Some Legal Terms Used by Attorneys Concerning Workers' Compensation Settlements
Although each state in the United States must have a workers' compensation system, each administers its own system, which leads to differences in procedures and terminology. As a rule, an injured worker who is unable to work will receive weekly benefits while being treated. Eventually, the parties will enter settlement talks to compensate the worker for any permanent injury or impairment. The worker should have a basic understanding of common terms used by attorneys when negotiating or discussing a workers' compensation settlement.
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Maximum Medical Improvement
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Before a determination regarding any permanent disability or permanent impairment can be made, a workers' compensation claimant must first reach what is referred to as "maximum medical improvement." Maximum medical improvement is the point at which the treating physician determines that the patient has recovered to the extent possible and that his condition is unlikely to substantially change from that point onward.
Average Weekly Wage or Benefit Week
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Although individual states may use a slightly different term, each state uses the average weekly wage to determine disability payments while the worker is receiving disability payments. In addition, the average weekly wage is generally used to calculate the amount of a lump sum payment in the case of a permanent partial or total disability award. States might compute the average wage differently, but it is often calculated by using the average of the worker's wages from the quarter before the injury.
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Permanent Disability/Permanent Partial Disability
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Once a claimant has reached maximum medical improvement, a determination must be made regarding any permanent disability or impairment. While some claimants recover completely from an injury or illness, others sustain permanent injury or impairment that affects their future earning capacity. If a claimant is determined to have a partial or permanent disability, she may then be entitled to a permanent disability award. The treating physician will determine the amount of partial disability or will conclude that the claimant is totally disabled. A permanent disability award may be paid to the claimant as a lump sum award or in scheduled payments depending on the policy of the state.
Schedule or Rating for Payments
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Each workers' compensation system has a schedule that assigns a rating, or percentage, to each possible permanent disability or impairment to a major body part. For example, if a worker has suffered a permanent disability to her arm, she may receive a 10 percent rating. The rating is then used to calculate how many weeks of permanent disability the claimant is entitled to based on the claimant's average weekly wage. The rating is crucial when negotiating a settlement as it will directly affect the settlement amount.
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