A Lump Sum Settlement Effects Only The Insurer And Employee Who Are Parties To The Agreement.
In Massachusetts, original case law held that an Employee could not seek incapacity benefits for the same period of time covered by a lump sum settlement. However, Carrier V. Shelby Mutual Ins. Co., 370 Mass. 674 (1976), was overturned.
In Kszepka’s Case, 408 Mass. 843 (1990), the SJC ultimately held that the lump sum settlement did not preclude an award of benefits pertaining to the shoulder claim, because a lump sum settlement does not simply represent the commutation of future weekly incapacity benefits to which the employee was entitled. The SJC explained that “[t]he amount of money agreed on may have been influenced by many factors, including issues of liability, the extent of future medical benefits, the possibility that Aetna might escape its full obligation as the result of a supervening injury or death, the attitude of the board, and the eagerness or reluctance of the employee to settle. Because of the uncertainty as to what the settlement amount actually represents, it is impossible to say on this record that it duplicate the recovery under the shoulder injury award.” (Id. at 848, 849.)
Section 48 of the Workers’ Compensation statute, and specifically subsection (4), indicates that whenever a lump sum agreement has been perfected in accordance with the terms of this section, such agreement shall affect only the insurer and the employee who are parties to such lump sum agreement and shall not affect any other action or proceeding arising out of a separate and distinct injury under this chapter, whether the injury precedes or arises subsequent to the date of settlement, and whether or the same insurer is claimed to be liable for such separate and distinct injury.
Stillman v. General Dynamics, 23 Mass. Workers’ Comp. Rep. 121, 123 (April 2009) addresses the only the only limitation:
“The only limitation § 48 places on further litigation after the execution of a lump sum settlement is prohibition of successive settlements of § 34A permanent and total incapacity benefits. ‘An employee who accepts a lump sum settlement for benefits claimed under § 34A shall be precluded from any further lump sum settlements for said benefits.” (Id.)
Moreover, the Employee shall not be punished because the new workers’ compensation insurance carrier is the same insurer as the prior injury. Kszepka’s Case tells us that it would be both arbitrary and inequitable if the right of an employee to compensation for an injury, after he has settled a different injury, would depend on the identity of the employer’s insurance carrier. Simply put, the Workers’ Compensation statute was not intended to subject Employee’s rights to such an arbitrary factor as the identity of the employer’s insurance