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H. Douglas Jones and Margo J. Menefee, JSB Attorneys,
So you’ve settled a workers compensation claim on a full and final basis with all waivers including reopening rights. Congratulations, now you can close that file and move on to the next. But wait, what if the employee dies after the settlement and the death is attributable to the work injury?
In Kentucky when an employee dies due to a work injury or occupational illness, the employee’s surviving spouse and dependents are entitled to “death benefits” per KRS 342.750. The weekly benefits payable to all beneficiaries in case of death can equate to as much as 75 percent of the average weekly wage of the state (current max is $688.34 weekly for injuries in 2021). Continued payment of those weekly benefits can continue until the date the deceased indemnity benefits would have ended per KRS 342.730 (age 70 or 4 years after injury, whichever occurs last).
In addition to the above weekly benefits, if the death occurs within four years of the date of injury, the deceased’s estate is entitled to a lump sum payment (currently $90,150.18 for injuries in 2021).
Death benefits can be quite the contingent liability, yet they are rarely discussed or analyzed as part of the settlement of a workers’ compensation claim. That’s because when we think of death benefits, we usually think of some catastrophic accident that has caused the death of the employee before that employee is able to adjudicate his/her own claim. The estate gets the lump sum payment, and the surviving spouse and dependents get weekly benefits as described above.
When settling a workers’ compensation claim with an injured worker, the parties usually don’t consider a possible future death relating to the work injury. However, what happens if a death occurs several years after the accident and after settlement of the underlying claim?
In the Supreme Court of Kentucky case Family Dollar v. Baytos, 525 S.W.3d 65 (Ky. 2017), the employee tore his aortic artery at work. He entered into a “full and final” settlement of all claims and died a year later as a result of the torn artery. His wife brought a claim for death benefits despite the prior settlement. The court affirmed the death benefit award, holding that death benefits are not derivative of the injured employee’s claim and therefore were not covered under the prior “full and final” settlement of her husband’s claim. Acknowledging that this interpretation of KRS 342.750 doubled the employers’ exposure, the court stated it was bound by the text of the statute.
KRS 342.750 creates a separate cause of action for surviving spouses and dependents when an injured worker dies as a result of a work injury, which results in a lingering contingent liability even after a claim is settled or paid in full. Whether the claimant can waive the rights of estates and death benefit recipients as part of a full and final settlement has not been resolved, but it is worth discussing death benefits as part of the settlement. We have included such waivers, along with additional consideration to the spouse as part of full and final settlements and would recommend exploring same when settling claims -- especially in high value and serious injury cases.