The average workers compensation settlement is only about $22,000, but about a third of all injured workers can get up to $100,000 when settling their case and a small percentage can go way up from there. But what makes the difference between a small settlement and a large settlement?
Is there anything you can do to get the biggest settlement possible? And could you be losing thousands of dollars on your workers compensation claim?
We're going to answer all those questions right now. How much you earn plays a big role in the size of your settlement offer because it's used to calculate the value of things like lost wages, future earning capacity, disability benefits and job training. Here in New York State, your income is calculated by dividing your gross salary for the one year leading up to your accident by 52 weeks.
This gives you your average weekly wage, which will be used to help determine the value of your case. Note that this is your gross salary and not your take home pay, which means your calculation should include things such as tips, overtime, profit sharing, sick pay, room and board and any other form of financial compensation offered by your employer.
Please be very careful in making this calculation and always ask to see how the insurance company calculated yours because if they're off by even just a little bit, it can result in your settlement being undervalued by thousands of dollars. The nature of your injuries is perhaps the biggest factor in a large settlement.
A national study found that workers compensation claims involving multiple body parts have the most settlements over $1 million, followed by injuries to the head and brain. While the average total pay out of a workers compensation claim is around $20,000, the average pay out of a claim with multiple body parts is three times as much at around $60,000. These injuries are most commonly caused by car accidents and slip and falls, which combined are responsible for about half of all claims above $1 million nationally.
Now I'm not just saying we can go out there and get you a million dollars, but I am demonstrating how claims involving multiple injuries are generally worth significantly more money when it comes time to negotiate your settlement value. Your injuries can also get you a big settlement if an unsuccessful surgery made things worse and now you require more medical treatment.
Permanent disability benefits typically make up the bulk of a workers compensation settlement, so your disability rating plays a big role in the size of your offer. If your work injury leaves you with a permanent disability, your doctor will perform a physical examination to give you a rating for your disabled body parts. For instance, you might get a 30% disability of your right arm or a 50% disability rating for your right foot.
This rating will then determine the permanent disability benefits you're entitled to for loss of use of that particular injury. Here in New York State, other injuries to the head, neck, and back and systemic injuries are rated differently. Regardless, if you go to a doctor and they give you a low disability rating, that means you're also going to get a lower settlement.
This is one of the reasons why it's crucial that you go to a doctor that's familiar with your state's workers compensation system. The insurance company might also have you examined by their doctor so that they can obtain their own opinion as to your permanent disability. Once there have been some medical opinions on your level of disability, the insurance company will often present you with a starting offer, which will likely be very low.
This is where it becomes crucial for you to negotiate, which I'm going to discuss in just a moment. Surprisingly, the state you're located in has a significant effect on how big your settlement offer can be.
As we discussed in my other video about calculating the value of your claim, there's oftentimes a cap on the maximum weekly benefits allowed and number of weeks you can receive benefits. This cap actually varies from state to state, with some states having a higher cap and others having a much lower one.
For instance, if you're from Iowa, the state with the highest maximum weekly payment at over $2,000 per week, any settlement you negotiate will likely be higher on the average. Whereas if you're from Mississippi, which tends to be the worst state to pursue a workers compensation claimant, the maximum weekly payment is less than $600, so most settlements will be considerably lower.
I'll include a link here with maximum weekly benefit amounts for all 50 states.
If your case is being disputed by the insurance company, it may prevent you from getting a big settlement. They might still offer to settle because they want to avoid the expense and uncertainty of a trial, but any offer they make is likely going to be low. However, there is still hope.
If you know you have the evidence to win in court, statistics show that continuing to litigate your case, or in some circumstances, filing an appeal from an adverse decision can get you, on the average, 34% more in benefits than if you accepted their initial low first offer.
Workers who file an appeal receive an average of about $25,000, while those who don't only receive an average of about $19,000. And statistics show that almost half of those who receive a settlement had previously had their case denied initially, so it pays to take the insurance company to court. Another way to get a large settlement is by getting leverage over the insurance company.
If they want something from you, then you can give it to them in exchange for more money. Some examples of this include if they're willing to settle, but want to avoid setting a precedent or accepting a certain type of case, or if they want to avoid having your case become public knowledge and ask you to sign a non-disclosure agreement, or if for some reason they want you to settle your case sooner rather than later.
