proof to the contrary.” That presumption also applies to a combination of the loss of any two of the following: an arm, eye, foot, hand, and a leg. Injured workers who are permanently and totally disabled are entitled to two-thirds of their average weekly wage, up to a maximum of 100% of the state average weekly wage.

Medical benefits

Injured workers are also entitled to medical benefits, which include the following:

  • Medical, surgical, or other attendance or treatment.
  • Hospital and nursing services.
  • Medicine.
  • Crutches and other apparatus.
  • Artificial arms, feet, hands, legs and other prosthetic appliances.

As the WCC notes, “the entitlement to these services may continue indefinitely or for whatever period is required by the nature of the accidental injury, compensable hernia or occupational disease if there is evidence to establish that the need for these services is reasonable, necessary and causally related to the accidental injury or occupational disease.”

Medical benefits also include the obligation of the employer or its insurer to “repair or replace an artificial eye, limb, tooth or other prosthetic appliance or eyeglasses damaged or destroyed because of an accident during the course of employment.”

Pain and Suffering

Like most states, Maryland workers’ compensation law does not provide any compensation for pain and suffering while an injured worker is recovering. But pain and suffering that continues after an injured worker reaches MMI can affect permanent disability ratings. It is therefore important to be treated by a doctor who agrees that continuing pain and suffering should be included in any permanent disability determination.

Present Value

You also need to calculate the “present value” of your case. “Present value” is the amount that your employer or its insurer should pay now for all of your expected future expenses and costs, medical and otherwise. It is a discounted amount because its investment will eventually yield the total of any agreed upon settlement.

Assume that a 30 year old worker earning $50,000 is injured. The injuries reduce the worker’s earning potential to $40,000. The injured worker also expected to retire at 62. Using these numbers, the injured worker has incurred a lifetime income loss of $320,000 ($10,000 x 32 years of expected future work). The question is therefore what amount of money must be paid now to produce $320,000 during the next 32 years. That is the “present value” of the case.

Determining the “present value” of your case involves many difficult calculations, including whether and by how much your future income has actually been reduced because of your injuries, your expected future medical costs, and even the future interest any settlement you receive is expected to earn. Your employer and its insurer will definitely try to minimize the first two calculations, and to maximize the third, in order to reduce the “present value” of your case as much as possible. The attorneys at Miller & Zois, LLC can help ensure this does not happen, and that the “present value” of your case accurately and adequately reflects your expected future costs and needs.

Death Benefits

The sad truth is that some workers’ compensation cases are not brought by injured workers, but by their estates. Maryland workers’ compensation law provides the following benefits in cases where a worker dies on the job:

  • Death benefits are paid to the dependents of the deceased worker. The benefits are two-thirds of a deceased worker’s average weekly wage, up to a maximum of 100% of the state average weekly wage.

  • The deceased worker’s income is divided by the family income to determine the percent earned by the deceased. That number is then multiplied by the death benefit to determine the amount payable to all dependents.

  • Death benefits are paid for at least five, and up to twelve years. Death benefits end when the decedent would have turned 70, provided that they have been paid for at least five years. Despite these limitations, death benefits will continue “if a dependent spouse or dependent child is incapable of self-support because of a mental or physical disability that preexisted the covered employee’s death.”

  • Death benefits end two years after a dependent spouse remarries.

  • Death benefits continue until a dependent child is 18, and for up to five years thereafter if the dependent child is attending school full time.

  • Dependents other than a dependent spouse or dependent child can combined receive a maximum of $65,000 of the total death benefits paid. That amount “shall be adjusted annually by the same percent applicable to the adjustment of the State average weekly wage.” As of January 1, 2018, that amount is $73,690.

  • The maximum funeral benefit is $7,000.

III. Settling Your Workers’ Compensation Case

Once you have valued your workers’ compensation case, you can decide whether to settle. Settling a workers’ compensation case typically ends your right to receive additional benefits in exchange for a lump sum payment. Maryland law allows parties to settle workers’ compensation cases, subject to the approval of the WCC. The WCC provides the following forms to parties that want to settle a workers’ compensation case:

Maryland law also specifies that “when approved by the Commission, a final compromise and settlement agreement is binding on all of the parties to the agreement,” including the claimant, employer, and insurer. These are some of the most important factors you should consider before deciding whether to settle your case:

  • Benefits already received. How much in benefits have you already received, and are you entitled to receive additional benefits?

