SETTLEMENTS AND LUMP SUM PAYMENTS FOR ON THE JOB INJURIES

Most workers’ compensation claims are settled by the payment of a lump sum for disability and any past due temporary total or temporary partial benefits that may be due. An administrative law judge or the commission has to approve the settlement reached by the employer and the attorney for the employee. The administrative law judge or the commission is directed to do so as long as the settlement is not the result of undue influence or fraud, the employee fully understands his or her rights and benefits, and the employee voluntarily agrees to the terms of the agreement. Section 287.390.1 of the Missouri statutes governs compromise settlements.

At times, especially in cases of permanent total disability, there is no settlement and the award is a weekly payment. Until the recent case of Dickemann v. Costco Wholesale Corporation, it was believed that the employee and employer could agree to commute an award. That is take the value of the future payments and decide upon a lump sum payment that would be in place of the weekly payments. In the Dickemann case, the employee was found to be entitled to nearly $800.00 per week. After that award, the employee and employer entered into a joint agreement for a lump sum payout. The Commission denied approval of the agreement. The value of the award if it was paid out over the employee’s expected life was $590,000.00. The joint agreement was for a lump sum payment of $400,000.00. The court held that there was no longer a claim pending and, thus, Section 287.390.1 did not apply. Rather the court found that Section 287.530 applied. The court, in Dickemann, found that an award could be reduced to a lump sum payment only in limited circumstances. Section 287.530 requires that the lump sum be equal to the value of future installments due to the employee, taking into account life contingencies, and it would be in the best interests of the employee or the dependents of a deceased employee, or it would avoid undue expense or undue hardship for either party, or the employee or dependent has been or is about to leave the country or the employer has sold or disposed of the greater part of its business or assets.

Oftentimes, an employer’s insurance company will not want to have an unknown future liability. The insurance company will want to close out the claim which gives it certainty. But if the claim is disputed from the start and no offer is made, the case has to be tried and the award will be paid out over time.

The Dickemann case is from the Eastern District of Missouri and conflicts with a prior case from the Western District of Missouri. The Supreme Court may be asked to resolve the issue.

If you have been injured on the job, please call for a free initial consultation.
Margaret Dean, Attorney at Law, 816-753-3100. Licensed in Missouri and Kansas.
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Posted in Workers' Compensation.