Do all workers’ comp cases end in a settlement?

Posted on April 18, 2022

Not all workers’ compensation cases end in a settlement. However, based on data from Illinois, about 90% of the cases do settle. Fewer than 5 percent of workers’ comp cases go to trial.

A similar percentage gets dismissed or denied without an appeal. A few workers’ comp claims go uncontested by the employer. Claims that settle, however, can still adequately compensate the victims of workplace accidents.

What percentage of workers’ comp cases settle out of court?

Based on one study, around 90 percent of workers’ compensation claims end up reaching a settlement out of court.

Workers’ comp cases can generally end in seven common ways:

1. the claim gets denied and the worker does not appeal or challenge the denial,
2. the employer and its workers’ compensation insurance company pays the claim without contesting it,
3. the employer’s insurer and the worker settle the case,
4. a mediator or arbitrator helps the parties settle,
5. a magistrate hears evidence about the case and issues a ruling,
6. one of the parties appeals the magistrate’s decision and a workers’ compensation hearing board or commission issues a ruling on appeal, or
7. the claim goes to court and a judge issues a ruling.

Not all states keep statistics about how workers’ compensation cases end. Those that do, however, show that the vast majority are settled out of court.

• In Michigan, for example, 5,558 new workers’ compensation cases were filed in 2019.
• Of those, only 58 required a magistrate judge to resolve the case.¹

Statistics about workers’ comp cases in Illinois are estimates, but include more information about when cases are resolved under its workers’ compensation laws.

According to the Illinois Workers’ Compensation Commission, an estimated 40,000 injury reports are received every year in that state. Among those:

• 3,100 are dismissed by an arbitrator or the Workers’ Compensation Commission, and
• 1,000 are resolved in a ruling by an arbitrator, the Commission, or a trial judge.²

The remaining 35,900 cases settle at some point during the process, or 89.8 percent of the total. An estimated 30,000 settle during the arbitration stage.³ In many cases, the settlement is reached at a mandatory settlement conference.

The best way to ensure that you get a fair settlement offer is to get legal representation from an experienced workers’ comp attorney from a reputable law firm. By establishing an attorney-client relationship with a workers’ comp lawyer and getting his or her legal advice, victims who have suffered a work-related injury can recover the workers’ comp benefits that they deserve.

What do these workers’ compensation settlements cover?

Workers’ compensation settlements are negotiated amounts that are meant to cover the injured worker’s:

• future medical expenses,
• future income lost due to a permanent disability caused by the workplace injury,
• lost wages during any period of total temporary disability that kept the worker out of work after the injury, and
• reduced wages from any partial disability that limits the worker’s production.

The amount of these workers’ compensation benefits will depend on:

• the extent of the victim’s injuries,
• how debilitating the injuries will be in the future,
• how expensive any future medical treatment and long-term care will be,
• whether the victim had a preexisting condition that may have contributed or complicated the workplace injury,
• the victim’s salary or wage,
• whether the victim was likely to advance in his or her career, and
• whether the victim has reached maximum medical improvement (MMI).

Note that the settlement will not cover the victim’s pain and suffering. Compensation for pain and suffering is not available in a workers’ compensation case. It is only available in a personal injury claim.

Workers’ compensation only provides coverage for the injured employee’s medical costs and disability benefits. The reduced damages available in a workers’ comp case are a trade-off for an expedited claims process involving the worker’s employer.

What types of workers’ comp settlements are there?

When workers’ compensation cases settle, there are 2 different ways to pay the settlement amount:

1. stipulation and award, and
2. compromise and release.

A stipulation and award is a structured settlement agreement where the workers’ compensation insurer for the employer agrees to pay for the victim’s future medical care. These agreements create an ongoing relationship between the victim and the insurer. The insurer agrees to pay for ongoing care for the specific body part that was hurt on the job. This relationship lasts for as long as the worker needs these medical benefits. It can last for the rest of the worker’s life in cases that require permanent disability benefits.

A compromise and release is a lump sum settlement agreement where the insurer makes a single payout to end the case. That lump sum payment is supposed to cover all of the worker’s lost wages and future medical bills.

There are benefits and drawbacks to each type of settlement. A workers’ compensation lawyer can help each victim determine which one is best for his or her particular circumstances.

What is the settlement process for a workers’ compensation claim?

In a workers’ compensation claim, the settlement process is a negotiation. It generally begins with the worker filing a claim for workers’ comp. As the case moves forward and the extent of the injury becomes apparent, the insurer and the victim’s workers’ compensation attorney will discuss what settlement amount would be fair. This settlement is meant to reflect what an arbitrator, magistrate, or hearing board would award the victim.

In some cases, the settlement process only takes a week. In many others, though, it can take months. The process generally speeds up as the hearing date approaches.

Settlements can be reached right up to the hearing or trial. See our article on When will workers’ comp offer a settlement?

About the Author

Neil Shouse

A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). He has been featured on CNN, Good Morning America, Dr Phil, The Today Show and Court TV. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys.