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Monday, August 6, 2007

Insurance Industry Again Offers MSP Legislation That Would Discourage Workers' Compensation Periodic Payments

After a failed attempt in the last Congress, the Insurance Industry has again offered similar legislation to encourage "lump sum" settlements in Workers' Compensation hearings, H.R.2549, and circumvent reimbursement of the ailing Medicare program. This legislation failed to gain acceptance in the last Congress as it did not receive the support of interest groups involved in preserving the Medicare system and Labor who continues to support a periodic benenfit system in Workers' Compensation. The proposal would encourage the dismantling of the current Workers' Compensation system in favor of lump sum benenfits. Leading commentators also oppose such legislation.

"In some jurisdictions, the excessive and indiscriminate use of the lump-summing device has reached a point at which it threatens to undermine the real purposes of the compensation system. Since compensation is a segment of a total income insurance system, it ordinarily does its share of the job only if it can be depended on to supply periodic income benefits replacing a portion of lost earnings. If a partially or totally disabled worker gives up these reliable periodic payments in exchange for a large sum of cash immediately in hand, experience has shown that in many cases the lump sum is soon dissipated and the worker is right back where he or she would have been if workers' compensation had never existed."
[8 Larson's Workers' Compensation Law, § 132.07[1] at 132-17 (2006).]


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