In Pennsylvania, if you have been injured on the job, you are eligible for workers’ compensation benefits. All employers in the state who have one or more employees are required to take part in the program. There are some exceptions, such as for railway workers, federal government employees and people who work on the docks in shipyards, but they are covered by other forms of workers’ compensation agreements.
When you have been injured on the job in Pennsylvania, you can file a workers’ compensation claim on your employer’s insurance policy. Your employer does not have to accept your claim — you may need to go to a workers’ compensation hearing to prove your case. If your employer does accept your claim, you are eligible to receive two-thirds of your average weekly wage as well as financial coverage of all relevant medical expenses.
These payments, known as Temporary Total Disability (TTD) payments, will continue until you are healthy enough to return to your job. If you can only return to your previous position with some workplace restrictions ordered by your doctor, you may still be eligible to receive some TTD payments. If you cannot return to your position because your injuries are too severe, you may qualify for Permanent Total Disability (PTD) payments which can continue for as long as 500 weeks in some situations.
In either case, it may be advantageous for you and for your employer and their insurance company to negotiate a settlement. A Pennsylvania workers’ compensation settlement may take the form of a one-time lump-sum payment or a structured settlement where you will receive regular payments over an agreed period.
About Workers’ Compensation Settlements
Workers’ compensation is designed to work for both the employee and the employer. Workers’ compensation is a no-fault system. This means it does not matter who is responsible for your workplace injury — you are still eligible for workers’ compensation benefits. Whether your injuries are the result of carelessness on your part or your employer’s, it does not matter. This works in favor of the employee.
For the employer, workers’ compensation means they will not face crippling lawsuits because of a workplace injury. Under the workers’ compensation program an employee is not allowed to sue their employer if they are injured on the job.
Workers’ compensation in Pennsylvania does not guarantee that every injured worker has a right to a lump-sum settlement or a structured settlement. It may make sense, however, for both the employee and the employer to settle a work-related injury. If you have been receiving workers’ compensation benefits for a long time and your doctor has placed permanent restrictions on your ability to work, a settlement may be a good idea.
Settlements also make sense for an employee if they have reached Maximum Medical Improvement (MMI). This is when your doctor tells you that you are healed as much as you’re going to be healed and no further recovery is possible. Although you can start to discuss a settlement with an employer’s insurance company four months after an injury takes place, many injured workers will wait until they have reached MMI because it allows them to anticipate better future medical costs that can be negotiated in a settlement.
Employees may also want to talk about a settlement if they are worried that they may lose their claim in front of a workers’ compensation judge.
Settlements work for the employer because they may help the employer save money in the long run. For instance, if an employer decides to fight an employee’s claim in a hearing before a workers’ compensation judge and they win the case, they won’t have to pay any future workers’ compensation costs.
There is also the chance, however, that they may lose. If a worker files a workers’ compensation claim, the employer must continue to pay the employee benefits until the hearing. Preparing for hearing involves attorney fees and other litigation costs. If the employer loses the claim, not only have they already spent a lot of money before the hearing, but they must continue to pay the employee workers’ compensation benefits afterward. Negotiating a settlement makes sense for their bottom line.
How Do Workers’ Comp Settlements Work?
In Pennsylvania, a lump-sum settlement is known as a Compromise and Release (CR). In return for releasing your employer and their insurance company from paying any future workers’ compensation benefits for either lost wages or medical bills, you will receive a one-time payment as a settlement.
It’s important to understand that in Pennsylvania, after you sign a CR, you will not receive any further funds even if your injury grows worse. In some states, settlements can be reached that allows the employee to continue to receive medical benefits. In Pennsylvania, however, an injured employee who negotiates a settlement will receive no future medical assistance.
Pennsylvania workers’ comp settlements can take two forms — a lump-sum settlement or a structured settlement.
Both of these forms of settlements have their pros and cons. If you have decided to either accept a settlement offer from your employer’s insurance company or make a settlement offer, it is in your best interests to talk with an experienced workers’ compensation attorney. They will help you decide which form of settlement works best for you and how much you should seek in a settlement offer.
1. Lump-Sum Settlement
You might want to consider a lump-sum settlement with your employer’s insurance company if:
- Your doctor has told you that you have reached your MMI. This means that a workers’ compensation lump-sum payment would be based on total permanent disability.
- You find the workers’ compensation benefits process tedious and time-consuming, and you don’t want to do it anymore.
You may also wish to reach a lump-sum settlement around what are known as specific loss injuries. These are work-related injuries that involve the loss of use of a particular body part. The Pennsylvania Workers’ Compensation board has assigned a specific number of weeks for which you can collect benefits for each injury.
Even if you return to work, if you have suffered a specific loss injury, you can still negotiate a settlement with the insurance company for that payment. For instance, if you have lost an eye in an accident, but it does not prevent you from returning to your workplace in a new position, you would still be eligible for a specific loss award worth two-thirds of your average weekly wage for 275 weeks. If two-thirds of your average weekly wage was $700, then your award would be worth $700 times 275 or $192,500.
You might not get all that in a negotiated settlement, but that is the value of the workers’ compensation benefits.
2. A Structured Settlement
Having your attorney negotiate a structured settlement makes sense if:
- You are worried about the tax implications of a lump-sum payment.
- You are worried you might spend a lump-sum payment too quickly, which would leave you nothing to cover future expenses.
Workers’ comp benefits are not subject to federal or state taxes. If you are also receiving Social Security Disability Insurance (SSDI) payments or Social Security Retirement benefits, however, there may be tax problems.
- If your settlement and your SSDI benefits put you above the 80 percent threshold of your average weekly wage, the Social Security Administration can reduce your SSDI benefits to put you below the 80 percent threshold.
