You can negotiate a settlement with your workers’ comp insurance company if you were injured at work and you have some type of lasting impairment.
Types of Workers’ Comp Settlements
In most states, you can negotiate a lump sum settlement rather than continuing to receive weekly permanent disability payments. In addition to future amounts the insurance company will owe you for permanent disability payments and medical care, you can also settle any disputed amounts, past-due temporary disability payments, and unreimbursed medical expenses.
You can also negotiate an agreement for a structured settlement in which you’ll receive payments over a period of time. In these settlements, you don’t need to give up all of your future rights to medical care (in fact, in some states, you can’t—more on this below).
Pros of Accepting a Settlement
If you don’t accept a settlement with your workers’ comp insurance company, you have two options:
- You can accept what the insurance company is offering and take your weekly permanent disability payments for as long as the insurance company has indicated it will pay you, or
- You can proceed to hearing or trial with the insurance company to try to win higher weekly payments or a higher lump-sum payment.
Keep in mind that if you go to trial (in some states, called a workers’ comp hearing), the judge could end up paying you less than the insurance company is offering. Although this doesn’t happen frequently, one of the advantages of a settlement is that it guarantees you benefits without the risk of a trial. And in some states, you can’t receive a lump sum payment after you win at trial; you’ll be limited to receiving weekly payments for a number of weeks or years.
Another advantage of accepting a settlement is that it saves you the time it takes to wait for a hearing and the hassle and anxiety of attending a hearing.
A third advantage is that you can often receive money from the insurance company in exchange for giving up rights to future benefits that you may never use. For example, if your doctor says that there’s a 15% chance you’ll need hand surgery in the future, you can demand that the insurance company pay you part of the cost of the surgery now. Of course, the likelihood is that you won’t need the surgery and you get to pocket the money.
Cons of Accepting a Settlement
In most states, you can give up your right to future medical treatment for your injury. If there’s a good chance you’ll need surgery or expensive medicines in the future, you may not want to waive this right by settling it for a certain amount. If you do settle this right and you end up needing medical care, you may have trouble getting your heath plan to cover it.
For some, another disadvantage of accepting a settlement is that the settlement money might be spent right away, leaving no weekly payments to help them with the possibility of lower wages in the future.
Amounts to Settle
Consider whether each of the following types of benefits should be a part of your settlement.
Permanent Partial Disability
If your work-related injury or illness caused you a permanent impairment, you are probably entitled to a payment for permanent partial disability (PPD). Your impairment doesn’t have to rise to the level of a disability to qualify for PPD. It’s sufficient if you are left with work restrictions that limit the work you can do, such as no lifting over 25 pounds, no walking on uneven surfaces, or no sitting for longer than two hours at a time, or if the limitations from your impairment will lower the amount of salary or wages you can compete for in the future. You can also ask for compensation for permanent scarring and disfigurement even if you aren’t restricted in any way from your injuries.
Before settlement negotiations begin, your insurance company should send you a permanent disability rating that can be converted into a monetary amount. For instance, in California, if you have a 40% permanent disability rating, the insurance company owes you 201 weeks of PPD payments at $230 per week, for a total of $46,230. (This amount could be increased or decreased by 15% depending on whether your employer offers you modified work, so that should be factored in as well.) The insurance company may use your rating to come up with a starting settlement amount, but you may want to ask for a moderately higher amount for permanent disability compensation plus the cost of future medical treatment and any past due temporary disability benefits.
Permanent Total Disability
Some states have different rules for total disabilities, and often pay life pension awards in addition to permanent disability payments. No one with a permanent total disability should try to handle settlement negotiations with the insurance company on their own; you need to hire a workers’ comp lawyer to represent you to protect your rights.
Temporary Partial or Total Disability
If your insurance company didn’t pay you the proper amount of temporary disability (wage loss) benefits while you were off work recovering, this amount should be included in your settlement. In many states, a percentage of the amount past due should be added on to late payments as a penalty. If your insurance company paid you too late or too little, consult with a lawyer about the penalty, which can be significant.
You should include in your settlement any unpaid bills for medical treatment as well as the costs for continuing medical care. Estimate your future costs for doctors’ visits, hospital stays, physical therapy visits for flare-ups, surgery, and medications, and consider what the worst case scenario would be if your medical condition deteriorates. The insurance company won’t pay 100% of your anticipated costs, and may in fact try to pay only around 25%, but you can ask for 75% of your future medical expenses. It helps your negotiating position if you can provide a strong opinion from your doctor that you’ll need continued medical care or surgery in the future.
In some states, you can settle your right to disability payments but keep your right to have the insurance company pay for your future medical treatment by leaving it out of your settlement. In other states, you can’t settle away your right to future medical treatment; in these states, you’re always allowed to go back to the insurance company to get it to pay for your medical care related to your work-related injury.
Structuring the Settlement
The actual wording of the settlement can be important to protect your right to future benefits, and this is where the fee for a workers’ comp attorney can really pay off. If your settlement agreement isn’t worded in certain terms, for instance, and you apply for and receive Social Security disability benefits, your Social Security may be reduced because of your workers’ comp settlement. For more information about this, see our article on minimizing the workers’ comp and Social Security disability offset.
Also, before you sign any settlement agreement, make sure you know the answer to these two questions:
- Will your workers’ comp claim be completely closed following the settlement, or will it stay open (or can it be reopened) to pay for future medical costs?
- Does the settlement amount represent all new money, or does it include permanent disability advances that you have already been paid?
Because the details of a workers’ comp settlement can be tricky, unless your permanent disability is rated 10% or less, you should strongly consider speaking to a workers’ comp lawyer about your options for settlement and what a fair settlement amount would be for someone with your medical impairments.
Judge’s Review of Your Settlement
In most states, a workers’ comp judge will have to review your settlement before it becomes official. This will take place at an informal conference. If you’re not represented by a workers’ comp lawyer, at the conference the judge may attempt to make sure the settlement is fair to you, but without knowing your medical history, the judge is limited in helping you. It’s better to consult with an attorney in your area who works with workers’ compensation applicants to find out if your insurance company’s settlement offer is a fair one. Often a workers’ comp attorney can negotiate a higher settlement offer with the insurance company that you can do on your own.