The Numbers Don’t Add Up: A 60-Second Seminar in Workers’ Compensation Claims Handling

Many employers and claims professionals don’t realize that the rules of conventional mathematics don’t always apply to claims for workers’ compensation benefits. For example, in workers’ compensation 25 + 25 does not equal 50, at least not in the context of permanent disability calculations! Allow us to demonstrate. 

A 25% PD award is worth $29,217.50. Therefore, two 25% awards should equal $58,435.00, but in work comp 50% equals $78,662.50.  To further demonstrate this point, consider a PD rating for a worker with a 25% back injury plus a 25% shoulder injury. Again, the total disability is not 50%. In workers’ comp 25% + 25% = 44%.

To further complicate matters, the value of 1% is often misleading.  In fact, 1% is the most dangerous percentage in workers’ compensation.  The PD rating chart identifies the value of 1% as being only $870, but that is not necessarily always the case.  1% could be worth over a million dollars!  Here are a few examples where adding just 1% to a PD rating changes the value of the case, sometimes well beyond $870:

1. Adding 1% to a 24% rating increases the value by $1,521.50.
2. Adding 1% to a 49% rating increases the value by $2,102.50.
3. Adding 1% to a 69% rating increases the value by $2,900.00 plus a life pension (LP) usually worth an average of $140,000.
4. Adding 1% to 99% rating increases the case value by an average of $1.45 million dollars!

In addition, a 1% increase “in causation” will sometimes result in some very expensive outcomes as well:

1. In a death claim, adding 1% to 0% causation increases liability from 0% to 100%, resulting in the claim value increasing from $0 to up to $320,000 plus $10,000 for burial, plus weekly benefits until minor dependent children reach age 18, or for life if the child is disabled.  Therefore, the value of 1% in this example can ultimately exceed $2 million dollars.
2. In a psychiatric cumulative trauma injury claim increasing 50% causation by 1% once again results in a denied claim becoming fully compensable.

Friedman + Bartoumian are ready to assist our clients and friends in their efforts to understand and apply these “fuzzy math” concepts!