As you know, we generally post updates on South Carolina case law or other events in the Workers’ Compensation world. However, I have received several questions from clients lately (many who are new to workers’ compensation) about how to calculate a permanency award or a settlement offer in South Carolina. The short answer is: it depends on the type of award/settlement. So, let’s break that down.
For purposes of this article, I will discuss permanent disability awards/settlements only, not offers to close out medical care. I’m also assuming here that you are aware of how the average weekly wage and compensation rate is calculated. If you would like a separate blog on settling medicals or on calculating the claimant’s average weekly wage and compensation rate, please let us know!
The Single Body Part Award or Settlement
This is the case where the claimant has hurt only his or her leg, shoulder, etc. First, let’s get some vocabulary straight. The doctor assigns an impairment rating, usually based on the AMA Guides, once claimant has reached a plateau in treatment, called Maximum Medical Improvement. Once that happens, the settlement or the SC Commissioner will award the claimant a disability rating. The impairment rating is not the same as the disability rating.
So let’s say the settlement or award is 10% to the right leg. The leg in South Carolina is valued at 195 weeks. So, the award would be 10% of 195, or 19.5 weeks of benefits. The commissioner will multiply 19.5 times the claimant’s compensation rate. So, if the claimant has the maximum compensation rate for 2018 ($838.21), the award would be $16,345.09.
So the calculation is max body part weeks (195 for leg) X percentage of award (.1 for 10%) X the compensation rate ($838.21 max for 2018).
195 X .1 = 19.5; 19.5 X 838.21 = 16,345.09
The back is the one body part in South Carolina that is more complicated to calculate. If the award or settlement is 1% – 49% to the back, then the calculation is based on 300 weeks. This would be the same formula as for any other body part.
If the award from the Commission is 50%-100% to the back, then first the claimant is presumed to be permanently and totally disabled (see below for further discussion). However, if the employer can show that the claimant is able to work, then the award from 50%-100% will be based on 500 weeks instead of 300 weeks, again using the same formula as above. Again, a lump sum award would be reduced to present day value.
The Wage Loss
The wage loss settlement or award is applicable when the claimant has injured 2 or more body parts AND can show that he is unable to earn the same income as before due to his work injury. If the claimant injures his arm and his leg but cannot demonstrate a loss in his ability to earn wages, the award calculation will be for each body part individually using the formula above.
If the commissioner awards a wage loss, the calculation is based on the claimant’s average weekly wage before the injury and the average wage he or she is capable of earning afterwards (not necessarily what he or she is actually earning at the time of the hearing).
So, let’s say the claimant’s average weekly wage (AWW) before the injury was $1000. Now, because of the work injury, the commissioner determines that the claimant can only earn $500 a week. The commissioner will take that difference of $500 and multiply that by .6667 to come up with a new compensation rate of $333.35. That number then gets multiplied by 340 weeks. However, using our calculators or the present day value table, a lump sum award will be reduced.
So, the calculation is the pre-injury AWW ($1000) – post-injury AWW ($500) X .6667 X 340 weeks. In the case of wage loss the 340 weeks of benefits would be $105,662.74 using the current 2% per annum reduction rate.
1000 – 500 = 500; 500 X .6667 = 333.35
340 weeks commuted is 316.9724
316.9724 X 333.35 = 105,662.74
Permanent and Total Disability (P&T)
This is the award a claimant receives when a commissioner determines that the claimant is unlikely to be able to return to any work at all; this award will also be given to a claimant with total loss of both shoulders, hips, arms, legs, or vision. A P&T award will be 500 weeks of benefits minus any temporary total disability (TTD) or temporary partial disability (TPD) the claimant has already been paid. The employer will not get this kind of credit in the awards described above.
So, the calculation is 500 – any TTD or TPD paid X the compensation rate. This again will be reduced if the payment is made in a lump sum. So a claimant who has been paid 100 weeks of benefits and has a compensation rate of $300 will receive $110,419.83 if paid in a lump sum.
500 – 100 = 400
400 commutes to 368.0661
368.0661 X 300 = 110,419.83
Lifetime indemnity benefits will be awarded to a claimant who a commissioner finds P&T AND who has (1) permanent and severe brain damage, (2) paraplegia, or (3) quadriplegia. Under this award, the claimant will be paid his or her compensation rate every week for life, so there is no real calculation to do here if this is the award (other than the claimant’s attorney’s fees, which is a whole different blog). However, when a claimant has an allegation that he or she is entitled to lifetime benefits, the parties will generally look to the claimant’s life expectancy under the SC statute to get an idea of the exposure, for settlement purposes.
So that was a lot of information that still oversimplifies some things and leaves a lot of nuances to consider, depending on your case. Hopefully this will give you enough information to be able to calculate a settlement offer or an award. If you have questions about calculating the exposure on your particular claim, feel free to contact us.