Lump Sums Assist Rather than Discourage Return to Work, Says New WCRI Study

CAMBRIDGE, MA, July 11, 2012— An ongoing question for many policymakers is whether lump-sum settlements in workers’ compensation cases help or hurt return to work for injured workers.  Although some believe that settlements discourage return to work, the Workers Compensation Research Institute’s (WCRI) new study, Return to Work after a Lump-Sum Settlement,  shows the opposite.   

“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,” says Bogdan Savych, author and public policy analyst at WCRI.  “My hope is this research will help policymakers and other stakeholders understand how workers respond to receiving a lump-sum settlement.”  

The study follows the experience of 2,138 workers who were injured in Michigan in 2004 and later received a lump-sum settlement.  WCRI followed the employment experience of these workers up through 2008.  Although the study focuses on injured workers in Michigan, policymakers from across the country can learn from these findings and better understand a worker’s decision to return to work after a lump-sum settlement.   

Among the study’s many findings are: 

• Three quarters [78 percent] of the injured workers in the study who received a lump-sum settlement didn’t change their employment status, which means that many of those who were employed at the time of the lump sum stayed employed and those who were not employed remained unemployed.
• Of those injured workers that did change their employment status, nearly a third [30 percent] who were employed at the time of the lump-sump settlement left work and nearly a fifth [19 percent] of those who were not employed at the time of the lump sum attained employment.  
• On average, more injured workers returned to work after receiving a lump-sum settlement than exited. Average employment in the sample increased from 25 percent of workers at the time of the lump sum to 32 percent of workers 1 year after a settlement.  The exception is older workers who experienced a decline in employment after a settlement.

About WCRI:

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. WCRI is a recognized leader in providing objective, credible, and high-quality information about public policy issues involving workers' compensation systems. WCRI's members include employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia and New Zealand.