Most North Carolina workers' comp claims eventually reach a settlement. Depending on the circumstances of your claim, you might decide to settle because you need immediate cash to pay off your bills or because you want to avoid the hassle of a workers' comp hearing. No matter the reason, make sure you clearly understand what rights you're giving up in exchange for the settlement funds.
In North Carolina, there are several types of workers' comp settlements: compromise settlement agreements, Form 26A settlements, and Form 21 settlements.
Sometimes called a "clincher," a compromise settlement agreement is a full and final settlement of your workers' comp claim. In other words, you agree to give up all of your rights to your workers' comp claim in exchange for a sum of money.
Most compromise settlement agreements involve a lump sum payment. However, insurance companies sometimes agree to pay the settlement funds in installments over time (sometimes called a "structured settlement"). Structured settlements are more common when a claim involves very serious injuries that leave the worker totally disabled and in need of long-term care.
If the insurance company agrees to your permanent partial disability rating, you can settle your claim by filing an Employer's Admission of Employee's Right to Permanent Partial Disability Benefits (Form 26A). In a Form 26A settlement, the insurance company pays the value of your permanent disability rating in weekly installments. In exchange, you give up your right to future permanent disability benefits. A Form 21 settlement is similar to a Form 26A settlement, except that it resolves your claim for temporary disability benefits.
Unlike a clincher, Form 26A and Form 21 settlements do not fully settle your claim. You will continue to receive medical benefits for two years after the date of your last compensation payment. If you need treatment beyond that time, you must file an application before the two-year period is up. Your request will be approved if there is a substantial risk that you'll need further treatment. Likewise, you can petition to reopen your case for additional disability benefits if you can show a substantial change in your condition.
This type of settlement is not in every worker's best interests. In North Carolina, you can choose to receive ongoing wage loss benefits instead of a permanent disability award. If you have significant ongoing wage loss, you should consult with an experienced workers' compensation lawyer before entering into a settlement.
Calculating your claim's settlement value is more of an art than a science. To value your settlement, you would start by calculating the total amount of benefits you might receive for your workers' comp claim. (See our article on North Carolina workers' comp benefits to get an idea of how much that might be.) Then, you must consider any evidence that weakens your claim, such as conflicting medical reports or preexisting conditions that contribute to your disability. However, several other factors impact how much a workers'' comp claim is worth. Only a workers' comp lawyer familiar with your case can give you a reliable assessment.
Certain items will be deducted from your settlement 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.
The North Carolina Industrial Commission must approve all workers' comp settlements. Once you and the insurance company agree on the terms of a settlement, you will file a series of documents with the commission. Your lawyer, if you have one, will explain these documents to you in detail. If you do not have a lawyer, you should seriously consider consulting with one before signing any settlement paperwork, especially a clincher that requires you to give up all rights to your workers' comp claim.
Unlike some states, North Carolina does not have settlement hearings. Instead, the Industrial Commission will review your signed documents and approve the settlement if it seems fair and just.
You can always cancel a settlement before the Industrial Commission approves it. However, once a settlement is approved, it is final. For this reason, you should never agree to settle if you are uncomfortable with its terms.
You can settle your workers' comp claim at any time. However, it can be difficult to properly value a settlement while you are still healing. That's why most workers wait to settle their claims until they reach maximum medical improvement—when your condition is stable and not likely to improve further with treatment. At that point, it will be much more clear how severe your injury is and whether it will impact your ability to work.