Calculating a Back Injury Settlement in North Carolina
This guide explains the basics of calculating the potential settlement on a serious back injury in a North Carolina Workers' Compensation case.
Know the Fundamental Numbers FirstWhat is the "comp rate" on the case? This is the compensation rate for temporary total disability purposes, and it is two-thirds of the AWW or average weekly wage for the 52 week period before the injury occurred. If a person averaged a gross income of $900 per week during that 52 week period before his injury, then his CR or compensation rate would be $600. Also, what is the PPD or Permanent Partial Disability rating number that the treating doctor has assigned? Under the Industrial Commission's rating guidelines, a rating for a back injury can be anything from a 0 to as much as 45%. A back strain or sprain usually results in a rating of no more than 5% and a surgical problem, such as a ruptured disk that has been removed, will generate a rating of 5% to 15%. A spinal fusion will generate a much higher rating.
Has the Injured Worker Returned to Work?This is a key question. If the worker has been able to get back to work, and is making as much money every week as he made before the injury ( see AWW, explained above), the the PPD rating money may be the best outcome available to the worker. One can accept the rating money on form agreements (Form 26A) and keep the medical benefits open for the next two years, and possibly longer, depending on the circumstances. But if the injured worker has not been able to return to work at wages equal to or higher than the pre-injujry AWW, then the rating money may not be the best deal. And fortunately, the injured worker gets to choose the "most munificient remedy" of the ones available---the highest-paying remedy, in other words. So, if you qualify for ongoing wage loss money, it is YOUR CHOICE to take it---it is NOT the INSURANCE COMPANY'S DECISION!
How Does a Wage Loss Settlement Work?For injuries occuring before June 24, 2011, a person who cannot work due to his injury is entitled to weekly wage loss payments (TTD) until he either returns to work, gets his benefits cut off by the Commission due to non-cooperation, or dies. (For injuries occuring on or after that date, there is a 500 week limit or cap on these benefits.) For workers who were injured before June 24, 2011, we calculate the "present value" of that potential stream of future TTD payments over their life expectancy. NC General Statute 8-46 is the mortality table that we use to determine life expectancy. For instance, the average life expectancy of a 40 year old person in NC is 38.3 additional years. If a person with a bad back injury is 40 years old and is drawing a $600 per week TTD check, then the Present Value of that check for the next 38.3 years, assuming an interest rate of 8% per year, is $467,691. That is the starting point for the settlement negotiation as far as the "indemnity" benefits are concerned. An additional amount of money should be identified to buy out the future medical benefits coverage. Assuming that $50,000 is a reasonable projection of the future medical costs, a starting point for the settlement negotiation might be $525,000. Contrast that with the payout on a PPD rating of, say, 20% to the back with a CR of $600. That amount would be 60 x $600 = $36,000. That is less than one tenth (1/10th) of the amount of indemnity or wage loss money that could potentially be paid out if the injured worker simply made the best choice. For cases arising since June 24, 2011, the Present Value calculation is different, because it is based on the number of weeks remaining in the 500 week period, rather than life expectancy. But for catastrophic injuries, the 500 week cap may not apply, and one may be able to use the life expectancy projection instead. The insurance company is not likely to offer the unrepresented worker this choice. The insurance company will typically offer only the rating money, as the insurance adjuster has no legal duty to deal with the injured worker "in good faith." You should never take legal advice from the adjuster, who is your adversary in the case, unless that advice is "You need to hire yourself a good lawyer." The insurance company is a for-profit business, and their primary goal is to make as much money as they can. If they can make $300,000 by shortchanging you, they will do it.