Payment of Permanent Partial Disability Benefits: Weekly Accrual or Lump Sum?

June 2020

By:Kelly E. Kamstra

A recent case before the Illinois Appellate Court raised the issue how permanent partial disability benefits should be paid out by a respondent.  In the case of Alphonse Lannoni v. The City of Chicago, Petitioner was awarded $6,189.73 in additional temporary total disability benefits and 175 weeks of permanent partial disability benefits or $126,290.50. 

Respondent issued an initial check to Petitioner for $62,890.49, covering the temporary total disability benefits owed and more than 70 weeks of the permanent partial disability benefits awarded.  Following that initial check, Respondent issued a second payment of $3,135.78, four weeks after issuing the first payment.

After receiving these checks, Petitioner filed a complaint against Respondent alleging that the entirety of his award became due and payable once it became final.  Respondent argued the benefits accrued month-by-month and Petitioner was actually receiving his benefits early, before they accrued.  The Circuit Court ruled in favor of Petitioner, and Respondent appealed. 

The Appellate Court ruled that under the Illinois Workers’ Compensation Act, permanent partial disability benefits are owed as they accrue, unless Petitioner can establish that the interests of the parties would be best served by a lump sum payment.  In the present case, no such allegation was made and the Appellate Court ruled in favor of Respondent.  In Illinois Workers’ Compensation case, permanency starts to accrue once a petitioner reaches maximum medical improvement. 

Using this reasoning in an open matter, respondents should consider whether a lump sum payment of permanent partial disability benefits would be in their best interest.  Such considerations should be made regarding the amount of the award, the age of the claimant, any potential Medicare issues involved, the severity of the injury, and the duration the file has been open.  Weighing these considerations, similarly to the considerations weighed in determining how to fund a Medicare Set Aside, respondents and their carriers can make the determination whether to fund the permanency aspect of a claim on a lump sum basis or as the benefits accrue.  Keep in mind, if Petitioner questions this method of payment, the burden is on them to establish that both parties, not just the petitioner, are benefitted by a lump sum payment.  In many cases, with large payouts, this may not be the case.

Our firm has utilized this strategy successfully in settlement negotiations both before and after trial.  This strategy has proven effective to reduce permanency discussions by making the assertion that we will issue the accrued permanency only and will meter out the additional permanency amount as it accrues.  This accomplishes our goals of promptly resolving the matter, mitigating exposure on the file, and closing out petitioner’s medical rights through settlement.  This strategy can also be employed following a trial to resolve the case on contracts, effectively accomplishing the same goals and potentially reducing the permanency amount awarded. 

As with any effective litigation strategy, all aspects of the particular case should be analyzed.  However, this case highlights an additional tool in Respondents’ toolbox that can be effectively deployed to protect the insureds and reduce litigation exposure.

Alphonse Lannoni v. The City of Chicago, 2019 Ill App. (1st) 182526.