I Won My Workers’ Comp Case. Now What?

Initially, victims who have attorneys must pay legal fees out of their settlement awards. In most states, attorneys charge a 25 percent contingency fee. Additionally, victims must reimburse their lawyers for most litigation costs, such as deposition fees and witness fees. So, an attorney partnership is a substantial investment, but it pays off big time. Attorney-involved settlements are over 700 percent higher than non lawyer settlements.

What happens next usually depends on the insurance company, the attorney fee agreement, and the state rules. Generally, insurance settlement checks go to lawyers, who then distribute funds accordingly. Sometimes, settlement checks go directly to victims, who must then dole out the money. In most states, insurance companies directly pay medical bills, and the remainder goes to a lawyer for disbursement.

Financial Matters

An obscure legal doctrine, the collateral source rule, often comes into play in these cases. If a third party, like a health insurance company, pays some or all of the medical bills, that payment might or might not affect a workers’ compensation settlement.

Assume Jim sustains a catastrophic injury and incurs $100,000 in medical bills, which is the average amount in such cases. Jim’s health insurance company pays all these bills.

In some states, Jim is still entitled to $100k. Jim shouldn’t be punished because he was responsible enough to buy health insurance. Other states reduce or eliminate medical bill reimbursement in these cases. These states don’t allow what they consider double dipping.

Now let’s change the facts a bit. Assume Jim’s lawyer negotiates with the doctor and reduces the medical bill to $50k. Once again, Jim might or might not be entitled to $100k medical bill reimbursement.
The collateral source rule also applies to other injury-related expenses, like physical therapy, prescription drugs, and medical devices.

Typically, prior lost wage replacement goes directly to victims, less attorneys’ fees and other costs. Future lost wages often go into a trust fund or retirement vehicle, like a 401(k).

Usually, lost wage replacement is retroactive to the claim filing date. This rule is complex in occupational disease claims, like toxic exposure or hearing loss. Usually, these victims are sick long before they file claims. In these cases, lost wages may be retroactive to the diagnosis date, especially if the victim has missed substantial amounts of work.
Future lost wages usually go into an interest-bearing account. That’s especially true in wrongful death cases. Frequently, surviving spouses set this money aside for their children.

Pre-Existing Conditions

After a workers’ compensation settlement, the current job injury becomes a pre-existing condition.

The eggshell skull rule, another legal doctrine, is usually the same in all states. Pre-existing medical conditions are usually irrelevant in personal injury or workers compensation claims.

If a victim must file a claim in the future, full benefits are available. An attorney must only prove that the new injury aggravated the pre-existing injury, instead of the other way around. Lawyers usually partner with doctors to secure necessary testimony in this area.

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