Settling your workers' compensation case is a big decision that shouldn't take lightly, and depending on what type of settlement you use, there could be no going back. So it's important that you understand the pros and cons of settling before committing to a course of action.
When we talk about settlements in workers' compensation, it can mean different things to different people. Essentially, a settlement is an agreement to resolve certain issues or the entire case. Sometimes, people consider it a settlement if a judge makes a decision and you receive a lump sum for your injury. Other times, it means negotiating specific parts of your case, like your average weekly wage or temporary benefits.
The most common understanding of a settlement is when you close the entire case and receive a single, lump-sum payment. However, it’s important to remember that "settlement" is a broad term and can apply to different scenarios within your workers' compensation claim. Knowing this can help you navigate conversations with your lawyer and the insurance company more effectively.
In the world of workers' compensation, there are two main types of settlements you should know about: stipulations and Section 32 settlements.
Stipulations: Think of a stipulation as an agreement on paper. It’s a flexible tool that can be used to resolve specific issues within your case or to settle the entire case. For example, you and the insurance company might agree on the extent of your injury or the amount of temporary benefits you should receive. This agreement is written down, signed by both parties, and then approved by a judge. One key point about stipulations is that they can generally be reopened if your condition worsens, giving you some room to address future changes in your situation.
Section 32 Settlements: These are more final and comprehensive. A Section 32 settlement typically closes the entire case for good. Once you agree to a Section 32 settlement, it’s almost impossible to reopen the case unless both parties and the Workers' Compensation Board agree, which is very rare. This type of settlement often involves a larger payment because the insurance company is paying to close your case permanently. However, there are instances, especially if you are receiving Medicare or Social Security benefits, where the medical portion of your case might remain open while the financial aspects are settled. This is known as an indemnity-only settlement.
Okay, now that we understand what a settlement is, what are some of the "pros" or benefits of settling your case?
Certainty and Control: One of the biggest perks of settling is that you get to bargain for a known outcome. Instead of leaving your fate in the hands of a judge, you negotiate the terms and know exactly what you'll be getting. This certainty can provide peace of mind, as it removes the unpredictability of a trial.
Financial Relief: Settling often means receiving a lump sum payment. This can be a significant financial relief, especially if you've been struggling to make ends meet while out of work. A large, one-time payment can help you pay off debts, cover living expenses, or even invest for the future.
Present Value of Money: Receiving money now is generally more valuable than receiving it in the future. This is especially true with inflation reducing the value of money over time. With a lump sum settlement, you can use or invest the money right away, potentially growing its value more than if you received smaller payments over time.
Efficiency: Settling your case is usually much faster than going through a trial and potential appeals. Once you reach an agreement, it can be just a matter of weeks or months before you receive your payment. This speed can help you move on with your life sooner.
Flexibility: Settlements can be very flexible and tailored to your specific needs. You and the insurance company can agree on terms that work best for both sides, which might include creative solutions to unique problems. As long as the agreement is fair and legal, almost anything is possible.
While there are many advantages to settling your workers' compensation case, it's important to be aware of the potential downsides. Here are some of the biggest "cons":
Reduced Total Value: When you settle, you often don't get the full value of your case. Insurance companies typically offer a lump sum that is less than what you might receive if you were to win at trial. They factor in the present value of money and potential future expenses, which can lead to a lower payout than you might hope for.
Potential for Lowball Offers: Insurance companies may start with a low offer to test your desperation or lack of knowledge. This initial offer can be disheartening and stressful, especially if you're in urgent need of funds. It's important not to accept the first offer without careful consideration and negotiation.
Waiving Future Benefits: Settling usually means giving up your right to future financial and medical benefits related to your injury. If your condition worsens or you need additional treatment down the line, you might have to cover those costs out of pocket. This can be a significant risk if your medical situation is still uncertain.
Negotiation Challenges: If you're not represented by an experienced attorney, negotiating a fair settlement can be challenging. Insurance companies do this every day and have skilled negotiators working for them. Without professional guidance, you might end up with a less favorable deal than you deserve.
Future Medical Expenses: Even if your settlement includes some allocation for future medical expenses, there's no guarantee it will cover all potential costs. Medical treatments and procedures can be expensive, and unexpected complications could lead to significant out-of-pocket expenses.
