Time to Cash Out? Considering a Lump-Sum Workers’ Comp Settlement
Posted D. Joseph Chapman on Jul 30, 2013 in Workers' Compensation
In recent years, the insurance companies that handle workers’ compensation claims in Pennsylvania have started to aggressively push lump-sum settlements for some cases.
Conventionally, someone who is receiving workers’ compensation benefits for a Pennsylvania workplace injury will submit medical bills to the insurer for payment, and will get periodic—monthly or biweekly—checks to replace a portion of lost wages. The worker will attend regular doctor visits to gauge his medical progress.
When a worker has a long-lasting occupational illness or medical condition caused by a workplace injury, this payment method can be unsatisfactory for both parties. The insurance company resents doling out benefits for an indefinite period, because there’s no way accurately to estimate the full value of the claim. The injured employee fears that one week the doctor will say, “That’s it, you’ve reached your maximum improvement,” which will suddenly turn off the payments.
And so lump-sum settlements were created to compromise on the differences. The workers’ compensation insurance firm offers the injured party a single large payment to settle all future obligations for this accident. If the worker accepts, he signs a form to discharge his claim and gets to keep the check—and he can spend it as he sees fit.
A big settlement—what’s not to love?
If a big lump-sum settlement seems too good to be true, then your suspicions are serving you well. You should always consult your workers’ compensation lawyer in Harrisburg before signing away your legal rights for any settlement amount. Our experience is that a big lump-sum settlement can serve the needs of a few clients, but that it’s a bad deal for the majority of people.
Here are some reasons why you might want to refuse a final settlement for your workers’ compensation claim in Pennsylvania:
- You recognize you don’t have the self-discipline to handle so large a sum of money. With the steady flow of money from standard workers’ compensation payments, you have enough for regular living expenses and medical care. A lot of people can’t handle a sudden windfall: they would spend it on a vacation, home furnishings, or a down payment on a car. That means they will run short, sooner or later, when the money is needed for a new wheelchair or next month’s groceries. If you can’t manage money prudently, refuse a lump-sum payment!
- The amount isn’t enough to meet your needs for the rest of your life. If your Dauphin County on-the-job accident caused complications that will limit your ability to work forever, or if you will have continuing medical expenses until you die, then the settlement offer must be big enough to meet those costs—including the costs of rising prices over the years.
- The amount isn’t enough to cover expected costs if complications arise. If the offer comes too soon for the course of your condition to be predicted, you have to consider the possibility that a sudden turn for the worse may require surgery or heroic medical interventions. You can’t afford the risk that the money will run out just as you need critical care.
- The money isn’t enough—period. The insurance company representative may think you’ll be so dazzled by the size of the check that you won’t accurately compare it to your needs. She may be offering a low settlement amount—considering your injuries—because she thinks you’re too naive to do the math.
Get advice before you make a commitment
You can contact the Harrisburg work accident lawyers of Schmidt Kramer by using the contact application on this website or by calling us 717-888-8888 (or 888-476-0807 toll-free) to schedule a free, confidential case review. We would be pleased to send you a FREE copy of our book, Who Pays The Bills When You Are Injured At Work? Give us a chance to talk about your case, and we can help you decide whether a lump-sum settlement would be in your best interest—or if it would just give the insurance company adjuster something to laugh about at the end of the day.