Settlement of claims for California workers’ compensation benefits takes two primary forms: 1) A stipulation and award, where you agree to have the insurance company provide future medical care for your injury for life, or 2) A compromise and release, where you take a lump sum of the cash value of future medical treatment.
Here are five key things to know:
The majority of workers’ comp claims settle.
Below, our California personal injury attorneys will explain:
Yes. A California workers’ compensation case will end either with
If you choose to settle your workers’ comp case voluntarily, there are two options:
You will nearly always settle a workers’ compensation claim when your condition has stabilized and is not expected to change within at least the next year. A doctor decides if your condition has stabilized and if further treatment will be necessary. Sometimes a worker’s comp settlement is reached even after you return to work.
A workers’ compensation settlement is an agreement on the medical benefits and other benefits available to you. Benefits include
Temporary disability benefits are paid for lost wages when you are unable to work due to your injury. 1
Since a case usually settles after your condition has stabilized, there will not normally be any temporary disability due later since you received temporary disability payments while you were not working.
The main exception to this is if the insurance company has denied that your injury occurred. In that case, it would not have paid temporary disability benefits to you. Any workers’ comp settlement would have to include the value of the lost wages.
Permanent disability benefits are paid when
A permanent disability benefit is for permanent damage from a work injury. It is based on medical reporting and is given as a percentage rating of disability. 2 3
Permanent disability is paid at a set amount over a period of weeks depending on the level of disability.
The insurance company must pay permanent disability when it stops paying temporary disability. 4
A medical report that gives you a level of permanent disability will also estimate what future medical care may be necessary in the future for your injury.
The future dollar value of the medical care is estimated based on the type of treatment.
A Stipulated Award is very similar to a judge’s decision. In a Stipulated Award, you and the insurance company agree on the above issues. In a judicial decision, a judge decides the same issues.
This future medical bill estimate does not have any effect on the value of a Stipulated Award because it is not part of the settlement.
Example: Dan settles his case by Stipulated Award. The agreement states that he injured his back; that he had temporary disability from April 4, 2016 to May 27, 2016 at a rate of $850 a week; that he had permanent disability of 24% that will be paid starting on May 28, 2016 at $290 a week; and that the insurance company will provide future medical care for the injured worker’s back.
Workers permanently injured may receive permanent disability payments.
A Compromise and Release is what many people commonly think of as a settlement of a legal case. One party (the insurance company) pays you (the injured worker) to end the case. You do not have anything to do with each other once the settlement is done and the money is paid. Some of the money may be placed in a Medicare set-aside.
You and the insurance company only have to agree on the total value of the settlement. This is different than a Stipulated Award where there has to be agreement on the value of each issue.
In a Compromise and Release, you are paid the estimated cash value of your future medical care.
The value of future medical care depends on what medical care the doctor believes you will need in the future.
Example: Dan settles his case with a Compromise and Release for $50,000. There isn’t a breakdown of the payments into parts. Dan will be paid the $50,000 in one payment immediately.
It has to do with the type of settlement and benefit available.
| Benefit Available | Stipulation and Award | Compromise and release |
| Get Medical treatment | yes | no |
| Reopen claim if condition gets worse | yes | no |
| Keep working at the same employer | yes | no |
| Lump-sum payment | no | yes |
If you settle a claim with a Stipulation and Award, you can reopen the injury claim within five years of the date of injury. 5
If you settle with a Compromise and Release, you are saying that you would rather take a cash payment than have the right to reopen the claim.
You are entitled to lifetime medical care for a work injury if it is medically necessary. A Stipulation and Award lists the parts of your body that have lifetime medical care.
You can ask for a single cash payment from the insurance company instead of payments for lifetime medical care. This is part of a Compromise and Release.
The cash payment is an estimate of future medical care. You are then responsible for your own medical care for the injury from the time of the settlement.
Example: Daniel injures his shoulder at work and has rotator cuff surgery. The doctor says Daniel may require another shoulder surgery in the future.
Daniel decides he wants the cash value of the future surgery instead of having the insurance company pay for the surgery.
As part of his Compromise and Release, Daniel got an extra $10,000 for the value of the future surgery. If Daniel later needs shoulder surgery, it will not be paid by the workers’ compensation insurance company.
If Daniel settles his case with a Stipulated Award instead, the insurance company would cover the cost of the shoulder surgery or other medical treatment for that shoulder for the rest of Daniel’s life.
The reason for this has to do with future medical care.
A Compromise and Release includes a lump sum payment to you instead of giving you lifetime medical care.
If you continue with the same employer after a Compromise and Release, you could file a new claim for the same part of the body. The insurance company then has to pay for the medical treatment again.
The insurance company does not want to have to pay for the same medical care twice.
Signing a compromise and release will result in a lump-sum payment within 30 days.
In a Stipulated Award, the insurance company is providing lifetime medical care. If the worker files a new injury for the same part of the body, it isn’t going to cost the insurance company any more money. It is already responsible for the medical care.
Example: Stephanie has a knee injury while working at Orange Co. Eventually she settles her claim with a Compromise and Release but continues working for Orange Co. The settlement included $15,000 to buy out the future medical care for her knee.
Six weeks later Stephanie files a new claim for her knee. Even though the insurance company just paid Stephanie $15,000 to avoid having to give her medical treatment for her knee for the rest of her life, they now have to provide knee treatment for the new injury.
If Stephanie’s case settles with a Stipulated Award, she has lifetime medical care for her knee. A new knee injury will not cost the insurance company any more money for medical care since it is already providing lifetime care for the knee.
Most insurance companies in Stephanie’s case would not agree to the Compromise and Release because she continues to work for the same employer.
Any amount of money agreed to in a Compromise and Release will be paid out within 30 days of the settlement.
A Stipulation and Award pays you for permanent disability. This must be paid at a specific dollar amount every week. 6 A check is sent to you every other week. There is no lump sum payment.
If an insurance company denies your claim, it does not have to pay you any benefits.
The insurance company does not have to agree there was an injury to settle with a Compromise and Release. It is an agreement that ends the claim in return for a lump sum payment to you.
A Stipulated Award does not end the claim. The insurance company is
It is unlikely that a denied claim will be settled with Stipulation and Award.
If an insurance company does not pay the Compromise and Release within thirty days, there is a late payment penalty on the amount that was late.
The overdue payment does not invalidate the settlement.
The choice of California workers’ compensation settlements affects the amount of money you will receive at the time of settlement and any future rights.
You should carefully consider the type of settlement that fits best with your injury and life situation.
For help with filing a workers compensation claim in California or completing workers comp forms, contact us. Our firm helps police officers, firefighters and other workers to get compensation for their job-related injuries. If your case is in Nevada, please see our page on settlement of workers’ compensation claims in Nevada. Also see our article on Do all workers’ comp cases end in settlement?
Call our law firm for legal advice. Our workers’ compensation attorneys offer consultations.
