One of the main reasons why injured workers end up retaining an attorney is because they've received a settlement offer that just doesn't seem right. The settlement offer probably contains some language about settling out your case for a certain amount of money, which is based on a percent of permanent disability a doctor provided you with.
What the letter probably fails to explain is why that value of permanent disability is fair, or what value is the insurance company placing on your need for future medical care, and host of other issues that you may have questions about.
So how do you know what is a fair settlement? Answering this question depends on: 1) understanding what type of settlement is being proposed; 2) knowing what benefits you are entitled to; and 3) the risks involved in settling out your benefits.
1. Stipulation Versus Compromise and Release
There are two main settlement types in the work comp system. Knowing which settlement type you are being offered makes a huge difference in evaluating the fairness of your claim.
The first settlement type is a stipulated settlement where the insurance carrier and the injured worker agree (stipulate) to a number of terms. The essential goal of a stipulated settlement is to get the employer and insurance company to agree that you were injured at work and that you are entitled to a certain amount of benefits because of the injury.
The terms of a stipulated agreement can include:
· Your date of injury.
· The body part(s) that you injured while at work.
· What insurance carrier and employer(s) are liable to pay for your work comp benefits.
· Whether your work injuries resulted in a period of temporary disability.
· What payment amount you were entitled to for temporary disability.
· What payment amount you are entitled to for permanent disability.
The second settlement type is a Compromise and Release (C&R). In a C&R, you additionally address releasing the insurance company for any further liability. It is like saying both parties would like to move on so long as you can come to a fair agreement, and you would like to take charge of your own medical care. The items that you would be settling out with a C&R would include:
· Future medical care, since the insurance carrier is liable to provide lifetime medical treatment.
· Temporary disability benefits, in case your condition becomes unstable or worse and you need to go off work again.
· Your right to reopen your case if your condition has resulted in New and Further Disability. If your condition gets worse, you may be entitled to additional benefits. This might happen, for instance, with a surgery your doctors decide you need. By settling out via C&R, you are precluded from bringing a claim for additional benefits in the future.
2. The Benefits You are Entitled to in the Workers' Compensation System
There are three main benefits to consider when settling out your claim.
The first benefit is temporary disability. If you get injured on the job and you either need to take the time completely off work to heal, or work less, you are entitled to receive temporary disability payments for up to two years. If you are completely off work, then you are eligible for 2/3 of your weekly wages. If you are able to work but took a pay cut because you are on modified duty, you are entitled to a differential. California law imposes a minimum and a ceiling on the amount of temporary disability payouts. For 2021, the minimum is $203.44 per week and the maximum is $1,356.31 per week.
In the context of settlement, if you think your condition is not altogether stable and you might need a surgery or go off work again, you should factor that in the settlement amount of a Compromise and Release. The starting point for value would be to take the maximum two years you are entitled to and subtract what you have received so far.
The second benefit is permanent disability. The amount of permanent disability depends on a formula that factors in a) permanent impairment, which is calculated by the AMA Guides; b) your age at the time of injury; c) your occupation. These three factors are then factored into a formula to get your permanent disability rating.
The third benefit is future medical care. The insurance carriers is liable to pay you for lifetime treatment. However, they often are willing to pay you a lump sum to release them for any of that liability. The insurance carriers do not pay the same amount as you would out of pocket to your own physician, so you might be surprised to learn of the low number they're quoting you as an estimate for your future medical care.
In these cases, it is beneficial to talk to a professional who understands how to valuate future medical care. It often depends on things like the need for future surgery, possibility of needing revision surgery, and so on. A good starting point, however, is to look at Medicare standard rates.
3. The Risks of Settling Early
The risks are more inherent in a Compromise and Release situation, since you are precluding yourself from getting any more future benefits.
The risks depend on what stage of the process you are in. For instance, you might have received a settlement offer based on a primary treating physician's report. However, you are entitled to a Qualified Medical Evaluation if you have any question or dispute about the diagnoses and recommendations made by your primary treating physician. Your treating physician is not always right, particularly when it comes to assessing what permanent impairment you have sustained as a result of your work injury. It is often better to get an opinion from a Qualified Medical Evaluator who is an expert physician that is specially trained to assess work injuries and permanent impairment.
If you have a more serious condition, such with internal organs, nervous system, the spine, or failing eyesight, settling before you've undergone all the recommended treatment (e.g., surgeries) may not be in your best interest. Of course, it is up to you whether to undergo any form of medical treatment. However, if you've deferred anything, more serious conditions can be unpredictable and turn for the worse. While the determination of whether to settle early is really a question of how best to take care of you and your family, consulting with a workers' compensation attorney is free and give you a better idea of how to plan for your future.