How to Calculate a Settlement in a Workman's Comp Injury
State laws regulate the majority of workman's compensation injuries. In limited circumstances, federal laws may preempt state jurisdiction. In either case, all workman's compensation laws operate similarly. These laws do not require proof of fault and are subject to limited employer defenses. Because of the easier standard of proof, settlements are often slightly lower than general negligence claims and do not include an award for pain and suffering. Settlement of compensation claims allows each claimant to collect a lump sum and avoid future disputes. The settlement value of each claim is determined by evaluating permanent disability and future medical expenses.
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Things You'll Need
- Accident report
- Witness statements
- Medical expenses
- Medical records
- Physician's opinion
- Financial calculator
Instructions
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1
Obtain copies of accident reports. Employers usually prepare a company report before filing an official claim form with state workman's compensation agencies. Any report signed by an employer may prove liability.
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2
Request copies of statements given by witnesses. Statements may prove the injury occurred in the normal course of employment and verify the severity of the accident.
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3
Wait until reaching a point of maximum medical improvement before exploring settlement. Treating physicians decide when a patient's recovery is complete. After reaching maximum improvement, begin collecting documents required for settlement.
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4
Request copies of medical reports and invoices prepared by all treating facilities. Verify the outstanding balance owed to each facility before settling.
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Request a physician's narrative opinion. A final medical report is necessary for evaluating the settlement value of each claim. A primary treating physician should either rule out permanent disability or assign a percentage rating for whole body impairment. Additionally, a final report should estimate the cost of future medical expenses related to the accident.
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Calculate disability settlement value. Historically, an average settlement for permanent disability payments is the product of multiplying the following items: (1) average weekly wage, (2) 52 weeks, (3) the percentage of whole body impairment, and (4) a factor of eight to include future years. Future value factors vary among geographical regions and states.
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Reduce the value of settlement for perceived risk. Legal disputes lower settlement values. Employers may deny liability if an injury involved "horseplay" or substance abuse. Employers frequently contest the calculation of average weekly wage and permanent disability ratings. Evaluate the merit of each dispute and estimate the likelihood that the claim value may decrease.
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Calculate net claim value by adding the present value of future disability payments, future medical expenses, and unpaid medical expenses. Subtract an estimated discount for risk.
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Tips & Warnings
Insurance companies settle claims to save money. The costs for prolonged disputes, agency hearings, and potential litigation affect settlements. State law may require an employer to pay a claimant's legal costs and fees if the claimant prevails at trial. In cases of clear liability, the discount value due to risk is negligible. Employers and insurance companies that deny claims unreasonably may be subject to state fines.
