Injured employees in California can usually choose between two types of workers’ compensation settlements
Not every workers’ compensation case is decided by a workers’ compensation judge. Most cases settle before trial.
A California workers’ compensation case will usually settle in one of two ways. One type of workers’ compensation settlement is called a Stipulated Finding and Award.
The other kind of workers’ compensation settlement is called a Compromise and Release. A Santa Rosa workers’ compensation lawyer can advise an injured worker about the type of settlement that is best under the circumstances.
Considerations in Settling a Workers’ Compensation Case
Whether a case should settle depends on whether the best settlement terms that are available after negotiation are reasonable. Lawyers recommend that their clients accept or reject a settlement by comparing the settlement terms to the expected outcome after a trial.
Nothing in life is certain, but an experienced workers’ compensation lawyer can predict the outcome of most cases with reasonable accuracy. When a lawyer is confident of the facts that can be established at a trial, applying the law to those facts determines the benefits that a workers’ compensation judge is likely to award.
Some cases, however, are less certain. In some cases, there is a serious dispute about whether an injury was work related or whether some part of a disability was caused by activities that occurred outside of work. In other cases, the extent of the disability is disputed.
When disputes depend on two competing views of evidence that both have some merit, it becomes more difficult to predict how a workers’ compensation judge might decide the dispute. If a reasonable settlement can be negotiated, employees will often prefer the certainty of a settlement to the risk of obtaining less (or nothing) after a hearing.
Disability Rating and Workers’ Compensation Settlements
The attorney for an injured worker and the employer’s workers’ compensation insurance company can usually arrive at a settlement if they can agree upon the injured workers’ disability rating. A disability rating is determined when the injured worker has permanent functional limitations, or a “permanent disability,” as a result of a work injury.
The disability rating is a determination of the degree to which an injured worker has suffered permanent functional limitations as a result of a work injury. The disability rating is expressed as a percentage. A total permanent disability receives a 100% disability rating. Less severe disabilities receive lower ratings in proportion to the degree of disability the injured worker has suffered, considering their medical condition, occupation, age, and lost earning capacity.
If a workers’ compensation claim is resolved by an administrative law judge in a contested hearing, permanent disability benefits are based on the disability rating determined by the judge. Using the date of injury and the disability rating, the judge will follow a formula that determines the benefit that the injured worker will receive and the number of weeks that the benefit must be paid.
Agreeing on the disability rating is usually the key to settling a claim for permanent disability benefits. Negotiating a workers’ compensation settlement may require the injured workers’ Santa Rosa workers’ compensation lawyer to work with the injured workers’ physician to correct omissions or inaccuracies. It may also be necessary to obtain an additional medical evaluation or an evaluation by a different medical specialist.
Reasons to Settle a Workers’ Compensation Case
Settlements give injured employees control over the outcome of their cases. Employees will often decide that “a bird in the hand” is better than a bird that might fly away if a workers’ compensation judge does not accept their view of the evidence.
Settlements also place benefits in the pockets of injured employees more quickly. It takes time to prepare for trials and busy judges cannot always schedule cases promptly. If the trial is not completed in one session, the judge might schedule the next session to take place some months down the road. Settlements avoid the frustration of not knowing when the case will end.
When a case settles, it is not necessary for the injured employee to make time to appear at the hearing. Nor will the worker need to spend time preparing to testify. Employees who are nervous about testifying can relieve their anxiety by settling their cases.
On the other hand, there are times when taking a case to a workers’ compensation trial is the smart thing to do. When a workers’ compensation claims administrator refuses to offer a reasonable settlement, an injured employee may need to take a case to trial to achieve a fair outcome.
Experienced workers’ compensation lawyers use their knowledge to help injured employees decide whether to settle a case. Beyond that, they help negotiate favorable settlement terms and advise workers about the kind of settlement that will best meet their needs.
Stipulated Findings and Award
When an injured worker and the workers’ compensation insurance company agree about the disability rating, a Stipulated Findings and Award settlement is one option. The Stipulation is an agreement about the facts (the “findings” upon which the judge will base an award). The most important facts are the disability rating, the fact that the disability was caused by a work injury, and the apportionment (if any) between work-related and other causes of the disability.
The workers’ compensation judge will treat the stipulated facts as if the judge had determined those facts after listening to the evidence at a trial. The judge will use the stipulated facts to make an award based on California law. Since the law is usually clear, the parties can predict what award the judge will make based on the stipulated facts.
If the judge approves the stipulation, the Stipulated Findings and Award has the same legal effect as if it had been entered by the judge after a contested hearing. The employer will rarely have grounds for appealing an award that is based upon stipulated facts, so the employee is usually assured that the judge’s approval of the settlement will end the case.
In most cases, the Stipulated Findings and Award will require the payment of a specified benefit every two weeks for a specified period of time. There may also be a lump sum payment of retroactive or back benefits if there is a gap between the time that temporary disability benefits ended and permanent disability benefits begin.
