There are two types of settlements in workers' compensation: a Compromise and Release ("C&R") and Stipulations ("Stips"). If an injured worker goes through treatment but doesn't heal 100% and a doctor has assigned some amount of "Permanent Disability" to the injured worker, the injured worker will get money to compensate them for how much Permanent Disability ("PD") the doctor assigned. The more PD that a doctor assigns, the higher the amount of compensation.
Settling Your case through Stipulation
Stipulations: the injured worker gets some money and retains the right to future medical care for the injured part(s) of the body.
When an injured worker settles his or her claim by Stips they get paid for that amount of Permanent Disability, and nothing more. The injured worker can continue to have access to free health care to the injured part(s) of their body.
Settling a workers’ compensation claim via Stipulations (or “Stips”) is rather simple. The injured worker gets paid for the amount of Permanent Disability (“PD”) that a doctor opines that the injured worker has. That is all that the worker gets paid for. He or she continues to have access to medical treatment through the workers' compensation system, which means that the worker can continue to get treatment paid for by the insurance company. (Please note that all treatment is still subject to approval or denial by the insurance company, just like treatment is prior to settlement.) Stips are paid at a rate of $290 per week, or less if the injured worker had a low rate of pay prior to their injury until the worker receives all PD payments, minus attorney fees. That’s all.
Settling Your Case Through C & R
Compromise and Release: the injured worker gets more money than Stipulations, but the injured worker will no longer get free treatment from the insurance company.
A C&R pays the injured worker for that same Permanent Disability, but also adds more money as an estimate of how much money the injured worker may need for future medical care for the injured part(s) of body. This type of agreement ENDS the injured worker's right to free medical care for their injury. This type of agreement also resolvesEVERYTHING in a workers' compensation claim. So after this agreement is made, the injured worker will NOT get future medical care and will not get any more money than was agreed to in the C&R.
A C&R ONLY occurs when the parties can come to an agreement on a reasonable dollar figure for a settlement. A judge cannot force an injured worker to "sell out" his or her right to future medical care.
Settling a workers’ compensation claim via Compromise and Release (“C&R”) is different from Stips, but the concept is also rather simple. The injured worker gets paid for his PD (just like he or she does in Stips), and they also get more money which is an estimate of future medical care that he or she may need to treat from the workers’ compensation injury. Because the injured worker gets money in exchange for future treatment, he or she can no longer treat through the workers’ compensation system after they settle via C&R. Unlike Stips, a C&R is paid with one lump sum payment (as opposed to being paid $290 per week). Also unlike Stips, when someone settles a claim via C&R, about 95% of the time employers require that the injured worker voluntarily resigns from his or her job. This is not a punishment or penalty to that worker; rather it is protection against fraud that used to run rampant before C&R’s required a voluntary resignation, and it is standard (although a small number of employers do not require it). Simply put, after a worker settles via C&R, the claim is over: the worker will not get any more treatment paid for and will not get any more money from the insurance company beyond what is agreed upon in the settlement.
Compromise & Release FAQ
Frequently asked questions about Compromise and Release:
- Is a Compromise and Release settlement taxable?
A Compromise and Release settlement is only available through workers’ compensation. Because workers’ compensation benefits are not taxable, C&R settlements are also not taxable.
- How are Compromise and Release settlements calculated?
To calculate a Compromise and Release settlement, three factors need to be considered: permanent disability rating, future medical treatments, and attorney fees. Whatever payment you receive from the insurance company after factoring in your disability and future medical care will be reduced by attorney fees, which we always try to keep reasonable and competitive.
- What happens after I settle my workers’ comp case?
If you were paid a Compromise and Release lump sum settlement, then you will get that payment sent to you after the case ends, usually within a week or 30 days at most. If you agreed to receive a structured settlement, then you should see checks mailed to you at regular intervals until the settlement amount is fully paid by the insurer.
- Can you release future claims in California?
You and the insurance company can agree to waive the right to future claims in exchange for compensation, but California law might say otherwise. In California, plaintiffs usually retain the right to sue for future grievances that should not be considered part of a preexisting waiver agreement or Compromise and Release.
- What are the risks of signing a Compromise and Release?
The biggest risk of signing a C&R is that the insurance company might try to use legalese to confuse you and make you agree to a less-than-fair settlement amount. The easiest way to avoid this risk is to allow an experienced workers’ compensation attorney to work with you as your case progresses. Let them review any C&R agreement sent to you before signing it.
- Who approves and executes a Compromise and Release?
A workers’ compensation judge must review your C&R and approve it. The judge’s involvement is another step to ensure that neither party is inadvertently agreeing to a situation that puts them at a legal disadvantage, or that would provide the claimant an unfairly small amount of compensation. A judge who disapproves of a C&R can order an additional medical report review with a follow-up hearing or instruct both parties 30 days to accept an agreement that the judge drafts.
About the Author: Attorney Eric Farber
Attorney Eric Farber is the founder of Pacific Workers’ Compensation Law Center. For more than 20 years, he has been in numerous high-stakes litigation battles and fought for the rights of professional athletes fighting through workers' compensation battles. He is an AV Rated attorney by Martindale Hubbel and has achieved numerous awards and honors for his the complex and litigated cases he has handled.