Like most legal claims, the majority of workers’ comp cases are settled before they go to a hearing with a workers' comp judge. This means that your employer or its insurance company will probably offer you a settlement at some point in your case. Before you agree to the offer, however, you should consider several things, including the timing, benefits, and risks of settlements.
When Should I Consider Settling my Workers' Comp Case?
In most cases, you shouldn’t agree to a settlement until your doctor says that you've reached what's usually called “maximum medical improvement” (MMI). This is the stage in your recovery when your condition has plateaued, and you’re not likely to improve with further treatment. In other words, you’re as good as you’re going to get.
The reason for waiting until this point is simple: You won’t be able to estimate the value of your case accurately until you know the full impact of your injuries. Will you be able to return to work? Will you have full use of your injured body part? Will you need future medical care? All of these questions must be answered before you can decide whether the settlement offer is fair.
Also, in many states, your temporary disability benefits will continue until you're ready to return to work or reach MMI. If you settle your case before this point, you may be cutting your temporary disability benefits short, and the settlement offer might not account for the value of those benefits.
You might also consider the possibility that your medical condition could change after your settlement, even if your doctor has said you've reached MMI. (See our survey results on how many injuries get worse after workers' comp cases close.)
What Are the Benefits of a Workers' Comp Settlement?
There are several potential advantages to settling your workers' comp case, including:
- A settlement removes the uncertainty that comes with a hearing—especially if there's a legitimate dispute about the extent of your injuries. For example, suppose your treating doctor gave you a 50% permanent disability rating (a measurement of the extent of your limitations resulting from the injury). In response, the insurance company has you attend an independent medical exam, and the examining physicians says that you're only 20% disabled. Assuming both doctors are reputable and have all of the relevant information, going to a hearing could be risky for both you and the insurance company. In that case, you may want to agree to a settlement that's based on a disability rating somewhere in the middle.
- You can agree to a lump-sum settlement rather than weekly payments as part of a permanent disability award. This can be helpful if you have a lot of bills to pay and need the money now—though it may be tempting to spend the money before you need it later.
- You can ask the insurance company to pay for a portion of future medical treatment that you might not ultimately need. For example, say your doctor finds there's a 25% chance that you'll need surgery on your back, and insurance company agrees to pay for a portion of the surgery as part of the settlement. If you don't end up needing the surgery (which is 75% likely), you'll get to keep that money.
- Settling your case will save you the time, energy, and stress involved in preparing for and testifying at a workers' comp hearing. It may also provide closure or peace of mind.
What Are the Drawbacks to a Workers' Comp Settlement?
Once you’ve signed a settlement agreement, you've entered into a binding contract. This means that you can’t change your mind a few weeks or months down the road and go back to the insurance company for more money.
In some cases, the insurance company will agree to pay for any future medical expenses that come up after you settle. More often, however, it will insist on a full and final release of all claims, including the right to future medical care.
Because of the finality of a settlement, you should be confident that your condition isn’t going to get worse after you settle your case. And you shouldn’t let your employer, the insurance company, or even your own attorney pressure you to settle when you’re not ready.
Consult With a Workers' Comp Lawyer
Whether a particular settlement offer is good for you depends on several factors unique to your circumstances, including how much is being offered, whether there's a dispute about the extent of your permanent disability, and whether you're likely to need future medical care related to your injuries.
It's important to understand your workers' comp settlement agreement and all of its potential consequences. For that reason, you should consult with a workers' comp lawyer before agreeing to a settlement offer.
An experienced attorney will be able to evaluate the offer, let you know whether it will fairly compensate you for all of your losses, and negotiate effectively with the insurance company if the lawyer believes you could do better.
A survey of people who went through the workers' comp process showed that they receive more compensation, on average, when they hired a lawyer than when they went through the process on their own—even after the attorneys' fees were taken out of their settlement.