Virginia Workers Compensation Settlements (Part 1)
Over the years our law firm has handled thousands of Virginia Workers Compensation claims. Our efforts have, in many claims, resulted in substantial settlement awards for our injured clients. Our experience has revealed to us that workers compensation settlements can be complex. An injured worker who wishes to settle a workers compensation claim should consider the following ____ questions before signing on the dotted line. VERY IMPORTANT: The following is an attempt to summarize some, but not all issues, that should be considered when settling a workers compensation claim. None of the ideas and conclusions noted below should be applied to a particular case without consultation of an attorney who has experience addressing these issues.
Is the claim an “accepted” or “denied claim”?
As you will see below, answering this question is important for almost every other issue that needs to be addressed when a workers compensation claim is settled. An “accepted” claim in Virginia is often referred to as a “compensable” accident that the worker's compensation insurer has agreed to cover. Compensable accident claims are usually reflected by the entry of an “Award Order” or other stipulated agreement that is approved by the Virginia Workers Compensation Commission. One way to determine this is to look for a document from the Virginia Workers Compensation Commission that says “Award Order” in the top left corner. While there are many questions that should be answered about the substance of the award order, the existence of this document is an indicator that at least some part of the worker's compensation claim has been accepted. A denied claim is one that the insurer after a claim has been filed with the Commission, has officially denied before the Virginia Workers Compensation Commission. One way to determine if your claim has been denied is to see if there is a denial of your claim in response to the “20 Day Order” generated by the Virginia Workers Compensation Commission. If you have received a Notice of Hearing, this is also an indicator that the claim, or at least some part of your claim, has been denied. Hearings can be set for some issues that arise in compensable accidents as well, but claims denied for compensability are always scheduled for a hearing once the insurer has denied the claim. Whether the claim is accepted or denied can have an impact on many of the following issues.
Will my Medicare Eligibility be an issue?
Many injured workers are also Medicare recipients either because they have qualified for Social Security Disability or have reached retirement age. Medicare also becomes in an issue for injured workers who wish to settle their claims who are not on Medicare but have a reasonable expectation of being on Medicare.
There are basically two considerations:
- Has Medicare paid work injury-related expenses incurred prior to the settlement?
- Does the injured worker need additional future medical treatment related to the accident and, if so, does the settlement account for that need?
Medicare often pays for treatment while the worker's compensation insurer decides whether or not to accept the claim (either the initial claim or some claim for medical treatment after compensability has been established). If Medicare makes such payments and the claim is accepted as compensable, the insurer is responsible for repayment of these expenses assuming that the parties do not agree otherwise in the worker's compensation settlement agreement. If the claim is settled on a “denied” basis, its is not entirely clear if Medicare has a right to recover any of the worker's compensation settlement for payments made prior to the settlement. Many lawyers agree that Medicare does not have such an interest, but to my knowledge, the issue has not been brought before any Federal Courts to date.
- For accepted claims, make sure that any settlement agreement has a “medicals through the date of entry of the ORder” clause. Be Careful and make sure that language in other parts of the agreement does not shift responsibility for paying back conditional payments to you the injured worker.
- In denied claims, it may be wise to at least ask Medicare if they think they have an interest in the denied settlement. Again, there is a debate about this. Some attorneys think that it is clear that Medicare does not have an interest in a denied workers compensation settlement.
Future Medical Treatment
Here is the basic issue: An injured worker who has a compensable workers compensation claim is not supposed to settle the claim, including entitlement to medical benefits, and then shift the responsibility of payment of future medical treatment to Medicare. Medicare has specific rules about this issue that seem to frequently change. If you are an injured worker and any of the following are true, you should think about the impact of the settlement in light of your Medicare status or potential Medicare entitlement.
If future medical treatment related to the injury is expected and
- You are a Medicare beneficiary at the time of the settlement or
- You are expected to be a Medicare beneficiary within 30 months of the settlement and the settlement is for a gross amount that exceeds $250,000.000. Again, this is a rule of thumb. Medicare may review any case where it appears that the injured worker or insurer company attempt to shift the responsibility of future medical treatment to Medicare after a settlement agreement.
