Workers’ compensation provides benefits to workers who are injured on the job or have a work-related illness. Benefits include medical treatment for work-related conditions and cash payments that partially replace lost wages. Temporary total disability benefits are paid while the worker recuperates away from work. If the condition has lasting consequences after the worker heals, permanent disability benefits may be paid. In the case of a fatality, the worker’s dependents receive survivor benefits.

Before workers’ compensation laws were enacted, an injured worker’s only legal remedy for a work-related injury was to bring a tort suit against the employer and prove that the employer’s negligence caused the injury. Under the tort system, workers often did not recover damages; those who did recover damages sometimes experienced delays or high costs in doing so. Although employers generally prevailed in court, they nonetheless were at risk for substantial and unpredictable losses if the workers’ suits were successful. Ultimately, both employers and employees favored legislation to ensure that a worker who sustained an occupational injury or disease arising out of and in the course of employment would receive predictable compensation without delay, irrespective of who was at fault. As a quid pro quo, the employer’s liability was limited. Under the exclusive remedy concept, the worker accepted workers’ compensation as payment in full and gave up the right to sue the employer.

Workers’ compensation programs are designed and administered by the states. The programs vary across states in terms of who is allowed to provide insurance, which injuries or illnesses are compensable, and the level of benefits. Generally, state laws require employers to obtain insurance or prove they have the financial ability to carry their own risk (that is, to self-insure).

Workers’ compensation is financed almost exclusively by employers, although economists point out that workers pay for a substantial portion of the costs of the program in the form of lower wages (Leigh and others 2000). The premiums paid by employers are based in part on the industry classifications of the employers and the occupational classifications of their workers. Many employers are also experience rated, which results in higher (or lower) premiums for employers whose past experience demonstrates that their workers are paid more (or fewer) benefits than workers for similar employers in the same insurance classification.

In 2002, workers’ compensation covered 125.6 million workers (Thompson Williams, Reno, and Burton 2004). Total wages of covered workers were $4.6 trillion and total workers’ compensation benefit payments were $53.4 billion, which amounted to $1.16 per $100 of covered wages. Employers’ costs for workers’ compensation—defined here as premiums written for policies in the calendar year, payments made under deductible arrangements, and the benefits and administrative costs of self-insurers—were $72.9 billion. Benefits and costs have declined from a peak in the early 1990s (Chart 1).

Chart 1. Workers’ compensation costs and benefits per $100 of payroll, 1989–2002

SOURCE: National Academy of Social Insurance estimates.

The difference between workers’ benefits and employers’ costs per $100 of covered wages is accounted for by expenses such as administrative and loss adjustment costs, taxes, and contributions for special funds, which can include the support of workers’ compensation agencies, and the insurers’ profits or losses.

Social Security Disability Insurance

Workers’ compensation in the United States is surpassed in size only by the federal Social Security Disability Insurance and Medicare programs in providing cash and medical benefits to disabled workers.

Although Social Security disability benefits and workers’ compensation are the nation’s two largest disability benefit programs, the two programs are quite different. Workers are eligible for workers’ compensation benefits from their first day of employment, but Social Security disability benefits are paid only to workers who have a substantial work history. Workers’ compensation provides benefits for both short-term and long-term disabilities and for partial as well as total disabilities. These benefits cover only disabilities arising out of and in the course of employment. In contrast, Social Security disability benefits are paid only to workers who have long-term impairments that preclude any gainful work, regardless of whether the disability arose on or off the job. By law, the benefits are paid only to workers who are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that is expected to last at least a year or result in death. The impairment has to be of such severity that the worker is not only unable to do his or her previous work but is also unable to do any other type of substantial gainful work. Social Security disability benefits begin after a 5-monthwaiting period.

The amount of benefits that Social Security paid in wage-replacement benefits to disabled workers and their dependents in 2002 was nearly twice the amount of cash benefits paid under workers’ compensation—$65.6 billion compared with $29.2 billion. Employer and employee each pay 5.3 percent of wages for Social Security’s Old-Age and Survivors Insurance and 0.9 percent for Disability Insurance. Thus, the total paid for Disability Insurance is 1.8 percent of taxable wages.

Trends in Social Security Disability Benefits and Workers’ Compensation

Social Security disability benefits and workers’ compensation had different trends in benefits paid relative to covered payroll. Social Security disability benefits grew rapidly in the early 1970s and then declined through the late 1980s, after policy changes in 1977 and 1980 reduced benefits and tightened eligibility rules. From 1989 to 1996, Social Security benefits again rose as claims and allowances increased during the economic recession of 1990–1991 (Chart 2). Since then, benefits relative to covered wages have been fairly stable (Board of Trustees 2004).

