At some point, many injured workers decide to settle their Wisconsin workers’ compensation claims. Settlement offers significant advantages: You get a guaranteed sum of money, you no longer have to deal with the insurance company, and you avoid the uncertainty of a workers’ comp hearing. However, you will also be giving up important rights.
A compromise agreement resolves a disputed workers’ comp claim. Compromise agreements are usually full and final settlements, meaning that you give up your right to all workers’ comp benefits in exchange for the agreed-upon sum. However, limited compromises are also possible. In a limited compromise agreement, you only give up some of your rights. For example, you might settle your disputed permanent disability benefits but continue to receive medical treatment through workers’ comp. These limited compromise agreements are relatively rare, though, because insurance companies would rather close out cases in their entirety.
Unlike many other states, Wisconsin does not allow single lump sum payments in compromise settlements. You can receive any accrued benefits at the time of settlement—such as unpaid temporary disability benefits—in a lump sum. You can also receive up to $10,000 in a lump sum if your case involves a dispute over the degree of your permanent disability. Otherwise, all of your benefits will go into a restricted bank account. You’ll be able to make monthly withdrawals from the account in the amount of your monthly workers’ comp rate plus interest.
In a stipulation agreement, you and the insurance company agree that you are entitled to certain benefits. For example, you could agree to a specific permanent partial disability (PPD) rating guaranteeing that the insurance company will pay your benefits at that rate. (To learn more about PPD and other benefits, read our article on Wisconsin workers’ comp benefits.) Unlike a compromise agreement, a stipulation agreement does not close out your workers’ compensation case. Your benefits will be paid in weekly installments, not in a lump sum.
If you have a financial need, you can file a request for an advance lump-sum payment of your unaccrued workers’ comp benefits. The Workers’ Compensation Division must approve all lump-sum advancements. If you’re entering a compromise agreement, the division will only consider your request after your settlement is approved.
You must show a good reason for needing the money; paying off credit card debt or personal loans do not qualify as sufficient reasons for an advance payment. The Workers’ Compensation Division will review your request and approve it if it’s in your best interests. Among other things, the division will consider:
If your request is approved, the payout of your benefits will be reduced by 5% (compounded annually).
If you are entering a compromise agreement, you will file a Compromise Agreement form (Form WKC-176), along with medical and other evidence explaining your dispute with the insurance company. The division performs a more detailed review of compromise agreements, especially if the injured worker is not represented by a lawyer. Before it approves a compromise agreement, the division must consider:
The division will approve your compromise settlement if it is fair and equitable.
If you are entering a stipulation agreement, your settlement documents must explain exactly which facts you and the insurance company agree upon. You can either use Wisconsin’s Stipulation form (Form WKC-177) or create your own document. Additionally, you must give the division a detailed explanation of how your benefits were calculated and a doctor’s report explaining the extent of your disability. If you fulfill these requirements, the division should approve your stipulation agreement.
Once you finalize a compromise agreement, you have one year to reopen your claim by filing a Compromise Review Application (Form WKC-7-B). However, the Wisconsin Workers’ Compensation Division will only reopen a case in limited circumstances, such as if there is evidence that the insurance company committed fraud. In practice, the division rarely reopens a claim after a compromise agreement is approved.
With a stipulation agreement, the same time limits do not apply. Your case will remain open until you have received your last scheduled benefit payment. If your condition worsens or you become eligible for additional benefits, you have 12 years to reopen your case.
It's a good idea to consult with a Wisconsin workers’ comp lawyer before agreeing to any settlement. However, this is especially important for compromise settlements, which are full and final. It takes detailed knowledge of the law to understand the value of a workers' comp case. Without a lawyer's help, you might accept far less than what you should receive for your case.
(To find out how much that might cost, see our article on attorneys’ fees in Wisconsin workers’ comp cases.)