- Consider establishing an “MSA” or Medicare Set Aside agreement and having the same approved by Medicare. This is a way of getting ahead of the issue and involving Medicare directly in the settlement process
- Different attorneys have different opinions about whether or how to pursue this option, but it is at least one option.
Will settling my worker's compensation case affect my Social Security Disability payments?
Workers compensation settlements can have an impact on Social Securit Disability benefits. If you are a recipient of monthly Social Security Disability benefits and you wish to settle your worker's compensation claim it is important to consider the impact of the settlement amount on your monthly worker's compensation benefits. If you are receiving weekly workers compensation benefits and are entitled to monthly Social Security Disability benefits, you probably already notice that your Social Security monthly benefit has been reduced, sometimes dollar for dollar, by the amount you are receiving in weekly workers compensation benefits.
- Make sure that there is specific language in the worker's compensation settlement agreement that pro-rates the lump sum of your settlement over your life expectancy.
- Social Security will look at the smaller weekly amount that is prorated to adjust your benefits which in many cases causes an increase in monthly Social Security Disability benefits.
Will Short Term, Long Term Disability & Health Insurance payments made affect my settlement?
Receipt of Short Term Disability Benefits, Long Term Disability Benefits and health insurance benefits related to the worker's compensation injury need to be considered. This can be complex and, in some ways, is similar to the Medicare considerations above. It should be noted that, while most lawyers follow basic best practices with this issue, the law is not perfectly clear. When a person is injured in a work-related accident and their health insurance pays for medical treatment or disability policies pay for wage loss that is arguably related to the accident do those providers have an interest in the worker's compensation settlement.
ERISA Health Policies
If your health care or disability payments are provided by an ERISA policy i.e. a policy fully funded by your employer, the “plan sponsor” may have an interest in the outcome of your worker's compensation case. This issue has received a lot of attention in the personal injury world and some attention in the worker's compensation world. In the worker's compensation world, the difference between accepted and denied claims may be relevant.
Accepted Workers Compensation Claims -- Basically, if your claim has been accepted, make sure that you have the “medicals through the date of entry of the Order” clause in the settlement Order and that there is no other language in the settlement documents that shift the burden of repayment of any ERISA lien to the injured worker. Here are some other possibilities for accepted claims. Have the worker's compensation carrier pay the medical providers directly for the bill which will then set in motion a reimbursement to the ERISA policy.
Denied Workers Compensation Claims -- This is a much more fuzzy situation. In this case, there is no potential for a “medicals through the date of Order” clause in the worker's compensation settlement. It is not perfectly clear whether the ERISA policy has a right of recovery against a denied workers compensation claim but ERISA administrators may be very vigilant to recover. Here are some potential tips:
- If the injured worker is using his health policy provided by the employer, the “plan sponsor” in the ERISA policy is the same as the employer in the worker's compensation claim. If so, you could argue that the employer can't deny a claim before the Virginia Workers Compensation Commission and then later claim that the medical expenses paid for by its own health policy are “work injury related”. Again, to our knowledge, this specific defense has not been raised before a court and it is unclear if it would be successful.
- Use the reasoning in #1 to have the lien reduced. Good luck.
State Governed Health Insurance Policy
- Accepted Workers Compensation Claims -- This is similar to accepted claims in the Medicare issue note above. Make sure it is clear that the worker's compensation carrier is responsible for all medical treatment through the date of the Settlement Order.
- Denied Workers Compensation Claims -- Many Virginia Workers compensation attorneys will argue that the insurer is not entitled to recover any money from the denied settlement amount because of Virginia's Anti-Subrogation law. As far as we know, this method of advising clients has held up to date.
The issue in this scenario is when state or municipal employees have an entitlement to state or municipal provided retirement and/or disability retirement wage loss benefits. Similar to Social Security Disability cases, the injured worker should understand clearly what benefits they are potentially entitled to and consider the impact of a lump sum settlement on those benefits.
Our general recommendation is that injured workers should seek the advice of an attorney who handles workers compensation cases to discuss these issues before settling a claim. Our firm offers a free consultation and our attorneys would be happy to discuss your claim. Whether or not you retain our firm or some other law firm, you need the certainty that you understand and can address the multitude of issues that can arise before settling your worker's compensation case.