How Long After a Pennsylvania Workers’ Comp Settlement Do I Get Paid?

Written by Mark R. Schmidt, Founding Partner and Certified Workers’ Compensation Specialist

After a Pennsylvania Workers’ Compensation Judge approves a settlement, the insurance company must issue the payment promptly. Contrary to what many injured workers are told, the insurer does not automatically receive a 30-day grace period in which it can delay payment without potential consequences.

The 30-day language in Section 428 of the Pennsylvania Workers’ Compensation Act concerns when an injured worker may execute judgment after a default. It does not create a 30-day, penalty-free period for an insurance company to withhold money it has agreed to pay.

Does the Insurance Company Have 30 Days to Pay a Workers’ Comp Settlement?

Many law firm websites are incorrect in the way they describe the deadline for Pennsylvania workers’ compensation benefits and settlement proceeds to be paid.

There is no such thing as an automatic 30-day grace period.

That myth developed from the 30-day waiting period before an injured worker may execute judgment on a decision under Section 428 of the Pennsylvania Workers’ Compensation Act, 77 P.S. § 921.

Section 428 provides a method of enforcing an existing payment obligation after the employer or insurer has remained in default for 30 days or more. It does not give the insurer permission to delay payment for 30 days before a default can begin.

Pennsylvania Workers’ Compensation Benefits Must Be Paid Promptly

Benefits must be paid promptly.

Following a work injury, the employer and insurer must “promptly investigate” the claim and “proceed promptly to commence the payment of compensation.” Section 406.1 of the Pennsylvania Workers’ Compensation Act, 77 P.S. § 717.1.

Where the insurer contests the injured worker’s right to benefits, the same section of the Act requires prompt notice to the employee explaining that the claim is being contested.

The repeated statutory requirement is prompt action—not an automatic 30-day waiting period.

The Pennsylvania Supreme Court Rejected the 30-Day Grace Period Myth

Where benefits have been awarded by a Workers’ Compensation Judge’s decision, the Supreme Court of Pennsylvania expressly dispelled the 30-day myth in Snizaski v. Workers’ Compensation Appeal Board (Rox Coal Company), 891 A.2d 1267, 1277 (Pa. 2006):

“A penalty is at least theoretically available the very day a default occurs; thus, a ‘refusal to make a payment’ could warrant a penalty if it persisted for a single day. In short, it is apparent that Section 428 of the Act does not set forth the thirty-day, penalty-free . . . construct. . . .”

The Supreme Court explained that Section 428 does not determine when a default begins. Instead, it assumes that a default has already occurred and provides an additional enforcement remedy when that default continues for 30 days.

That is an important distinction for an injured worker waiting for a settlement check, wage-loss benefits or money awarded by a Workers’ Compensation Judge.

The Real Issue Is What Constitutes a Default

The issue is what constitutes a default.

The answer depends in part upon how the obligation to pay arose and whether the employer is pursuing an appeal and a Petition for Supersedeas.

Payment After a Contested Workers’ Compensation Decision

Where a contested claim results in a decision awarding benefits, the employer has the right to file an appeal and a Petition for Supersedeas.

That right would be rendered meaningless if penalties could be imposed during the appeal and supersedeas process without regard to the rules governing a timely supersedeas request.

The payment analysis in a contested case must therefore account for the status of the appeal and any request for supersedeas.

Payment After an Agreement, Stipulation or Settlement

The circumstances are different where a decision is issued upon the agreement of the parties, such as a Stipulation or workers’ compensation settlement.

In that situation, there is little to no prospect that an appeal will be filed.

Payment is even more certain where the employer or insurer drafted the documents and negotiated a waiver by the injured worker of the right to file an appeal in exchange for expedited payment.

The insurer has already agreed to the amount, participated in preparing the settlement documents and appeared at the hearing to request approval of the agreement.

How Quickly Should a Pennsylvania Compromise and Release Settlement Be Paid?

A Pennsylvania workers’ compensation settlement is generally completed through a Compromise and Release Agreement.

In the specific scenario of a Compromise and Release, the insurer knows the exact amount to be awarded and—within a day or two—the date on which the approval order will be issued.

There is no reason for the insurer to delay payment beyond the mere couple of days necessary to process and issue the settlement check.

All necessary action to process payment can be accomplished between the date the insurer files the Compromise and Release Petition and the date of the hearing seeking approval.

The insurer knows before the hearing:

• the amount it agreed to pay;
• the terms of the Compromise and Release Agreement;
• the scheduled hearing date;
• that the parties will request approval from the Workers’ Compensation Judge; and
• what internal steps will be required to issue the settlement payment.

An insurance company should not wait until after the approval decision arrives to begin a payment process it knew would be necessary when it prepared and filed the settlement documents.

Insurance Companies Can Act Quickly When They Are Stopping Benefits

Compare the “diligence” with which insurers are capable of stopping benefits upon receiving a decision in their favor.

