It depends on the insurer. Many workers’ comp insurance carriers will only offer a lump sum settlement if you resign. They claim that letting you return to work would mean that the insurer may have to pay for another workplace injury that is already covered by the settlement. To return to work, you often have to accept a stipulated award.
Why won’t insurers offer a lump sum settlement if I go back to work?
In theory, there is no reason to require you to resign in order to take a lump sum settlement award from workers’ compensation. And, moreover, most states even have laws that forbid employers from firing workers because they suffer a workplace injury and bring a workers’ comp claim.
In practice, though, many workers’ compensation insurance companies will refuse to offer a lump sum settlement if you return to work at the same employer. These insurance companies claim that they might have to cover another injury that is related to the one they already compensated.
Pros and cons of lump sums
The lump-sum settlement agreement aims to compensate you for your future medical expenses for the injury. Once the lump sum agreement is made and signed, the insurance company gets to walk away from the injury. The settlement amount that has been paid absolves the insurer from covering whatever medical care is needed for the injury in the future.
However, insurers claim that problems can arise if you receive a lump sum settlement and then return to work at the same employer. If you aggravate your old injury you could file for workers’ compensation, again. Your employer’s workers’ comp insurance carrier would then find itself paying to compensate a work-related injury that it already settled.
For example: Melanie hurts her knee while at work for Employer A. She files for workers’ compensation and receives a lump sum settlement for $10,000. That $10,000 is meant to cover her future medical care for the injury, as well as disability benefits for lost wages. She then goes back to work for Employer A. 3 weeks later, she aggravates the injury to the same knee at work and files another workers’ comp claim. The insurance company could end up paying for medical care for Melanie’s knee injury twice.
Because of this potential outcome, workers’ comp insurance companies tend to insist that you leave your job in order to receive a lump sum settlement. If you really want to return to work for your employer, you could settle for a stipulated award, instead.
What are the different kinds of workers’ compensation settlements?
There are 2 different types of workers’ comp settlements:
- compromise and release, and
- stipulation and award.
A workers’ comp lawyer can work on your behalf to pursue the one that best suits your particular needs and interests.
Compromise and release
When people think of a workers’ compensation settlement, they tend to think of a compromise and release. These settlements pay you a lump sum of money. That money represents all of the anticipated future costs for your injury.
It can be paid all at once, with the full amount in a lump sum, or in a structured settlement. A structured settlement would pay the same amount, but
- in smaller batches
- stretched out over an agreed-upon period of time.
Once a compromise and release settlement agreement has been reached and signed, the insurance company walks away. The agreement ends the claim for workers’ compensation. To get the money, you have to relinquish your rights to sue and release the insurer from further liability. If it becomes clear that the settlement amount is inadequate, you cannot reopen the case. The agreement is final.
Requirement to leave your job
Insurers claim that the finality of a compromise and release makes it very difficult to continue your employment. If you stay at work, you are still covered by your employer’s workers’ comp insurer. But all of your medical care for that injured body part will have already been paid. Insurers stress that, if you get hurt again, this can lead to a situation where you either:
- get denied workers’ comp coverage for a workplace injury to the same body part, or
- receive a windfall for medical care.
Both of these outcomes are unfair to one of the parties involved. As a result, many insurers require that you leave your job in order to receive a compromise and release settlement agreement.
The finality of a compromise and release also makes it essential that you settle for an adequate amount. Accepting less than you will need to recover will mean that you pay out-of-pocket for your future medical treatment. Ensuring that you receive the workers’ comp benefits that you deserve often takes the legal advice of a workers’ compensation attorney from a reputable law firm.
Stipulation and award
You can also settle a workers’ compensation claim for a stipulation and award. Under this type of settlement, you can return to work. The workers’ compensation insurer agrees to cover all future medical expenses from your injury, as they accrue. If you need further medical care for the injury, the insurance company will pay for it. This payment relationship continues for the rest of your life.
If the costs of your anticipated future medical care increases, the insurer will cover them, anyway. You may have to reopen your claim to get them to pay for the additional costs of the medical care, though.
Because there are no unfair outcomes from getting paid upfront for your injuries, insurers do not require you to leave your job in order to receive a stipulation and award settlement.
What is a workers’ comp settlement supposed to cover?
A workers’ compensation settlement is supposed to provide financial compensation to cover your:
- lost wages, and
- medical expenses.
You may also be entitled to recover attorneys’ fees as a part of your workers’ compensation benefits. If the injury was a fatal one, the victim’s loved ones can pursue death benefits, which are sometimes referred to as survivor benefits.
Workers’ compensation law covers lost wages through:
Temporary disability benefits cover wages that were lost while you recovered. Permanent disability benefits cover wage loss that you are likely to experience because your job injury left you with an impairment.
Temporary benefits generally turn into permanent benefits when the injured employee reaches maximum medical improvement, or MMI. This is the point at which further medical care will not improve your condition.
Both types of benefits generally provide a portion of your average weekly wage from before the accident.
- In many states, disability benefits are 2/3rds (two-thirds) of your prior wages.1
- Many states cap the amount.2
Partial v. total disability
The workers’ compensation system further breaks down these permanent and temporary disabilities into:
- partial disability benefits, and
- total disability benefits.
Partial benefits cover a reduction in your wages if you go back to work in a lighter capacity.
Total benefits cover all of your wages if you are completely unable to work.
For example: Tom is a construction worker. He breaks his leg while on the job and files a workers’ comp case for his personal injury. While recovering, he cannot return to work for a month. He receives temporary total disability benefits for that time period.
By establishing an attorney-client relationship with a workers’ compensation lawyer, you can pursue the payout that you deserve.
Injured workers are also entitled to have their medical expenses paid for after a workplace accident. Your employer’s workers’ comp insurer pays them up until the point that you settle your workers’ compensation case.
- If you take a lump-sum payment, then paying subsequent medical expenses is your responsibility.
- If you agree to a stipulation and award, the insurer will continue to pay for your medical care until you die.
Generally, you will have to go to the doctors and healthcare professionals provided by your employer and its insurer.