Unlike most states, Alabama does not have an administrative system for reviewing and deciding disputed workers’ compensation claims. Instead, workers’ comp disputes are heard by a court of law. Because workplace injuries are fairly common, the state court system would be deluged with workers’ compensation matters if there wasn’t a strong encouragement of settlement. To avoid this type of overload on the courts, Alabama’s workers’ comp laws create several opportunities for the parties to settle the claim without going to court.
A settlement is exactly what the term implies: You and your employer reach an agreement as to how much you are owed for your workplace injury. In Alabama, you can receive a lump-sum settlement, which means that you’ll receive the total agreed-upon sum in either one payment or a few payments. The other form of settlement acts like an annuity providing you with a regular payment over a fixed period of time.
Typically, both types of settlements require you to fully release your employer from any additional payments for your work injury in the future. All settlements must be approved by the court.
Alabama law presumes you will continue to receive coverage for medical expenses after the settlement date. In fact, Alabama courts have expressly held that settlement agreements must contain clear and specific language waiving coverage for future medical expenses. Otherwise, the employer will still be liable for them.
Often times, employers will offer an extra sum of money in the settlement in order to be relieved of paying for future medical expenses. You should consider the decision to waive this right carefully, however, especially if your medical condition is still uncertain. It’s best to consult with an attorney before making a decision.
Alabama law establishes the amount injured workers should receive in benefits, based on their regular salary and the extent of their disabilities. (See our article on workers’ compensation benefits in Alabama to learn exactly how these benefits are calculated). Except in rare cases, you can’t enter into a settlement that would be less than what the law clearly requires. You can settle for more than the law requires, however. For example, as mentioned above, employers might offer a larger settlement in exchange for a full and final release of rights. In disputed cases, it won’t be clear exactly how much you are entitled to. In those situations, you and your employer might find a compromise somewhere in the middle.
Alabama offers free mediation services to help employers and employees reach a settlement in disputed workers’ comp cases. A mediation is not a legal proceeding, but rather an informal negotiation session facilitated by an independent mediator. In Alabama, the mediator is called an ombudsman. This person is a full-time state employee dedicated solely to handling workers’ compensation mediations. The ombudsman has no authority to force either you or your employer to accept a settlement. Instead, the ombudsman will seek to find common ground between the two sides and see if a compromise can be reached.
If a settlement is reached, the ombudsman prepares a settlement agreement for both parties to sign. The agreement must be approved by a court, and the settlement can be overturned within 60 days of signing in certain circumstances, for example if new evidence is discovered.
The parties can settle informally outside of mediation as well. If everyone agrees to the settlement, an agreement will be drawn up, signed, and submitted to the court. Unlike a settlement reached through the state-sponsored mediation, though, the judge has an obligation to make sure the agreement is fair to everyone. It’s possible that the judge will hold a hearing in order to make sure that the settlement makes sense for both sides and that no one is being taken advantage of.
Once the judge approves the settlement, it can be challenged within six months of the date of agreement if one side thinks it was obtained through fraud, coercion, or other illegal means. After the six months, the judgment becomes irrevocable.
Alabama limits the fees an attorney can collect to 15% of the total settlement, which is less than the percentage allowed by many other states. This makes it feasible for injured employees to use the services of a workers’ compensation attorney. Given the limitation on attorneys’ fees and the free mediation services, it often makes sense to hire an attorney to represent you. In most cases, a lawyer can get your more compensation than you would receive on your own. To learn more, see our article on attorneys' fees in Alabama workers' compensation cases.