Attorneys should make every effort to be as clear as possible in language that the client can understand. Clients, for their part, must communicate as much information as possible about their situation so that the attorney can properly advise them.
All of this is particularly true in the context of making a decision to settle or not settle a claim. As I frequently explain to my clients, I am happy to be their expert on what their claim is worth, but they need to be the expert on what is in their best interest. I typically do not recommend to people that they settle a claim or accept any particular offer, or refuse to accept any offer or not settle a claim. The reason for this is encapsulated in an example that was recently brought to my attention.
I represented a nice gentleman with very significant injuries. The carrier approached us about the possibility of entering into a lump sum settlement in a way that would free the carrier of its obligations to pay time loss benefits, permanent disability benefits, and vocational assistance. The claimant indicated he was interested and I worked up some figures.
After having the figures, we sat down and discussed it, and he authorized me to go forward with trying to settle it. I did, but the attorney on the other side who had suggested the negotiation was extremely slow in getting a response back to me. His client then processed the claim to a closure and the injured worker was awarded nearly $100,000 in permanent partial disability benefits. The worker was also eligible for vocational assistance, and at that point, the injured worker decided he did not want to settle. I had no problem with that, inasmuch as that was his choice.
The injured worker took the permanent disability in a lump sum to avoid having it reduced following the next closure, post-vocational assistance. He then went into vocational assistance and received time loss until his vocational assistance ended. As soon as his vocational assistance ended, he applied for Social Security disability and received it.
The outset of claimant’s disability extends into his workers’ compensation claim, and the Social Security Administration is therefore entitled to an offset for the periodic payments he received. Periodic payments are defined by the Social Security Administration as his time loss (wage replacement) and his permanent disability benefits. Anyone who is on Social Security disability is entitled to 80 percent of what are called average current earnings. Average current earnings are determined by taking the five years of employment immediately prior to the onset of disability, selecting the year with the largest average monthly wage. The Social Security applicant is then entitled to 80 percent of that average monthly wage from all sources, including Social Security and workers’ comp. To the extent that the combined receipts are below that 80 percent threshold, there is no offset for anything. If the combined benefits exceed that 80 percent threshold, then the Social Security Administration will reduce the Social Security disability payments until that 80 percent threshold is reached.
In the case of a settlement, you are able to prorate the lump sum that you receive over the life expectancy of the disabled person. That greatly reduces the amount of the monthly combination between Social Security disability and that periodic payment.
Had the injured person notified me that he intended to apply for Social Security disability, and that he would not utilize his vocational assistance to actually go to work, a different analysis would have been made and he would have been presented with a different choice which could perhaps have ensured that he would have no offset of his Social Security disability benefits and still receive the benefit of a large lump sum.
Again, the importance of this is to make sure that the person seeking advice from the attorney understands what he or she wants and is able to effectively communicate that to the attorney so that the attorney can assist him or her in achieving that result.