  • Medical benefits. What medical benefits have you already received, and what, if any, will you need in the future? You should strongly consider not settling your workers’ compensation case until you have at least reached MMI. But as noted, reaching MMI does not mean that you will not need future medical care for your injuries. Many injured workers who reach MMI are still significantly disabled.

  • Work. Have you returned to work? If you have not, do you expect to be able to do so in the near future? Can you return to your previous profession, or will you instead have to retrain for a new career? Have you received or do expect to need vocational rehabilitation services? The anticipated cost of these services, as well as living expenses while doing so, should be included in any settlement.

  • Wages. If you are working, how does your current and predicted future salary and benefits package compare to what you earned and received before you were injured?

  • Contested cases. Is your workers’ compensation case being contested by your employer and its insurer? Settling a contested workers’ compensation case at least allows you to receive some payment.

  • Fees. Attorney and doctor fees are paid from the settlement.

  • Third party claims. Do you have a claim against a third party for your injuries? Except in certain limited instances, workers’ compensation benefits are the “exclusive remedy” available to injured workers, meaning they cannot file a civil lawsuit against their employer for their injuries. But they can file a civil lawsuit against other parties responsible for their injuries.

    Employers and insurers are entitled to be reimbursed from any award an injured worker receives from a third party. But offering to settle a workers’ compensation case may encourage them to waive their right to reimbursement.

  • Financial advisor. Depending on the amount of the settlement, you should strongly consider consulting with a financial advisor about how it can best be invested and managed.

  • Net proceeds after death. Maryland law states that any portion of the settlement amount that has not been paid at the time of your death is an asset of your estate.

  • Medicare Secondary Payer (MSP) Act. The MSP Act is an important part of any decision to settle a workers’ compensation case. The “Settlement Worksheet” provided by the WCC asks a range of questions about whether the proposed settlement of a workers’ compensation case complies with the MSP Act. The WCC website also includes several documents (click here) explaining the law.

The MSP Act makes Medicare a secondary payer in workers’ compensation cases, which means that the cost of work related injuries must first be paid by all other parties, including the claimant, employer, insurer, and any third party responsible for the injury. To ensure that Medicare’s interests are adequately protected, workers’ compensation insurers are required to report settlements that meet certain criteria and threshold amounts to the Centers for Medicare and Medicaid (CMS). “For settlements within the Medicare thresholds, CMS approval must be obtained BEFORE the Commission will approve the settlement.

That includes settlements involving future medical expenses. As the WCC states: “[i]n some cases, protecting Medicare’s interests requires getting CMS approval of the amount allocated for future medical expenses (Medicare Set-Aside) in the settlement. CMS may impose harsh sanctions on claimants who do not obtain CMS approval of a settlement when required under CMS thresholds.” As the WCC notes, CMS can deny the claimant future medical care for their injuries, designate a different allocation, and sue to recover any payments.

Your attorney knows the current thresholds that trigger the MSP Act, and therefore require CMS approval. Not complying with the MSP Act could jeopardize your settlement. Even settlements that are outside the thresholds, must still “contain a statement that Medicare’s interests have been considered and identify the amount of the proposed settlement apportioned to future medical expenses.” That is why a proposed settlement that does not include an allocation for future medical expenses must be supported by documentation.

IV. Stipulations

Stipulations are different than settlements. Stipulations do not end workers’ compensation cases, or foreclose future benefits. They are simply an agreement in which the claimant, employer, and insurer agree about the degree to which the claimant is permanently partially disabled, as well as how much the claimant will receive, and for how long. All this information is included on the “Stipulation of Parties & Award of Compensation” form (click here) that the parties file with and for consideration by the WCC. But because stipulations involve disability determinations and therefore benefits, they must always be reviewed by an attorney.

V. Conclusion

You need to focus on your recovery. But you are also concerned about the future. Can I return to work? What are my future medical needs? How much will all of this cost? What is my case worth? Should I settle, and if so, for how much? The attorneys at Miller & Zois, LLC can help you answer these questions. We can value your case, and ensure that you receive a settlement that provides for your needs now and in the future. We can help you get the settlement you deserve.

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