The trend in workers’ compensation benefits as a share of covered wages follows a very different pattern. Total workers’ compensation benefits (cash and medical combined) were less than Social Security disability benefits during the 1970s but grew steadily throughout the 1970s and surpassed Social Security disability benefits in the mid-1980s. While Social Security disability benefits were flattening out during the mid-1980s, workers’ compensation payments continued to grow at a rapid rate. Then, as workers’ compensation payments declined as a share of covered wages after 1992, Social Security disability benefits rose.

The opposite trends in workers’ compensation and Social Security disability benefits during much of the past 25 years raise the question of whether retrenchments in one program increase demands placed on the other, and vice versa. The substitutability of Social Security disability benefits and workers’ compensation for workers who have significant, long-term disabilities that are, at least arguably, work related, or might be exacerbated by the demands of work, has received little attention by researchers and is not well understood (Burton and Spieler 2001).

The Offsets

An offset for concurrent receipt of workers’ compensation was contained in the original 1956 Social Security disability program, eliminated in 1958, and reinstituted in 1965. The 1965 Social Security Amendments required that Disability Insurance benefits be reduced when the worker is also eligible for periodic or lump-sum workers’ compensation payments, so that the combined amount of workers’ compensation and Social Security disability benefits does not exceed 80 percent of the worker’s average current earnings. The combined payments after the reduction, however, will never be less than the amount of total Social Security disability benefits before the reduction. Average current earnings are defined as the highest of

• the average monthly wage on which the unindexed disability primary insurance amount is based,
• the average monthly earnings from covered employment and self-employment during the highest 5 consecutive years after 1950, or
• the average monthly earnings in the calendar year of highest earnings from covered employment during the 5 years ending with the year in which disability began.

Total earnings, including those above the Social Security taxable maximum, are used to determine average current earnings.

The intent of the offset provision is to ensure that the combined benefits from workers’ compensation and Social Security are not excessive. The offset of Disability Insurance benefits applies to disabled workers under the age of 65 and their families. Benefits for a worker’s spouse or dependent children are offset before the offset is applied to the worker’s benefit. Under the 1965 law, the Social Security disability benefit will not be reduced if the state workers’ compensation law or plan provided for a reverse offset (a reduction of the workers’ compensation benefit of a worker also receiving Disability Insurance).

The Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35) ended the option for additional states to adopt reverse offsets. It also extended the Social Security disability offset to apply to certain public disability benefits paid by federal, state, or local governments. In particular, it applies to disability benefits that are earned in employment that is not covered by Social Security—for example, in jobs that are covered by the California Public Employees’ Retirement System and not by Social Security. At the time of the 1981 legislation, 16 states and Puerto Rico had reverse offset statutes, which remain today.

When a workers’ compensation law provides for periodic payments but permits a lump-sum settlement that discharges the liability of the insurer or the employer, the settlement is subject to the offset. In this case, the lump sum is prorated to reflect the monthly rate that would have been paid had the lump-sum award not been made. Medical and legal expenses incurred by the worker in connection with workers’ compensation may be excluded when computing the offset.

Specifically excluded from these offset provisions are all Department of Veterans Affairs’ benefits; needs-based benefits; federal, state, or local disability benefits that are based on employment that was covered by Social Security; and private pension or private insurance benefits.

In December 2003, about 7.6 million beneficiaries (workers and dependents) received Social Security Disability Insurance benefits. Of those beneficiaries, about 1.3 million, or about 17 percent, had some connection to workers’ compensation or public disability benefits.¹ That connection includes those who

received workers’ compensation or public disability benefits,

had received workers’ compensation or public disability benefits in the past,

received a lump-sum settlement in lieu of periodic benefits, or

had claims pending for workers’ compensation or public disability benefits.

Of those with a connection to workers’ compensation or public disability benefits,

about 1 million were disabled workers, and about 240,000 were dependents;

about three-fourths were connected to workers’ compensation and one-fourth to other public disability benefits;² and

53 percent of disabled workers had a pending connection or claim, and 47 percent had a prior connection.

The percentage of Social Security Disability Insurance beneficiaries with a connection to workers’ compensation or public disability benefits varies by state of residence, in part because workers’ compensation programs vary, as do rules for coverage of public employees under Social Security and alternative public disability benefits. Jurisdictions with the highest percentages of workers with a connection to workers’ compensation or public disability benefits are California, Puerto Rico, Rhode Island, and West Virginia.

Jurisdictions with the lowest percentages include the District of Columbia (just 5 percent), Indiana (7 percent), Wisconsin (about 8 percent), and North Carolina (9 percent).

