In this article, we’ll outline the main benefits of settling an injury (common law) damages claim OUT of court. In doing so we also wish to highlight that in some cases, injured workers may well believe that their case is worth much more than the workcover insurance company is willing to pay, and also believe their case is worth much more than it is actually worth. Indeed injured workers hear or read stories about large settlements and/or court verdicts and may get caught up in the (very expensive) litigation process.
Settlement of a workcover claim
An employer (therefore their workcover insurance company) or an injured worker can actually settle a disputed common law damages claim at any time. In other words, settlement can happen before court proceedings are issued [and also] after court proceedings are issued; and a settlement of a common law damages claim can even happen when you’re partly heard in court.
The more straight-forward the injury is, as well as the circumstances – especially negligence– in which the workplace injury occurred the more likely the chance of early resolution or settlement of the claim.
For example, if a worker falls at their workplace and breaks his back because the flooring was wet (from cleaning) and there were no warning signs up (eg. warning: wet floor), that would be a fairly clear case of negligence on the part of the employer.
Settlements are generally agreed between the parties (lawyers) acting for the injured worker and the employer and/or its workcover insurer.
In common law damages cases, when negotiating a settlement both parties must consider the nature and extent of the injury, how the injury affects the worker’s life, and how it affects the worker’s ability to earn an income.
Once all the information has been considered, the parties then “calculate” the amount of damages or weekly payments that should be awarded to the seriously injured worker. But in doing this, both representatives (lawyers) essentially make an experienced guess of what verdict (award) a judge or jury would likely have come up with if the matter had proceeded all the way to court (trial).
If any of the parties (injured worker or employer (workcover insurer) go to court (trial), they will have a lot of costs, and the outcome is almost always uncertain.
Where any litigation (going all the way to court/trial) involves risks for both parties, settlement out of court gives a known outcome, reduces the cost exposure (very important for the injured worker), and also prevents matters from being aired and documented in court (i.e matters of a more personal nature for the injured worker such as bullying, harassment etc; and matters that may adversely impact upon the reputation of an employer).
It is well knows in the “industry” that both parties tend to prefer to negotiate a settlement for a damages claim so that they both have a known outcome. It obviously may not be the best outcome for one party (injured worker) or the another (employer insurer), but at least they know, and they take away that risk and associated costs of litigation.
It’s very important to know that once settlement has occurred, you can not go back unless there’s a legal argument such as proving that there was something fundamentally wrong with the information upon which settlement was based. This is extremely rare.
To accept or not to accept a settlement offer is the question
A few weeks ago I heard from an injured worker who was offered a settlement (out of court) by the workcover insurer (employer) for the amount of $70,000. The injured lawyer strongly advised the injured worker to please accept the offer (before going to trial) but the injured worker flatly refused. The case went all the way to trial and the injured worker’s representatives tried it well…But the jury only awarded the injured worker $15,000!!! OOPS!
Unfortunately we do hear of quite a few such unfortunate outcomes.
In some cases, injured workers take on a belief that their case is worth much more than the workcover insurer is willing to pay, and in some cases they believe that their case is worth far more than the case is actually really worth. As stated above, injured workers hear and/or read stories about large settlements and verdicts, some get caught up in the litigation process, and some -yes- simply have an inflated value of their own injury.
It’s may help to know that the average payout (as in damages claim) in Victoria is only $80,000!
So, before you refuse a reasonable settlement offer please read the following points:
- First of all, you should hire (or have hired) a decent and very experienced lawyer (or law firm)
- Your lawyer will have (vast) expertise in the area of persona injury law
- Your experienced lawyer will expect that you (the injured worker) will take seriously his/her recommendations with respect to settlement when, and if, that occurs
- Although ultimate settlement authority is your decision, your lawyer will hope that you (the injured worker) will trust his/her judgment [and that of other lawyers in his/her office] in evaluating and assessing the merits of your case.
- Have confidence in your decent, experienced lawyer(s)
- It is important to meet with your lawyer from time to time and be sensitive to their concerns (and vice verse). Try not “getting out of hand.” Stay realistic about the value of your claim, preferably before you begin the settlement process.
