Tuesday, September 29, 2015
Caps in Workers' Compensation
Workers' Compensation claimants are now beginning to appreciate the effect of "caps" in Workers Compensation cases. In March of 2007 cases for claimants who suffered accidents or on the job injuries and who became classified as permanent partial disability cases with initial dates of injuries on or after that date began to have their benefits limited in duration from the date of classification. What this means is that the apparent right to receive continuing indemnity benefits could be stopped once a cap was instituted as directed by the changes in the Workers' Compensation Law. A schedule of continuing monetary benefits is posted for the degree of an individuals loss of earning capacity. It appears that this duration for most classes of permanent claims is around 5 to 6 years. The effect of the caps is that once effectively established as a classified case with a finding of loss of earning capacity, you can only receive with limited exceptions monetary benefits up to the duration of the cap. Therefore the value of your monetary benefit outside of continuing medical rights, ends, at the expiration of the capped time period. If your cap is for 5 years you can only receive another 5 years of indemnity benefits post the date of classification. For years claimants attorneys for different reasons have avoided classification and hence held off the institution of a cap. The claimants' attorney held off to permit continuing benefits to the claimant and the carriers could put off having to place large reserves and payments to specific funding aggregates. also known as the aggregate trust fund. Now the agency has begun to set cases for classification and findings for loss of earning capacity regardless of either the claimant or the the carrier requesting same. What this has done is to place the administration directly in charge of curtailing benefits for most claimants and requiring the institution of deposits by certain insurance providers into this aggregate trust fund. An additional effect has been a reduction in the settlement value of a case to claimants with capped cases. For example if you have a capped case of 5 years the insurance carrier only has to continue paying indemnity benefits for an additional five years so their interest in settling a case becomes a factor of the five years. Some insurance companies are using a factor of 60% of the cap . Five year cap value at 60%, which would generate three more years of benefits as the settlement rate as a function of the weekly indemnity rate. If the payout was five years at $400 or $104,000, now the offer becomes $62,400. Some claimants when faced with such offers opt to continue running out the cap till nothing remains. Other grasp for the reduced indemnity benefit in one payment rather than weekly payments under the length of the cap. The real incentive to the claimant is reduced and it to this writer is unclear what happens to the deposit into the aggregate trust fund once the case is settled. Some believe the fund retains the deposit regardless. In either event no one is pleased with this turn of events. More to come at a later date. As stated throughout this blog. These articles are to be considered for educational use not being case specific. All cases should be discussed with your attorney for more specific application to your case.