Home > Property & Casualty > Lump sum settlement – impact on return to work

Lump sum settlement – impact on return to work

The Workers’ Compensation Research Institute (WCRI) recently released the results of an interesting study regarding the behavior of workers’ compensation claimant’s upon receiving lump sum settlements of their workers’ compensation claims. The Institute followed 2138 workers’ compensation claimants injured in 2004, who later received lump sum settlements.

Of the 2138, 78%  (1667) did not change their employment status following their receipt of a settlement – i.e.: if they were gainfully employed upon receiving the settlement, they remained employed and vice versa.

Of the remaining employees whose employment status changed upon receiving a settlement, a greater percentage attained employment then exited employment. Of the claimant’s studied, 25% were employed at the time of settlement and 32% were employed one year after the settlement.

What does this mean to those of us involved in workers’ compensation claims? Settlements, when properly negotiated, can benefit to the employer (and insurer) for obvious reasons — Capping exposure, potentially reducing reserves, allowing more time to focus on active claims. But, aside from the increase in their bank balance, settlements may also provide claimant’s the ability and motivation to make a fresh start.

Conventional wisdom used to tell us that once a claimant got a settlement, they’d never go back to work, but we now can consider, at least the possibility, that the closure provided by a settlement may get the claimant back to work.

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William Gallagher Associates is a leading provider of insurance brokerage, risk management and employee benefits services to firms with complex risks and dynamic needs, within industries that include technology, life sciences, financial risks, health care, renewable energy & clean technology, and environmental services. WGA has offices in Boston, MA; New York, NY; Hartford, CT; Princeton, NJ; Columbia, MD; and Atlanta, GA.

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