Why Settle My Workers Comp claim BEFORE my Car Crash Case?
If I have an AWARD in my Workers Comp claim that provides for my future medical care, permanent injury and wage loss, why would it be a good idea to settle the WC case BEFORE the personal injury case settles? That is a question that experienced Herndon Virginia lawyer Doug Landau answers regularly for his clients.
One of the reasons it may be a good idea to settle the Workers Comp claim BEFORE the related car crash case is to try to maximize the value of the Workers Compensation claim. If a Workers Comp claim is NOT settled before the related car crash case, then the Workers Compensation insurance company not only gets paid back on their “IOU” for the money they have spent on the injured worker’s medical bills, wage loss, medications, mileage reimbursements and other Comp benefits, but the WC Insurance company no longer has to pay weekly benefits. The Virginia Workers Compensation Commission will enter what is known as a “Suspension Order.”
Under Virginia law, the AWARD Order is suspended, and the Workers Comp carrier only has to pay back their “pro rata” share of the recovery costs of the related car crash case. In other words, the Workers Compensation insurance company only has to pay back 20-40 cents on the dollar of each dollar of comp benefit incurred. What’s worse, is they only have to do so QUARTERLY. So, the injured worker has to front the costs of their medical care, transportation, wage loss, medications, etc., after the settlement of their related car crash case. The injured worker then has to send in the medical bills, records, medication receipts, off work slips, and other proof of comp related losses, in order to be reimbursed at 20-40 cents on the dollar. Only when the injured worker has used up his or her “Net Recovery” from the car crash case, can they then go back on full Workers Compensation benefits. The math is complicated. The successful execution of this procedure is even more complicated.
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In a case Doug Landau helped a big box warehouse worker win his workers comp claim after sustaining chemical burns on his face and body, there was a large workers comp “IOU” to the Workers Compensation insurance company for the client’s employer as the result of extensive medical treatment and time off from work. The numbers lawyer Landau submitted to the Virginia Workers Compensation Commission for the required “Suspension Order” were as follows:
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- GROSS Settlement of accident case: $278,000.00
- Total amount of workers comp insurance company “IOU”: $61,798.00
- Total amount paid back to workers comp insurance company on their “IOU”: $37,222.04
- Total amount of accident case costs (filing lawsuit, service, etc.): $1,288.76
- Total amount of accident case attorney fees: $111,200.00
- Recovery costs [$1,288.76 + $111,200.00] divided by Gross Recovery [$278,000.00] = 0.40463 or 40%
- Net to client: $103,713.24
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And under Suspension Order, all future Workers Comp benefits were to be paid at $0.40463 until the NET accident case recovery was met.
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The good news? The injured worker got a tax free check for $103,713.24 from his accident case AND he only had to pay back the Workers Comp Insurance Company’s $61,798.00 “IOU” at $37,222.04, a savings of $24,719.00. Plus, he could still settle his Workers Comp claim, though for less money than before he settled his accident case.
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The tough part for many injured workers is that once the car accident case settles or goes to verdict, they will have to spend your money on medical care, wage loss, permanency, etc., then turn in the receipts/off work slips quarterly, for reimbursement at 30-40 cents on the dollar until their “NET recovery” from the personal injury case is met. This can be years, and if there is a $5,000.00 medical procedure needed, the injured worker has to front ALL the money, and then get reimbursed $2,000.00 some 4 months later, IF they are lucky AND the treatment, bills or referrals are not disputed by the WC insurance company. Even the WC insurance company adjusters will admit that it becomes an accounting nightmare. That is why many workers comp claims settle before or at the time the accident case is concluded.
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If you or someone you know or care for has been injured as the result of a car, truck, bicycle or motorcycle crash while on the job, and there are questions about what laws apply, and whether you should settle your case, e-mail or call us at ABRAMS LANDAU, Ltd. (703-796-9555) at once.