With no time to lose, multiple surgeries were performed and after a long recovery our client was able to settle his claim for $3.3 million. He has since returned to his native country of El Salvador, and lives comfortably with his family.

Case No. 909090JRL – 2009 Virginia Workers’ Compensation Claim

Source (Flowingdata.com)

This case was settled for a total of $30,000.

Case No. 909090MS – 2009 Virginia Workers’ Compensation Claim

Medial Meniscus

Our client, a 63 year old undocumented worker, slipped and fell off a ladder onto the ground below while at work. The fall from the ladder resulted in a complete tear of the medial meniscus in his knee.

Once evaluated by a physician it was determined that our client required surgery to repair torn meniscus. Arthroscopic surgery to the knee was performed followed by extensive extensive physical therapy. Upon completion of physical therapy our client was released light duty with restrictions. Despite the undocumented status of our client, the case was settled for a lump sum settlement of $50,000.00.

Case No. 909090JC – 2009 Virginia Workers’ Compensation Claim

Our client received 50% Permanent Partial Disability from her treating physician. The Independent Medical Examiner also agreed that our client had reached maximum medical improvement but provided her with a 30% Permanent Partial Disability to her left foot.

After long course of treatment, this case was settled for $41,000.00.

Case No. 909090MV – 2009 Maryland Workers’ Compensation Claim

Now which one would you prefer? Most individuals decline Medpay coverage when purchasing or renewing their home auto insurance policy. Medical coverage not only covers your medical expenses, but also covers any passengers you might have at the time of the accident.  In some states such as, Maryland, medical coverage also known as PIP or Personal Injury Protection, is coverage that the insured purchases with a liability policy in the State of Maryland. This coverage can be waived, but why waive something that can help you if you are injured in an accident. The minimum PIP coverage amount in Maryland is $2,500.00 and can be purchased up to $10,000.00 in coverage. Some states have minimum medical coverage as low as $500.00.

Here are two example cases, one with Medpay/PIP and one without:

Medpay or PIP Coverage: Jane has $5,000.00 in outstanding medical expenses and no health insurance.  The liability carrier is offering her $10,000.00 to settle her claim. Jane has $5,000.00 in Medpay/PIP. She also has attorney’s fees (33 1/3%) in the amount of $3,330.00 and no case costs. Jane attorney’s fees are only taken out of what she receives from the liability carrier ($10,000.00).  In the end Jane nets $6,670.00.

No Medpay or PIP Coverage:  Jane has $5,000.00 in outstanding medical expenses. The liability carrier is offering her $10,000.00 to settle her claim. She also has attorney’s fees (33 1/3%) in the amount of $3,330.00 and zero case costs. In the end Jane will net $1,670.00, as she must use the money she receives from the other driver to pay her medical bills.

So, which one would you choose? The next time you purchase coverage, considering getting medical coverage, even if it is the minimum. In the end it can make a big difference in your settlement.

As a result of the accident, our client suffered neck and back sprains/strains, and also suffered from a shoulder injury which did not respond to either physical therapy or injections. Our client was diagnosed as suffering from Subacromial Impingement Syndrome and required an arthroscopic subacromial decompression of the left shoulder. Following the surgery and a long course of physical therapy, our client recovered from his injuries and was released back to work without any restrictions.  Following a long negotiation with the Workers Compensation Insurance Carrier, this claim settled for $45,000.

Case No. 909090MH – 2009 Virginia Workers’ Compensation Claim

Once the treating physician determined that the client was at maximum medical improvement, the client received 22% Permanent Partial Disability of his left arm. The client an undocumented worker with a low compensation rate, settled this case for $15,000.

Case No.. 909090JA – 2009 Virginia Workers’ Compensation Claim

1. Call the police call (911).

2. Get as much information as you can about the other driver and his vehicle.

3. Get witness information; names, addresses, and phone numbers.

4. If you are hurt, tell the police and get medical care.  Go to the emergency room, you deserve to be checked.

5. If you have a camera or camera phone, take photos of the accident scene.

6. Be aggressive in getting medical care and getting yourself well.

7. Be extremely careful and hesitant when speaking with the insurance companies.  Their sole purpose is to deny the claim or to pay as little as possible.

8. Do not accept any money or sign any papers until you are absolutely certain your injuries and continued health will be covered.

9. Document everything. Such as property damage estimates, medical bills, medical records, lost wages, pharmacy receipts, and your phone calls with the insurance company.

10. If there is any doubt about the insurance company accepting your claim or if you think they are taking too long to respond to you, call a lawyer.