How Do Workers’ Compensation Settlements Work: Risks, Types, Claims & Average Workers Compensation Settlement

Millions of workers are exposed to workplace injuries and accidents every day. Hence, affecting their overall efficiency and ability to execute their jobs, either temporarily or permanently. For this reason, if a person is injured on the job, they can file a claim with the company’s insurer for workers’ compensation benefits. The workers’ compensation insurance acts as a safety net, covering medical costs, lost wages resulting from a workplace injury, and aid during recovery.

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However, this does not imply that such workers must accept whatever the insurance company offers. An injured worker may be dissatisfied with the amount offered by the insurance company or does not believe the reimbursement offered is of a fair amount. In such a case, a workers’ compensation settlement could be required. In this article, we will cover how workers’ compensation settlement works.

Workers’ compensation settlements are means for injured workers to receive compensation or benefits for work-related injury or accident. As an employee, workers’ compensation settlement serves as a way you can negotiate the immediate payment of injury benefits that may be owed to you after a claim is made.  It is a form of a settlement agreement in which an injured worker receives final payment for work-related injuries and accidents.

Settlements in workers' compensation cases are voluntary. You are not obligated to accept a settlement offer made by your employer or its insurer, nor do you have the power to compel the employer or insurer to settle your claim.

If you choose to settle, there are two ways to resolve a workers' compensation claim and receive benefits. They are: to 

• lump-sum payment plan
• Structured payment plan.
• Lump-Sum Settlement: The lump-sum settlement, sometimes called section 32 settlement, requires the injured worker to sign a settlement agreement that renounces certain rights in preference of a single lump-sum payment from the employer or insurer. That is, instead of weekly installments, you can negotiate a settlement that allows you to receive a one-time payment. Here, an employee signs a settlement agreement concluding the case, and in return, they get a one-time payment from the employer or the insurance company. Payments for future medical care, as well as money the insurer owes you for late temporary disability benefits and unreimbursed medical expenses, may be included in this settlement type. Lump-sum settlements make the process easier and beneficial if you have a pressing or specific financial need. An advantage of this settlement type is that you control your medical needs and schedule doctor appointments or procedures when you see fit.
• Structured Settlement: As an employee, you can negotiate a structured settlement that will provide payments over a defined time. In a structured settlement agreement, the injured worker consent to receive payment at a predetermined length of time, such as ten or fifteen years. You do not have to give up all of your future medical care rights under this form of settlement. Unlike lump-sum payments, this method eliminates the risk of spending the money too quickly.

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When an employee is injured, a workers’ compensation claim is filed with the employer and insurance company, who will review the medical records and accident report. When the insurance carrier accepts the claim, it then offers a certain amount as compensation. The employee must next decide whether or not to accept the offer and receive the remuneration that has been approved.

Employees can, however, decline the initial offer. An injured worker may opt for a more significant compensation instead of accepting the insurance company's offer. The injured employee will consult with their lawyer to decide on what they believe fair compensation would be for the injury in question. It should be sufficient to cover both past and future medical expenses. The employee and their legal counsel typically consider the following factors when determining this amount:

• The medical costs and likely future costs of the injury
• Lost wages and potential future lost earnings
• Disability payments
• Cost of retraining to perform the job, if necessary
• The workers’ compensation rules and regulations of the state in which the injury occurred
• Lost wages or future wage loss
• Temporary or permanent disability payments
• Legal fees

Workers’ compensation Settlements may take weeks or months to resolve. It is therefore essential to ensure employees know their options to return to work. Injured workers who are kept informed and know their options are less likely to sue. However, if the insurer and the employee cannot agree, a hearing will be held in court.

It is also conceivable for insurers to accept the claim and begin paying benefits. But, they can later challenge the claim if there are reasons to believe the injury was not work-related. In such a circumstance, a court struggle is almost sure to ensue, which can be a risky proposition for both parties.

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A fair settlement can be determined through a workers' compensation hearing or litigation. This hearing is necessary when both the injured worker and his employer are unable to reach an agreement. As a result, the only recourse left is to let the courts determine the settlement. At the hearing, both sides (employee and employer/insurer) will present their case and position. The ideal situation is for disputes to be resolved without the need for a lengthy legal battle. 

