If you have a workers' compensation claim, you might be considering settling your case and trying to work out how much money you should get. You should understand both what you gain—and what you give up—by settling.
Here's some useful information that might help you decide whether to settle your workers' compensation case.
The first thing to know is that, if you settle your workers' compensation case, you can never again receive any weekly benefits for that injury. Settling a workers' compensation case closes that part of the case. (To understand what you might be missing, learn how much you might receive in workers' compensation benefits.)
Some states require the insurer to continue paying medical benefits after settlement, but other states allow insurers to terminate medical benefits upon settlement of a workers' compensation case. You should check with your state's workers' compensation agency or a workers' compensation lawyer in your state to find out whether your state requires medical payment benefits to continue after a settlement.
Even in a state where medical benefits are supposed to continue after settlement, be aware that if you settle your workers' compensation case, the insurer will likely be reluctant to continue paying for your medical benefits. You might find that your medical bills don't get paid quickly or even at all. If this happens, you will need to file a claim with your state's workers' compensation agency to force the insurer to pay your medical bills.
Just because you, your lawyer, and your insurer agree to settle the case does not mean that it will be settled. Most, if not all, states require that you and the insurer submit the proposed settlement to the state workers' compensation agency for approval.
The agency will hold a hearing, and the workers' compensation judge or hearings officer will review the proposed settlement with you. Only if the judge or hearing officer is satisfied that you voluntarily agreed to the settlement, that you understand the settlement terms, and that the settlement is in your best interests, will the settlement be approved. It is not unusual for judges or hearings officers to reject the settlement if they believe that the injured employee didn't get enough money from the settlement.
Because workers' compensation benefits have nothing to do with pain and suffering (unlike a personal injury claim), calculating the value of a workers' compensation settlement is based primarily on two things:
Your future workers' compensation benefits are based on the medical evidence in your case and how long your state's workers' compensation laws allow you to receive those benefits.
As an example, let's say that you're on temporary total disability, that all of your doctors, as well as the insurer's doctor, agree that you will be totally disabled for another two years, and that you will then be fully recovered from your injury, with no permanent impairment.
In that case, you would be entitled to another two years of temporary total disability benefits, so it wouldn't make sense to settle your case for a lump sum less than the value of two years of temporary total disability benefits, unless you really need the money right now. Even then, if you have a lawyer, it might not make much sense to settle the case at all because your attorneys fees will come out of the settlement.
Let's change the above example a little. Let's say that the insurer's doctor thinks that you can return to work now, and you have a hearing coming up next week in which your benefits might be terminated.
Now, your future entitlement to benefits could be anywhere from one week to two more years of weekly compensation. Let's also say that you and your lawyer agree that the insurer's doctor's opinion is stronger than your own doctor's opinion. In that case, it is more likely than not that you will only get another week of benefits, and so you might want to settle your case before the hearing for an amount that reflects your likelihood of having your benefits terminated at the hearing.
Estimating the value of a settlement is more complicated if you are on permanent total disability because your weekly benefits might continue for decades. Thus, an estimate of the settlement value has to take into account the present value of your future entitlement to benefits.
Present value is a financial concept that involves determining the value of a future stream of income (for example, future weekly workers' compensation benefits) as if it were all in a bank account today. In other words, how much money does the insurance company need in a bank account today in order to pay you weekly benefits for, say, the next twenty years? This is a complex financial calculation. If you are on permanent total disability and do not have a lawyer, you should not consider settling your case without speaking with a workers' compensation lawyer.