Recent thoughts and experiences from the injured employee’s side of Permanent Total Disability claim settlement:
1. The big stick in the hands of the defense is that the employer/insurer does NOT have to pay a lump sum to settle PTD cases. A key option the employer/insurer has is to simply pay the weekly amount until the employee dies (with very limited exceptions). Along with the weekly compensation check, the defense also has to pay future medical along the way. However, the injured employee can expect the defense to drag their feet and balk before continuing to pay future medical bills. To resolve disputes over non-payment of future medicals, the employee racks up more attorney fees to hire counsel to sue in a circuit court (not the Division of Workers’ Compensation), and waits months for a hearing/trial date. Not many PTD employees have any money for court costs and attorneys fees as they are living from week to week on the meager weekly compensation checks running about 2/3 of their former weekly wage. The defense knows the last thing the employee wants is to never have any money again and to have to fight forever to get their medicals paid. This puts the employee in such a bind that is is difficult to put real pressure on the defense over the total compensation the employer/insurer face paying over the life expectancy of the employee. The end result is that the employee is under serious pressure to get as much of a lump sum settlement as the defense will offer and get the hell out of Dodge. The danger of taking the money and running is that is may well not be enough to pay the future medical expense, especially after the employee catches up the bills and tries to have a life again. At the other end of the gauntlet sits Medicaid which has the right to refuse to pay for medical expense of a employee who received a work comp settlement that included money for future medical expenses. After all, why should taxpayers pay medical bills that the injured employee was given settlement money to pay?
2. While word on the street is that Medicaid lacks the time and staff to check on smaller lump sum settlements (below $250k, we hear), that is uncertain and the risk remains that Medicaid may refuse to pay for future medical care, forcing the PTD employee to use his/her settlement money (if any remains) to pay health care providers. And who knows how long the economy will support even present levels of Medicaid. At some point in the future, Medicaid may not be around, at least not as we now know it.
3. Medicaid Set-Aside Trusts–To buy out of the obligation to provide the PTD employee with future medical care at its expense, the defense sometimes looks into paying a chunk of money into a Medicaid Set-Aside Trust by which Medicaid agrees to pay the future medical care of the employee. If Medicaid wants a relatively large funding from the defense, then this option may be rejected. But sometimes the employer/insurer uses this tool and funds a Trust, leaving Medicaid to pay the future medicals. Some concerns for the PTD employee from the Trust route are: 1) he/she gets no money for future medical treatment, reducing his settlement; 2) Medicaid may not last or continue to pay for the lifetime of the employee; 3) some doctors do not accept Medicaid, particularly some of the top-notch pain management physicians; 4) the employee’s attorney who fought for the defense to pay future medicals now has to fight again to receive a contingency fee percentage that the attorney would have received had the future medical compensation been paid in settlement to the employee (example: if future medicals are $100,000 of the settlement, the attorney’s typical work comp 25% fee amounts to $25,000).
4. If the PTD employee decides not to take a lump sum settlement, the alternative is weekly compensation checks for life. BUT if the employee’s disability improves and he/she can reenter the labor force in a meaningful way, the defense can simply move for orders converting the case to one of Partial Disability, thus ending its legal obligation to pay weekly compensation as long as the injured employee lives. Put another way, a PTD case stays open for reassessment of the employee’s ability to work a job.
5. Reaching a lump-sum settlement puts the injured employee in some control of his destiny. He or she can now pick his doctors and course of treatment although at his/her expense (unless it can be panned off on Medicaid which runs off taxpayer money). Conversely, NOT accepting a lump sum settlement leaves the employee at the mercy of the defense who picks the doctors it wants to get what may be a less expensive or beneficial treatment plan than what the injured employee wants. And, if the employee refuses to follow the treatment plan of the defense doctors, then the defense cuts the employee loose to pay for his/her own treatment (the ideal outcome for the defense so beware).
6. FYI–a typical present value rate in work comp is 4% compounded annually.
7. The weekly workers compensation checks run about 2/3 of regular pay (up to caps set by law), which leaves many employees so destitute that they jump for any semi-reasonable lump sum settlement–letting the defense off the hook, so to speak.
Kurt H. King
Law Office of Kurt H. King, 20 E. Franklin, Liberty, Clay County, Missouri 64068; 816.781.6000
Litigation, Personal Injury, Workers’ Compensation, Other Matters
The Law Office of Kurt H King 