“Should I take a lump sum in a workers’ compensation payout?”
One of the first questions prospective clients ask is if they can get a lump sum settlement in a workers’ compensation case.
Unfortunately, the answer is not always yes. As the saying goes, “it takes two to tango.” If the insurance company isn’t willing to offer a lump sum settlement, then no cash settlement may be available.
In certain cases, though, workers’ compensation claimants can get a lump sum settlement. The question that you really should be asking (besides “Can I get a settlement at all?) is:
Should you take a settlement if one is offered?
This question is very fact specific and personalized. However, there is some general information that an injured worker should be aware of prior to making such a decision. Start by asking the following questions:
- What are the ramifications of a settlement?
- Can I settle part of my case only?
- When will I receive the funds if I do settle?
- Once I settle, what happens next?
Let’s address each of these questions separately.
Types of Georgia workers’ compensation benefits
In Georgia, there are three types of benefits an injured worker can receive.
The first benefit is medical treatment. Medical treatment is available for 400 weeks after the date of the accident for injured body part, provided that the case isn’t deemed catastrophic under O.C.G.A. 34-9-265.
This medical treatment is paid for completely by the insurance company with no out-of-pocket expenses paid by the injured worker. The payments go directly to the medical provider and the injured worker doesn’t have to front any money whatsoever. In order to toll the statute, the injured worker must treat once per year with an authorized treating physician for the body part that was injured on the job.
Indemnity (wage loss) benefits
The second benefit are indemnity benefits. Indemnity benefits is money paid to the injured worker when they are unable to work or are forced to work less due to their injury.
The third benefit available is a permanent partial disability (PPD) rating. This rating is provided by the authorized treating physician and is based upon the workers’ compensation rate and the body part as provided by Georgia workers’ compensation law (O.C.G.A 34-9-263).
What about pain and suffering?
One type of benefit that you’ll notice we did not mention was pain and suffering. Compensation for pain and suffering is NOT recoverable in a workers’ compensation case.
The workers’ compensation system essentially trades liability for pain and suffering. This means that it doesn’t matter whose fault the injury was, the injured worker can recover under the workers’ compensation system in Georgia. But they cannot receive any money for pain and suffering against their employer. This is one of the main differences between workers’ compensation and personal injury.
Can you settle part of your workers’ compensation case only?
A settlement can resolve each of the three benefits mentioned above individually, or two of the three, or all of them. The State Board of Workers’ Compensation has to approve any settlement involving more than $100. This means that documents stating the intentions of the parties, including what is being resolved and for how much must be sent to the State Board of Workers’ Compensation for approval.
When will you receive the funds if you settle?
Once the State Board has given approval, the employer and/or the insurance carrier has 20 days to make payment or else a 20 percent penalty on the amount owed is due.
Types of settlement agreements in workers’ compensation cases
There are 3 basic types of settlements in workers’ compensation cases:
- Global settlements that resolve the entire claim. (This settlement effectively ends the workers’ compensation case once the State Board approves the settlement.)
- Settlements that resolve only indemnity benefits and leave the medical treatment open and available to the injured worker
- Settlements that resolve only medical treatment and do not address the closure of indemnity benefits
1. Global settlement agreements
There are 2 types of global settlements: liability and no liability.
A liability global settlement occurs where the injured worker has received indemnity benefits of some sort. In the settlement agreement, the employer and the insurance carrier admit that the injured worker was hurt on the job, and agrees to settle the claim for a certain amount.
In a no liability global settlement, no indemnity benefits have been paid and the employer and insurance carrier don’t admit that the injured worker got hurt on the job. A no liability settlement may be more beneficial when it comes to insurance rates for the employer, but it typically has no effect for the injured worker so long as the settlement payment is enough.
Both types of global settlements close the case out. This means that the settlement must take into account past due, current and future indemnity benefits, all medical treatment—including potential past bills that have not been paid, future treatment that the injured worker may require, and the cost of any independent medical evaluations—along with the permanent partial disability rating.
Once the State Board approves the settlement agreement, it’s nearly impossible to have the settlement overturned (barring fraud).
Benefits of global workers’ compensation settlements
As you can see, many different factors must be taken into account when reaching a global settlement. Giving up the ability to receive indemnity benefits, medical treatment and a permanent disability rating is not something you should do lightly. This is a process that must be done carefully, methodically, and with a lot of discussion with your attorney.
Here are some of the advantages to settling your workers’ compensation case on a global basis:
- You receive a lump sum of money upfront. The current financial situation of an injured worker may require the immediate need for money. This money could be put to better use if received all at once as opposed to over time. The workers’ compensation rate of an injured worker is determined at the time of their injury and does not increase over time. If an injured worker is earning significantly less on workers’ compensation benefits, circumstances may dictate a need to settle a case.
- You gain control over your medical treatment. Once a workers’ compensation case is settled on a global basis, the injured worker can treat with whomever they want. They will be required to pay for that treatment, but that can be considered in the settlement.
- Settlement may allow the injured worker to take back control. When an individual is on workers’ compensation, they may be required to treat with doctors they don’t like, and the indemnity checks may come on different days of the week. Settling a case allows the injured worker to once again be the dominant force in their own lives.
- There is a genuine dispute regarding the compensability of the claim. There might be evidence that the injured worker was hurt on the job, and also evidence that maybe it did not take place on the job. Settlement allows for a compromise between the parties that still provides an avenue for the injured individual to treat.
There are other reasons to settle that can be very personal to the injured worker, and these should be fully discussed with your attorney.
2. Settlements that only resolve indemnity benefits
A workers’ compensation case can also be settled for indemnity benefits while the medical treatment remains open. This means that the insurance carrier will pay for medical treatment, but they will not be responsible for indemnity benefits. This doesn’t happen very often as insurance companies typically like to deal in certainties, and this does not provide that.
A case can be settled with open medical treatment in circumstances where there is a set amount of time for open medical treatment as well. This may occur when a doctor has recommended a procedure or physical therapy for a set amount of time and the open medical period covers that.
Additionally, if an injured worker is eligible for Social Security benefits, the parties in a workers’ compensation case must consider their interests. This is a much larger discussion that you should address with your attorney.
3. Settlements that only resolve medical benefits
The third type of settlement is one that deals with medical treatment only. This settlement may not contain any money and therefore doesn’t have to go to the Settlement Division at the State Board of Workers’ Compensation. Instead, this can be agreed to via a consent order that an administrative law judge can sign off on.
Issues that can be agreed to include choosing an authorized treating physician, agreeing to a change in doctors, or authorizing a specific type of treatment. This type of resolution doesn’t end a claim; it is merely a part of the process in a workers’ compensation claim.
Settlement in each case is different and very personal to the injured worker. Don’t hesitate to contact the Athens workers’ compensation attorneys at Gerber & Holder Workers’ Compensation Attorneys if you have any questions about settling your case.