Ask the insurance company

Posted by on May 6, 2019 in Articles, Stories

Most injured workers who seek help from TWC2 have engaged a law firm to assist with their injury claim.  Although legal assistance is not necessary for the no-fault work injury compensation (WIC) process at the Ministry of Manpower (MOM), many workers feel more secure having an injury lawyer.  Perhaps the worker is unsure how to navigate the process, or fears that his employer plans to send him home before he can make a claim, or feels that his employer is denying him access to medical treatment for his injury. Being represented by someone familiar with Singapore law and processes is reassuring when dealing with government bureaucracy or an uncooperative employer.

Processing the injury claim at MOM

When treatment for the injury has concluded, MOM issues a notice of assessment to the injured worker, the employer, and the insurer.  This notice shows the compensation to be paid to the worker based on a doctor’s report of the extent of permanent incapacity resulting from his injury, the worker’s average monthly salary, and an age factor. (Younger workers have higher age factors as they have a longer potential working career ahead of them.)

If there are no objections from the employer or insurer, the worker can choose to accept this amount.

Pursuing compensation through a common-law suit instead

Sometimes around this point in the process, the worker — with advice from his injury law firm — may decide to withdraw his work injury claim at MOM and instead seek compensation for his injury by bringing a common-law suit against his employer (see the footnote 1 for a comparison of the two processes).  Why would a worker forgo the relatively quick no-fault injury claim process at MOM?  Because compensation amounts via the MOM no-fault route are capped, and it isn’t necessarily the best course when the injury is severe. A higher award might be possible through a common-law suit.

Unlike the situation for MOM’s no-fault process, workers pursuing compensation through a common-law suit are not permitted to remain in Singapore while their case is being heard. Negotiations and court proceedings may take years before reaching a conclusion, and the time will seem particularly long for a worker who is waiting at home, injured, unemployed, and pestered by debt collectors.

Not all injury claims settled under common law go through the courts. When the amount is not expected to be high, the settlement may be arrived at by negotiations between the injury law firm and the insurance company. Both are spared the cost and trouble of having the case heard in court, and the settlement is usually quicker.

Typically, as the common-law suit concludes, the injury law firm will inform the worker of the compensation amount mutually agreed upon with the other party in the suit — the employer’s insurer or the insurer’s law firm. The worker, in his home country, doesn’t have the means to verify this amount. He may also worry that asking too many questions will irritate the law firm or arouse their suspicion. 

The compensation amount includes three parts:

  1. General damages: compensation meant for the injured worker
  2. Party-to-party costs: meant to cover time and expertise of the law firm engaged by the worker
  3. Disbursements: meant to cover law firm’s costs such as court costs, filing fees, document costs

If the worker suspects his lawyer is not revealing the true total compensation amount, how can the worker find out what compensation amount was actually paid to his injury law firm?

Here’s the story of one worker who did just that.

Bangladeshi worker RM (see footnote 2) sustained a workplace injury in mid 2012. The doctor assessed the permanent incapacity resulting from the spinal injury at 30%, which translated to a compensation amount of $51,527. RM’s injury law firm advised him that compensation through a common-law suit would be more financially advantageous, although it would take longer. RM agreed to this course of action and returned home to wait for the outcome of the suit.

In early 2015, the injury law firm phoned RM to tell him that the insurance company had offered $100,000 as settlement for the injury compensation. RM agreed to this amount without being informed of how much the legal fees would be.

When he arrived in Singapore in mid 2015 to collect his compensation, RM signed a letter with the injury law firm stating that he understood the claim was settled for $100,000. The amounts for costs and disbursements were not mentioned in the letter. The injury law firm then instructed him to return $14,000 as their legal fee.

The worker went directly to the insurance company

Several days after settling the payment with his law firm, RM visited the insurance company to ask how much they had paid out to the law firm for his claim. They gave RM the following breakdown:

  1. General damages: $100,000
  2. Party-to-party costs: $17,051.01
  3. Disbursements: $1,378.02

The total came to $117,428.02.

The injury law firm had correctly informed RM about the amount awarded for general damages ($100,000), but had failed to mention that they had also received two separate amounts to cover their legal fees and disbursements. Asking for a further $14,000 from the client seems improper.

Insurance companies have long been aware that injury law firms representing low-wage foreign workers do sometimes withhold amounts beyond what was specified in the agreement, or determined by a court (should it have gone to hearing), to be a reasonable amount for legal fees and costs. The injured worker, relying upon the law firm for information about the settlement amounts, is usually unaware that the amounts for legal fees and disbursements are separate from the amount for general damages. Some injury law firms take advantage of this opportunity to profit from common-law settlements because it is more difficult for the worker to oversee the process, especially when he is not in Singapore.

Shedding light on total compensation amounts

On behalf of various injured workers, TWC2 has recently approached insurance companies to inquire about the amount of compensation awarded under common-law suits. We look forward to the continued cooperation of insurance companies in providing this information to injured workers.  As a result, TWC2 would like law firms to become more transparent about their fees, and about the settlement amounts.

The grip that the injury law firms exert over their clients is often so powerful that even after being made aware of the total compensation amount, many workers prefer to accept the lesser amount and refrain from taking further action (see footnote 3). Nonetheless, the ability to see the total amount paid by the insurer and the intended allocation of the funds is a step in the right direction.  When insurance companies provide information to the worker about his settlement, he is able to make more informed choices and decisions going forward.  TWC2 appreciates the understanding and support of insurance companies to provide workers access to information about their case when they’re distrustful of their own legal representatives.

 

1. A comparison of MOM’s no-fault system and common-law suits:

Excerpt from a letter MOM sent to employee MR in 2012

2. This old case is used to demonstrate a situation TWC2 is seeing more commonly. Some of the men involved in more recent cases may still be waiting for a resolution to the claim, or may be attempting to apply for a new work permit. These men are fearful that any exposure will affect the settlement, or the new application.

3. Law firms retain information about their client, such as the home address and telephone numbers. They are said to make use of assistants to visit their clients to make payments and collect on loans. Workers have told TWC2 about fraud, threats and violence perpetrated by people known to be working for the law firm, usually as a result of the worker making inquiries about the settlement or requesting TWC2’s assistance in obtaining information. Workers have also reported receiving none of their settlement amount, and fabricating documents suggesting that payment was made.

TWC2 is an organization that is dedicated to assisting low-wage migrant workers when they are in difficulty. We are motivated by a sense of fairness and humanity, though our caseload often exceeds our
means.

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