If you have a Louisiana workers' compensation claim, you probably will consider settlement at some point. A workers' comp settlement offers many advantages: you no longer have to deal with the workers' comp system, you receive a lump sum payment to pay your bills, and you avoid the uncertainty of a workers' comp hearing.
However, a settlement also has its risks, so you should never agree to settle unless you understand exactly what rights you are giving up.
In exchange for a settlement payment, you typically give up your rights to any and all workers' comp benefits, including disability benefits and medical coverage. While insurance companies occasionally agree to more limited settlements—such as a settlement that leaves your medical benefits open—these are relatively rare.
Insurance companies pay most settlements in a lump sum. However, in some cases, settlements are paid out in periodic installments (called a "structured settlement"). Structured settlements are relatively rare, though, and typically only offered when you have catastrophic injuries that require long-term care.
If you are already receiving workers' comp benefits, you can request a lump sum payout of your benefits without agreeing to a full and final settlement. Your weekly benefits will be added up and then discounted to bring them to their present value (a reduction of up 8% per year). Sometimes called a "commutation," this discounted lump sum does not close out your workers' comp claim.
If you need help determining whether a commutation or a settlement is in your best interest, contact a Louisiana workers' comp lawyer.
Unlike many states, Louisiana's workers' comp laws include a strong preference for benefits to be paid on an ongoing basis, rather than in a lump sum. However, you can settle your claim after six months have passed since your last temporary total disability payment. You can waive this waiting period, if you wish.
However, most workers wait to settle until they have reached maximum medical improvement (MMI). You reach MMI when your doctor finds that your condition is stable and unlikely to improve further with treatment. It's risky to settle a claim before you reach that point, as you might undervalue the benefits that you're entitled to.
Settlement isn't always in every worker's best interests. Louisiana workers' comp laws provide a lifetime of benefits under certain circumstances. If the insurance company has accepted your claim and you have very serious injuries requiring ongoing medical care, you might be better off receiving ongoing benefits. A lump sum settlement might also be a bad idea if you have a hard time managing a budget and are concerned you'll spend your settlement too quickly. A lawyer familiar with the facts of your case can advise you on the best option.
To assess your claim's settlement value, you need to understand the maximum amount in benefits that you could receive. This includes the value of your future medical treatment, disability benefits, vocational rehabilitation benefits, unpaid medical bills, and more. (See our article on Louisiana workers' comp benefits to learn the types and amounts of benefits available.) You would also need to assess any weaknesses in your claim, such as conflicting medical evidence as to the severity of your disability.
Determining a fair settlement offer is a very complicated matter, and several other factors can impact the value of your case. Before agreeing to any settlement, you should seriously consider talking with a Louisiana workers' comp lawyer.
Typically, you do not pay state or federal income taxes on a workers' comp settlement. However, other expenses might be deducted from your check. Depending on the nature of your claim, these costs may include:
To learn more about these deductions, read our article discussing how much of your settlement you will get to keep.
Your settlement isn't final until a workers' comp judge approves it. Once you and the insurance company agree to a settlement, you will file a series of documents with the Louisiana Office of Workers' Compensation Administration (OWCA), including a Request for Compromise or Lump Sum Settlement (Form LWC-WC-1011).
If you don't have a lawyer, the judge will schedule a hearing. At this hearing, you will present your settlement and answer questions. If you have a workers' comp lawyer, you typically will not have a hearing. Instead, you will sign an affidavit confirming that your lawyer fully explained these terms to you and that you fully understand them. Either way, the judge will approve your settlement if he or she believes that it is fair and just.
Once a workers' comp judge approves your settlement, it is final. If you signed a full and final release, you cannot reopen your claim and demand additional compensation, even if your condition unexpectedly gets worse. The only exception is that you can cancel the settlement if there is evidence of fraud or misrepresentation on the part of the insurance company. However, this is very difficult to prove, and very few settlements are overturned.
For this reason, you should never take the decision to settle lightly. Never agree to a settlement unless you are completely comfortable with its terms. And, it's always in your best interest to consult with an experienced Louisiana workers' comp lawyer before you settle. A lawyer can help you ensure that a settlement is in your best interests.