When an employee is out of work as a result of a work related injury, disability income is paid by the workers compensation insurance company. As long as the workers compensation insurance company begins to pay benefits on time, the company can pay “without prejudice.”
Once the employer is aware of a worker’s disabling injury, the employer is supposed to send a form to the insurance company. The insurance company must begin to pay the worker (or deny the claim) within 14 days of receiving the form. On time means within 14 days of when the insurance company receives the form and becomes aware of the employee’s disabling injury.
Without prejudice means the insurance company is paying without accepting legal responsibility for the work injury. In the without prejudice period, receiving payment from the insurance company doesn’t bind it at all.
The insurance company can pay without prejudice for 180 days from the first day of disability. Within that 180 day period, the insurance company can legally change or stop paying benefits without permission from a Judge. When an insurance company changes or terminates benefits, the employee must file a claim with the Department of Industrial Accidents to get further compensation. Eventually, a Judge decides whether the employee is entitled to benefits. The injured worker receives no money from when checks are stopped until Judge considers the case.
Under the law, the insurance company may extend the 180 day pay without prejudice period for up to a year as long as the injured employee agrees. If an injured employee agrees to the extension, the insurance company can actually pay but then terminate benefits to nearly the first anniversary of disability.
Often, the insurance company adjuster will ask an injured worker to sign an extension form without fully or accurately describing what it means. For example, an adjuster may say, “just sign this form and it will allow me to continue paying benefits.” That’s partially true. But it’s misleading. Signing the extension form grants rights to the insurance company that it would not have otherwise. Indirectly, benefits continue because sometimes, the insurance company will terminate weekly checks if the injured worker does not extend the pay without prejudice period.
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Any injured worker who is asked to sign an extension of the pay without prejudice period or the Form 105 should consult an experienced Workers' Compensation lawyer to understand exactly what that means. Every injured worker should know their rights under the Workers Compensation Act. An experienced, qualified workers compensation lawyer can provide explanations and guidance about these tricky matters. Pellegrini, Seeley, Ryan & Blakesley has been helping injured workers since 1957.