Workers’ comp vs. personal injury: Understanding the differences is essential

Workers’ comp vs. personal injury: Understanding the differences is essential

Insurance professionals and attorneys need to understand the difference between a personal injury claim and a workers' compensation claim, because they may often seem to overlap. (Photo: Shutterstock)Insurance professionals and attorneys need to understand the difference between a personal injury claim and a workers’ compensation claim, because they may often seem to overlap. (Photo: Shutterstock)

A single incident can often result in a variety of claims and available benefits. Consider a car accident while a person is “at work.” This could involve driving to a sales meeting; a construction or landscape laborer travelling between sites; a police officer pursuing a suspect; a food delivery person — the list of possibilities is endless.

Related: 10 workers’ compensation trends to watch in 2018

This single accident could lead attorneys to believe they can gather the medical records, fill out forms, use boilerplate pleadings and pursue each of the various claims this single accident could create, such as the following:

 

  • A negligence claim against other driver
  • Workers Compensation
  • FMLA
  • Short- and long-term disability
  • For officers on duty, a Heart & Lung Act claim
  • For prolonged disability, Social Security benefits
  • For complications from treatment, a medical malpractice claim
  • For defects in one of the cars causing the accident, a products liability claim

 

Few law firms, let alone sole practitioners, are equipped to capably handle all aspects involved in what may seem at first glance to be one, simple claim, not as a result of the lawyer’s particular skill or ability, but rather because each type of practice is so very different in its nature, procedures, scheduling issues and just plain “style” of practice. In order to maximize the value of each separate component of the claim, as well as to protect the client’s best interest, lawyers need to be wary about what they don’t know. Clint Eastwood probably put it best: “A man’s got to know his limitations.” (Magnum Force, 1973).

Origin

Personal Injury (PI) law originated in common law trespass. Workers’ Compensation (WC) is purely statutory. When rights and duties are created by statute, the legislature giveth, and the legislature may taketh away. For example, Pennsylvania’s Workers’ Compensation Act was called “The Grand Bargain” when created in 1915. The primary element given was the relaxed burden of proof (course of employment vs. negligence); while the benefit(s) taken away involve the types og compensation available (for instance, pain and suffering).

Related: 3 ways agents can control workers’ comp costs

Burden of proof

A personal injury claim requires proof of four elements: duty, breach, proximate cause and damages. The first two are typically subsumed by the term “negligence.” The injured person (plaintiff) must prove that the defendant owed a duty to act (or not act), as a reasonable person would in similar circumstances. The failure to act reasonably is the breach of that duty. The plaintiff must have suffered some damage or injury, which was caused by the defendant’s “negligence.” If any of the elements can’t be proven with sufficient evidence, there will be no award.

The Pennsylvania Workers’ Compensation Act (which is similar to most states) essentially eliminates elements one and two. Negligence is not necessary to be entitled to workers’ compensation benefits; and no “extra” benefits are available even when it can be proven. Likewise, negligence on the part of the injured worker (claimant) is not a defense to a WC claim. Negligence is irrelevant. Instead, the claimant must prove the injury occurred while in the course of employment, and is related to it. The additional element of disability determines the availability of wage loss benefits, but not the compensability of the claim.

Related: When is a rejected proof of loss also a denial of the claim?

Benefits available and duration

In personal injury matters, there is one single award or settlement to cover all damages and injuries suffered. Elements of damage include economic losses (for medical bills or lost income), and the ubiquitous pain and suffering. Other components may include loss of enjoyment of life, loss of consortium and even punitive damages. The settlement or award may include future injuries and losses, if supported by sufficient evidence. Once settled by the parties, or a judgment is entered by the court, the plaintiff can’t seek additional benefits for injuries lasting longer than expected or consequences unforeseen at the time of settlement or trial.

Workers’ compensation provides a hybrid of benefits. As a general rule, the claimant is entitled to payment of medical bills for treatment that is reasonable, necessary and related to the work injury, and payment for lost wages (based on formulas in the act). Wage loss and medical benefits may be payable on an ongoing basis, as long as the claimant remains disabled (compared to the one-time payment structure of negligence cases). Benefits can also be paid as a one-time settlement, discussed below.

“Total disability” can, conceivably, last for life. “Partial disability,” that is, the situation in which the claimant can work, but at restricted duties and less pay, may be available for up to 500 weeks.

Additional benefits, commonly called “specific loss”, may exist for certain disfigurements, amputation or loss of use of a body part. Penalties may be awarded for a defendant’s violation of the terms of the law — subject to a judge’s discretion. There is no award of pain and suffering or loss of enjoyment of life, for instance. Furthermore, insurance companies have many tactics available to challenge a claimant’s right to benefits (for example, the defense doctor stating the claimant is recovered, vocational rehabilitation showing work is available and many other strategies).

