HOW DO LAWYERS ANALYZE THE VALUE OF CASES?

Cases are resolved by analyzing the injured workers' future earning capacity and comparing it to the wages he or she was earning at the time of the injury.  Attorneys also analyze the strengths and weaknesses of a particular case in determining whether a case should settle.

Under Pennsylvania law, if an individual with residual disability in connection with a work injury returns to employment at wages which are less than the employee's pre-injury wages, the employer or insurance company is obligated to pay tax-free wage loss benefits to the employee at a rate equal to two-thirds (2/3) of the difference between the employee's return to work wage and his or her pre-injury average weekly wage.  Once an employee returns to work at duties that are restricted due to the effects of a work injury, the law considers the worker “partially disabled.” An individual may receive partial disability benefits up to a maximum of five hundred (500) weeks for a work injury.

Where an individual has undergone an impairment rating evaluation and is found to be less than 50% disabled under AMA guidelines, the employee may recover no more than 500 additional weeks of benefits, even if he is totally disabled from all work.

In settling the case, the attorney attempts to estimate the earning capacity of the employee in the future.  Using this estimate, the attorney determines what compensation would be payable to the employee if he or she returns to work at wages less than the employee's pre-injury wage.  Finally, the attorney reduces the future payments to present dollars in order to determine the "value" of a particular claim. 

For example, if your average weekly wage at the time of injury was $550.00, and you  returned to work at a wage of $250.00 per week, the insurance company would be obligated to pay a "make up" check of $200.00 per week you.  ($550.00 average week wage - $250.00 return-to-work wage = $300.00 x 2/3 = $200.00)

As long as you continued to receive wages of $250.00 per week, the insurance company would be obligated to pay a makeup check of $200.00 per week.  If you work continuously for 500 weeks straight, and earn $250.00 per week for each of those 500 weeks, the insurance company would have to send you $200.00 per week until the 500 week period ended. 

What is the "present value" of the insurance company's obligation to pay you $200.00 per week for 500 weeks straight?  At first glance, it would seem to be $100,000.00.  (500 weeks x $200.00/week = $100,000.00).  Insurance companies do not analyze the value of cases in this manner, however, due to the effect of interest rates and investment income on their obligation to pay benefits to you on a week-by-week basis. 

 
The best way to explain the present value concept is to consider what happens when an individual wins a million dollar lottery.  If you won a million dollars in the lottery, you would not receive a check for a million dollars, even if you paid no taxes.  Leaving aside the issue of taxes, you would really receive $50,000.00 per year for 20 years.  Obviously, this is not the same as receiving a million dollars up front.  If you were to receive a million dollars up front rather than spread over 20 years, you could invest the money and live off the proceeds of the investment.  If you received a 4% return on your million dollar investment, you would receive $40,000.00 per year in income alone for the rest of your life, and still have one million dollars left over.  If you received a million dollars over 20 years ($50,000 per year), and spent $50,000.00 each year, at the end of 20 years, you would have no money left.

Under Pennsylvania law, an employer and its workers’ compensation insurance company has 21 days from the date disability begins for them to make a decision about whether or not to pay your claim.  Where the injuries are obvious and self-limited, the insurance company will probably pay the claim without a hitch.  For example, if you break your leg on the job, and must miss time from work in connection with that injury, the insurance company will probably pay the claim.  From their perspective, the injury is obvious and you will eventually recover in full.

For more severe injuries, they probably will look more closely, even if the injury is obvious.  This may mean that there will be some delays before they accept legal responsibility for your claim.

Even if you are going to a doctor to whom you were referred by your employer, there are things that you can do to make the insurance company’s process of looking at your claim go more quickly.  In most cases, doctors that are designated by the employer send medical reports directly to the insurance company.  You should not, however, assume that this is the case.  Ask the doctor for a copy of the report, and send it to the insurance company yourself.  You should find out who the insurance company is by asking your employer.  The insurance company will assign a claims adjuster to handle the file.  A claim number will also be assigned to the case.  And any letter you sent to the insurance company or any phone conversation you have with the claims adjuster, you want to reference the claim number.

Sometimes the insurance company will refuse to pay a claim because the doctor does not clearly state in a report whether the condition is work-related.  Again, ask for a copy of the report.  If the doctor does not state in the report that the condition is work-related, ask him why he has not explicitly stated that, noting to him that it may result in a delay in the processing of the claim.  If the doctor refuses to acknowledge that your condition is work-related, you probably need to speak with a lawyer.

 

If the insurance company requests you give an oral statement, you need to be very careful.  Except in relatively minor injuries, you probably want to seek the assistance of an attorney.  While many attorneys will charge a fee for this service, our office does not.

In giving a statement to a claims representative, you need to assume that they have information that you do not have.  Insurance companies have access to a central information source that gives them all of the claims that you have ever made, whether the claims resulted in a lawsuit or not.  It is not uncommon for claimants to make the mistake of informing an insurance company that they had no prior injuries, that is false.

If you are asked to give a statement, the statement, on the record, should be preceded by the following comments:  I am giving this information to the best of my knowledge and belief.  I do not have access to my medical records at this time, and cannot recall specifically all that may be contained in those medical records.  If there is any information that the insurance company has concerning me that I do not have, I would like that information in advance.”

Except in obvious injury cases, it is best to have a good knowledge of your prior medical history.