In addition, in cases of financial hardship, it may be possible to negotiate a lump sum payment in lieu of future weekly benefits, subject to approval by the workers’ compensation judge. The judge will need to be persuaded that it is in the best interest of the employee to receive some or all of the payments as a lump sum.
For example, if the employee is delinquent on mortgage payments and needs money to avoid a mortgage default, the employee has a strong basis for seeking approval of a lump sum payment. If the employee is not facing financial hardship, however, the judge will want the money to be paid in installments to assure that the employee will have a regular source of funds to meet living expenses.
Advantages and Disadvantages of Stipulated Findings and Award
One of the benefits that can be awarded on stipulated findings is ongoing medical treatment at the employer’s expense. For that reason, a Stipulated Findings and Award is commonly used when an injured worker has a permanent disability that will require future medical care.
Payment of medical bills is a continuing workers’ compensation benefit, provided the medical treatment is appropriate and the injured worker’s treating physician notifies the workers’ compensation claims administrator before receiving the treatment. If there is a dispute as to the appropriateness of future treatment, a Santa Rosa workers’ compensation attorney can help resolve the issue.
If benefits are awarded pursuant to a Stipulated Findings and Award and the injured worker’s medical condition worsens during the five years after the original date of injury, the injured worker may be able to obtain additional permanent disability benefits to reflect the increased severity of the disability. That will require the injured worker’s Santa Rosa workers’ compensation lawyer to establish that the worsened condition was caused by the work injury rather than some intervening event (such as an unrelated accident at home).
The biggest disadvantage of settling with Stipulated Findings is that benefits are paid every two weeks. When employees have a steady source of family income, they may prefer to receive their benefits as a lump sum so that the benefits can be invested or used to make a significant purchase. As noted above, lump sum payments are only available in the case of financial hardship when a settlement is based on Stipulated Findings.
Compromise and Release
The second type of California workers’ compensation settlement is called a Compromise and Release. An injured worker who settles with a Compromise and Release agrees to accept a lump sum of money to resolve the workers’ compensation claim. That payment ends the case.
Unlike a Stipulated Findings and Award settlement, the employer has no obligation to pay for continuing medical treatment when an injured employee accepts a Compromise and Release. For that reason, the Compromise and Release is usually used when an employee does not expect to need future health care for the work injury or does not need the employer to pay for it.
Although the injured employee and the employer’s insurance company agree upon the settlement, a workers’ compensation judge must still review the agreement to determine whether it is fair. The judge will usually approve the agreement if the employee is represented by an experienced workers’ compensation attorney, because the judge will usually be confident that the insurance company is not taking advantage of the employee.
The release generally prevents the injured employee from making further claims for benefits based on the same injury. In some cases, an insurance company might try to argue that the employee released it from the responsibility to provide benefits for other work injuries. The employee’s workers’ comp lawyer will need to make sure that the release cannot be interpreted to cover work injuries that are unrelated to the injury covered by the settlement.
Advantages and Disadvantages of a Compromise and Release
Like a Stipulated Findings and Award, a Compromise and Release has advantages and disadvantages. One advantage is that it puts money in the injured worker’s hands right away that the worker is free to invest or spend. The injured worker does not need to wait for permanent disability benefits to be paid in installments when settling with a Compromise and Release. That’s one reason why most employees prefer the Compromise and Release form of settlement.
In many cases, the Compromise and Release also has the advantage of giving injured employees a more favorable financial settlement. Since this type of workers’ compensation settlement ends all of the insurance company’s future obligations, the insurance company will usually pay more when the injured worker accepts a Compromise and Release than it would pay if the claim were settled with a Stipulated Findings and Award.
The disadvantage is that the injured worker is gambling that he or she will need no further medical care (or that future treatment will be covered by other insurance) and that their medical condition will not worsen. Injured workers who agree to a Compromise and Release may regret that decision if they incur new medical bills that are related to the work injury, or if their condition unexpectedly deteriorates. Of course, that risk can be partially offset by negotiating a higher lump sum payment that accounts for the likelihood that those contingencies could occur.
Which Type of Workers’ Compensation Settlement is Best?
Injured workers in Northern California will usually want to seek advice from a workers’ compensation lawyer in Santa Rosa before deciding which type of workers’ compensation settlement is best for them. The Compromise and Release works well in many cases and is most appropriate when the injured worker is confident that his or her disability will require no more treatment and will not get worse during the next five years. The Stipulated Finding and Award may be more suitable when the injured worker still needs future medical treatment, particularly when the injured worker has no private health insurance or any other means to obtain medical care.
Experienced Santa Rosa workers’ compensation lawyers are in the best position to help injured workers negotiate the type of workers’ compensation settlement that will serve their best interests. To discuss a settlement of your work injury compensation claim with an attorney at Kneisler & Schondel, call (707) 542-5132. You can also ask for an appointment by using our online contact form.