An insurance company may try to hedge its financial bets by claiming an immediate set-off for future benefits it may be obligated to to pay, such as lost wages or medical bills, when an injured worker receives a settlement from a third party. However, the insurer is only entitled to a set-off for compensable benefits and not for either non-compensable expenses or even for compensable expenses if they are not foreseeable.
A Massachusetts Appeals Court rejected a motion by EastGuard Insurance Company for such a set-off and affirmed the trial court’s allocation of funds from settlement of a worker’s claim for on-the-job injuries and award of the full amount allocated for the claimant’s pain and suffering.
The court rejected EastGuard’s motion because it offered only “equivocal evidence” of the potential for compensable future expenses for lost wages and medical expenses for management of the worker’s pain resulting from his injuries.
The claimant was working as a heavy equipment operator at a job site in North Eastham. Another worker, employed by a different employer on the same site, was also operating a piece of heavy equipment and ran over the claimant’s leg, causing serious injuries.
EastGuard paid the claimant’s medical bills and lost wages, as compensable expenses under the workers’ compensation laws, and the claimant eventually returned to work.
The claimant, as he was entitled to do under Massachusetts law, sought damages against the man who ran over his leg, as well as the man’s employer. The case was settled for a total of $425,000. The court allocated $109,610.27 to EastGuard as reimbursement for what it paid for claimant, and $315,398.73 to the claimant for his pain and suffering, minus proportional deductions for attorneys’ fees and costs.
After the settlement, EastGuard requested that the trial court order a set-off to cover its future payments for claimant’s medical expenses and lost wages, to be withheld from the three-fourths of the settlement awarded to the claimant for pain and suffering. The court denied EastGuard’s motion.
The court’s reasoning was that the set-off should be denied because pain and suffering are not compensable damages under the workers’ compensation laws, and therefore, under Massachusetts case law a set-off for an insurer such as EastGuard against any award for pain and suffering is not available because EastGuard did not pay the claimant anything for his pain and suffering. Furthermore, settlement proceeds are only subject to a set-off for the insurer against any future payment of benefits, if those expenses are foreseeable.
The Court of Appeals affirmed the Superior Court decision, finding that:
- there was reasonable evidence to conclude that the claimant endured substantial pain and suffering: in the first year after his injury he underwent three surgeries on his injured leg. Therefore the allocation of three-fourths of the settlement to pain and suffering was reasonable; and
- based on his uneventful return to work and his incurring no lost wages between his return to work and the court proceedings, the potential for the claimant to incur compensable future medical expenses for pain management was at best, equivocal, and therefore not foreseeable, as required by law to justify a set-off.
The Appeals Court accordingly affirmed that the claimant should retain the three-fourths of the settlement allocated for his pain and suffering.
If you are hurt at work, you may be entitled to workers’ compensation benefits. You may also be entitled to damages from third parties who are responsible for your injuries. An experienced Massachusetts workers’ compensation attorney can evaluate whether you have a sound claim and fight to make sure that your employer and its insurer follow the rules or give you guidance if there is no insurance available. Contact us by calling 800-367-0871 or using our online contact form.