Settling A California Workers’ Compensation Claim

An injured worker can settle his or her claim for California workers' compensation benefits case by:

  1. agreeing to have the insurance company provide future medical care for the injury for life, or
  2. taking the cash value of the future medical care.

The alternative settlement agreements are called:

In both settlements, the injured worker is paid for the level of permanent disability from the injury. These agreement are often reached at the mandatory settlement conference.

  • A Stipulation and Award is paid over a period of weeks or years.

A Stipulation and Award creates a continuing relationship between the injured worker and the insurance company. The Award is an agreement as to which parts of the body are injured and the future medical care the insurance company is going to provide for the rest of the injured worker's life.

  • The Compromise and Release is paid as a single lump sum immediately.

A Compromise and Release will settle the injured worker's entire case. At that point, the relationship between the injured worker and the insurance company is over.

Below, our California personal injury attorneys will explain:

1. Settling a Workers' Compensation case in California

A California workers' compensation case will end either with a trial and judicial decision or a voluntary settlement between the injured worker and the insurance company.

If an injured worker chooses to settle his or her case voluntarily, there are two options:

  • Stipulation and Award
  • Compromise and Release

An injured worker will nearly always settle a workers' compensation claim when his or her condition has stabilized and is not expected to change within at least the next year. A doctor decides if an injured worker's condition has stabilized and if further treatment will be necessary.

2. What is a workers' compensation settlement?

A workers' compensation settlement is an agreement on the benefits available to an injured worker. Benefits include lost wages in the form of temporary disability, permanent damage from an injury in the form of permanent disability, and medical care for the injured part(s) of the body.

2.1. Temporary disability benefits

Temporary disability benefits are paid for lost wages when an injured worker is unable to work due to an injury.1

Since a case usually settles after an injured worker's condition has stabilized, there will not normally be any temporary disability due later since the injured worker received temporary disability payments while he or she was not working.

The main exception to this is if the insurance company has denied that the injury occurred. In that case, it would not have paid temporary disability benefits to the injured worker. Any settlement would have to include the value of the lost wages.

2.2. Permanent disability benefits

Permanent disability benefits are paid when an injured worker's condition has stabilized, and the injury is unlikely to improve. Permanent disability is for permanent damage from a work injury. It is based on medical reporting and is given as a percentage rating of disability.2 3

Permanent disability is paid at a set amount over a period of weeks depending on the level of disability.

The insurance company must pay permanent disability when it stops paying temporary disability.4

2.3. Future medical care

A medical report that gives the injured worker a level of permanent disability will also estimate what future medical care may be necessary in the future for the injury.

The future dollar value of the medical care is estimated based on the type of treatment.

3. What is a Stipulation and Award?

A Stipulation and Award settles:

  • parts of body injured that need future medical care
  • temporary disability
  • permanent disability

A Stipulated Award is very similar to a judge's decision. In a Stipulated Award, the injured worker and the insurance company agree on the above issues. In a judicial decision, a judge decides the same issues.

This future medical care estimate does not have any effect on the value of a Stipulated Award because it is not part of the settlement.

Example: Dan settles his case by Stipulated Award. The agreement states that he injured his back; that he had temporary disability from April 4, 2016 to May 27, 2016 at a rate of $850 a week; that he had permanent disability of 24% that will be paid starting on May 28, 2016 at $290 a week; and that the insurance company will provide future medical care for the injured worker's back.

4. What is a Compromise and Release?

A Compromise and Release settles:

  • parts of body injured
  • temporary disability
  • permanent disability
  • future medical care
  • right to claim more disability

A Compromise and Release is what many people commonly think of as a settlement of a legal case. One party (the insurance company) pays another (the injured worker) to end the case. The two parties don't have anything to do with each other once the settlement is done and the money is paid. Some of the money may be placed in a Medicare set-aside.

The injured worker and the insurance company only have to agree on the total value of the settlement. This is different than a Stipulated Award where there has to be agreement on the value of each issue.

In a Compromise and Release, the injured worker is paid the estimated cash value of the future medical care.

The value of the future medical care depends on what medical care the doctor believes the injured worker will need in the future.

Example: Dan settles his case with a Compromise and Release for $50,000. There isn't a breakdown of the payments into parts. Dan will be paid the $50,000 in one payment immediately.

5. What is the difference between a Compromise and Release and Stipulation and Award?

Type of settlement and benefit available

Make chart

 

Stipulation and Award

Compromise and release

Benefit Available

   

Get Medical treatment

yes

no

Reopen claim if condition gets worse

yes

no

Keep working at same employer

yes

no

Lump sum payment

No

yes

5.1. Ability to reopen your claim

If an injured worker settles a claim with a Stipulation and Award, he or she can reopen the claim within five years of the date of injury.5

An injured worker that settles with a Compromise and Release says that he or she would rather take a cash payment than have the right to reopen the claim.

