Massachusetts’ workers who have suffered serious work related injuries and occupational diseases must often times make the important decision as to whether or not to accept an offer a lump sum settlement of their workers’ compensation claim. Typically when an injured worker is either at or near maximum medical improvement, their employer’s workers’ compensation insurer will contact the injured worker or their attorney to discuss the possibility of settling the claim. There are many important factors to consider when determining if a settlement is in the best interest of the injured worker. Before addressing those important issues, first I want to define some important terms:
What is MMI (Maximum Medical Improvement)?
Maximum medical improvement, commonly referred to MMI, is simply a term used by medical and legal professionals to describe the point in time where a patient has had all of the reasonable and necessary medical treatment available that might improve their condition. In layman’s terms, MMI can be described as “you are done with treatment, and you are as good as you will ever get.” Once a patient is at MMI, their medical professional must determine if they are cleared to return to work with no restrictions, cleared to return to modified work with restrictions, or permanently and totally disabled from all work. Some injured workers who are cleared to return to work with restrictions may be good candidates for vocational retraining services, which are another benefit provided to injured workers by the Massachusetts’ workers’ compensation system.
What is a lump sum settlement?
A lump sum settlement is a voluntary agreement between an injured worker and their employer’s workers’ compensation insurer to close out the weekly indemnity (weekly disability payment) portion of the claim. The parties must both agree on a “lump sum settlement” amount, i.e., a one- time payment to the injured worker in exchange for the injured workers signing off and foregoing their rights to any future weekly disability payments. There is nothing either party to can do force the other into a settlement agreement. A settlement agreement is only reached when both parties agree that it is in their best interest to accept the terms of the agreement.
Factors to Consider in Evaluating a Settlement Offer:
- Has the injured worker reached Maximum Medical Improvement? It is rarely a wise decision for an injured worker to settle before reaching MMI.
- Does the amount offered by the insurance company reasonably reflect the amount of future weekly compensation that you would otherwise receive if you continued to receive weekly benefits, after a net present value reduction?
- Does the settlement offer include a reasonable allocation to Section 36 permanent loss of function benefits?
- If your entitlement to benefits is in litigation and being contested by the workers’ compensation insurer, does the offer reasonably reflect your chance of prevailing on the pending issues being disputed in the litigation? You need to consider the reputation of the judge presiding over your claim, the skill level of the employer’s insurance company’s lawyer and also the impartial physician assigned to your case by the Department of Industrial Accidents.
- If you are a candidate for permanent and total disability benefits, do you have any health issues that affect your life expectancy (and therefore may limit the amount of future weekly benefits that you receive)?
- If you are a candidate for permanent and total disability benefits, you may have a spouse that you wish to inherit your remaining settlement funds upon your death (surviving spouse is not entitled to continue receiving weekly disability benefits, unless the death is caused in whole, or in part, by the occupational injury or disease).
- How a settlement of your workers’ compensation claim will affect your other disability benefits, such as Social Security Disability or Long Term Disability benefits.
These are just a few of many factors that must be considered in evaluating a workers’ compensation settlement offer for an injured worker. Most often, in order for an injured worker to receive a reasonable settlement offer from an insurance company, claims for enhanced benefits must be filed in order to increase the amount of possible future benefit payments the insurance company may make. It is advisable to seek legal representation in negotiating a settlement of a workers’ compensation claim in Massachusetts. The insurance company will be represented by an experienced attorney, and therefore in order to protect their own interests it is advisable that an injured worker also be represented in the settlement negotiation and settlement approval process.