The insurance company pays the injured worker a lump sum to settle the workers’ compensation case in a compromise & release. Present and future lost wages and medical expenses determine the settlement’s value.
What is a compromise and release?
A compromise and release (C&R) is an agreement in which the insurance company pays the injured worker a lump sum check to settle the entire workers’ compensation case. The value of the settlement is determined mainly by the present (and projected future) lost wages and medical care expenses.
A C&R will occur in two situations:
- when the injury has been denied by the insurance carrier
- when the injured worker’s condition is considered permanent and stationary, and the amount of disability has been determined
A C&R agreement must be approved by a workers’ compensation judge.
Compromise and Release
- A C&R must be approved by a judge.
- It can be approved at any hearing, including a Mandatory Settlement Conference, a Status Conference, or a workers comp trial.
- A C&R can also be approved as a “walk-through,” meaning the injured worker can go before a judge without a hearing on the court calendar.
- A C&R can also be mailed to the court for approval.
- The insurer will agree to pay the C&R settlement within 30 days of its approval by a judge.
- The insurance company will give the injury claim a claim number after the employee files a claim for workers’ comp benefits. A claim number is different from the case number. A case number is assigned by the Worker’s Compensation Appeals Board (WCAB) when a document is filed with the court.
- Normally the first document that will be filed with the court is the Application for Adjudication of Claim. This will give the claim a case number.
- If there is no application filed, the C&R settlement will be the first document filed with the court. Therefore, the case number will be given at the time of settlement.
- If there is an attorney for the injured worker, he or she will take 15% of the total settlement amount.
- An insurance company will only agree to a C&R if the injured worker is not returning to work for the employer.
- As a C&R ends the worker’s entire claim, if the worker returns to the same job, he or she could file another claim.
- Workers’ compensation benefits are not taxable. This includes payments an injured worker receives in a Compromise and Release workers’ compensation settlement.
What does a settlement agreement contain?
- The date of injury
- Case number
- Injured body parts
- Where the injury occurred
- Whether it is a specific injury or cumulative trauma
- Whether there is temporary disability or permanent disability
- The dollar value of the settlement
- Date of death
- Name of widow/widower
- Name and ages of all children
- Names of all other dependents
- Whether dependents were totally or partially supported by the deceased worker
- Amount of death benefit
- Who the death benefit is paid to
The process for executing a C&R
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C&R usually settles California workers' compensation cases.
Most injured workers prefer to settle the entire workers’ compensation case. It gives an injured worker an immediate lump sum settlement.
The benefit of future medical care may not be appealing to an injured worker as he or she may have private health insurance. The injured worker does not necessarily need the workers’ compensation insurance company to pay for future medical care.
When contacted by the insurance company about a C&R settlement, an injured worker should carefully consider his or her case’s value. An injured worker should attempt to negotiate a settlement and not rush into an agreement.
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