The myth about workcover settlement

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By sharing his/her story, the following seriously injured worker highlights again the common“myths” about those ignorant people who think that because you have been seriously injured at work (and are entitled to a common law damages claim) you “will be set up for life” or “it will be like winning the lottery”. Wrong!

The myth about workcover settlement

The injured worker’s story

After getting injured in [month] 2010, then rushed into surgery 1 month later, it amazed me how hard I had to fight to prove that I was still injured, even after the operation.

Gone are the days where I was earning over K100 p/a, to the workcover lump sum compensation of just under K600, but hold now you need to deduct everything that Workcover has paid you, wow, I get just under K300, but hold on, now you need to deduct legal fees and medical fees out of that, not much left for me to live on for the rest of my life, as doctors have said I will never work again!
Which way do I turn, I am lost at the moment, still trying to get my head around what has happened over the past 5 years.

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In a recent article titled “Settlement of a workcover claim out of court “, we outlined the main benefits of settling an injury (common law) damages claim OUT of court. In that article we also highlighted 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 (and common people) hear or read stories about large settlements and/or court verdicts and may get caught up in the (very expensive) litigation process.

Conversely this story and article highlights the prevailing misconception (myth) that because you have been seriously injured at work (and are entitled to a common law damages claim) you “will be set up for life” or “it will be like winning the lottery”. WRONG! WRONG and WRONG again!

Unfortunately as this (and many others) injured worker has found out the hard way there is no such a thing as a ‘fair’ compensation. Indeed, you have to pay back all your previous weekly payments (for some injured workers this can be many years worth); you also have to pay back any Medicare bills, any Centrelink monies, and of course your legal costs! There are other hidden costs when going trough court such as ‘ vicissitudes ‘ (This term is used to describe the risks that everybody faces in their life which can have a potential effect on your ability to earn income in the future). See: How are damages calculated. for a detailed overview of all things you have to pay back and/or are deducted from your settlement/compensation award.
In many cases it’s is better to settle your claim out of court, as you don’t have to pay back your weekly payments and other hidden costs and your legal fees will be a lot less.
Lastly for some it is better to drop the economic loss part of a damages claim, as in doing so your weekly payments will continue.

So, basically there is NOTHING you can do once your case has settled. You will receive a letter from Centrelink advising you how many years you won’t be eligible for centrelink benefits (known as the preclusion period). Once the preclusion period over, you can claim centrelink benefits. So, you will have to seek sound financial advice on how to maximise your payout as to enable you to live on it for several years (until the preclusion period is over).

As we’ve stated on our workcover myths page: $300.000. is the equivalent of $30.000 a year for ten years. That isn’t much to live on, especially when you consider that you may never be able to work again. Imagine living on that for even just a family of three? So forget the “myths’ about those ignorant people who think that because you have been seriously injured at work (and are entitled to a common law claim) you “will be set up for life”!

This is also the very reason why seriously injured workers suffer from what is called a second wave depression after settlement.

To settle your workcover case in court (trial) or not is the question

Most seriously injured workers (eligible for a common law damages claim) will be plagued by this question at some point during their case.

The main question being: Should you settle and take potentially less than what you think your case is worth, or risk it all in court?

The vast majority of seriously injured workers will choose to settle OUT of court— and for good reason.Not only are you spared what is known as a trial by combat or a trial by ordeal, which can inflict extreme insult to injury (!) – but accurately predicting a court (jury) verdict is about as likely as correctly predicting a coin flip! As such there is ALWAYS a RISK.

Settlement — out of court

The downside of a settlement out of court is quite obvious — you may get less money (as in compensation) than you would get from your best possible court outcome. Whilst arguably winning big at trial (in court) can be euphoric. You feel vindicated, relieved, and you act like you “knew you would win all along.” Bitch-slapping an arrogant insurance company or major corporation that refused to make you a decent settlement offer feels great, however going all the way to trial should be reserved for those times when the insurer (employer) is totally unreasonable in their settlement offer and where your lawyer has cause to believe you will win your case.

There are many benefits of settling out of court (and we’re talking a reasonable settlement amount), these include:

  • You get a guarantee of payment in the near future and a lifting of (extreme) stress
  • You get paid a lot sooner than if you have to wait for a court date (getting to court takes 12 to 18 months in VIC)
  • You no longer have to stress about your case and lawsuit, the stress that the uncertainty of your lawsuit injects into your life (you may get less money, you may even loose your case!)
  • The insurer (employer) can not appeal a settlement. (they definitely can appeal a judgment further delaying your compensation, or even causing you to loose it)
  • You don’t incur exorbitant legal fees (barrister, expert witnesses, court fees etc)
  • You don’t have to pay back your weekly payments to workcover (for many injured workers this can be a significant amount of money) – in other words: your lawyer will negotiate a settlement figure “plus keep” – this “plus keep” effectively means you keep your weekly payments and don’t have to pay them back
  • You don’t have to pay any TAX on your settlement monies (!)
  • For more benefits of settling out of court, read our previous article: Settlement of a workcover claim out of court

Case example:

A seriously injured worker (WPI >40%) settled his case out of court and received K550 in compensation.

After paying  his legal costs he ended up with K497 in his pocket, tax free.

This settlement amount is the equivalent of a jury verdict of at least K800 (could be even more)!

Had this injured worker taken his case all the way to trial, he (and his lawyers) would not have been able to accurately predict the jury verdict. Judges and members of the jury are all human beings, they can be sympathetic, they can be unsympathetic, they can have a bad day, be in a bad mood, or even swayed by media bias alleging all injured workers are lazy rorters, right?! If the negligence in the injured worker’s case is not black on white (and most aren’t!) his case may go in favour of his employer (insurer); and/or the injured worker may be slapped with a certain percentage (i.e. 20-35%) ‘contributory’ negligence.

Let’s assume all is this injured worker’s favour and he had the best possible court outcome. The Jury (Judge) awards him K850. Great!? Not so great when all the deductions are made, including repayment of all the injured worker’s weekly payments (let’s say K300); his legal fees (which will easily be in the hundreds of thousands if for example the case was heard over the period of 2 or 3 weeks) – let’s assume K150; and yep, the injured worker ends up with only K400 in his pocket, and that’s not even counting all the other ‘hidden fees and deductions’ made such as TAX etc. See where we’re getting at?

Or simply re-read the injured worker’s shared story above: s/he was awarded compensation of just under K600, but hold now s/he needed to deduct everything that Workcover has paid him/her, wow, I get just under K300, but hold on, now s/he needed to deduct legal fees and medical fees out of that, not much left for me to live on for the rest of my life, as doctors have said I will never work again! Essentially this means that this seriously injured worker who was awarded K600 in court ended up with around K250 in his/her pocket! Maybe, just maybe the insurer offered K300 or K350 as a settlement out of court but the [pathetic] offer was rejected by this injured worker and/or his legal reps? Would this injured worker have been better off with settlement out of court?

 

We really believe that going all the way to trial should be reserved for those times when the insurer (employer) is totally unreasonable in their settlement offer and where your lawyer has cause to believe you will win your case.


 

 

donate-download-tipSince 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.

 

 



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