When a decision permits an insurer to suspend, reduce or terminate an injured worker’s benefits, the insurer is fully capable of acting immediately.

Given the remedial objectives of the Pennsylvania Workers’ Compensation Act, the same diligence must be exercised to ensure prompt payment to the injured worker when those payments have been agreed upon.

An insurance company should not exercise one level of urgency when it is stopping an injured worker’s checks and a different level of urgency when it is required to pay money to that worker.

Can an Insurer Be Penalized Before 30 Days Have Passed?

Yes.

Under Snizaski, a penalty is theoretically available on the day a default occurs. A refusal to make a required payment could warrant a penalty even if the refusal persisted for only one day.

That does not mean a penalty is automatically imposed whenever a payment is delayed. Whether to impose a penalty remains within the discretion of the Workers’ Compensation Judge.

It does mean that an insurer cannot defend an unjustified delay merely by arguing that fewer than 30 days have passed.

Failure to issue prompt payment does—under Snizaski—subject the insurer to the Workers’ Compensation Judge’s discretion to impose a penalty.

Does This Rule Apply Only to Workers’ Comp Settlement Checks?

No.

Although settlement payments are a particularly clear example because the insurer already knows the amount it agreed to pay, the prompt-payment requirements of the Pennsylvania Workers’ Compensation Act are not limited to settlements.

Late-payment issues may also arise when an insurer:

• fails to begin wage-loss benefits promptly after a work injury;
• delays or misses ongoing workers’ compensation checks;
• fails to pay benefits awarded by a Workers’ Compensation Judge;
• delays payment required by a Stipulation; or
• refuses to make another payment required by a decision.

The exact default and penalty analysis will depend upon how the payment obligation arose, whether the matter remains contested and whether a timely request for supersedeas is pending.

Should I Accept a Pennsylvania Workers’ Comp Settlement Without a Lawyer?

How quickly an insurance company issues a settlement check matters only after the settlement amount and terms have been agreed upon.

Before reaching that point, the more important question is whether the proposed settlement properly reflects the value of the claim and the rights the injured worker will be giving up.

The insurance company is negotiating to resolve its own legal and financial exposure. It is not the injured worker’s legal adviser, and it is not responsible for identifying the highest possible value of the claim or explaining every reason the worker may have for rejecting the offer.

A Pennsylvania Compromise and Release Agreement may affect or permanently resolve rights involving:

• future wage-loss benefits;
• ongoing medical treatment;
• recommended surgery;
• unpaid or disputed benefits;
• the legally accepted description of the work injury;
• potential future petitions;
• Medicare or Social Security issues;
• third-party claims or liens; and
• the injured worker’s ability to pursue additional workers’ compensation benefits after the settlement.

The Workers’ Compensation Judge must determine that the injured worker understands the full legal significance of the Compromise and Release Agreement. The Judge’s role, however, is not to negotiate a higher settlement for the injured worker or serve as the worker’s attorney.

An unrepresented worker may not know how the medical evidence, wage-loss exposure, litigation risk and future treatment needs affect the value of the claim. A lawyer who does not regularly practice Pennsylvania workers’ compensation law may also be unfamiliar with issues that arise specifically in a Compromise and Release Agreement.

Workers’ compensation is a specialized area of Pennsylvania law. Certification as a Workers’ Compensation Specialist requires substantial involvement in the practice, continuing legal education and successful completion of a certification examination.

Schmidt, Kirifides, Rassias & Rio has three Certified Workers’ Compensation Specialists who regularly evaluate Pennsylvania workers’ compensation settlements and the rights injured workers may be asked to release.

If you are considering a settlement and do not have an attorney—or you have questions that have not been answered clearly—have the proposed amount and terms reviewed before you sign the agreement.

Contact our Pennsylvania workers’ compensation attorneys for a free consultation before accepting a settlement that may permanently close your claim.

What Should I Do If My Workers’ Comp Settlement Check Is Late?

Do not automatically accept the explanation that the insurance company has 30 days to pay.

Preserve the documents and information showing:

• the date the Compromise and Release Agreement was approved;
• the date the Judge’s decision was issued;
• the payment terms contained in the settlement;
• any agreement concerning expedited payment;
• emails or letters discussing the settlement check;
• the date printed on the check;
• the postmark on the envelope; and
• the date the payment was actually received.

If you are represented, contact your attorney promptly and ask what steps are being taken to secure payment.

If you are not represented, or if your weekly benefits, Judge-awarded compensation or approved settlement have not been paid promptly, an experienced Pennsylvania workers’ compensation lawyer can review whether the insurer may be in default and whether a Penalty Petition may be appropriate.

If your settlement check is late, your weekly checks have stopped, or you are considering a settlement and do not know whether the amount is fair, call 610-892-9300 or contact Schmidt, Kirifides, Rassias & Rio online for a free consultation from our award winning workers compensation law firm.

There is no fee unless we win your case or recover benefits for you.