Many Utah workers' compensation claims eventually settle. Settling a workers’ comp case has its benefits: You will receive a guaranteed sum of money and be free of the hassles of the workers’ comp system. However, you will also be giving up significant rights.
In Utah, there are two types of workers’ comp settlements: compromise agreements and commutation agreements. A compromise settlement is used when there is a legitimate dispute as to whether the worker is owed benefits. A commutation agreement is used when the insurance company has accepted the workers’ comp claim and there is no dispute regarding benefits.
Both types of settlements are considered “full and final,” meaning that you are agreeing to close out your case for good. The difference, however, is the amount of money you will receive. In a compromise settlement, you are typically agreeing to accept only a portion of the available workers’ comp benefits in order to avoid the risk of going to a hearing. With a commutation agreement, you are already receiving (or entitled to receive) weekly benefits, so the goal is simply to pay those benefits out.
Settlements are often paid out in a lump sum. However, other arrangements are also possible. For example, you and the insurance company can agree to a structured settlement, in which you receive your payment in installments over a period of years.
You can settle your workers’ comp claim at any time. However, many workers wait to settle their claims until they reach maximum medical improvement (MMI). You are at MMI when your condition is stable and your doctor no longer believes you will improve with treatment. Settling before you reach this point is risky because you won’t know how severe your injury is or how it will impact your ability to work.
All settlements must be approved by the Utah Labor Commission. A workers’ comp judge will review your settlement documents and make sure the agreement is not “manifestly unjust.” For a compromise agreement, the judge will also review your case to make sure you are settling a legitimate dispute.
For a commutation agreement, the judge will also review the following:
The judge will make sure that the commutation is in your best interests and that your future medical costs won’t be inappropriately shifted to another system (for example, to Medicare or an employment-based health insurer). The judge will also want to make sure that you have enough income to support yourself. If your ability to work or future medical needs are unclear, the judge might refuse to approve the agreement.
Unlike many states, Utah does not have a mandatory settlement approval hearing. Instead, a judge will make a decision after reviewing the papers.
Once a judge approves your settlement, it is final and you typically cannot change your mind. This means your medical treatment will no longer be covered through workers’ comp and you can’t ask for additional compensation, even if your condition takes a turn for the worse. (To learn more about what you might be giving up, see our article on Utah workers’ comp benefits.)
For a compromise agreement, you will receive the agreed-upon sum minus any deductions applicable in your case—for example, for attorneys’ fees and legal costs, unpaid child support, or for future medical care. (To learn more, see our article on how much of your settlement you will get to keep.)
For a commutation agreement, you will receive the present value of the total workers’ comp benefits you are owed. This is based on the concept that a dollar received today is more valuable than a dollar received at some point in the future. Utah uses a discount rate of 8% per year.
You should seriously consider consulting with a Utah worker’s comp lawyer before settling your case, unless your injury is very minor and you have fully recovered. This is especially true for compromise settlements. Without the help of a lawyer, it can be very difficult to know whether a particular settlement offer is fair in your case. In many cases, a lawyer can be instrumental in getting you a higher settlement and structuring it in a way that protects your interests.