Industrial Accident Compensation Insurance Act | A Significant Judgment on the Reference Date of the Average Wage Applied When the Korea Workers' Compensation and Welfare Service Calculates an Indemnity Claim

Plaintiff, Respondent : the Korea Workers' Compensation and Welfare Service

Defendant, Appellant : the insurance company

Injured Worker : A

A, the injured worker, suffered an industrial accident while at work when A collided with an at-fault vehicle insured by the Defendant insurance company in a traffic accident.

After a decision to provide medical care, A was found to have recovered around February 2018. At that time, A was recognized as having an initial disability grade of Grade 8 and, in March of the same year, received a lump-sum disability compensation benefit equivalent to disability Grade 8 under the Industrial Accident Insurance Act.

Thereafter, A's disability grade was changed to Grade 6 and then changed again to Grade 5.

Because A had elected the lump-sum disability compensation benefit instead of the disability compensation annuity, the Plaintiff, the Korea Workers' Compensation and Welfare Service, around September 2020 decided to pay a disability compensation annuity calculated by applying the average wage, and asserted an indemnity claim against the Defendant, the insurer of the at-fault vehicle.

At the time, in the first-instance trial, the Korea Workers' Compensation and Welfare Service asserted an indemnity claim of approximately 90 million won against the Defendant insurance company, and the lower court granted the amount claimed. The Defendant insurance company immediately appealed.

This was because, in calculating the amount of the disability benefit, the calculation was based on the average wage of 68,720 won as of around September 2020.

The lower court took the view that the time of the ‘initial’ decision to pay the disability compensation annuity, rather than the lump-sum disability compensation benefit, was around September 2020, and that therefore, in calculating the lump-sum disability compensation benefit that would have been paid had the injured worker elected to receive the lump-sum disability compensation benefit instead of the disability compensation annuity, the average wage as of around September 2020 should be applied.

The Defendant insurance company once again pursued a final appeal, and the Supreme Court reversed the lower judgment and remanded the case to the Seoul Central District Court. The reasons are as follows.

Applying the legal principles set out above, the Supreme Court held that A's disability Grade 5 determination appeared to be a determination based on the time of recovery, around February 2018, and therefore that A's lump-sum disability compensation benefit should be calculated by applying the average wage of March 2018, the commencement date for the application of disability Grade 5.

The distinction between a disability compensation annuity and a lump-sum disability compensation benefit is merely a difference in the method of payment. Except in special cases, the choice between the annuity and the lump sum rests with the beneficiary's intent, so the two are regarded as having the same value as a whole.(See Supreme Court, Decision of July 13, 2001, 2000 Du 6268, and Supreme Court, Decision of June 15, 2007, 2005 Du 7501, among others)

The Labor and Industrial Accident Group of Daeryun Law Firm LLP includes attorneys who have served as advisory counsel to the Korea Workers' Compensation and Welfare Service and who have handled the litigation representation of the Korea Workers' Compensation and Welfare Service on numerous occasions. If you are pursuing legal procedures relating to an industrial accident or an indemnity claim, or are seeking ways to defend against procedures related to an insurance claim, you are welcome to request a consultation with the Labor and Industrial Accident Group.

The attorneys of our firm who handle these matters can review your circumstances and discuss possible responses.