House Bill 2490 & Implications for Pennsylvania Workers’ Compensation Settlements

House Bill 2490 has been introduced and it is best to quote from the sponsoring legislator’s words:

[S]ome employers and insurers require claimants to sign side agreements forcing them to resign, preventing them from ever reapplying for work again or requiring confidentiality agreements to settle a claim . . . My legislation would amend the Workers’ Compensation Act to prohibit employers from requiring such side agreements as a condition of a workers’ compensation settlement and would penalize employers and insurers if they are found to be in violation of this prohibition.  HB 2490 [linkprotect.cudasvc.com]

This proposed legislation is problematic from multiple perspectives, including the following:

1. It would result in governmental overreach into private arrangements between employers and employees, each of which desire a severance because of an injury’s physical limitations, because the employee has found a new job, because the employer needs to find a more able-bodied individual to perform the work, because the employee fears re-injury, or for other reasons personal to either side.
2. It would make a mockery of the concept of disability, if post-settlement where someone gets a Compromise and Release collapsing future indemnity and medical payments, and then be legally entitled to return to the very job they are claiming they can no longer perform.
3. It would allow injured workers to claim entitlement much more easily to post-settlement Unemployment Compensation benefits, by stating a readiness/willingness and ability to work when the entire settlement was predicated on exactly the opposite scenario.
4. It would allow post settlement employees to share confidential settlement information with whomever they like at the workplace or by way of public advertising for law firms, encouraging possible filing of spurious cases.

The Pennsylvania Workers’ Compensation Act guarantees the right to wage loss and medical benefits only. It does not guarantee or provide the right to a settlement. This legislation, if enacted would chill if not put a complete stranglehold on settlements for many employers, insurers and injured workers throughout the Commonwealth. Such a scenario would deny claimants lump sum cash, which many of them want. It would also deny employers and insurers the ability to move files to closure, no doubt resulting in increased litigation to clog a system that should not case closure options artificially limited. If employers are evaluating the merits of doing business in the Commonwealth, excess reserving requirements necessitated by this legislation no doubt will weigh on any business decision to locate or remain in this state. Interested parties should be in touch with their government relations representatives and/or their legislators to express an opinion on this matter.