In Texas, the reforms to the workers compensation laws enacted in 1989 regulate settlement of claims. In the "old law" era pre-1989 Act, a case could be "settled" to end the right to medical care in exchange for a "lump sum" payable to the injured employee, minus attorney's fees. For injuries that occurred at that time or before, it is still possible to settle those claims if they have not already been settled.
But for injuries occurring after those legal changes, it is no longer allowed to "settle" cases in a lump sum. Every case, at least in theory, carries with it the right to lifetime medical care. That is true even if the injury is minor, such as a pinky contusion, strained back, or sprained elbow, which may resolve after weeks or even days.
The Labor Code provides:
(b) An employee's right to medical benefits as provided by Section 408.021 may not be limited or terminated.
There are exceptions to the "no lump sum" rule.
Every employee is entitled to receive an impairment rating for the injury. That impairment rating is a measure of the permanent damage caused by the injury, expressed as a percentage of whole person impairment. An impairment rating may be zero and receive no compensation. But any impairment rating above that results in an award of compensation, three weeks of impairment income benefits for every percentage of impairment assigned. For example, a twelve percent rating results in thirty-six weeks of benefits, beginning the day after the date of maximum medical improvement and continuing as a weekly payment thereafter until exhausted.
How does lump sum enter the picture? If you have returned to work for at least three months making approximately your pre-injury wages, you can apply to have the remainder of the impairment rating paid in a lump sum.
Let's take an example. You are injured June 1, 2017. You are out of work for six months and return to work on January 1, 2018. You are doing your regular job and getting full pay, but you are still in treatment. On April 1, 2018, your doctor gives you an impairment rating of 10% and certifies that you reached maximum medical improvement on that date. Before the injury you made an average of $500 per week. Your impairment income benefit rate is 70% of that, or $350 per week. With a 10% rating, you are entitled to 30 weeks of impairment benefits, and these are benefits you get regardless of your work status, so you can collect these on top of your regular paycheck. You send in the form to receive these benefits in a lump sum, so the adjuster issues a check for $350 x 30 weeks ($10,500.00). You are paid in full. However, if you elect to receive this money in a lump sum you cannot get any additional income benefits for this injury. You do remain entitled to medical treatment for your injury for life as long as you continue to need it and it can be shown as medically necessary under the treatment guidelines.
The form required by the TDI for this election to receive benefits in a lump sum carries this warning and guidance:
Notice to Employee: Section 408.128 of the Texas Workers' Compensation Act allows you to elect to receive your impairment income benefits in a lump sum if you have returned to work for at least three months, earning at least 80% of your average weekly wage.
The Texas Department of Insurance, Division of Workers' Compensation (TDI-DWC) field office handling your claim will assist you with information to complete this form, if needed. If the insurance carrier denies your request, you may request TDI-DWC to set a benefit review conference by calling 800- 252-7031.
WARNING: Supplemental Income Benefits may be available to you at the end of the impairment period if you have an impairment rating of 15% or more, are earning less than 80% of your average weekly wage as a direct result of your impairment, and if you in good faith have tried to obtain employment in line with your ability to work. IF YOU RECEIVE A LUMP SUM PAYMENT OF YOUR IMPAIRMENT INCOME BENEFITS, YOU WILL NOT BE ABLE TO RECEIVE SUPPLEMENTAL INCOME BENEFITS OR ANY ADDITIONAL INCOME BENEFITS FOR THE INJURY. Medical benefits related to this injury will not be affected if you receive a lump sum.
For these reasons I generally advise against electing to receive the impairment benefits in a lump sum. If the impairment rating is 15% or greater, receiving the benefits in a lump sum can potentially close off several more years of benefits, including (for example) if the injury requires you to be out of work again for a surgery. Generally I will advise clients to take the remaining benefits in a lump sum only if they are back to work, making good money, receiving no treatment, not anticipating any treatment, and are overall medically stable. Even then I will generally suggest taking it weekly and setting it aside unless there is a specific need (such as paying off debt) that will be accomplished by taking it in a lump sum but not weekly.
Even still, there are other options. Instead of taking the benefits in a lump sum, you can accelerate the impairment benefits (taking them at 100% of pre-injury wages for fewer weeks) or receiving an advance on the benefits (in other words, getting a loan on the benefits from the insurance, which is then recouped by a deduction from the weekly check for a certain number of weeks).
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