New Case Update-Can Payments by the SIF be Accelerated by a Lump Sum Settlement?


Schaffer v. Subsequent Injury Fund, 2012 Md. App. LEXIS 108 (Md. Ct. Spec. App. Sept. 4, 2012)

This case examined whether the Subsequent Injury Fund's payments can be accelerated pursuant to a lump sum settlement between the Claimant and the Employer.

Russell Schaffer ("Schaffer") suffered a compensable work-related accident in 2006, and filed a claim with the Workers' Compensation Commission. After a hearing, the Claimant was found to be permanently totally disabled with 45% of his disability a result of pre-existing conditions. Subsequently, he reached a settlement with his Employer in the sum of $92,000.00. The settlement was to be paid as a lump sum. The Commission approved the settlement and the lump sum payment was made.

Had there been no lump sum settlement, the Employer's payments under the Commission's award would have finished in June 2015. After this date, absent the settlement, the Subsequent Injury Fund's ("SIF") responsibility would begin, and payments would be made for the rest of the Claimant's life. The Claimant, however, filed issues with the Commission requesting that the SIF begin paying him shortly after the lump sum payment. The Commission issued an Order requiring the SIF to commence payments in October 2009. The SIF appealed.

The SIF argued that to require themto begin paying after the lump sum payment was made, and not when their responsibility would arise without the settlement, they would extend their liability greatly. By being ordered to commence payments in 2009 instead of 2015, an extra 6 years of payments, a windfall to the Claimant, would occur. It was argued that this would have the effect of incentivizing Claimants and Employers to reach lump sum settlements at a deep discount as a means of shifting an unnecessary burden to the SIF.

The Court agreed and found that payments to a Claimant from an Employer and the SIF shall be made consecutively and not concurrently. This finding was in accordance with the statute and in the interest of protecting the SIF from bearing more than their lawful share of disability suffered by an employee.