When a workers compensation lawsuit is filed in court, the judge will assess the case and determine whether the claim is valid, and if so, offer a fair settlement sum. The insurance company must follow the judge’s order to pay the claim, and the settlement is complete. 

However, for both insurers and injured workers, taking a workers' compensation case to trial can be dangerous. A judge may order a settlement that is significantly lower or higher than what either party had offered. As a result, both parties won't have much say in the outcome of the hearing. The primary aim is to provide any relevant information to each side. Therefore, to avoid the court process and for everyone's benefit, it's critical to get an injured worker back on the job as soon as possible.

In addition, the average period permitted for a judicial appeal is 30 days. The settlement is concluded, and the insurer will pay up the agreed sum if the insurance company fails to challenge the court decision or accepts the suggested amount outright.

Employers and insurers usually deny claims for injuries and accidents that have been reviewed to be not work-related. Other specific reasons include: 

• A self-inflicted injury
• Injury caused by fighting or horseplay
• An injury that occurred during an employee’s work commute
• An injury that occurred while under the influence of alcohol or drugs, violating company rules, or committing a crime

The injured worker may as well appeal the denial and possibly hire an attorney to represent the case. An administrative hearing in court is usually part of the appeal procedure. 

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If your workers' compensation claim is approved, the insurance company will cover any medical costs incurred due to your injury. While employees cannot work, they will receive a portion of their wages as a weekly benefit. Temporary total disability benefits (usually two-thirds of the employee's regular pay) will be paid by your workers' compensation insurer as well. However, even if an employee's claim is still active, temporary complete disability payments stop once they return to work.

Also, if injured workers require physical therapy for their injury, the insurance company would continue to pay for any medical bills related to the claim.

The amount for your workers' compensation settlement claim is determined by several criteria, such as your medical condition, how much you earned before your injury, and compensation laws in the state you applied your claims.

Four primary criteria go into calculating a workers compensation payment settlement:

• Future loss of income
• Cost for future medical treatments
• Costs for future prescription medications
• Transportation needs

A permanent impairment rating determines the four variables combined to establish the settlement's final amount. A settlement can also be negotiated between the insurance company's adjuster/ employer and the employee and his attorney.

Similarly, if the injured worker did not receive temporary benefits for medical expenses and lost wages before the settlement, those variables will be included in a final agreement. In most cases, however, only workers who are permanently incapacitated are involved in settlement negotiations.

A variety of factors influence the amount a worker receives in a workers compensation settlement. Factors such as the body part(s) injured and the severity of any permanent impairment. It is also tough to put a figure on the amount of your workers' compensation award because it's so individualized. Therefore, no two workers' compensation cases are the same. 

Overall, the average employee gets around $21,800 for their compensation. 

According to national research conducted by Martindale-Nolo, nearly three-quarters of workers receive compensation for their claims. The research shows that at the extreme ends of the scale, 12% of workers received less than $2,000, while only 8% of workers received between $60,000 and $100,000. The majority of workers, 55%, received between $2,000 and $20,000. The Compensation typically ranges from $17,000 to $27,000. Also, employees who hired a workers’ compensation attorney or law firm received a slightly higher settlement ($23,500 compared to the $18,000 people who didn’t hire a workers' compensation lawyer received)

It is worth noting that the quantity of benefits a worker receives varies substantially from state to state. When it comes to workers' compensation payments, some states are more generous than others. In Washington or Pennsylvania, for example, a worker will often receive benefits at a significantly higher rate than in Alabama or Georgia.

There is no specific answer as to how long workers’ compensation settlements take. It varies greatly. Cases can sometimes settle shortly after an injury, within a few weeks or a couple of months, or they can take years.

The average workers’ compensation case will be resolved within about 16 months. According to a reader poll conducted by Martindale-Nolo, it takes an average of 15.7 months to resolve a case, with less than 20% of cases being handled in less than six months. A resolution could lead to a settlement agreement or a judge's hearing. Bringing a settlement to a court can take a long time and make the process longer, resulting in larger settlements.