If you have a workers' comp claim, the insurance company will likely approach you about a settlement at some point in your case. Sometimes, settlement is in a worker's best interest. For example, you might want to accept a fair lump sum in order to avoid the hassle of a workers' comp hearing. However, before you settle your claim, you should understand what rights you are giving up.
In Pennsylvania, workers' comp settlements are formally referred to as "compromise and release agreements." When you settle your claim, you typically give up your right to all workers' comp benefits in exchange for a sum of money.
Most settlements are paid in a lump sum. However, the insurance company might agree to a structured settlement if you have catastrophic injuries and need long-term care. A structured settlement is paid over time. Depending on the terms of your structured settlement, you may receive payments each month, annually, or every few years.
It's possible to get a lump sum without agreeing to a full and final settlement. In Pennsylvania, if you are already receiving workers' comp benefits, you can request for them to be paid in a lump sum. This is called a "commutation of compensation." Typically, your total benefits will be discounted by 5% to bring them to present value. With a commutation, you are not giving up your other workers' comp benefits (such as medical treatment).
In Pennsylvania, the earliest you can settle your claim is four months after your date of injury. 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 doctor finds that your condition is stable and will no longer improve with treatment.
Remember, when you settle your claim, you are typically giving up lifetime benefits. If you are unsure about whether to settle, an experienced workers' comp lawyer can help you assess the benefits and risks.
A workers' comp judge must approve your workers' comp settlement. Once you and the insurance company have agreed to settle, the Pennsylvania Workers' Compensation Office of Adjudication will schedule a hearing. At the hearing, you or your lawyer will present a series of settlement documents, including a Compromise and Release Agreement.
You will also testify at the hearing, answering the judge's questions about the terms of your settlement. If the judge believes that you understand what you are giving up and receiving in exchange, he or she will approve your settlement. If you don't have a workers' comp lawyer, the judge may scrutinize your settlement more closely to ensure that it is fair and reasonable.
Once the judge approves your settlement, it is full and final. In other words, you cannot reopen your claim or demand additional benefits. For this reason, most injured workers consult with a workers' comp lawyer before they settle. A Pennsylvania workers' comp lawyer will help you understand your claim's value, negotiate a fair settlement, and ensure that your settlement paperwork is properly completed.
Every workers' comp claim is different. For this reason, your claim's settlement value will depend on a series of factors, including your pre-injury wages, the severity of your injuries, your ability to return to work, and whether there is conflicting evidence in your claim. Generally speaking, claims where workers have higher wages, expensive medical bills, and strong supporting evidence have higher settlement values.
Certain items will be deducted from your settlement. 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.