How the Pennsylvania Workers' Compensation Act and a Compromise and Release Can Affect Workers’ Compensation Benefits
In every workers’ compensation case, there comes a time when an employee’s right to Workers’ Compensation benefits will end. This ending is usually due to a judicial action, either by way of terminating the claimant's benefits, or most often, by way of a Compromise and Release performed under the Pennsylvania Worker's Compensation Act. While a Compromise and Release may be beneficial to employers and employees, in some cases, what comes after may be of more important for claimants who have sustained catastrophic injuries.
What is a Compromise and Release?
Since 1996, the Compromise and Release has been an excellent tool for the elimination of workers’ compensation benefits, both for employers and employees. It allows an employer to liquidate their loss and bring down any reserves that the carrier set aside for payments of future compensation. Similarly, it allows a claimant to move on with their lives, thus ending what is typically lengthy, hostile litigation, or at minimum, eliminate the irritation of having to deal with an insurance carrier.
However, what comes after the Compromise and Release may be of significant importance for claimants who have sustained catastrophic injuries, requiring long-term care beyond the date of the Judge’s hearing for the Compromise and Release. This is particularly true of individuals who have been ruled incompetent or those who will need significant long-term care. Quite frankly, I look at this situation, especially with regard to annuities and Medicare resolutions, and believe that plaintiffs’ attorneys are not doing right by their clients by simply resolving the case and making the claimant the trustee of their own ongoing benefits. While the vast majority of claimants are fully capable of handling this responsibility and dealing with the necessary bookkeeping, the reality here is that even if the claimant is responsible for his own set-aside, plaintiff’s counsel should be protecting their client’s future by obtaining a medical trust under Section 317 of the Pennsylvania Worker's Compensation Act for the purposes of paying future benefits.
Section 317 of the Pennsylvania Worker's Compensation Act
Section 317 of the Pennsylvania Worker's Compensation Act allows for the establishment of a trust, which is ruled upon by the Workers’ Compensation Appeal Board. This hearing allows the employee to place funds for their future care (both indemnity and/or medical) into a trust that allows them, pursuant to the Act, to make what is stated in the act as, “the same amounts and at the same periods as are herein required of the employer, until said fund and interest shall be exhausted.”
What does this actually mean?
The trust fund will make medical payments as required by the course of treatment for the claimant's disability. The benefit is that the payments are made under the insurance payment regulations of the Pennsylvania Worker's Compensation Act, and therefore, the trust pays only the Medicare Cost Containment Act fee scheduled amounts for treatment. Otherwise, the total billed payment must be made, which is what is typically paid by the trustees and beneficiaries of most Medicare Set Asides. Even if an individual trustee or company takes a fee for managing the payments to treatment providers, the cost savings far outweighs the management costs. This allows the claimant to extend the size of the Medicare trust and/or special needs trust well into the future. The benefits of such an arrangement should be obvious to a claimant and their counsel. In this capacity, all parties are protected, as is Medicare, from future issues regarding the dissemination of the trust proceeds. Moreover, individuals, not just trust companies, including the beneficiary, can be trustees of these funds.
For questions, comments or additional information, please contact Bret Goldstein, Partner in our Employment Practice Group, at firstname.lastname@example.org or via phone at 215.495.6528.