- Before the settlement process starts, establish a reasonable $ $ $ settlement range with your lawyer
- Understand that the value you place on your case is not necessarily the insurance company’s value or the amount that a jury would award you on a given date
a. The value of the case/claim placed by the injured worker
This value may be high or low depending on how reasonable you are. If your own guessed value is high, your lawyer should inform you that you are entitled to such (inflated) an opinion but that, in reality, you will probably never see it, even if the case goes all the way to court and trial.
b. The value placed by the workcover insurance company
This value is one that a particular workcover insurance company may be willing to pay at a certain time for a particular case/claim on a settlement basis. Beware that workcover insurance companies are (very) “conservative” especially in small-ish cases (= non-catastrophic cases). The workcover insurance company will try to place a value on your case claim that will -of course- encourage settlement. Also it’s worth knowing that once the insurer has placed such a value, they are usually quite firm in their position. Saying that, always expect the first insurer’s offer to be shockingly/insultingly low! It is not uncommon that a first insurer’s offer is ZERO ($0), or, for example that you had a value of $800,000 in mind but the insurer’s first offer is a miserable $100,000.
c. The value a jury would award you (your case) on a given day in court
This third value of you case is the possible verdict a jury would award given the set of facts put to your case. This value can best be described as a sort of bell-shaped curve. The low value could be zero in some cases -especially-if liability is an issue or could be less than or equal to all the weekly payments you have received to date! (remember that you have to pay back all your weekly payments (and more) if your receive a settlement (compensation) in court). The mid-range value is often consistent with the workcover insurance company’s settlement range. At the right end of the bell-shaped curve is the unlikely high verdict that a jury would award on the very best day if all factors went in perfectly for you (the injured worker).
- Using the above “bell-shape” approach you can see that if the workcover insurance company’s offer is in or near the mid range the bell-shaped curve, settlement should be seriously considered
- If you (the injured worker) still refuse (for whatever reason) to accept an offer deemed reasonable by your decent and experienced lawyer simply request/obtain a second opinion. Make sure you go to a reputable lawyer for that opinion!
- Please take the time (a much as you need) to clearly understand the costs and problems of litigation (taking your case to trial). Many problems of litigation include testimonials (including very costly expert witness testimonials), interrogatories, your costs (legal fees) and the lapse of time getting to trial (12-18 months at least -it will take at least 1 year, sometimes 2 and several thousand dollars to take your case to court )
- Also understand that in some cases, the workcover insurance company will lower the ‘commercial’ value after litigation has been started, especially if weaknesses (e.g negligence) are disclosed in your case
- It is also well known that juries are reluctant to award significant verdicts (compensation) in small or small-ish cases such as soft tissue injuries. Go and check out some of the recent low verdicts on law databases that have occurred in small cases or cases similar to you. It is also true that quite some juries are negatively influenced by media (fraud cases, injured workers ripping off system, “whiplash’ comp etc.)
- Beware at all times that the potential jury verdict you could get could be a fraction of the workcover insurer’s final offer!
- If you still insist that the settlement is not enough, your lawyer may “bite the bullet” and start litigation. If your lawyer believes you have a clear liability (negligence) case that will result in some verdict or the possibility of an increased settlement offer, your lawyer will tell you that litigation is required or an option. Your lawyer will also tell you when s/he does not believe it is in your best interest to start litigation. Beware that some decent experienced lawyers may (try to) release you – end your no win no fee contract if you are extremely unreasonable with respect to the commercial value of your case. (In such a case, your lawyer may possibly release the file to you with the expectation that s/he will be paid either when the case settles or at the time s/he releases the file for the time s/he has spent on the case so far. This is a last resort tactic but, if you are way out of line with respect to the value of your case, your lawyer may have no choice but to release you and let you pursue the claim with another lawyer).
Since the law requires that the ultimate settlement authority rests with the plaintiff (that is: the injured worker), you may be interested in our ‘smart tip’ in exchange for a donation to help pay for the hosting fees of our site.
