The holiday season is already a bad time of year for recipients of workers’ compensation benefits, but many workers’ compensation insurance carriers engage in troubling conduct that makes it unbearable.
Workers’ compensation benefits provide a critical financial lifeline to injured workers, but lost wage benefits only partially reimburse those workers for the income they have lost. As a result, they and their families must survive on less income than they earned before their injuries—while dealing with the stress and pain of recovering from those injuries. This puts them in a financially precarious situation, requiring them to adjust their lifestyles and cut costs in light of their reduced monthly income. During the holiday season, this cost cutting can be especially painful if it means reducing or eliminating the gifts injured workers and their spouses give to their children, grandchildren, and other family members.
Already struggling with their circumstances during the holiday season, many injured workers have to face an additional obstacle: A suspiciously timed annual “error” by workers’ compensation insurance carriers that prevents these workers from receiving their workers’ compensation benefits as scheduled.
The annual workers’ compensation insurer holiday harassment campaign
In Pennsylvania, worker’s compensation recipients are to receive their benefits in the same manner they received their paychecks. If an injured worker’s employer paid them via direct deposit every other Friday, that’s how the employer’s insurance carrier must pay their benefits. From time to time throughout the year, a worker might receive their benefits late through no fault of anyone because it came as a paper check and there was a hiccup with the United States Postal Service’s delivery of that check, or there was a rare glitch with their direct deposit.
But in my almost four decades of practicing claimants’-side workers’ compensation law in Pennsylvania, I have seen a troubling tendency around the holiday season for workers’ compensation insurers to miss scheduled payments to our clients. Each year, beginning a week or so before Thanksgiving and lasting through the end of the year, Pond Lehocky Giordano receives a large number of emails and phone calls from its workers’ compensation clients regarding missed payments. If two is a coincidence and three is a trend, the massive number of missed payments we see each year, like clockwork, must be a campaign—a harassment campaign.
The chances that thousands of payments made by several insurance carriers would all be late during the holiday season because of a series of unrelated errors are slim to none. These insurance carriers are not mom-and-pop operations with rooms full of individuals handwriting checks and mailing envelopes who occasionally write a mailing address incorrectly. They are Fortune 500 companies with sophisticated payment systems designed to operate flawlessly without much human intervention. Yet, when we ask opposing counsel what happened to a missing payment, they often tell us it “fell off the system.”
Insurance carriers’ failure to pay benefits on time during the holiday season is a harassment campaign. When injured workers do not receive their benefits on time, they cannot pay their rent, mortgage, or other bills, and they cannot afford the groceries with which they will feed their families, let alone afford any discretionary spending. When our clients do not receive their check or direct deposit on the scheduled day, they frantically call or email us the next morning because of how vital that income is to their ability to keep a roof over their families’ heads and food on the table.
The insurance carriers know this. They know if they throw their weight around with an injured worker, they can use that as a bargaining chip with that worker down the road, or worse, with that worker’s law firm regarding the firm’s other workers’ compensation clients the insurer is on the hook for regarding their benefits.
To insurance carriers, missed payments are a game. To our clients and other injured workers targeted by this campaign, missed payments are disrupting their lives and harming their well-being.
Penalty petitions are ineffective remedies for missed benefit payments
It is our practice at Pond Lehocky Giordano to wait a few days after a client’s check or payment should have arrived before contacting counsel for the payor insurance carrier. Often, after taking our call, opposing counsel will call the adjuster assigned to the matter, who will send us a ledger or schedule of payments. However, neither provides proof that an insurer sent a payment, and neither causes a missing payment to magically arrive.
Thus, we often have to resort to filing a penalty petition against an employer and their workers’ compensation carrier for not paying benefits. Section 435 of the Pennsylvania Workers’ Compensation Act allows Workers’ Compensation Judges to penalize employers and insurers for violating the statute, and gives them the discretion to award penalty fees of up to 50 percent of the amount owed.
Often, a carrier will send the missing payment to the client the night before, or the day of, a penalty petition hearing. Counsel for the carrier will also ask one of our attorneys to withdraw the petition. If we do not, a Workers’ Compensation Judge will dismiss it, not realizing that what seems like a onetime late payment is actually part of a systematic campaign that has a catastrophic effect on the recipients of late payments.
Thus, penalty petitions are ineffective remedies for these intentionally missed benefit payments because Workers’ Compensation Judges do not hold carriers’ feet to the fire. Judges often view penalty petitions only as a means to compel a late payment and not a means for holding carriers accountable for their repeated late payments. But even if a Workers’ Compensation Judge ruled against a carrier, the amount of the penalty allowed by the Workers’ Compensation Act in these cases would be limited to just a few hundred dollars at best.
A stronger deterrent is needed to stop insurers’ holiday harassment campaign
Today, the reason workers’ compensation insurers can get away with their holiday harassment campaign is because there is no potent deterrent in place to make them think twice before missing a benefits payment. As we noted above, the monetary penalties currently available under Section 435 of the Workers’ Compensation Act are paltry in proportion to the pain caused by missed workers’ compensation benefit payments.
In our view, when balancing the interests of Pennsylvania’s injured workers, employers, and insurance carriers, the best deterrent for intentionally missed payments during the holidays would be a system that fines carriers for each day they are late sending a payment to a recipient, with escalating dollar amounts based on the duration of the delay. A system in which fines start at $100/day for a single missed payment and double or triple with each additional day, and then pile up because there are multiple claimants who are missing multiple payments, should be painful enough for carriers to stop their campaigns.
Without a powerful reason not to, workers’ compensation insurers will continue to take part in their annual holiday financial harassment campaign during which they withhold from injured workers the workers’ compensation benefits they are legally entitled to. This campaign cruelly inflicts additional harm on people who are likely going through one of the toughest periods of their lives through no fault of their own.
That insurers would carry out such a campaign at any point in the year is awful enough, but to do so during the holiday season is disgraceful. It’s time insurers paid for their abhorrent conduct here.
Jerry M. Lehocky is a founding partner of Pond Lehocky Giordano LLP, the largest workers’ compensation and Social Security disability law firm in Pennsylvania, and one of the largest in the United States. He can be contacted at firstname.lastname@example.org.
Reprinted with permission from the December 18, 2023 edition of The Legal Intelligencer © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or email@example.com.