In many workers compensation cases, the settlement negotiation process starts with the claim adjuster (or insurance defense attorney) asking for a formal settlement demand.
Sometimes this request is accompanied by the insurer’s first settlement offer. But this is rare in my experience, with insurance companies (such as Travelers, Liberty Mutual, etc.) and third-party claim administrators (such as Sedgwick, Memic, Gallagher Bassett, etc.) preferring that the claimant makes the initial demand.
You may be tempted to respond quickly with a number.
Don’t!
You are not ready.
First, you must analyze how much your workers compensation case is worth based on the evidence, damages available under workers comp law, and other relevant facts.
Only then should you draft a settlement demand letter in your work injury case.
Sometimes the demand letter plays a significant role in resolving the dispute.
But other times, it does not bring the parties closer.
Regardless, you should prepare a settlement demand letter that lets the insurance company know that you are know your rights and what your case is worth.
Below is an example settlement demand letter similar to what I send in workers compensation cases.
You can see that it is not very long.
Indeed, most of the workers comp demand letters I submit are significantly shorter than the demand packages I send in personal injury cases involving automobile crashes and defective products.
Two reasons explain this:
First, the workers compensation laws in Virginia require the parties to produce medical records and reports as soon as they receive them.
Second, many claims settle after a workers compensation hearing (trial) on the disputed issues.
In workers comp, therefore, the parties have exchanged more information by the time they start negotiating a settlement than in personal injury cases. And the demand letter does not have to provide as much detail on liability (negligence does not matter) and damages.
Keep reading to learn more.
And call me at (804) 251-1620 or (757) 810-5614 if you want help getting top dollar for your case.
My firm has helped hundreds of injured workers and their families. And we are ready to start working for you.
October 11, 2022
Ben Thomas
Slippery Ladders Insurance Company
123 Delay Avenue
Disputed Claims, VA 00112
Re: Adam Smith v. Big Dog Trucking LLC
Jurisdiction Claim No: VA0123456789
Date of Injury: March 1, 2021
Claim Administrator No: A1B2C3
Dear Ben:
You have asked for a formal settlement demand now that Mr. Smith has reached maximum medical improvement for his work accident.
I am authorized to settle the claim for $426,030.00 plus the employer’s funding of a Workers Compensation Medicare Set Aside worth $190,300.00.
The information below supports this demand.
Please call me after reviewing the letter, preferably within thirty days.
I look forward to working with you to resolve the case.
Case History
Mr. Smith sustained injuries to his back, right knee, and left shoulder (a torn rotator cuff) in a work-related car crash on March 1, 2021.
Despite initially alleging that Mr. Smith violated safety rules (speeding and not wearing a seat belt), the insurer accepted the claim as compensable after completing pretrial discovery. And the Workers Compensation Commission entered an Award Order providing lifetime medical benefits and wage loss payments beginning March 2, 2021.
Mr. Smith remains under an open award for Temporary Total disability, which the insurer continues to pay at $1,137.00 per week (the weekly maximum compensation rate) based on a pre-injury average weekly wage of $2,200.00.
The insurer has paid approximately 84 weeks of indemnity benefits and $118,300 in medical expenses (including a lumbar spinal fusion).
The Insurer’s Indemnity Exposure
I submit that the carrier will likely have to pay the remaining 416 weeks of Temporary Total benefits available.
Several factors will make it difficult for the insurer to find a light-duty job for Mr. Smith:
Even if the insurer succeeded in finding a job for Mr. Smith, it is unlikely the employer would pay close to Mr. Smith’s pre-injury wages. Therefore, you would have to pay Temporary Partial disability benefits.
In addition, Mr. Smith has received permanent impairment ratings of 40 percent in the right leg, 15 percent in the left leg, and 50 percent in the left arm. Therefore, even if the insurer’s vocational rehabilitation efforts worked, it would likely have to pay the remaining weeks of indemnity available as compensation for permanent loss of use of the affected body parts (permanent partial disability).
Further, the insurer may have to pay even more than 500 weeks of wage loss benefits.
Though we are less than two years removed from the automobile accident, two factors indicate that Mr. Smith may qualify for Permanent and Total Incapacity benefits –
The insurer, therefore, has a significant risk of remaining liable for wage loss payments for the remainder of Mr. Smith’s life under Code Section 65.2-503.
The sum of 416 weeks of indemnity benefits is $472,992.00, excluding any applicable cost of living adjustments (which could be high due to record inflation). And the present value of this amount (using a four percent interest rate) is $406,030.13.
Based on these figures and the insurer’s potential lifetime exposure, I submit that $406,030.13 is an appropriate amount to settle the indemnity portion of Mr. Smith’s claim.
The Insurer’s Future Medical Exposure
Unfortunately, the spine surgery and rotator cuff repair failed to eliminate Mr. Smith’s pain in both legs, his back, and his left arm.
Therefore, Mr. Smith requires ongoing pain management with a board-certified orthopedic specialist.
In addition, Mr. Smith has developed post-traumatic stress disorder (PTSD) from the life-threatening car crash and has frequent bouts of depression and anxiety due to his pain.
Both defense medical examination doctors agreed with Mr. Smith’s diagnosis and future medical care needs.
Given the severity of Mr. Smith’s injuries, the need for ongoing medical attention, and his intent to apply for Social Security disability insurance benefits after settling his workers comp case, I have obtained a future medical care cost projection.
This evaluation, which I have attached, indicates that Mr. Smith will require $190,300.00 in future Medicare-covered medical treatment. And any settlement must be contingent on the Centers for Medicare and Medicaid Services (CMS) approving the proposed amount for funding a Workers Compensation Medicare Set Aside Arrangement (WCMSA).
I submit, therefore, that $210,300.00 is an appropriate amount to settle the medical portion of Mr. Smith’s claim (the future cost projection plus $20,000.00 for non-Medicare-covered medical expenses).
Other Items
The insurer must agree to resolve any claims by Medicare for conditional payments and include the Social Security offset (proration) language we will provide if the case settles.
Our law firm has handled nearly every type of workers comp case involving various injuries and occupational diseases and other disability benefits (such as Social Security disability, Long-Term disability, the Longshore and Harbor Workers Compensation Act, and VRS work-related disability).
This experience has allowed us to determine what works and what doesn’t when you submit a workers comp demand letter. And we use this knowledge to put more money in our clients’ pockets.
Call or contact us online if you need help with your case.
We can help you pursue your case in Virginia or Maryland or find an attorney who can if you are injured elsewhere.