In the past, Arizona workers could not settle their workers’ comp claims. The law now allows settlements, but you should always approach settlement cautiously. Before you settle your claim, make sure you understand exactly what rights you are giving up and what you are getting in exchange.
In a workers’ comp settlement, you give up certain rights in exchange for a lump sum payment or a structured settlement (payments in installments over the years). When you settle a workers’ comp claim, you typically give up your right to future benefits—including payment of your medical bills, disability benefits, and the right to reopen your claim. However, the scope of your settlement will vary, depending on whether the insurance company is voluntarily paying benefits or disputing your claim.
If the insurance company has accepted your claim and is voluntarily paying your benefits, you can only settle your claims for known injuries. Later on, if you discover that your accident caused another work injury or occupational disease, you can ask for additional benefits. The same is true if you have received an award of benefits from the Industrial Commission of Arizona.
If you and the insurance company disagree about your eligibility for workers’ comp benefits or the amount that you are owed, you can resolve this dispute through a settlement. Called a "compromise and settlement agreement,” you typically give up your right to all workers’ comp benefits arising out of the injury. This includes claims for injuries that were unknown at the time of settlement.
If your claim was undisputed, you cannot settle until you reach maximum medical improvement (MMI). You are at MMI when your doctor believes that your condition is stable and will no longer improve with treatment. If you are resolving a disputed claim, you may settle at any time. However, it’s usually still best to wait until you reach MMI, because it can be very difficult to properly value your case while you are still recovering and receiving treatment.
Settlement is not in every worker’s best interests. Some workers would rather receive ongoing benefits—especially if they need expensive, long-term care. Or, if there’s no dispute and you’re happy receiving weekly benefits, there would be no reason to settle. A settlement is always voluntary—the insurance company cannot force you to settle. If you are unsure whether you should settle, consult with an Arizona workers’ comp lawyer.
Calculating a claim’s settlement value isn’t a simple matter. To get an idea of types and amounts of benefits you might be entitled to, see our article on Arizona workers’ comp benefits. However, you’ll also need to consider the strength of your claim and whether there is conflicting evidence. For example, evidence that you have a preexisting condition that caused your disability would reduce the value of your claim. Valuing a workers’ compensation claim is a very complicated matter, though, and several other factors might affect your settlement amount. To find out what a fair settlement is, you’ll probably need to consult with a workers’ comp lawyer.
Fortunately, you will not have to pay taxes on your workers’ comp settlement (except in certain cases if you’re also receiving social security disability benefits). However, your settlement might impact your eligibility for certain federal tax credits.
Certain items will be deducted from your settlement check. These costs might include:
To learn more, read our article discussing workers' comp settlement deductions.
A workers’ comp settlement is not final until the Arizona Industrial Commission approves it. You and the insurance company will file a series of documents with the commission, explaining the terms of your settlement. If you have a lawyer, he or she will explain these documents to you. If you do not have a lawyer, make sure you carefully read these documents and fully understand them. Because settlements are final, you should seriously consider contacting an Arizona workers’ comp lawyer before signing.
If you have a lawyer, the Industrial Commission will review the signed documents without hearing. If you don’t have a lawyer, you will need to attend a hearing before a workers’ compensation judge (beginning in November 2017). If the Commission believes you understand what you are doing and the terms are fair and reasonable, it will approve the settlement.
You can always change your mind before the Industrial Commission approves your settlement. However, once a compromise settlement is approved, it is final and you cannot reopen the claim and demand additional benefits. For this reason, you should never agree to settle unless you are completely comfortable with its terms.