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Earlier cash settlement doesn't reduce workers comp benefits

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An employer can’t receive credit for the full amount of a lump-sum workers compensation settlement to lower the amount of benefits due to a former employee whose case was reopened, the Kentucky Supreme Court has ruled.

Bethany Balderas worked as an exercise trainer for Gardens Glen Farm in Lexington, Kentucky. Court records show that she was injured in November 2006 when a horse she was riding fell and rolled over her.

Ms. Balderas underwent fusion surgery for two fractured vertebrae and returned to work without restrictions. She later negotiated a lump-sum workers comp settlement of $100,000, based partly on a disability impairment rating of 29%.

Ms. Balderas successfully petitioned to reopen her workers comp claim in 2011 based on a worsening of her occupational disability, court filings show. An administrative law judge ruled in 2013 that Ms. Balderas showed that her whole body impairment had increased to 30%, based on decreased range of motion in her spine and other medical problems, and also found that Ms. Balderas was no longer able to work as an exercise trainer.

The judge awarded Ms. Balderas 425 weeks of permanent partial disability benefits at $275.83 per week, filings show. The award was based on Ms. Balderas being eligible for $456.25 in weekly benefits minus a credit of $180.42 per week to offset the value of Ms. Balderas' claim at the time of her settlement with Gardens Glen.

Gardens Glen appealed, arguing in court filings that the offset should have been based on the $100,000, which was worth “substantially” more than the value of Ms. Balderas’ claim at settlement time, records show. But the administrative law judge’s opinion was upheld by the Kentucky Workers’ Compensation Board and the Kentucky Court of Appeals.

No dollar-for-dollar credit

The Kentucky Supreme Court last week unanimously upheld the lower court rulings, finding that Gardens Glen was not entitled to a dollar-for-dollar credit for settlement payments it made to Ms. Balderas.

While Gardens Glen paid more in its settlement than the value of Ms. Balderas’ workers comp benefits at the time of her original claim, the Kentucky high court found that award credits should be based on the claimant’s “actual occupational disability” despite “the figure for which (she) settled.”

When “a settled claim is reopened, the monetary value of the original negotiated settlement may not reflect the claimant’s actual disability,” the ruling reads. “The change in occupational disability should be calculated as the difference between the actual disability on the date of the settlement, as found by the (administrative law judge), and the occupational disability at the time of reopening.”