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:
- Adding 1% to a 24% rating increases the value by $1,521.50.
- Adding 1% to a 49% rating increases the value by $2,102.50.
- 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.
- 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:
- 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.
- 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!