- If the combination of the benefit you are receiving from workers’ comp and SSDI puts you, say, $300 above the 80 percent threshold, the SSA will cut back your SSDI benefits by $300. However, you would still be taxed on your SSDI total which includes the $300 you are no longer receiving. You are taxed as if you are still getting that $300 in SSDI benefits, although workers’ compensation is paying it.
If you are worried about spending all your workers’ comp lump-sum settlement too fast, your lawyer can structure the settlement so that you will receive payments on a schedule that you and the insurance company have agreed on.
The final step in a settlement is that it must be approved by a workers’ compensation judge. The judge will review the settlement and make sure you understand all the implications of a CR. If the judge thinks you are not being treated fairly or are not receiving enough compensation from the settlement, they will not approve it and send you and the insurance company back to negotiations.
In either case, talking to an experienced workers’ compensation attorney is a wise move. An experienced attorney can make sure you receive an appropriate amount of compensation if you decide to accept a lump-sum settlement, or they can negotiate a structured settlement that will help you avoid both tax problems and spending your award too quickly.
How Are Workers’ Comp Settlements Valued?
Although lawyers have differing opinions, you probably don’t need to negotiate a settlement if you are only going to be off work for a few months.
But if your injury means that your conditions are not going to get better and you won’t be able to work again, you can negotiate a settlement based on two-thirds of your average weekly wage and the 500-week period (about nine and a half years) for which you are eligible to receive benefits in Pennsylvania.
- There are limits to how much you can receive in lost-wage benefits. The most you can receive is based on the State Average Weekly Wage (SAWW) which in 2019 is $1,049. So even if two-thirds of your average wage weekly would normally be $1,200, the most you can receive in workers’ compensation benefits is $1,049 a week.
- Since workers’ comp benefits are not taxable, it helps an injured work receive benefits close to their actual wage before they were injured.
- If your doctor has told you that you have reached your MMI, and two-thirds of your average weekly wage was $700, you would multiply the $700 by 500 months, to reach a total of $350,000.
If you decide to accept a lump-sum payment, however, there are several important factors that you should discuss with your lawyer:
- Are you going to need more surgeries in the future?
- Do you think you will be able to work again one day? In how many years?
- Does this settlement provide you and your family with the financial security that you need?
- Could your current injuries become worse, or could they cause other injuries?
Remember, it’s unlikely you would receive all $350,000. You may receive less in a negotiated settlement, and you may have other fees that you will need to pay such as attorney’s fees or medical bills.
It is also likely that you’ll need to establish a Medicare savings account. This is to help pay for future medical treatments that won’t be covered by Medicare. Only when all of your funds in your Medicare savings account are used up can you use Medicare.
Now let’s look at specific loss settlements.
As we mentioned above, if your injury is so severe that you lose all or part of a functioning body part, the Workers’ Compensation Board of Pennsylvania has determined that you will receive lost wage benefits for a certain number of months for each type of injury.
Instead of an eye, suppose you lost the use of your left arm. You would receive two-thirds of your average weekly wage for 410 weeks. If a doctor determines, however, that you have only lost 50 percent of the use of your arm, then you would only receive benefits for 205 weeks. If we take the $700 figure used above for two-thirds of your average weekly wage and multiplied that by 205, the workers’ comp settlement amount is $143,500.
What about a structured settlement?
In a structured settlement, your lawyer would negotiate a settlement that paid out a certain amount of money on a schedule determined by you and the insurance company. Your lawyer would structure the settlement to reduce any possible tax problems and ensure that you receive regular payments to secure your family financially for many years to come.
Some important things to remember when negotiating a settlement:
- There is no going back. Once you have signed a CR form and accepted a settlement, your employer’s insurance company will not have to pay you any more workers’ compensation benefits.
- Workers’ comp benefits do not cover pain-and-suffering. They only deal with lost wages and medical costs. Pain-and-suffering is covered by personal injury awards.
- If you participate in the workers’ compensation program, you cannot sue your employer. It is possible, however, to sue other people associated with your injury. Suppose you are running an errand for your boss in your car, and another vehicle hits you. You are eligible for workers’ compensation if you are injured. You can also sue the person who hit you under a personal injury claim.
To Learn More About Workers’ Compensation Settlements, Contact Calhoon and Kaminsky P.C.
Negotiating a fair workers’ compensation settlement is not an easy task. Many different factors come into play such as future medical expenses, financial security for you and your family, taxation issues and how to determine the amount of money you will need to cover all these expenses. Your employer’s insurance company is used to negotiating workers’ comp settlements. They will employ every trick in the book to ensure that you receive as little as possible.
If you are trying to negotiate a settlement on your own, it’s an uphill battle. For starters, you may not be feeling your best if you’re still recovering from your injury. Your employer’s insurance company has a whole hoard of lawyers who are used to hardball negotiation tactics. It would be difficult not to feel overwhelmed by the situation, and chances are you would not receive the compensation for which you are eligible.
That’s why you should talk to an experienced workers’ compensation attorney at Calhoon and Kaminsky P.C., before you talk to your employer’s insurance company about a settlement. The attorneys at Calhoon and Kaminsky P.C., have won millions of dollars in awards and settlements for injured workers. Our sole focus is on workers’ compensation cases. We know how to handle the insurance companies’ attorneys and how to prepare for the hardball tactics those attorneys will use in a settlement negotiation.
If you would like to talk to one of our experienced workers’ compensation attorneys, you can arrange a free consultation today. You can call us at 1-717-695-4722 or visit our contact us page where you can tell us how to get in touch with you and leave us some information about your case. We will reach out to set up your free consultation as soon as possible.