There are two types of workers’ compensation settlements.
Stipulated Finding and Award and Compromise and Release are the two type of workers’ compensation settlements. A Stipulated Finding and Award is an agreement which reaches the same decisions that a judge would make after a trial. A Compromise and Release completely closes the case.
What is a Stipulated Finding and Award?
A “Finding and Award” is what the judge’s decision is called. A “Stipulated Finding and Award” is an agreement that has the same effect as the judge’s decision. It is entered into voluntarily by both sides rather than being imposed on the parties by the judge. However, once it is reviewed by a judge and the judge signs the “Award” then it has the same effect as if the judge had made the Award after trial.
The main components of a Finding and Award are the percentage of disability and whether or not the applicant needs further medical care. The percentage of disability derives from the doctor’s opinion as to your level of disability. There is a formula for determining disability from the language in the medical report, combined with your age and occupation. Usually we have a dispute as to the level of your disability since it is the percentage of disability that determines the amount of money you receive. The benefits awarded by a judge are paid out over time. They are not paid in a lump sum unless the weekly payments are found to be due from a date so long ago that all payments are already due.
Permanent disability is paid at different rates for different dates of injury and for different percentages of disability. For example, an injury occurring during the year 2013 is paid at $230.00 per week if the disability is less than 54%, $270.00 per week if the disability is between 55% and 69% and $290.00 per week if the disability is between 70% and 99%.The rates are lower for earlier years of injury and for injuries after January 1, 2014 all levels of disability are paid at $290 per week.
A Stipulated Finding and Award will set forth the percentage of disability which we agree to as well as the number of weeks to be paid and the rate. Each specific percentage of disability is paid for a certain number of weeks. For example, 10% is paid for 30.25 weeks and 50% is paid for 271.25 weeks (for injuries before 1/1/13). As you can see, a disability of 50% is worth more than five times as much as a disability of 10%.
Permanent disability benefits should begin within two weeks after the last payment of temporary disability benefits. Therefore, if it has been some time since your benefits should have begun and they have not, and if we agree that they should have begun some time ago, then there may be some money accumulated already that is due to you. For instance, if we agree that you had a 10% disability and this agreement was made more than 30.25 weeks after you had stopped receiving temporary disability and you had not received any permanent disability advances then the entire amount of the award would have already be due to you.
Permanent disability advances may have begun before your settlement. These advances will be counted as credit against the number of weeks that the employer is supposed to pay you. If your injury was between 01/01/2005 and 01/01/2013 the amount you receive per week may go up or down by 15%, depending on whether your employer has over 50 employees and whether they offer you a job. If you are back at work or at another job earning your usual pay then you receive no payments until we have arrived at a certain level of disability, either by agreement or award after trial.
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Future medical care
An important part of the Stipulated Finding and Award is the agreement as to whether or not you are entitled to future medical care. There are three choices. Either that you are or are not or that you may be entitled to future medical care. If you are entitled or may be entitled to medical care you will need to notify the insurance company before you receive medical care. Usually the doctor will do this for you. Be sure that it is done. Usually you should just call your adjuster or the person at your company which handles workers’ compensation. If you have already elected a primary treating doctor you should continue to treat with that doctor, but you do have a right to change treating doctors.
After January 1, 2005, you may be required to obtain all medical care from the employer’s or the insurer’s Medical Provider Network. All medical care will also be subject to Utilization Review.
Attorney’s fees
Attorney’s fees on a Stipulated Finding and Award are often “commuted” from the far end of the award. This means that the fees are paid to the attorney now but credited to the employer against the last payments that they would have to make. Since attorney’s fees are usually 15%, you would receive approximately 15% less payments than you are scheduled to receive. For instance, if you were to receive 100 weeks of benefits, you would only receive about 85 weeks. The last 15 weeks of payments would have already been paid to the attorney for attorney’s fees.
Because the insurance company is paying the benefits now to the attorney which would not be paid to you for some time, they are allowed to take a small percentage of interest which they might have earned on that money while they are waiting for the payments to be due. The interest is computed at 3% and there are tables for determining the amount of interest. In the previous example you might receive only 83 or 84 payments rather than 85. The difference would be because of the commutation of the award. Most people prefer this to paying the attorney first and having to wait for their benefits to begin.
