Workers’ Compensation insurance provides cash benefits and medical care for workers who are injured or become ill as a direct result of their job. Medical benefits include medical treatment provided, under the Workers’ Compensation Law, to injured workers as a result of injuries arising out of and in the course of employment. Indemnity benefits is compensation paid to the claimant for non-medical loss resulting from an injury or illness.
To calculate the possible exposure of the claim, both the indemnity and medical benefits should be considered. The medical benefits based on the medical treatment provided. The medical treatment can vary from conservative treatment to invasive surgery. The cost of the medical care depends on the type of care provided. The amount of indemnity benefits a claimant will be entitled to can be calculated by relying on the medical opinions of the treating physician and the independent medical examiner.
At permanency, if there is a permanent disability, the claim will result in a Schedule Loss of Use (“SLU”) finding or a Loss of Wage Earning Capacity finding. A SLU finding occurs when the claimant has permanently lost use of his or her shoulder, arm, hand, wrist, finger, hip, leg, knee, ankle, foot, toe, eyesight or hearing. The amount of indemnity benefits which the claimant is entitled to is limited to a certain number of weeks based on the body part and severity of disability, according to a schedule set by law. The law sets a certain number of weeks based on the body part and severity of the disability, ie. the schedule. The claimant is entitled to benefits based on his or her average weekly wage and the amount of weeks based on the schedule. It should be noted that in an SLU finding, the employer/carrier is entitled to take credit for prior indemnity awards paid in the claim.
If a claim is established to a site that is not covered by the schedule and is non-Schedule Loss of Use site, the claim will result in a Loss of Wage Earning Capacity finding at permanency. In these cases, these benefits are based on the employee’s permanent loss of earning capacity. In LWEC findings, benefits are payable as long as the partial disability exists and results in wage loss. If the claimant is found to have a total disability, he or she will be entitled to benefits at the total disability rate for life.
The statue does set a maximum number of week for disabilities which are less severe than total disability, as follows:
LWEC |
Max. # weeks of PPD benefits | ||||
>0-15% |
225 weeks | ||||
>15-30% |
250 weeks | ||||
>30-40% |
275 weeks | ||||
>40-50% |
300 weeks | ||||
>50-60% |
350 weeks | ||||
>60-70% |
375 weeks | ||||
>70-75% |
400 weeks | ||||
>75-80% |
425 weeks | ||||
>80-85% |
450 weeks | ||||
>85-90% |
475 weeks | ||||
>90-95% |
500 weeks | ||||
>95-99% |
525 weeks | ||||
To evaluate the possible exposure of a claim, one should calculate the indemnity portion of the exposure based using the SLU schedule or LWEC statute by multiplying the claimant’s average weekly wage by the statutorily set amount of weeks. Additionally, future medical treatment should be considered based on the type of treatment the claimant has been provided and is expected to need in the future. Although a rough estimate, the calculation of the potential exposure can serve as a benchmark for settlement negotiations. Furthermore, it could be helpful in determining whether additional litigation is cost-effective.
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