Settlements

A personal injury claim may be settled out of court by forms prepared and signed by the parties, called a release.

Workers compensation settlements, called a compromise and release must be approved by a workers’ compensation judge. “Out-of-court” settlements are invalid. The parties can settle some or all benefits available. For example, the parties may settle the right to future wage loss benefits, but keep medical benefits “open,” to be paid by the insurance company. No judge can force either side to settle. The amount of the settlement, and every condition must be agreed upon, or there is no deal.

Related: Workers’ compensation renewal rates suffered through most of 2017

Procedures

A negligence lawsuit begins when plaintiff files a complaint with the court. The court will typically issue a trial or case management schedule. Discovery is managed by the parties and must be completed within the schedule. If not resolved by agreement (or a dispositive order), the court will hold a single trial, at which all evidence is presented, and counsel may make opening and closing arguments. At the conclusion, the judge or jury will render a verdict or award, determining the outcome.

Workers compensation proceedings begin with a petition, filed by either party, with the Bureau of Workers’ Compensation. The claimant may be seeking benefits; or the insurance carrier may be trying to stop or reduce benefits. Each judge sets rules and deadlines (within bureau guidelines). There are no juries.

Knowing each judge’s rules is extremely important. A typical case may involve 2–5 hearings, over the course of about 6–8 months. At the final hearing, all evidence is identified and certified, and then uploaded to the state’s computer system. The judge orders each attorney to write a brief, usually within 30–60 days. After the judge has reviewed all evidence and briefs, a written decision will be circulated.

Unlike the “immediate award” in personal injury claims, it can take three months (or more) after the final hearing to receive a decision. Additionally, unlike the single trial procedure in PI claims, WC may involve serial petitions. So long as the claimant is receiving benefits, multiple petitions can be filed (by either side), arguing a number of theories to stop, reduce or even increase the benefits being paid. There is no “permanent” award.

Related: Massage therapy — is it a covered workers’ comp medical treatment or not?

Attorney fees & expenses

Counsel fees in personal Injury cases are determined by the contract between the client and lawyer, typically a percentage of the amount recovered by settlement or trial. The costs of litigation are also deducted from the amount recovered. A distribution summary is provided to the plaintiff, explaining the allocation of all funds, including fees, costs, outstanding medical bills or other liens/subrogation that may exist against the plaintiff’s recovery.

Counsel fees in workers compensation are regulated by the WC Act at 20% of the benefits obtained or protected — and must be approved by a judge before they can be paid. They may be paid from the weekly wage loss benefits, settlement proceeds, or both. In the rare event that a judge finds the defendant has “unreasonably contested” a matter, the judge may order the defendant to pay the claimant’s attorney fee. Costs of litigation are reimbursed by the insurance company — if the claimant wins. If the claimant loses, those costs are borne by either counsel or claimant — subject to their retainer agreement. Common practice is for counsel to incur and risk the costs.

Though not impacting the allowable fee, attorneys meeting strict requirements, and passing a Bar Association test may be certified as a Workers Compensation Specialist — a designation available in few areas of law.

Related: The 10 law firms most used by insurance and finance companies

Subrogation

A person injured in a work-related accident, with a related personal injury claim can’t “double-dip.” The workers’ compensation insurance carrier has an absolute right to subrogation, to recover all the benefits paid to the claimant, to the extent recovered from the negligence claim. With knowledge and experience, a reduced payment can be negotiated, but the timing, strategy and ethics must be carefully considered. When the injured person is represented by separate law firms for each case or claim, it becomes more difficult to coordinate each attorney’s actions to ensure the best interest of the client vs. either attorney getting the best deal for their specific part of the claim — but it may harm another element of the claim.

Subrogation also encompasses medical bills paid by a private insurance carrier or Medicare/Medicaid, when the bills should have been paid by workers’ compensation or first-party benefits under the motor vehicle policy. This right is not absolute, and it can be waived by lack of due diligence.

Attorneys and insurance professionals need to recognize what they don’t know — and, even with the best of intentions, should not seek to represent a client, either plaintiff or defendant — if not experienced, and equipped to really help them. Moreover, when experienced and equipped to represent only one aspect of a client’s multiple claims, coordinate your efforts with other counsel to ensure the client’s best interest is fully served.

Related: Get workers moving to reduce workplace injuries

Mark R. Schmidt is a partner of Schmidt, Kirifides & Rassias, he has practiced workers’ compensation exclusively since 1990, and is a certified workers’ compensation specialist, as authorized by the Pennsylvania Supreme Court. George G. Rassias joined the law firm in 2008. He currently practices civil litigation in Pennsylvania.

Originally published on The Legal Intelligencer. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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