Settling Your Workers' Compensation Case in Michigan

An overview of how, whether, and when to settle a Michigan workers' comp case.

Most workers settle their Michigan workers’ comp claims at some point. For example, the workers’ comp appeals process can be lengthy, and you might decide to accept a lump sum payment to save your time or energy. Or, if there is conflicting evidence in your case, you might decide to settle rather than risk losing your claim at trial. In Michigan, workers’ comp settlements are also frequently called “redemptions.”

What Is a Workers’ Comp Settlement?

When you settle a Michigan workers’ comp claim, you typically give up all of your rights to workers’ comp benefits. Occasionally, the insurance company will agree to keep your medical benefits open—meaning that it will continue to pay for treatment related to your work injury. However, this is relatively rare. In most cases, the insurance company is paying you a set amount of money to close out your case for good. Even if your injury gets worse or you learn new information, you generally cannot reopen your case and ask for additional money or benefits.

In Michigan, there are generally two types of workers’ comp settlements: lump sum settlements and structured settlements.

Lump Sum Settlements

Most Michigan workers’ comp settlements are made in a lump sum. In a lump sum settlement, the insurance company agrees to make one payment that resolves your entire workers’ comp claim.

A lump sum settlement is different than a voluntary payment (VP) agreement. A VP agreement simply means that the insurance company has agreed to voluntarily pay you a certain amount in workers’ comp benefits. If you signed a brief voluntary payment form (Form WC-115) and did not attend a redemption hearing (see below), you did not settle your case. You can still demand ongoing benefits or file an appeal if the insurance company disputes your benefits in the future.

Structured Settlements

When you enter a structured settlement agreement, the insurance company will issue periodic payments instead of a lump sum. For example, payments might be monthly, annually, or every few years. Even though your settlement is paid over time, a structured settlement (once finalized) is full and final. As with a lump sum settlement, you typically cannot go back later and request additional compensation.

Structured settlements are relatively rare in Michigan workers’ comp claims. Typically, they are used for workers with catastrophic injuries who are no longer able to work and earn wages.

How Is a Settlement Finalized?

Once you negotiate a settlement with the insurance company, you must attend a redemption hearing before the Michigan Workers’ Compensation Agency. Before the hearing, you will sign a series of documents, including the following:

Make sure you understand these documents before you sign them. Because you are agreeing to give up all rights to your workers’ comp claim, you should consult with a lawyer before attending a redemption hearing.

At your redemption hearing, you will present the settlement documents to the administrative law judge (ALJ). You (or your lawyer) will explain your reasons for settling your claim. You will also answer a series of questions, confirming that you understand the implications of your workers’ comp settlement.

If you are unable to attend your redemption hearing, you may settle your workers’ comp claim by affidavit. An affidavit is a signed statement that you must file in addition to the standard workers’ comp settlement forms. You typically must sign this affidavit in the presence of a notary public.

If the settlement appears fair and reasonable—and the ALJ is convinced you understand what you are doing—he or she will approve the settlement. If you have a lawyer, the ALJ will typically approve your settlement without too much scrutiny. However, if you are unrepresented, the ALJ will review your settlement more carefully and may deny it if it is unfair or unreasonable.

Can I Change My Mind?

After your settlement is approved, there is a 15-day appeal period. Within these 15 days, you can file an appeal with the state agency, asking them to overturn your settlement. However, you must show “good cause” to set aside the settlement (for example, you had a previously unidentified occupational illness and received a diagnosis immediately after settling your case). Because this is a hard standard to meet, most settlement appeals are unsuccessful. For this reason, you should never participate in a redemption hearing unless you are convinced settlement is in your best interest.

How Much Will I Get in a Settlement?

In Michigan, a variety of factors impact settlement value. They include:

  • the strength of the evidence supporting your claim
  • the severity of your injuries
  • your wages at the time of the injury, and
  • your need for expensive medical care in the future.

To learn more about how much you might receive, see our article on Michigan workers’ comp benefits. If you need help valuing your workers’ comp claim, contact a Michigan workers’ comp lawyer.

Certain expenses will likely be deducted from your settlement before you get paid, including:

  • attorneys’ fees and legal costs, if you have a lawyer (read our article about Michigan workers’ comp attorneys’ fees to learn more)
  • a $100 processing fee imposed by the state workers’ comp agency, and
  • a sum of money to cover your future medical bills, if you are Medicare-eligible.

However, you will not pay state or federal taxes on your workers’ comp settlement (although the settlement may impact your eligibility for certain federal tax credits).

When Can You Settle a Michigan Workers’ Comp Claim?

In Michigan, you can settle a workers’ comp claim at any time after you file a claim. (See our article on filing Michigan workers’ comp claims for more information about the claim process.) However, if your injury occurred within six months of your settlement, you must provide additional information to the administrative law judge. However, most workers do not settle their claims until their conditions have stabilized and you no longer need significant medical treatment (sometimes called maximum medical improvement or “MMI”).

Settling before you reach MMI is risky. It can be difficult to value a workers’ comp claim before you are healed, because your condition may worsen or you may require unanticipated medical treatment. And, after you settle your claim, you are financially responsible for all your medical treatment—which may include expensive surgeries or other therapies. (To learn more, read our article about the timing of workers’ comp settlements.)

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