Example: Anne is a firefighter in California who files a workers comp claim after she injures her back at work on October 12, 2014. She misses eight weeks of work and has an epidural injection in her back. She goes back to work. Her doctor says her condition has stabilized.

Anne and the insurance company agrees on a Stipulated Award that says she has injured her back, has eight weeks of temporary disability, 15% permanent disability to her back, and needs future medical care. The agreement is completed on June 3, 2015.

Two years later Anne's back is much worse. She believes her 2014 injury was the cause of her current back problems.

Because Anne thinks the permanent disability for her back is more than 15%, she files a Petition to Reopen her claim on March 12, 2018.

Anne filedher Petition to Reopen within five years of the original injury, and she can get additional temporary disability and an increase in her permanent disability.

But if…

Anne injures her back at work on October 12, 2014. She misses eight weeks of work and has an epidural injection in her back. She goes back to work. Her doctor says her condition has stabilized.

Anne and the insurance company agrees on a Compromise and Release that pays her a lump sum to end her claim on June 3, 2015.

Two years later Anne's back is much worse. She believes her 2014 injury was the cause of her current back problems.

Anne cannot reopen her claim. She decided to take the extra money as part of the Compromise and Release instead of keeping the option of lifetime medical care and the right to reopen her claim.

5.2. Ability to continue to get medical treatment

An injured worker is entitled to lifetime medical care for a work injury if it's medically necessary. A Stipulation and Award lists the parts of the body that have lifetime medical care.

The injured worker can ask for a single cash payment from the insurance company instead of payments for lifetime medical care. This is part of a Compromise and Release.

The cash payment is an estimate of the future medical care. The injured worker is then responsible for his or her own medical care for the injury from the time of the settlement.

Example: Daniel injures his shoulder at work and has rotator cuff surgery. The doctor says Daniel may require another shoulder surgery in the future.

Daniel decides he wants the cash value of the future surgery instead of having the insurance company pay for the surgery.

As part of his Compromise and Release, Daniel got an extra $10,000 for the value of the future surgery. If Daniel later needs shoulder surgery, it will not be paid by the workers' compensation insurance company.

If Daniel settles his case with a Stipulated Award instead, the insurance company would cover the cost of the shoulder surgery or other medical treatment for that shoulder for the rest of Daniel's life.

5.3. Ability to keep your job

It is common for an insurance company to refuse to settle an injured worker's case with a Compromise and Release if the injured worker still works for the employer.

The reason for this has to do with future medical care.

A Compromise and Release includes a lump sum payment to the injured worker instead of giving him or her lifetime medical care.

If the injured worker continues with the same employer after a Compromise and Release, he or she could file a new claim for the same part of the body. The insurance company then has to pay for the medical treatment again.

The insurance company does not want to have to pay for the same medical care twice.

In a Stipulated Award, the insurance company is providing lifetime medical care. If the worker files a new injury for the same part of the body, it isn't going to cost the insurance company any more money. It is already responsible for the medical care.

Example: Stephanie has a knee injury while working at Orange Co. Eventually she settles her claim with a Compromise and Release but continues working for Orange Co. The settlement included $15,000 to buyout the future medical care for her knee.

Six weeks later Stephanie files a new claim for her knee. Even though the insurance company just paid Stephanie $15,000 to avoid having to give her medical treatment for her knee for the rest of her life, they now have to provide knee treatment for the new injury.

If Stephanie's case settles with a Stipulated Award, she has lifetime medical care for her knee. A new knee injury will not cost the insurance company any more money for medical care since it is already providing lifetime care for the knee.

Most insurance companies in Stephanie's case would not agree to the Compromise and Release because she continues to work for the same employer.

5.4. Lump sum payment

Any amount of money agreed to in a Compromise and Release will be paid out within 30 days of the settlement.

A Stipulation and Award pays the injured worker for permanent disability. This must be paid at a specific dollar amount every week.6 A check is sent to the injured worker every other week. There is no lump sum payment.

6. What if a workers' compensation claim was denied?

If an insurance company denies a claim, it does not have to pay the injured worker any benefits. 

The insurance company does not have to agree there was an injury to settle with a Compromise and Release. It is an agreement that ends the claim in return for a lump sum payment to the injured worker.

A Stipulated Award does not end the claim. The insurance company is accepting that there is an injury and is agreeing to provide future medical care.

It is unlikely that a denied claim will be settled with Stipulation and Award.

7. Late payment of a Compromise and Release

If an insurance company does not pay the Compromise and Release within thirty days, there is a late payment penalty on the amount that was late.

The overdue payment does not invalidate the settlement.

8. Determining the right kind of workers' compensation settlement

The choice of California workers' compensation settlements affects the amount of money an injured worker will receive at the time of settlement and any future rights.

An injured worker should carefully consider the type of settlement that fits best with his or her injury and life situation.

Call us for help...

For help with filing a workers compensation claim in Calfornia or completing workers comp forms, contact us at (855) LAW-FIRM. Our firm helps police officers, firefighters and other workers to get compensation for their job-related injuries.

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