How do lump payments affect workers' comp cases?

How do lump payments affect workers’ comp cases?

July 16, 2012 by Fred Hosier

Posted in: In this week's e-newsletter, Injuries, Latest News & Views, Workers' comp

Conventional wisdom held that giving injured employees lump-sum payments in workers’ comp cases discouraged them from returning to work. A new study tested that theory.

Turns out conventional wisdom may be wrong in these situations.

A new study from the Workers Compensation Research Institute shows lump-sum payments don’t discourage employees from returning to work.

On average, more injured employees returned to work after receiving lump-sum settlements than exited. Employment increased from 25% of employees at the time of the payment to 32% after one year. The exception was older workers who had a decline in employment after a settlement.

Most of the injured employees (78%) who received lump-sum payments didn’t change their employment status: Those who were employed stayed at work, and those who were not working remained unemployed.

Of those employees who changed their employment status, 30% who were employed left work and 19% of those who were not employed found employment.

“This is an important study because we need to find out whether settlements discourage return to work for injured workers who want to return to work or assist them in closing this chapter of their life and moving on with their career,” said Bogdan Savych, author of the study.

The study followed 2,138 employees who were injured in Michigan in 2004 and received a lump-sum settlement.

What’s your experience been with injured employees who receive lump-sum payments in workers’ comp cases? Let us know in the comments below.

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Tags: lump-sum settlement, return to work, Workers Compensation Research Institute, workers' compensation

Lily

Jim when someone is drastically injured on the job no matter how hard they try they never get back to where they were. Forcing someone to take annuitized payments only pads the pockets of those cash now companies that take 60% or more for giving the person what they rightfully deserve in a settlement. In today’s economy especially, people are living paycheck to paycheck and an injury, even if covered by workman’s comp still throws a wrench in that struggle. Workman’s comp is not paid right away and gets people further behind until the payments come in. When payments do come in they do not pay the late fees garnered by not having that paycheck right when you need it. Who are you to decide someone is not good with their money?? Circumstances, not necessarily squandering ones money is usually what leads to money problems. There are very few people that could or want to go on an Alaskan cruise after being injured – they usually want to get back to their daily living.
http://SafetyNewsAlert Jim N.

Annuities should be MANDITORY – in cases of continued significant (i.e. loss of limb) imparament – where continued or future medical care will be required. Injured employees, with significent lump sums of cash, often lack the financial skill-sets or willingness to seek an expert opinion that will allow them to sequester sufficent settlement amounts, until the day follow-up medical care (new limb) is required. They will look past the Casino trips / Vacation crusis to Alaska / Winabego fun van / in-ground pool / etc. to return to the well (Employer’s WC Carrier) for assistance. JN
Jan

I find that most of my employees who receive settlements do return to work. However, I have had a few that get injured again hoping for additional monies whichi s really frustrating.