State: Calif.
Lump Sum Settlements: Should You Sign?: [2004-01-03]
Question:
My lawyer says that if I want my settlement in a lump sum, I HAVE to sell off my future medical for my back. A friend of mine got a lump sum AND future med.! Check this out!! We had/have the same law firm. When I called my lawyer on it, he says it never happened. He says it's the law!
Please, if someone knows anything about this, reply soon! I need to make a decision soon. I have had settlement papers for 2 weeks! I don't want to sign them-I'm getting robbed! $28,000.00 walk away money for 3 years of pain, spinal fusion surgery, and the fact that I've had to ride my lawyer's butt to get him to do his job. If he has lied to me about the future med so he can have more money, heads are gonna roll! I'd appreciate any info about this.
Answer:
It sounds like your settlement document is a full Compromise & Release. This is the most common way to get a lump sum settlement. It is possible, although not common, to settle your claim by Compromise & Release while leaving open a provision for Future Medical Care. This type of settlement pays you a lump sum for the Permanent Disability (sometimes discounted, though) plus additional money if they want to close out liability for the right to reopen for New/Further and any other benefits that they want to close out. It leaves open the FUTURE MEDICAL aspect of the case. This is not a common type of settlement and is usually only considered when there is a high potential for death and/or increased disability within 5 years from the date of injury.
If you want a lump sum and future medical you can always settle by Stipulation and then, with good cause, petition the WCAB for a commutation of a lump sum of your Award. Or, you could Stipulate and then at a later date offer to settle by Compromise & Release.
Try to get your attorney to talk to you about your options. You do have options !!! If you don't think the lump sum is enough, tell your attorney. Tell him to make a counter offer for more money and indicate that you will settle by stipulation if more money isn't offered. Sometimes this works if the insurer really wants to close their claim. Sometimes they'll pay a 'premium' to close their file.
Editor's remarks:
There are numerous factors that come into play relative to receiving a lump sum settlement, and something that every injured worker must be honest with themselves in considering the various options.
First, what is the likelihood in the future that some medical treatment may be needed for the affects of the injury. A Compromise and Release of a claim dissolves ALL liability for ALL medical treatment in the future. If you don't have medical insurance that will cover a pre-existing medical condition (i.e. your work injury) then giving up your right to future medical may be a costly mistake. Be honest about this, and don't be greedy. You might need the money now, but if you need treatment in the future and you can't pay for it, then you'll really be hurting!
Second, an insurance company may not be willing to settle for a lump sum. The carrier is going to go through a complex evaluation of the present value of your claim, the expectation that future medical rights will be exercised, and what the expected rate of return will be on invested dollars to justify whether a lump sum is cost effective.
Third, as noted above in Answer, don't forget about commutation. Commutation will discount the series of PD payments by 3% (required by law) and there must be good cause' for the Board to approve a commutation of future payments, but good cause' is a loose standard and is typically demonstrated by a showing that considerable financial relief will occur if granted (i.e. payment of debt accumulated during a period of disability because the bi-weekly payments were insufficient to make house/car payments, etc.). In fact, in Question the user said that his friend received both a lump sum and future medical rights - in all likelihood the friend settled his or her case by a Stipulated Award and then requested a commutation of all or a portion of that award.
The decision to take a lump sum settlement is probably the most significant one that an injured worker can make. There are many times when the injured worker elects a lump sum settlement, seeking some financial relief in the process, and is later very sorry that future medical rights are no longer available.
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