What is a Compromise and Release?
A Compromise and Release closes the entire case and eliminates the need for payments over time. It also closes any right to future medical care. If you have a right to future medical care but would rather pay for it yourself or have some other means such as other health insurance to pay for it, then you may want to consider a Compromise and Release. If you close your future medical care, you are usually compensated to some degree for relieving the insurance company of having to pay for future medical care. Most applicants prefer to have their case be completely over if there is no definite need for continuing medical care.
The amount of the Compromise and Release is usually more than the amount of the permanent disability which you would have received over time. The difference is intended to compensate you for future medical care. If all of the doctors agree that you do not need any future medical care then your workers’ compensation settlement would be about the same as the amount of permanent disability. Technically, the insurance company has the right to reduce the amount by 3% per year for “commuting” the entire award. In practice, this is not usually done, although some insurance companies do insist on it. For instance, if you had a disability of 10% you would be entitled to $4,235.00 paid over 30.25 weeks under a Finding and Award. However, if you Compromise and Release your case you would receive the $4,235.00 all at once. (Less attorney’s fees)
Depending upon the amount of future medical care the doctor describes as being necessary and the probability of you actually obtaining that medical care, a Compromise and Release of that 10% disability might be anywhere from $4,500.00 to $10,000.00. For instance, if the doctor says that you might have flare ups that would require brief periods of physical therapy, this would be worth more than a statement of future medical care that only said you could control your pain with aspirin and over the counter medication. However, now that every medical treatment gets reviewed by Utilization Review and much care that used to be routine is now denied, insurance companies are more reluctant to offer much money to close their obligation to provide care. On the other hand, if the doctor says that you will probably need a total knee replacement within 10 or 15 years, the future medical care has much more value. Under those circumstances you may not want to settle by Compromise and Release.
A Compromise and Release is not always possible. If you are continuing to work with the same employer and they are insured by the same insurance company then they normally do not want to settle by way of Compromise and Release. The reason is that they cannot buy the end of the case. If you continue to work there you could be re-injured the day after the settlement and they would have to begin paying medical benefits again.
Can I settle my Supplemental Job Displacement Benefit (SJDB)?
For injuries after January 1, 2013, you cannot settle your “voucher” or SJDB. For injuries between 01/01/2004 and 01/01/2013 that possibility exists but experience has shown the insurance companies that most people do not use that benefit so they often offer little or nothing to settle it.
Can’t I get all of the money and keep the medical open?
While it is theoretically possible to Compromise and Release the permanent disability but keep future medical care open, until recently this was almost unheard of in Southern California. The whole point of a Compromise and Release from the insurance companies point of view is that they get rid of you. They know how much the case costs and they get it over with rather than having to keep the case open and wonder when you will be going to the doctor again. However, now that medical care is so difficult to obtain under workers’ compensation, the carriers are becoming more willing to do this, knowing that your future care will not cost them much.
What if the insurance company won’t make a reasonable offer?
Remember that it takes two sides to settle a case. The reason we have judges and trials is to make the decisions when the two sides of the case cannot agree on what is fair. Your attorney can make the argument to the insurance company but if they do not think the case is worth as much as you and your attorney think it is then they will not settle the case. At some point if the insurance company will not accept your demand and you will not change or if you will not accept the insurance company’s offer and they will not change then the only alternative is to go to trial.
What happens if the case is settled?
The attorneys will complete forms provided by the court; either a Compromise and Release or a Stipulated finding and Award agreement. There will be presented to the judge who must review the documents and medical reports to be sure that it is adequate for your injuries. The judge will then sign either an Order Approving Compromise and Release or the Award made pursuant to the Stipulated Finding and Award. These documents, when signed by the judge, have the effect of an order by the court. Generally speaking, when you receive the order, you should receive your check for the amount of the workers compensation settlement less attorney’s fees and less any permanent disability advances, within 30 days. With a Stipulated finding and Award, you are often already receiving benefits by the time we enter into the agreement. The agreement just determines when those benefits will end.
If you have any other questions regarding the workers’ compensation settlement process, please contact your attorney.
This article is for general information, and not meant as specific legal advice. You should always see an attorney for specific legal questions.