What Happens if an Employee Dies Before Receiving Their Workers’ Comp Settlement Check?

What happens if an employee dies from unrelated causes before receiving their settlement check?

If the matter has been decided and an agreement has been signed, the insurance company most likely must still pay the proceeds to the deceased employee’s family, even if an Agreement and Final Release has not been approved by the Commission.

This is a change from the prior rule because, as the Court of Appeals explained in Ex Parte: Horne last year, the legislature changed the rule that required approval of the Agreement and Final Release by the Commission even when both parties were represented by counsel.

In this article, we will look at the procedure when an employee passes away before receiving their workers’ compensation settlement, including:

• What the Court of Appeals decided in Ex Parte: Horne,
• When a workers’ compensation settlement agreement must be approved by the Commission before taking effect, and
• What SC law says about who receives settlement proceeds when an employee dies due to causes unrelated to the work accident.

Ex Parte: Horne – What Happens When an Employee Dies After Settling Their Case

In Ex Parte: Horne, an employee (King) was injured on the job and received permanent and total benefits, which were paid in a lump sum, and future medical benefits.

At mediation, the parties agreed to settle the claim for future medical benefits for $1 million, and signed a document called, “Agreement Following Mediation Conference.” The agreement was signed by all parties, and the mediator filed a Form 70 stating the issues were settled at mediation.

Seven days later, before the Agreement and Final Release were filed with the Commission, King was killed in an auto accident. On the same day, the insurance company mailed the settlement check to King’s attorney to place in their trust account.

When the insurance company discovered King’s death, they attempted to withdraw from the settlement agreement and did not file the Agreement and Final Release with the Commission, claiming that, since King had died and the Agreement had not been filed with the Commission or approved by the Commission, the agreement was now unenforceable.

King’s attorney and King’s beneficiary filed Form 50s, asking the Commission to enforce the agreement, and the insurance company replied, arguing that King’s claim ended upon his death. The single commissioner and the Full Commission agreed, finding that the settlement agreement was unenforceable, but the Court of Appeals reversed and ordered the insurance company to pay the proceeds to King’s family.

When the Agreement and Final Release Must be Approved by the Commission

Before 2007, the insurance company may have been right, and the settlement agreement may have been unenforceable.

Before 2007, SC Code § 42-9-390 said:

A copy of the settlement agreement must be filed by the employer with and approved by only one member of the commission if the employee is represented by an attorney. If the employee is not represented by an attorney, a copy of the settlement agreement must be filed by the employer with and approved by four members of the commission.

Before King’s death, the legislature amended the statute, however, so that the Commission’s approval is no longer required when both parties are represented by attorneys:

The employer must file a copy of the settlement agreement with the commission if each party is represented by an attorney. If the employee is not represented by an attorney, a copy of the settlement agreement must be filed by the employer with the commission and approved by one member of the commission.

The employer must file a copy of the settlement agreement, but, if both parties have attorneys, there is no requirement of approval by the Commission – if the parties were represented by attorneys, reached an agreement, memorialized that agreement in writing, and signed the agreement, it is a valid and enforceable agreement, even if one party dies after the agreement has been reached.

Who Receives the Settlement Proceeds When the Employee Dies After Settlement

In addition to the plain language of the 2007 amendment to Section 390, the legislature has provided other clear guidance for insurance companies who aren’t sure what to do if an employee passes away before receiving their settlement check.

SC Code § 42-9-280 clearly states that, if an employee dies from a cause unrelated to their workers’ compensation claim, any unpaid compensation is given to the employee’s dependents:

When an employee receives or is entitled to compensation under this title for an injury covered by the second paragraph of Section 42-9-10 or 42-9-30 and dies from any other cause than the injury for which he was entitled to compensation, payment of the unpaid balance of compensation shall be made to his next of kin dependent upon him for support, in lieu of the compensation the employee would have been entitled to had he lived.

In summary, if an employee dies before receiving the full amount of their compensation:

• If both parties are represented by counsel, a settlement or mediation agreement is valid and enforceable without approval by the Commission,
• If the employee is not represented by counsel, one member of the Commission must approve the agreement before it is enforceable, and
• Any unpaid proceeds must be paid to the employee’s dependents.

Got Axelrod?

If you have an on-the-job injury in SC, the Myrtle Beach Workers’ Compensation attorneys at Axelrod and Associates can help you file your claim, gather and present your medical evidence to the Workers’ Compensation Commission, and file any necessary appeals.

Call now at 843-353-3449 or send us a message online to set up a free consultation with a SC workers’ compensation lawyer today.