Questions and answers about settlement
It has been said that it has become more and more difficult to convince the average injured worker that acceptance of settlement offers from greedy workcover insurers is in their best interest. Many injured sods hear or read about huge damage awards and often assume they are entitled to the same. Not long ago a decent very experienced senior PI lawyer told me that he finds that he is now spending as much time working with the injured worker as he does trying to convince the workcover insurer to make a reasonable offer. He was kind enough to share the most common questions (and answers) asked by injured workers about their settlement.
It is not always possible to settle a case for the amount of money the injured worker requires. It is your decent, experienced lawyer’s job to make sure that your settlement (compensation/common law damages claim) is fair and consistent with other settlements paid to other injured workers for similar injuries. You have, of course, a right to place a (commercial) value on your injuries, pain and suffering. loss of enjoyment of life, wage loss etc. but the workcover insurance company has also a right to place its own value on your injuries, even if that value is much lower than your own expectations. When the injured worker and the workcover insurance company cannot reach agreement on the value of a case, it is up to jury (or judge) to decide. The goal of your decent, experienced lawyer is to achieve a settlement that, in his/her opinion, and based upon his/her expertise, is close to the potential award from a jury/court.
In your lawyer’s opinion, the offer that you (and your lawyer) now have on the table from the workcover insurance is well within the potential verdict range in this case. It may be closer to the top range of the verdict/award scale than the bottom range. Or it may be that the offer is closer to the low range of the potential verdict/award in your case, but it is still well within the range of a potential jury verdict and is being paid now rather than 2 years from now. If you decide to go to court (trial), it will be a long and expensive process before your case goes to trial. When that trial takes place, the chances of you obtaining more than a few thousand dollars more than the present settlement offer are very slim and, in fact, the chances are equal that you may get less than the present offer! For these reasons, your lawyer may not recommend gambling on a trial, when the chance of obtaining significantly more money is against the odds.
You must understand that when a case goes to trial (court) the workcover insurance company will hire competent defense counsel (lawyers) to do anything possible to either reduce the potential verdict or even to win the case outright. In some cases, “errors” are made during the course of trial that result in an appeal. If the insurance company loses this case and has to pay significantly more than the offer on the table, they may decide to appeal the case, which will drag it even further into the future. Also, you must remember that any amount of recovery is reduced by legal’ fees and additional court costs. So, if you go to court and win $5,000 more than the last offer on the table, you will receive only a fraction of that amount and possibly less. If you settle your case now, you will receive a check (within 6 or so weeks). If you decide that you want to go to court, all you have left is a disputed lawsuit with at least a 12 to 18 months wait before you even walk into the courtroom.
Many injured workers believe that the more you ask for in a settlement counter-offer, the more the insurance company will offer you at the time of settlement. This is not true. High figures are reserved only for catastrophic injuries where the worker has been severely injured and the liability (=negligence) is clear-cut. The figure your lawyer requests for settlement is based upon logic, reason, and experience as to the potential verdict your case may have in a court of law. In addition, when you accept a settlement out of court you do NOT have to repay all your weekly payments! For some injured workers this can be a substantial amount (say 3 years at $40,000 a year = $120,000 – or 5 years at $30,000 = $150,000!!!). You lawyer will generally request a settlement figure PLUS KEEP (wich means you keep your received weekly pay AND your lumpsum).
What’s of extreme importance to know is that, at least in VIC, if the court (Judge/Jury) awards you less than the statutory offer (made in the mediation/negotiation by the Defense) then the injured worker becomes liable for the cost of the legal proceedings for the other party as well! (*) Which may leave you in debt! So there is only a measly 10% margin, not much room for speculation indeed!
- if the judgment or order is for not less than 90% of the worker’s counter statutory offer but greater than the agent’s (or employer’s) statutory offer, the agent (or employer) must pay all costs
- if the judgment or order is equal to or less than the agent’s (or employer’s) statutory offer the worker must pay all costs
- if the judgment or order is less than 90% of the worker’s counter statutory offer but greater than the agent’s (or employer’s) statutory offer each party must pay their own costs
Read more about how damages are awarded and calculated, and what you need to pay back (weekly pay, lumpsum, Centrelink etc) in our article: To drop or not to drop the economic loss part of a common law damages claim.
[Article dictated by WCV and transcribed on her behalf]