Workers Comp Predation

Recently it was reported by the Deseret News that Sen. Mayne is sponsoring a bill to "safeguard settlements" by prohibiting cutthroat financing companies from the "predatory" practice of buying injured workers' disability settlements for lump sums at 30 cents on the dollar. As an example of this pernicious evil, Alan Hennebold of the Utah Labor Commission lamented that recently a disabled truck driver sold his future $200,000 Worker's Comp. settlement for a quick $40,000.

While this bill may be an eensy weensy spider step in the right direction, the question is, how has a market been created in which an injured worker is willing to sell her $200,000 settlement to a predatory financial company? Answer: it has been created by the predatory insurance companies who own the predatory financial companies who buy up legislators, lobbyists, industrial commissions and insurance defense attorneys. They, in turn, work to ensure that, as Hennebold intimated, while "wait[ing] for [her] claims to move through the legal process," the injured worker loses her home, hearth, and health.

Ask any honest broker familiar with the Utah Worker’s Comp. system and they’ll tell you it’s more cloyed up than a poodle on chocolate. The blame lies directly at the feet of our insurance companies, their legislators, and defense attorneys, who all benefit from the injured workers’ desperation. Currently, the Worker’s Comp. system is riddled with myriad systemic and substantive problems that allow the insurance companies to deny, delay, stall, and drag their collective sagging behinds. Why? Because, well, they can. The current laws are so flawed that they not only condone this delay, but encourage it.

Hence, when the worker is told by her doctor that she is terminally ill, or she immediately needs a $40,000 surgery to return to work, or when the mortgage company puts her house into foreclosure, what can she do? She certainly can’t wait for the Industrial Commission to void, nor for the Legislature’s next round of nose-picking progress. She does what she must. Out of a fit of desperation, she takes the $40,000 from the predatory financial company, owned by the predatory insurance company--who in turn takes half of the $160,000 windfall and buys up more legislators, lobbyists, and insurance defense attorneys to cloy up the system even more. Then, the next injured worker, who becomes even more desperate, will sell his $200,000 claim for 20 cents on the dollar.

So, to slim down the beast from a plus size 24 dress to a strapping 20, maybe leaving injured workers alone with their desperation is a step in the right direction. Maybe not. You decide. Just hope you don’t become a member of this maligned minority and need that $40,000 to avert death. If you do, in the near future your only choice may be to rest in peace knowing that, instead of a predatory financial company getting $160,000 of your never realized $200,000, because you died, a predatory insurance industry kept all $200,000 of it.

Loren Lambert
©January 23, 2007