Study Shows Lump Sum Workers’ Compensation Payments Encourage Return to Work

Many states, including Massachusetts, offer workers’ compensation recipients an option to receive a lump sum payment in lieu of weekly benefit payments when they are injured and have been approved for workers’ compensation payments. Policy makers have debated for years whether offering beneficiaries a lump sum payment encourages or discourages workers from returning to work. Many policymakers have argued that a lump sum payment takes away a beneficiary’s incentive to return to work. A recent study indicates that the opposite is true—lump sum payments actually encourage workers to return to work earlier.

The study was conducted by the Workers’ Compensation Research Institute, or WCRI, and followed 2,138 injured workers for four years. Although the injured workers were from Michigan, all states that offer a lump sum option can benefit from the information gained from the study. All of the study participants were originally injured and became eligible for workers’ compensation in 2004 and later received a lump sum settlement. Among the finding of the WCRI study are the following:

• 78 percent of the workers involved in the study did not change their present employment status after receiving a lump sum payment. In other words, if they were presently working, they continued to work despite receiving the lump sum payment.
• Of the workers who did change their employment status after receiving a lump sum settlement, 30 percent were workers who were working and subsequently quit their job while 19 percent were workers who were unemployed at the time they received the lumps sum settlement and then attained employment afterward.
• More workers returned to work after they received a lump sum settlement, on average, than left their employment.
• The exception to the tendency to return to work after receiving a lump sum settlement was found in older workers who were more inclined to leave work after receiving a lump sum settlement.

In the State of Massachusetts, workers who are injured or become ill as a result of their employment may be entitled to receive workers’ compensation benefits. If approved, a worker will be entitled to have medical expenses associated with the injury paid for by the workers’ compensation system as well as be entitled to wage replacement. Wage replacement benefits provide a weekly check to the beneficiary. Wage replacement may be for temporary partial or total incapacity or may be for permanent partial or total incapacity. Which type of benefits a worker is entitled to will depend on the extent and type of injury the worker has suffered and the extent to which the worker is able to work, in any capacity, after the injury.

In Massachusetts, workers’ compensation benefits are administered by the Department of Industrial Accidents, or DIA. According to the rules and regulations of the DIA, a beneficiary may agree to a lump sum payment in lieu of weekly benefits. The beneficiary and insurer, as well as the employer in some cases, must agree to the lump sum payment. A beneficiary should fully understand the rights that he or she is giving up if a lump sum payment is accepted. Along with taking the place of future weekly benefit payments, other rights that a beneficiary has with regard to workers’ compensation may also be given up by accepting a lump sum payment.

If you have been injured on the job in Massachusetts and are considering an agreement that will provide you with a lump sum payment in lieu of weekly benefits, make sure that you consult with an experienced Massachusetts workers’ compensation attorney prior to agreeing to the lump sum arrangement.

Contact the Massachusetts workplace injury lawyers at Kantrovitz& Associates, P.C., if you need assistance with filing a claim or appealing a denial by calling 800-367-0871 or by using our online contact form.