Do all workers’ comp cases end in a settlement?

Posted on February 1, 2023

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 you for 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 you do not appeal or challenge the denial,
2. the employer and its workers’ compensation insurance company pay the claim without contesting it,
3. the employer’s insurer and you settle the case,
4. a mediator or arbitrator helps you 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.

You do not have to accept a worker’s compensation offer. Settlements are voluntary. You can go to a hearing if you do not agree with the settlement offer.

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 their legal advice, you can recover the workers’ comp benefits that you deserve for a work-related injury.

What do these workers’ compensation settlements cover?

Workers’ compensation settlements are negotiated amounts that are meant to cover your:

• 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 you out of work after the injury, and
• reduced wages from any partial disability that limits your production.

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

• the extent of your injuries,
• how debilitating the injuries will be in the future and whether you can continue working,
• how expensive any future medical treatment and long-term care will be,
• whether you had a preexisting condition that may have contributed or complicated the workplace injury,
• your salary or wage,
• if you were under the influence at the time of your injury,
• if you injured yourself,
• whether there is conflicting evidence, and how compelling the evidence is,
• whether you were likely to advance in your career, and
• whether you have reached maximum medical improvement (MMI).

Note that the settlement will not cover your 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 your medical costs and disability benefits. The reduced damages available in a workers’ comp case are a trade-off for an expedited claims process involving your employer.

Also note that you are advised not to agree to a settlement until you reach MMI so you can more accurately calculate the future benefits you will need.

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 your employer agrees to pay for your future medical care. These agreements create an ongoing relationship between you 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 you need these medical benefits. It can last for the rest of your 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 your lost wages and future medical bills.

(In some states, workers’ comp settlements are called “Section 32 settlements.”)

Note that there are combination settlements that include both lump sums as well as structure payments. Some settlements are partial, meaning that a part of the claim has been settled but a part remains in dispute and may have to go to a hearing.

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

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

In a workers’ compensation claim, the settlement process is a negotiation.

After your injury, first you report the accident (within your state’s time limit), seek a physician’s care, and contact a worker’s comp attorney to represent you. At that point, we file a claim for workers’ comp.

As the case moves forward and the extent of your injury becomes apparent, the insurer and your 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 you.

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.

In some states, workers’ comp settlements are classified into one of two types of settlements:

1. Liability settlements, where everyone agrees on you are eligible for benefits
2. Non-liability settlements, where the insurer disagrees about your eligibility status

Settlements can be reached right up to the hearing or trial. In some states, settlements must be approved by the state Workers’ Comp board. You and the workers’ comp insurer would need to submit all relevant documents, including the stipulated agreement, medical records, and lawyer fee information.⁴

In the rare event no settlement happens and a hearing occurs, there will be:

• a court reporter
• testimony taken under oath
• cross-examination
• evidence (such as medical records) introduced

Finally, a judge will decide if and how much you will receive in benefits.

See our article on When will workers’ comp offer a settlement?

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