This is a question we deal with in every claim where the parties begin discussing a possible settlement. There are any number of reasons why a claim may be settled, either at the suggestion of the insurance company or the injured worker.
A work comp insurer may want to discuss settlement of the claim for these reasons:
-The claim has been open for a long time and the insurance company is spending a lot of time and money on the claim for vocational rehabilitation expenses, attorneys fees, ongoing benefits, etc.;
-There is a pending dispute and the insurance company wants to avoid the risk of losing the case at trial;
-The likely future benefits to be paid are pretty clear and the insurance company wants to pay a lump sum advance to close the file;
The injured worker may want to explore settlement for some of these reasons:
-The claim has been open a long time and the employee is tired of being bound to the requirements of the work comp system regarding medical care, job search, meeting with a vocational rehabilitation consultant, attending independent medical examinations (IME), etc.;
-The injured worker may have a new job lined up which will provide financial security and settlement of the current claim allows him or her to leave the work comp system with a tax-free payout;
-There is a pending dispute and the injured worker wants to avoid the risk of losing the case at trial, so a compromise settlement provides a guaranteed recovery.
There are many other reasons why a claim may be settled based on the particular facts and circumstances of the claim. Regardless of the reason, cases that have gone on for months or years are most likely settled at some point at the suggestion of one or both parties.
Valuing a Claim for Settlement Purposes
Regardless of why the claim is being settled, calculating a value for the claim is pretty similar in all cases. The work comp system is intended to replace lost income and there are limits on the length of time any benefits may be received. There is no compensation in the work comp system for “pain-and-suffering” or, unfortunately, for how much an injury may have messed up a person’s life.
Therefore, evaluating a claim is very similar in all cases. An important factor affecting the value of a claim is how much the injured worker was earning on the date of injury. This is called the average weekly wage (AWW) and determines the amount of any weekly benefits to which the injured worker may be entitled. For example, a person with a shoulder injury working a union construction job will generally have a claim far more valuable than a person with the same shoulder injury while working at a fast food restaurant. The length or type of benefits might be exactly the same, but the weekly compensation rate will be higher for the construction worker with a much higher weekly wage.
Taking into account the average weekly wage and compensation rate, we then generally consider these additional questions:
1. What benefits have been paid to date (how many weeks of total or partial wage loss have been paid)?
2. What benefits remain available (how many weeks of these benefits are left)?
3. What future benefits are likely to be paid, based upon the evidence, and over what period of time?
4. How strong, or weak, is the medical or other evidence that will determine the future of the claim?
If the injured worker has used up a majority of the available benefits and has made a good recovery from the injury, the claim may not have much settlement value. On the other hand, a person very seriously injured and with likely long-term and permanent work restrictions would have a more valuable claim.
Please keep in mind that these are only generalizations to help you understand how a lawyer and the insurance company come up with values when negotiating a settlement. When the issue of settlement arises for one of our clients, we schedule a meeting at our office to review the entire claim, to explain the settlement evaluation process and agree on a settlement strategy. Settling a work comp claim is an important decision and we strive to make sure our clients have all of the information they need to make informed decisions during the settlement negotiation process.
I hope this information was helpful and answered some of the questions you might have about settling a Minnesota work comp claim. If you have additional questions and would like to schedule a free consultation, please call our office or send an email from the contact page on our website. We have been representing injured workers across all of northern Minnesota for more than 38 years and would be happy to discuss your work injury, answer your questions and give you an honest evaluation of your claim.
Previous Posts Discussing Settlement
For more information on work comp settlements and the settlement process, you can read some of our previous blog posts here:
I hope you find these or some of our other blog posts helpful and informative. Thank you for visiting our blog.