Types of Settlements
Now I want to talk to you about what type of settlements there are in which one you may want to agree to. Generally, there are two basic types of settlements. The first one is called a compromise settlement. In a compromise settlement, you will be paid a lump sum of money to close your permanent disability and medical benefits. For example, if your weekly rate is $300 per week, and you agree that you have a 40% Industrial disability, then a lump sum settlement would be a 40% times your body as a whole, which is 500 weeks. So 40% times 500 weeks of benefits equals 200 weeks of benefits. If the insurance company has already paid your impairment rating of say 10%, then they would receive a credit of 10% times 500 weeks or 50 weeks So, you would take 200 weeks and subtract the credit of 50 weeks, leaving 150 weeks times $300 per week for a total of $45,000. Keep in mind that usually as part of a compromise settlement, you will also have to agree to close your medical. This means that the workers' compensation insurance company will not pay for any future medical treatment and your case is closed, which will not allow you to review reopen your case. Even if your condition worsens. Usually, the insurance company will pay additional money for a closed file compromise settlement. So using the above example, if you have 40% Industrial disability, then they should pay you additional money to close your medical file. There are some cases in which it makes sense to close your case and others it does not. Also sometimes the insurance company will agree to close your permanent industrial disability. benefits, but keep your medical open, meaning they would pay for future medical expenses. It is very important in settlement negotiations and in reviewing settlement documents that you understand and agree to how your case is being settled. The other type of settlement is an agreement for settlement. This is commonly used when you are still working for the same employer that you were working for when you were injured. In an agreement for settlement, the parties agree to a certain percentage of disability times your weekly rate, the benefits that have accrued since your last payment of workers comp will usually be paid lump sum, and then additional benefits will be paid weekly. It is possible to receive all of your weekly benefits at once by doing what's called a full commutation. But if you do this, you will be closing your file. So the insurance company will not pay for future medical costs and your case will be closed. Therefore, even if you were to lose your job or your medical condition worsened, your case would be closed and you could not seek additional compensation. It is also possible to do a partial computation with some of your benefits will be paid all at once, but your case would remain open. Keep in mind that regardless of the type of settlement, there are special provisions that should be in the settlement documents that the insurance company is unlikely to tell you about. Failing to put the proper language in the settlement documents can cost you thousands of dollars. For example, in a compromised settlement, you should always have social security disability offset language in the documents, or you risk losing thousands of dollars in Social Security benefits. If you eventually receive Social Security Disability. In an agreement for settlement there is language should be added any event that your employer decides to terminate you. So you have the ability to review and reopen your case if the statute of limitations has not expired. Overall settlements can be very complicated. And if you are considering settling your case on your own, I would always recommend that you talk to an attorney before agreeing to anything or you may end up costing yourself thousands of dollars.