Today's post is guest authored by attorneyJon Rehmof the Nebraska Bar.
What's my case worth?
I hear that question a lot when I meet a new client. In a workers' compensation case I tell them it depends on many factors; How much were you earning when you were hurt, what part of your body was injured, how severely you hurt, where you live, how much education you have, whether you can return back to your old job, etc.
There are a lot of variables. But in cases where an employee has some reasonable chance of being found to be permanently and totally disabled, in other words, unable to find work from their work injury, there are two constants effect the value of any settlement: discount rate and life expectancy.
The discount rate is synonymous with the time value of money.In short, a dollar today is worth more than a dollar in the future. This is important in workers compensation because if a worker is found to be permanently and totally disabled then they will be paid weekly benefit checks for the rest of their life. Under Nebraska law, that benefit check will not increase over time. The question then becomes how much will the value of that money decrease over time. The discount rate is the expected return on investment on the money. The higher the expected return on investment, the higher the discount rate. But the higher the discount rate, the less a lump sum settlement is worth in present dollars.
The other variable in valuing an award of permanent and total disability is life expectancy. The Nebraska Workers Compensation Court uses a general life expectancy table to value awards of permanent and total disability that doesn't vary by gender or nationality/race. The CDC breaks down life expectancy along those lines. Men and African-Americans have shorter life expectancies so they would actually benefit from the use of the Nebraska Workers Compensation Court life expectancy tables. Women and Hispanics tend to live longer so they would not benefit by the use of the court tables. For example, a 50-year-old Hispanic woman is expected to live 35.9 years whereas the Nebraska Workers Compensation Court just assumes a 50-year-old has a 31.4-year life expectancy. Use of the court's life expectancy tables for a 50-year-old Hispanic woman earning $600 per week at the time of her injury could undervalue an award of permanent and total disability by about $18,000.
But workers who have a reasonable chance of being found to be permanently and totally disabled have other factors to think about when it comes to valuing any settlement of their claim. First, an insurer/employer only has to pay weekly benefits rather than a lump sum of money if a court finds a worker is permanently and totally disabled. They are free to use whatever discount rates and life expectancies they chose in valuing a claim for a settlement. Court rules about discount rates and life expectancy only come into play when an injured worker wants to take a lump sum settlement on an awarded finding of permanent and total disability.
Secondly, many employees who could potentially be awarded permanent and total disability benefits are also awarded social security disability benefits. Social security disability benefits payments can be reduced or offset by any workers compensation benefits received. An offset can have the practical effect of capping the value of any settlement based on the probability of a worker being awarded permanent and total disability benefits.
ABOUT THE AUTHOR
Jon L. Gelman is nationally recognized as an author, lecturer and skilled trial attorney in the field of workers' compensation law and occupational/environmental disease litigation. Over a career spanning more than four decades, he has been involved in complex litigation involving thousands of clients challenging the mega-industries of asbestos, tobacco, lead paint and burn pits. He is the author of the 3-volume treatise entitled Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise of Modern Workers' Compensation Law (West-Thomson-Reuters).
There have been 1 comments made!
You must Login or Register in order to read and make comments!