Is an Insurance Company Seeking to Buy Out Your Workers' Compensation Award?
If your Workers' Compensation case has settled by way of Stipulations with Request for Award or a Findings and Award issued by a judge, the Workers' Compensation insurance carrier might be contacting you about a possible settlement of your case for a lump sum of money. What does this mean? Generally, when you have been issued an Award entitling you to benefits that include, but are not limited to, permanent disability and future medical care concerning your work injuries, these benefits have a monetary value that the insurance carrier might be seeking to "buy out" from you to close out the claim in its entirety. These types of settlements can be paid in one lump sum or a combination of a partial lump sum and life time payments.
There are several reasons why the insurance carrier might do this, including the fact that it reflects well on their "books," or your open claim is costing them too much money.
Buying out or settling your case for a lump sum can potentially pose problems. The obvious one being that once you settle for a lump sum, you can no longer receive medical treatment for your work injuries through the Workers' Compensation system. You are basically left to fend for yourself should you need medical treatment in the future. However, some people see this as a benefit. That is, they feel they are no longer tied to the limitations of the Workers' Compensation system and are free to pay for and control their own medical treatment, and, in some circumstances, do whatever they wish with the money should they opt for a lump sum.
If you are considering closing out your case for a lump sum, determining the value of your case is not easy, and every case should be viewed differently. Many individuals are misguided, usually by the insurance carrier, as to what is a fair value to close out a case. There are many factors to consider. For instance, the type of medical treatment recommendations made by the treating and/or evaluating physicians. The more invasive the medical treatment recommendations being made, such as surgery(ies), diagnostic studies, home healthcare, etc., the higher the value of the case.
In addition, other aspects of value to contemplate are the permanent disability indemnity and whether a balance remains to be paid to the injured worker. Also, was the injured worker awarded a life pension? Is the injured worker entitled to a subsequent job displacement voucher? Is there a possibility that the claim can be re-opened pursuant to the "five-year-rule"? This rule permits an injured worker to re-open his or her claim within five years of the date of the injury, if attempting to determine whether there is additional permanent disability that can be awarded. Furthermore, a person who is interested in a buyout should be aware of the offsets with other disability benefits such as pension or retirement benefits.
These are some of the important questions that need to be addressed prior to settling the claim. The goal is to be aware of all of the benefits you are entitled to so that you can maximize the value of the claim. The insurance carrier will not provide this information in hopes of getting the injured worker to agree to settle for a lower amount.
Other matters to consider are the effects a lump sum settlement will have on an injured worker who is receiving, is eligible to receive, or is seeking to receive in the near future, Medicare and/or Social Security benefits. In these situations, the parties must consider securing a Medicare Set-Aside to protect the interest of the injured worker and those of the government.
It is vital to have an experienced, knowledgeable attorney outline exactly what's involved in a buyout of your case to help ensure you receive the full amount of benefits to which you are entitled.
The law continues to evolve in this respect, and with the introduction of the Affordable Care Act it is unclear as to how the ability to purchase insurance coverage for a pre-existing condition will be affected.
Attorneys from Gordon, Edelstein, Krepack, Grant, Felton & Goldstein, LLP remain updated on the latest developments, and are constantly working on strategies to help ensure the best outcome for injured workers. If you have questions about your legal options, please call 213-739-7000 or click here.