Deciding when to settle your workers' compensation case can be as crucial as deciding whether to settle at all. Here are some key times when settling might make the most sense:
Uncertain Case Outcomes: If your case is controversial or there's a significant chance you might lose at trial, settling can provide a guaranteed outcome. This certainty can be a relief, especially if the risk of getting nothing is high.
Readiness to Move On: Sometimes, people just reach a point where they want to put the case behind them. If you're tired of dealing with hearings, medical exams, and the overall stress, settling can offer closure and allow you to move forward with your life.
Financial Urgency: If you're facing urgent financial pressures, such as foreclosure or mounting debts, a settlement can provide the immediate funds you need. While it might not be the ideal time to settle otherwise, urgent financial needs can make it a necessary step.
Approaching Permanent Disability: When you're nearing the point of being classified as permanently disabled, it's often a good time to consider settling. By this stage, most major medical treatments are complete, and your condition is more stable, allowing for a clearer assessment of your case’s value.
Stabilized Medical Condition: If your medical condition has stabilized and no significant treatments are expected in the future, this might be an opportune moment to settle. At this stage, both you and the insurance company can more accurately gauge the value of your settlement.
Just as there are good times to settle your workers' compensation case, there are also times when it might be better to hold off. Here are some situations when you should consider delaying settlement:
Ongoing Major Medical Treatments: If you still need significant medical treatments, such as surgery or other major procedures, it’s often best to wait before settling. Settling too soon could leave you responsible for expensive medical bills that would otherwise be covered by your workers' compensation benefits.
Uncertain Long-Term Implications: If you're not fully aware of the long-term impacts of your injury, it's wise to hold off on settling. For instance, some injuries might require ongoing treatments or result in complications down the road. Settling prematurely could mean missing out on coverage for these future needs.
Need for Future Medical Equipment: If you anticipate needing durable medical equipment, such as a wheelchair, special mattresses, or other assistive devices, make sure these needs are addressed before settling. Otherwise, you might have to cover these costs yourself later on.
Recent or Upcoming Surgeries: If you’ve had a recent surgery or have one scheduled soon, it’s generally not a good time to settle. Surgeries can come with complications and additional recovery costs that should be factored into any settlement agreement.
Unstable Medical Condition: If your medical condition is still changing or hasn't stabilized, it’s better to wait. Settling when your condition is unpredictable can lead to insufficient compensation if your situation worsens.
Settling a workers' compensation case can be a complex process, but with the right strategies, you can navigate it more effectively. Here are some pro tips to help you settle your case wisely:
Individualized Approach: Every workers' compensation case is unique, and so are the individuals involved. What works for one person might not work for another. Consider your personal circumstances, long-term needs, and financial situation when deciding whether to settle.
Comprehensive Medical Evaluation: Ensure you have a thorough medical evaluation before considering a settlement. Understanding the full extent of your injuries and potential future medical needs is essential for negotiating an adequate settlement.
Consider Future Costs: Think about all possible future expenses related to your injury, including medical treatments, durable medical equipment, and long-term care. Make sure your settlement covers these potential costs to avoid financial strain down the line.
Don’t Rush the Process: Settling too quickly can lead to missed opportunities for fair compensation. Take your time to evaluate offers, consult with your attorney, and make informed decisions. Rushing might result in accepting a settlement that’s less than you deserve.
Be Prepared for Negotiation: Understand that initial offers from insurance companies are often low. Be ready to negotiate and don’t be discouraged by initial lowball offers. Your attorney can help you push for a fair amount that reflects the true value of your case.
Professional Guidance: Having an experienced attorney by your side is crucial. They can negotiate on your behalf, ensuring you get a fair settlement. Attorneys understand the tactics insurance companies use and can counter them effectively, preventing you from being lowballed.
I hope this guide has helped clarify the ins and outs of settling your workers' compensation case. The process can be complicated, but understanding your options and timing can make a big difference in the outcome. If you’re feeling overwhelmed or unsure about your next steps, don’t worry—you don’t have to navigate this alone.
I’m here to help you through every stage of your case. Whether you need advice on when to settle or you’re ready to start negotiating, I’ve got your back. Feel free to reach out to me, Rex Zachofsky, anytime at 212-406-8989. Let’s work together to get you the best possible outcome. Give me a call, and we can discuss your situation and find the best path forward for you.
Take care, and I look forward to helping you.
