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Creditors Cannot Touch Your Workers’ Compensation Settlement

Posted on in Workers' Compensation

Creditors Cannot Touch Your Workers’ Compensation SettlementSuffering an injury at work can put you in an immediate financial bind. Although you can receive disability benefits if you are unable to work, those benefits are only two-thirds of what you normally make. Your expenses also go up if you need continued medical treatment for your injury. Without adequate health insurance to cover your treatment, you could end up owing hundreds of thousands of dollars to doctors. Injured workers rely on receiving workers’ compensation benefits in order to pay these expenses, but sometimes the debts pile up too fast before the worker can receive payment. If you file for bankruptcy, will you be able to keep your workers’ compensation benefits? A recent Illinois Supreme Court ruling confirmed that money awarded or settled upon in a workers’ compensation case is protected during bankruptcy from the healthcare providers that treated the injuries related to the workers' compensation case.

Protection for Your Compensation

The Illinois Workers’ Compensation Act includes a section stating that creditors cannot seize a debtor’s workers’ compensation award or settlement. Illinois and federal courts have long recognized that this section of the law works as an exemption when someone files for bankruptcy. The total benefits received in a workers’ compensation case can be used to pay for:

  • Medical expenses
  • Missing wages
  • Wage differential compensation
  • Vocational training

Recent Case

In the case of In re Elena Hernandez, a woman had filed for Chapter 7 bankruptcy in 2016. Among her debts were $138,000 she owed to three medical practices that had treated an injury related to an ongoing workers’ compensation case. The woman listed her pending workers’ compensation claim as an asset and estimated its value at $31,000. She reached a settlement with her employer for approximately that amount two days after filing for bankruptcy. The three medical providers argued that the workers’ compensation settlement should not be exempt from them because of amendments made to the Illinois Workers’ Compensation Act in 2005. The revisions created new fee schedules for injuries and limited what providers could collect from employers. The providers claimed that the revisions created a new exception to the part of the act that exempted workers' compensation settlements from creditors.

After working its way up through state and federal courts, the Illinois Supreme Court was asked to rule on medical providers’ argument. The court determined that the revisions to the act do not change the section that prevents creditors from seizing a workers’ compensation settlement. The court reasoned that if Illinois legislators had intended to create a new exception to this rule, they would have explicitly stated it in the law.

Contact a Crystal Lake, Illinois, Workers’ Compensation Lawyer

Employers and insurance companies will often contest workers’ compensation claims, which can delay the employee’s eventual payment. A McHenry County workers’ compensation attorney at Botto Gilbert Lancaster, PC, will work to get your benefits as soon as possible while also making sure that you are receiving enough to cover your expenses. To schedule a free consultation, call 815-338-3838.

Source:

https://www.businessinsurance.com/article/20200127/NEWS08/912332761/Illinois-comp-law-does-not-allow-medical-providers-to-go-after-settlement

Illinois State Bar Association State Bar of Wisconsin Crystal Lake Chamber of Commerce Illinois Trial Lawyers Association McHenry County Bar Association
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