workers’ comp insurance companies have the flexibility to propose a settlement at any stage of the claims process. However, they typically opt to wait until the injured worker reaches maximum medical improvement (MMI). MMI is significant because it marks a point of clarity regarding the worker’s future medical needs and overall prognosis. This stage often occurs approximately a year after the initial filing of the claim by the injured worker, giving both parties a better understanding of the long-term implications of the injury.
How workers’ comp cases proceed
Workers’ compensation cases, particularly when serious injuries are involved, tend to progress gradually. The initial steps in these cases typically include:
- Experiencing a Workplace Injury: You sustain an injury while at work.
- Reporting the Injury: You report this injury to your supervisor or the human resources (HR) department.
- Seeking Medical Treatment: You receive medical care to address the injury.
- Case Review by Adjuster: An adjuster from your employer’s workers’ compensation insurance company assesses your case.
If the injury results in an inability to work, you will be eligible for temporary disability benefits, which compensate for your lost wages. Additionally, your medical expenses related to the injury will be covered.
As your recovery progresses, it will be determined whether you suffer from a long-term disability requiring permanent disability benefits. If you recover and can return to work, your case may close without a settlement. However, if you remain disabled, negotiations for a workers’ comp settlement may begin, particularly focusing on permanent benefits.
The settlement stage typically arrives when doctors conclude that you have either fully recovered or have reached maximum medical improvement but will continue to have disabilities. This is often when most workers’ compensation cases are resolved.
How to Maximum medical improvement
Maximum medical improvement (MMI) occurs when doctors determine that additional medical treatment will not improve your condition, which has become stable.
At this juncture, if you are unable to perform your previous work duties, you may be classified as having:
- Permanent Total Disability: You are completely unable to return to any form of employment.
- Permanent Partial Disability: You are capable of working, but only with certain limitations.
Given that further recovery is not anticipated, MMI provides a clear basis for workers’ comp insurance companies to assess the long-term benefits you will require. With this clarity, and no further need for speculation, insurance companies are likely to extend a settlement offer to conclude the case.
Types of workers’ compensation settlements
Workers’ compensation claims can be resolved through two primary types of settlements:
- Compromise and Release: This settlement type resolves the claim completely, with the worker receiving a lump sum payment.
- Stipulation and Award: This type of settlement involves agreed-upon terms that generally include ongoing payments and medical treatment provisions.
The differences between these settlement types are significant, and it is advisable to consult with a workers’ compensation attorney before making any decisions.
Most state workers’ compensation laws mandate that a settlement agreement must receive judicial approval before it becomes effective. This step ensures that the terms of the settlement are just and fair to all parties involved.
Compromise and release
In a Compromise and Release settlement, the insurance company offers you a lump sum to conclude your workers’ comp case. This lump sum, which can be paid all at once or arranged as a structured settlement over time, is intended to compensate for your future losses resulting from the work-related injury.
The lump sum covers various costs, including:
- Future Medical Expenses: Costs for ongoing treatments such as physical therapy.
- Disability Benefits: Compensation for future wage loss due to disability.
- Out-of-Pocket Expenses: Any additional costs you have incurred that the insurance company is responsible for.
It is crucial to negotiate this amount diligently to ensure that it adequately meets your needs.
Once the lump sum is paid, your workers’ comp claim is considered settled and closed. Reopening a claim after it is closed is typically very challenging, and if the agreed amount turns out to be insufficient later, further recourse is unlikely.
Stipulation and award
In a Stipulation and Award settlement, which is a less common method for settling workers’ compensation claims, there continues to be an ongoing relationship between the claimant and the insurer. Under this arrangement, the insurer commits to cover ongoing medical expenses related to the work-related injury and continues paying disability benefits to accommodate for your impairment.
This type of settlement ensures that you continue to receive support for medical treatments and disability from the insurer as you manage the consequences of the work-related accident.
What is included in a workers’ comp settlement amount?
Workers’ comp settlements are designed to cover critical aspects of your financial and medical recovery,
- Disability Benefits: These provide compensation for lost wages due to your inability to work.
- Future Medical Costs: Expenses for ongoing medical treatment required due to your injury.
Determining these benefits can be complex, particularly early in the claim or when injuries are severe. Therefore, settlements typically occur after you reach Maximum Medical Improvement (MMI), as this is when there is a clearer understanding of the necessary medical care and your future work capacity.
Injured employees who are represented by a competent personal injury or workers’ comp lawyer from a reputable law firm often secure higher compensation in their workers’ comp settlements.
Why settlements take so long
Settlements can be prolonged due to the uncertainty surrounding your future needs, especially if your injury is severe. Throughout the settlement process, your employer’s insurer continues to cover your medical expenses and provides temporary disability benefits as you recover.
Settling too hastily often isn’t in your best interest. If you settle prematurely, you might agree to an amount that later turns out to be insufficient for your long-term needs. This underscores the importance of carefully evaluating the settlement to ensure it adequately accounts for future requirements before agreeing to it.
Factors that can delay a settlement offer
Two primary factors can significantly delay the offer of a settlement:
- Factual Disputes: Disputes over the details of the accident or the nature of your injuries are common. Key issues often include debates over whether your injury qualifies for workers’ comp coverage and disputes regarding the appropriate amount of compensation. For instance, if there’s a question about whether you were injured while performing job-related duties, or if factors such as self-inflicted injuries or impairment due to drugs or alcohol were involved, insurers may deny your claim outright. Additionally, if it’s not clear how much compensation is justified, insurers, aiming to minimize payouts, may delay settlement offers until they can ascertain the necessary disability payments and future medical care costs.
- Willingness to Compromise: The negotiation process can be affected by the flexibility of both parties. Workers’ compensation insurers vary in their approach; some may be known for their stringent payout strategies, potentially delaying offers to pressure claimants into accepting lower settlements. Conversely, your readiness to adjust your compensation expectations can also expedite the settlement process. If you show a willingness to negotiate, it often leads to a quicker agreement.
Both of these factors play a significant role in the timing and outcome of workers’ compensation settlement discussions.
