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Lump-sum settlements encourage injured employees to return to work: WCRI

Lump-sum settlements encourage injured employees to return to work: WCRI

CAMBRIDGE, Mass.—Lump-sum settlement of workers compensation claims encourage injured employees to return to work, the Workers Compensation Research Institute reported Wednesday.

Whether lump-sum settlements discourage or encourage employees to return to work post injury has been a topic of debate, the WCRI said.

Some observers believe that receiving a large, lump sum delays returning to work as employees feel less immediate need for income while other observers say the settlements provide a sense of claims closure that motivates restarting careers.

To help settle the issue, WCRI looked at 2,138 workers who were injured in 2004 and received lump-sum settlements. The Cambridge, Mass.-based research organization followed their employment status through 2008.

It found that 78% of those who received the settlements did not change their employment status. They either stayed employed or remained unemployed.

Of those injured workers that changed their employment status, 30% who were employed at the time of the lump-sum settlement left work and 19% of those who were not employed at the time attained employment.

On average, more injured workers returned to work after receiving a lump-sum settlement than exited, the WCRI said. The exception is older workers who experienced a decline in employment after a settlement, the WCRI said.

Although the workers in the study were all from Michigan, policymakers across the country can learn from the findings, the WCRI said.

“This is an important study because we need to find out whether settlements discourage return to work for injured workers who want to return to work or assist them in closing this chapter of their life and moving on with their career,” Bogdan Savych, a WCRI public policy analyst, said in a statement. “My hope is this research will help policymakers and other stakeholders understand how workers respond to receiving a lump-sum settlement.”

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