Sometimes insurance companies might be willing to negotiate a favorable settlement without formally accepting liability. One of my clients once had a heart attack at work, and the insurance company did not want to accept the case, but they were willing to settle for a favorable amount without formally accepting the claim. We agreed on the terms, and my client got a settlement which made him very, very happy.
So what happens if the insurance company provides you with a low first offer? This is extremely common. In fact, in all my years as a workers' comp lawyer, it's very rare for me to even remember an insurance company making an acceptable first offer. That means you should be prepared to negotiate, because injured workers who accept the first settlement offer they receive end up with an average of about $10,700, which is half of the average settlement amount most injured workers will get.
Whereas those who engage the insurance company in negotiations receive an average of $26,300, almost a 150% increase. So as with a disputed case, it seriously pays to push back against the insurance company. To learn more about negotiating, be sure to watch my other video on how to negotiate a big workers' compensation settlement.
Most people get a workers' comp lawyer to help them settle their case. However, about a third of the injured workers still try to do it by themselves, and on the average they receive a smaller amount of total compensation at around $18,000, whereas those who do hire a lawyer receive nearly 30% more compensation at around $23,500.
Why is that?
Because not only are workers' compensation attorneys skilled negotiators, but they also know how much your case is worth and understand how to get that money out of the insurance company.
When it comes to the value of your workers' compensation case, you can think of it as a line graph. At the start of your case, the potential value is at its highest because you haven't received medical treatment or been paid for your time off work.
But as you receive those benefits over time, that line starts to come down as the value of your claim diminishes. And that means the potential of any settlement is also decreasing. But that's okay because you're receiving the benefits that you're entitled to.
Now during this time, nobody's entirely sure what the exact value of your case is because there are still so many unknowns. How much medical treatment will you need in the future? Will you be permanently disabled? If so, how disabled will you be? Will you be able to return to work or will you need job retraining?
Nobody knows for sure. And because nobody knows, it's difficult to put an exact value in your workers' compensation case. And because it's difficult to put a value in your case, you and your workers' compensation lawyer have more room to negotiate for a big settlement. However, all that changes once you have your permanency hearing. There comes a point in time where your case will be brought before a judge and they will determine your degree of permanent disability. And once they make that decision, the value of your case becomes a lot more black and white, which means you have less room to negotiate.
So there is a sweet spot where you want to settle your case, a point where you and your lawyer can negotiate a much larger settlement than otherwise possible. So where is this sweet spot where you can potentially negotiate a huge workers' compensation settlement?
You want to settle your case when it's clear that you're going to have permanent disability but before a judge determines your level of permanent disability.
Why?
Because before you receive your permanency rating, your lawyer can use their imagination and the facts before them to show that the value is high and that there's going to be a lot of exposure to the insurance company. Your lawyer can also show that there's going to be a high level of permanent disability and that it's going to require a lot of future medical treatment. And because the insurance company doesn't know exactly how much exposure they'll have, you could often negotiate a settlement that's as much as 50% larger than if you waited until after permanency.
Not only that, I've seen injured workers who turn down settlements before permanency go on to receive absolutely nothing. So it's not only a bigger settlement but often a safer one as well.
But wait, if settling before permanency allows you to negotiate a bigger settlement, why don't insurance companies just refuse to settle until after? Because it's often in their best interest as well to settle your case. It's expensive for insurance companies to determine your degree of permanent disability.
They have to pay for every doctor they depose, every hearing they request, every court reporter taking transcripts, and every lawyer they assign to your case. Then once the judge makes a decision, they have to pay you whatever the award is. So a lot of times they're willing to negotiate even though the deck is stacked in your favor.
All you need to do is ask your lawyer to settle once it's clear that you're going to have a permanent disability before your permanency hearing. It's as simple as that.
So how does the New York workers comp settlement process work? The settlement process starts with you or your lawyer approaching the insurance company or vice versa. Often times the insurance company will make a low initial offer that does not adequately consider the value of your claim.
This is simply their attempt to get a quick, easy, cheap settlement from an otherwise valuable case. Don't be discouraged by a low initial offer. And certainly don't be angry at your lawyer for bringing you a low offer. As your attorneys, we are obligated to bring you any offer the insurance company makes. You will continue to negotiate the terms of the settlement that both you and the insurance company can agree to, at which point either the insurance company or your lawyer will draw up the settlement agreement.
