Charlotte, NC (WorkersCompensation.com) – Traditionally, workers’ compensation benefits have been intended to provide payment to an injured worker consistently over time.
But, as a North Carolina court recently had to consider, there might be times when a one-time payment is called for.
A high school teacher experienced an injury on the job while breaking up a fight. As a result, she was diagnosed with numerous physical and mental injuries. The North Carolina Industrial Commission found the teacher to be permanently and totally disabled and awarded her weekly benefits. Some time later, the teacher asked that her award be converted into a single, lump-sum payment.
A deputy commissioner denied the teacher’s request, and this denial was upheld on appeal to the full commission. The commission based its denial on the belief that a lump-sum award was not allowed in a situation where the number of future payments was not certain. The reason the amount was not certain was because the teacher was eligible to receive weekly benefits for the rest of her life, however long it might be. The teacher then appealed to court.
Under the state’s Workers’ Compensation Act, lump sum payments may be awarded when doing so is in the best interest of the employee or where it will prevent undue hardships on the employer or the carrier.
Was the teacher allowed to receive a lump sum payment?
A. Yes. The Commission could make the lump sum award, using traditional calculation tools to determine what an approximate life expectancy for the teacher would be.
B. No. A lump sum payment could only be made in a case where the amount of payments the worker would receive would be certain.
If you chose A, you agreed with the court in Blackwell v. North Carolina Department of Public Instruction, No. COA20-829 (N.C. Ct. App. 03/01/22), which held that the law permitted a lump sum payment even in the absence of complete certainty on how much the worker would be entitled to. To determine life expectancy, the commission could use a mortality table to calculate how long the teacher might be expected to life.
However, the court also reasoned that a lump-sum payment should come with a discount since “a dollar today is worth more than a dollar tomorrow (or next year)” and paying out the entire amount a worker would expect to receive over the course of her lifetime would result in a windfall.
Additionally, the court also emphasized that, from a policy perspective, the goals of the workers’ compensation system are better accomplished through periodic payments rather than one-time pay-outs as it prevents “the employee from dissipating the means for her support and thereby becoming a burden on society.”
This feature does not provide legal advice.