Over the past several weeks, I have released a series of articles on North Carolina Workers’ Compensation Death Claims. The series has addressed the following five overarching issues:
- Whether the underlying accident or occupational disease is compensable.
- Whether the accident or occupational disease caused the resulting death.
- What benefits are owed?
- To whom are the benefits owed?
- How are the benefits to be distributed?
This final article in the series analyzes how benefits are to be distributed in the event of a compensable death claim.
N.C. Gen. Stat. § 97-38 provides in part, “compensation payments due on account of death shall be paid for a period of 500 weeks from the date of the death of the employee.”
In cases involving beneficiaries who are whole dependents, the general rule in compensable cases is that the 500 weeks are paid out week to week, rather than in a lump sum settlement. There may be situations where if the parties agree, there could be a petition to the Commission for a lump sum settlement. However, the Commission is hesitant to approve these agreements on the grounds that the beneficiaries were dependent on the decedent to receive funds from week to week.
In denied cases involving alleged whole beneficiaries, lump sum settlements can be negotiated as opposed to paying out benefits week to week.
If there are no whole dependents, and partial dependents meet the “next of kin” definition, they can elect for a commuted (present) value of the 500 weeks of benefits in a lump sum settlement.
Although the Commission is hesitant to allow for lump sum payments involving whole dependents, lump sum payments are how claims are resolved in cases involving “next of kin.” Those “next of kin” who qualify for priority take, share and share alike, the present value of the 500 weeks of benefits.
Death claims involving “next of kin” beneficiaries are the sole instance where the legislature and Industrial Commission have dictated how the parties must determine the discount rate to use for determining present value. Per Rule 406 of the North Carolina Industrial Commission Rules, the parties must use the Internal Revenue Services’ Applicable Federal Rate for an annuity. This rate changes from month to month. The current rate for March 2022 is 2.0%. The lower the rate, the higher the lump sum payout will be.
As you can see, how benefits will be distributed in a death claim is fact specific, and will depend on the class of beneficiary that will be taking on behalf of the decedent. Determining how benefits may be distributed cannot be answered until all of the previously analyzed overarching issues have been determined.