The agreement is then signed and submitted to the workers compensation board for review and to set up a hearing in front of a law judge. Once your settlement has been approved by a law judge, the parties enter into a 10 day cooling off period during which time either party to the settlement may change their mind and back out. If anybody does choose to withdraw from the settlement during this period, they must do so in writing and it must be received by the board and the insurance company within the 10 day period.
Your section 32 is not final in binding until it has been approved by a judge and the waiting period is passed. Once the 10 day period is passed, the workers compensation board will file a section 32 notice of approval. Once this notice of approval has been filed, the insurance company has 10 days from the filing date to pay your award.
At that point, the settlement process is complete.
When it comes to settling your case, the fact of the matter is that you could settle your case at any time. You or your lawyer can draft a demand letter anytime you want with the settlement amount you're looking for. And if you send a demand letter early on in your case, the insurance company might just take you up on it.
But does that mean you should break out the pen and paper and start drafting the letter right now? Not necessarily. If you're submitting a demand early in your case, there's a good chance you've undervalued your claim.
Why?
Because you probably don't yet understand all the factors that make your case valuable, such as the severity of your injury, how long you will remain disabled, your expected future medical costs, the extent of any permanent disability, future lost wages, future job opportunities and any job retraining that you might need.
Submitting a settlement demand to the insurance company before you understand each of these runs the risk of selling your case short, which the insurance company will love because then they get to pay you less money. Instead, it's usually a better strategy to wait until you're close to reaching Maximum Medical Improvement, or MMI, before trying to settle your case. MMI is when your condition is stabilized and further medical treatment is not expected to significantly improve it.
Before this point, it's impossible to know how much more your injury will heal or how much care you'll need to get there. You'll also want to know your disability rating or future loss in wage earning capacity. So any demand you make will likely either undervalue your case, which the insurance company will accept, or overvalue it, which they will deny outright. That said, if you have urgent financial pressure or just want to get out of the workers' compensation system completely, you can, of course, settle before you reach MMI.
Just know that any settlement amount you agree to could be less than what you're entitled to.
When will the workers' comp insurance company send you a settlement offer? It could be weeks, months or even years into your claim, depending on the circumstances. Some insurance companies will reach out right away and make a settlement offer, acting as though they were looking out for your best interest, when, in reality, they're trying to get you to accept a low offer before you get a chance to calculate the future costs or hire a workers' compensation lawyer.
Workers might wait and see if they can avoid your expensive medical request, which will allow them to settle for less money. Some will even intentionally wait just to see if you start feeling anxious and eventually agree to a small settlement amount. Whatever their strategy may be, one thing is as certain as debt and taxes, but they are trying to pay as little as they can.
Insurance companies are businesses, and their goal is to maximize their bottom line. They stay in business by taking in more money and paying out less. So don't be so eager to settle that you end up accepting a bad offer. To get a better idea of when you might be able to expect a settlement offer to come through, you need to look at your case from the perspective of the insurance company.
They're almost always interested in settling, especially before you reach MMI and discover how much your case might be worth. As I explained in my other video, "5 Tips to Negotiate a Big Workers' Compensation Settlement," most people don't receive the full value of the case when they settle, which means the insurance company saves money every time they do so.
They also don't want your case to go to court because it's expensive for them to hire a lawyer and pay all the associated costs. Some of the reasons the insurance company might send you an offer sooner rather than later include if your doctor says that you don't require surgery, if there's a reason for risk of your condition worsening, if your condition is severe and they want to avoid long-term disability benefits or ongoing medical treatment, if they want something from you like signing a non-disclosure agreement, or if they think you're anxious and will take a low-ball offer.
Some of the reasons why they might wait before sending you a settlement offer include if they think your request for surgery might get denied, if they dispute the validity of your claim, if they need more time to investigate and gather evidence, or if they think holding out will make you more desperate.
They also might just be one of those insurance companies that fights for every penny. Unfortunately, a lot of employers are drawn to these types of insurance companies because oftentimes they tend to have lower premiums.
Regardless of whether you receive an offer sooner or later, one thing is certain. You need to be ready to negotiate.
I can't remember a single initial offer that was acceptable and have almost always had to negotiate on behalf of my clients in order to get a settlement that they deserve. As a result, I consistently put more money in their pocket than they would otherwise have gotten if they tried to negotiate on their own. When insurance companies see that you're not represented by a lawyer, they know they'll be able to persuade you to accept a low-ball offer.
Once your case has been filed and accepted, chances are it will eventually end in a settlement. Nobody wants to drag out workers' comp claims, which is why many eventually end with a settlement often in the form of a lump sum of money. There are a few different types of workers' compensation settlements that can happen at any point in time during a case, and the settlement process itself may be fast or slow, depending on your specific situation.
Some of the reasons why your settlement might be fast include if you don't want to have surgery, the insurance company doesn't want to litigate your case, you need money now and you don't want to wait, you don't have a very strong case, or the insurance company makes a low-ball offer that you accept.
Whatever the reason may be, please keep in mind that a fast settlement is almost always undervalued. It's just quick and easy money. It's impossible to accurately calculate the value of your case before your injury has improved, so any settlement made before that is going to be on the low side. This is often called nuisance value, and in most cases it can be less than $5,000. You could be offered this nuisance value within a matter of weeks or just a few months, depending on your situation.
The slower and more common settlement process typically requires that you wait until you reach maximum medical improvement, or MMI, before settling your case. MMI is when your condition has stabilized and further medical treatment is not expected to significantly improve it. And the reason why most settlements don't happen until you reach MMI is because it is impossible to know the true value of your case before then.
You don't know how much more medical care you'll need, what your disability rating might be, or how much your wage earning capacity will suffer as a result of your permanent disabilities. So you often need to wait until your doctor declares that you've reached MMI before you can negotiate a settlement.
But how long does that take?
Well, generally speaking, if your injury involves an extremity such as an arm, leg, hand, or foot, it can take a year from the date of accident or surgery to reach MMI. If you have an injury to a body part like your spine, lungs, heart, or brain, it's not uncommon for it to take two years before you reach MMI.
And if you suddenly need additional surgery, that restarts the clock and generally adds another year to your case. That means the recovery process is often the longest part of your workers' compensation claim.
If you're worried about your claim taking too long and you live in New York State, we can help. My name is Rex Zachofsky, and I've been a workers' compensation attorney here in New York for the last 17 years. If you or a loved one have been injured on the job in New York and you'd like to set up a free consultation with an experienced lawyer who will move your case along as fast as possible, please give me a call today at 212-406-8989.
Our call is confidential. It costs you nothing and can get you more in benefits than you would otherwise receive on your own.
Okay, back to the timeline. Once you've reached MMI, all that's left to negotiate is your settlement and get it finalized. When negotiating, some insurance companies respond very quickly while others drag their feet. You cannot force an insurance company to settle with you, so if they are slow to respond, the only thing you can really do is wait.
I've had insurance company representatives reach out to me and say, "Hey, does your client want to settle the case? If so, how much does he want?" And I talk to the client, I work up a demand and send it to them, and then crickets. They never respond, and they ignore me from that point forward. I don't understand why they do it, but keep in mind that this can happen.
But I've also had cases where I've gotten on the phone with the insurance company, put them on hold while I spoke to my client, and got everybody on board on a settlement agreement within one phone call, and it's done.
So there's no rhyme or reason to it. But if I had to give the negotiation process an average timeline, I would say around three to four months, which leads us to the last part of your case, which is finalizing the agreement.
Generally, once we agree on a number, finalizing the physical paperwork, the agreement itself, is rather fast. Again, there are certain circumstances where it might take a few months, but generally speaking, once we have an agreed upon settlement amount, we can get papers done in a week or two.
So what are some of the reasons why you might consider settling your workers' compensation case?
Probably the biggest pro is the fact that you get to bargain for a known outcome. If you were to go to trial, there's a chance you could get more, but there's also a chance you could get less, and there's always a chance you could get nothing.
Settling on the other hand gets you a definite amount of money that you can agree to, eliminating the risk of going to trial and guaranteeing that you receive compensation for your case. Another big pro for settling your case is the fact that you'll receive a lump sum payment from the insurance company that is yours to do with as you see fit.
While generally speaking workers' compensation benefits end when you're medically cleared to return to work, a settlement is yours to keep forever. This can relieve any financial pressure you might be experiencing and provide you and your family with a safety net. A lump sum settlement can also pay you for benefits that you never end up using.
For instance, if you're entitled to benefits for a prolonged period of lost time or permanent partial disability, you would lose out on money if you went back to work early. But if you negotiated a settlement based upon that same period of projected lost time and settled your case, you can go back to work whenever you want and still keep that money. Generally speaking, settlements are also quicker than taking your case to trial. Since everyone is in agreement, the only holdup is doing some paperwork, getting the board to approve it, and having a judge sign off.
This can typically take a matter of weeks to maybe a few months to complete, which may be considerably shorter than going through a lengthy trial process. And once it is completed, you finally have closure and can move on with your life, putting the case behind you. Another big pro that most injured workers are unaware of is the flexibility that a settlement provides.
Sometimes insurance companies might not want to formally accept a particular claim because of the precedent it sets, or they might want to avoid accepting liability for an accident because it looks bad on their books. A settlement allows them to avoid these liabilities while paying you additional compensation as a quid pro quo.
For example, we had a case years ago where a client had a heart attack and we were claiming that it was a work-related heart attack. The insurance company wanted to avoid accepting the case because they feared opening the floodgates to every heart attack victim who might claim that their heart attack was work-related.
So the insurance company reached out to us and said, "Hey, we're not formally accepting this claim, but we will pay you for it as long as you understand we are not going to accept it." We discussed it with our client, we signed the paperwork, and ended up getting him a very significant settlement.
Another big pro for settling your case sooner rather than later is the present value of money. This is something that is very evident right now. A dollar today is worth more than a dollar tomorrow. And with the current rate of inflation, money you get down the road is not as valuable as money you get today.
The sooner you settle your case and maximize the overall value of your claim, the more it will be worth to you. A dollar invested today and grown in the future is worth more than a dollar earned years from now. Settling your case isn't all upside though.
So what are some of the cons of deciding to settle? The biggest one is that you might not get the full value of your claim. People will come to me and say, "I have a permanent partial disability at a 50% rate and I'm entitled to $300 per week for the next 300 weeks and I want all that money now."
Well, you're not going to get it all right now. If you want to lump some of money in most cases, the insurance company is only going to give you a percentage of what they owe you. It will often be a large percentage, usually more than 50%, but you don't get all that money now.
Sorry, it's the cost of doing business, my friends.
Another negative is the very real possibility of getting a low ball offer from the insurance company. Insurance companies know that most people would rather avoid a risky court trial, so they often provide low ball offers hoping that you will accept them out of fear or impatience. They're banking on the fact that you're ready to get things over with and you will likely accept whatever offer they throw at you.
It's also important to keep in mind that when you settle your case, you're a waving your future right to request benefits, usually both medical and financial, for that accident and injury. That means you could find yourself with medical expenses that you have to cover out of pocket from your settlement later on down the road. It's not uncommon for people receiving a lump sum of money to spend it right away and then be left without weekly payments to help offset lower wages due to their ongoing disability, but with some proper planning ahead of time, you can find ways to invest your money and make it work for you.
If you decide to settle your case, it's often a full and final closure. Once you accept a lump sum settlement, it is typically impossible to reopen your case or receive any further compensation for that injury. There are specific types of settlements that don't close out your entire case, such as an indemnity only Section 32 agreement that only closes the financial portion while leaving the medical open, but generally speaking, once your case is settled, it's closed forever.
If you want to learn more about different types of settlements, be sure to watch my other videos on settlements and Section 32 agreements. Another possible negative is the fact that you need to have decent negotiation skills if you want to settle your case for what it's worth. The insurance companies have skilled adjusters and attorneys who negotiate settlements every single day.
They've tried to go through several rounds of negotiations before reaching an agreement, and if you're going to go up against an insurance company that negotiates these deals every single day, you're probably going to be leaving money on the table. That's one of the prime reasons for having a workers' compensation attorney on your side, because they negotiate these agreements as often as the insurance companies and know how to get you more money than if you tried to go at it alone.
Now that you know the pros and cons, the big question remains, should you settle your case? I'll share with you what I tell all my clients. If you need significant medical treatment or surgery, then I don't recommend you settle your case and take that burden on yourself.
But that's not to say some of my clients have not done it.
Settling your case is a very personal thing that depends on the type of person you are and the situation that you're in. Everybody's different, and you need to decide what is best for you. Do you think you might need more treatment further down the road? Do you urgently need the money now? Does the thought of taking your case to trial stress you out?
The answer to these questions will not be the same for everybody, so it's important that you make the decision for yourself when the time comes. And if you want to know how much your workers' comp injury is worth, watch my other video breaking down average costs by accident type and body part.
In it, I also walk through the calculations you need in order to determine the value of your claim. I'll include a link to that video here.
Click to watch it now and I'll see you there.
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