When Will Workers Comp Offer a Settlement?

When a worker gets injured on the job site, among the first (and most popular) questions asked is: When will workers comp offer a settlement?

The usual timeline for settling a workers compensation case is 12-24 months, with the average case settling in about 16 months. Lots of factors go into when a case settles, but one quick bit of advice for injured workers: Don’t try to get too far ahead of the game.

Settling a workers compensation case is the last step in the recovery process, not the first. You probably have medical treatment needs; wage compensation; rehabilitation; evaluation for maximum medical improvement and maybe even some vocational training to get to or get through before both sides agree it’s time to end this with a settlement.

In other words, says Mack Babcock, a Denver workers compensation attorney and President of the Workers Injury and Legal Advocacy Group (WILG), don’t rush yourself.

“The good thing about settling a workers compensation case is that you are the one making the final decision, not a judge, and there is some level of control there,” Babcock said.  “But settlements are a cost/benefit analysis for both the worker and the insurance company, and that analysis takes time. Neither side wants to take the risk of going to trial and losing.

“Still, the injured worker needs to be aware there is a cost for settling: You are releasing the insurance company from further financial responsibility. If anything happens down the road – you need more medical treatment, your wage benefits run out – you have no recourse because you shut the door by settling.”

And there lies the real question workers should be asking, especially if they were seriously injured: Do I want to shut the door by settling my workers compensation case? Or should I hire an attorney to see that I receive all the benefits I deserve?

Some good news for the worker is that in most states, settlement offers have to be approved by a judge and typically the judge is there to make sure the worker is being fairly compensated for the injury.

When Does Workers Comp Offer a Settlement?

One rule every injured worker should understand is: there are no rules for when an injured worker can reach a settlement with the insurance company. It could happen the day after the accident, or it could happen years after the accident … or it could happen somewhere in between.

“If both sides are represented by competent attorneys, conversations about settling matters are a natural part of the ongoing process,” Babcock said. “It’s not like what you see in a movie or on TV. You don’t have two guys daring each other to make the first move or trying to make the other side look weak and desperate.

“Workers compensation is a small, specialized practice where we all know each other. Most of the time, you are working cooperatively with the opposing side to get results.’’

The recovery time from a workplace accident varies so wildly depending on the worker’s age and injury sustained, that it’s impossible to put a timeline of days/weeks/months on when a settlement will be offered … by either side!

Yes, it’s best for workers to understand that the insurance company is not the only side that can offer a settlement. The worker or attorney representing them, can look at how things are going and decide it’s time to settle.

But if you’re determined to find a timeline for settlement, Babcock suggest you check the calendar and see if the Christmas holidays are coming up or the tax filing deadline is near.

“You’d be surprised to know how anxious both sides get around Christmas,” Babcock said. “Nobody wants to go to a hearing on Dec. 28 and everybody wants to start the New Year with a clean slate, so settlements speed up that time of year.

“Same thing is true around April 15 (tax filing deadline). There may be some taxes due that a settlement can support so the worker is in a hurry to settle.”

Beyond those calendar markers, however, the best place to look for a settlement offer is around the time of the doctor’s examination to determine whether the patient has reach Maximum Medical Improvement or MMI as it is widely known.

An MMI exam should be a good indicator of whether the injured employee is ready to go back to work, never going to be able to go back to work, or somewhere in between. The casual conversations about settlement can suddenly grow serious as both sides evaluate the value of settling this case rather than going to trial after doctors determine the worker has reached MMI.

Things both sides must consider before a settlement offer is made include:

• What type of injury do you have?
• How long will it take to recover from the injury?
• Will you ever be able to do the job you were doing when the injury occurred?
• What balance is left on medical bills?
• Will there be future medical treatments that need to be covered?
• How much wage compensation is needed now … or in the future?
• Is partial or permanent disability a factor? How much should be set aside for those possibilities?
• Whose paying attorney fees and how much will that cost?

Timeline for Workers Comp Settlements

In theory, a settlement for a workers comp claim could happen the day after an injury.  It also could take years after the accident. And it could happen anytime in between, for that matter!

There are steps in the process, steps which take place whether the two sides are negotiating a settlement or not. Here’s a look at the necessary steps in a worker comp cases with the understanding that some form of settlement discussions probably are happening all along.

1. Employer Files First Report of Injury

When an employer is made aware that a worker has been injured, the employer must file a claim with his insurance company and the state agency responsible for workers compensation. The deadline for filing varies by state but generally speaking employers have 7-10 days.

The First Report of Injury means the claim is open and now insurance companies and the state workers compensation agency have a record of what happened and when it happened.

2. Claim Is Approved or Denied

A high percentage of workers compensation claims are approved immediately because the injury is easily treatable and the worker returns to their job the next day or next week.

However, if the injury is more serious, the claim process slows and the insurer must decide, usually within two weeks, whether to approve or deny the claim.

If the claim is denied, things get serious on both sides. The injured worker can appeal the claim and that puts the insurance company on the defensive about why it won’t accept the claim.

It is wise to consult with an attorney if your claim is denied.

3. First Settlement Offer from Insurance Company

When a worker files a claim, the insurance company adjuster looks at it and assigns a dollar amount he/she thinks it will take to settle things.

Ideally, the insurance company would prefer the worker make the first settlement offer to see if it’s close to (or preferably under) that amount. However, most workers compensation attorneys want to hear from the insurance company first and go from there.

Regardless of who makes the first move, the process of a worker recovering from the injury and the insurance company paying medical bills rolls on. Eventually, one side or the other will get anxious about where the process is headed and make a settlement offer. That is when the negotiating process gets serious.

4. Negotiations Take Place

As Babcock said, informal negotiations go on throughout the process, but if both sides are ready to settle, it’s probably time for a mediation hearing, which definitely expedites matters.

Both sides know the strengths and weaknesses of their case and want it to end before going to trial. Workers compensation attorneys agree that somewhere around 90% (probably higher) of cases are settled during mediation.

A mediator meets with each side independently and presents the strengths and weaknesses the opposite side has with the case. The mediator draws the two sides closer to the middle and eventually, to a final agreement.

5. Benefits Are Paid

If the case settles at mediation, the only thing left is how to distribute the money being paid the worker. The sides could negotiate a structured settlement plan, but in most cases, both sides want a lump-sum payment.

A structured settlement provides payments on a weekly, monthly or annual basis. That might be a more favorable avenue if the worker’s injury is so serious that there is no way to gauge how long he/she will be in rehabilitation and whether or not they will even work again.

The structured settlement could mean guaranteed income for the rest of the worker’s life. The other major benefit to the worker is that money from structured settlements is not taxed.

However, most cases are paid off in a lump-sum settlement. This is beneficial from the worker’s perspective because they don’t have to wait for the money and they don’t have to worry about inflation eating into the value of the settlement down the road.

The value to the insurance company is that the case is permanently closed. They are no longer responsible if medical complication arise down the road. When they settle, they are satisfied that this amount is all it’s going to cost them.

Does Workers Comp Always Offer a Settlement?

The extent and seriousness of an injury determines whether their claim results in a settlement.

If you have a sore back or sprained ankle injury that should take only a week or two to heal, there is no reason for a settlement. The medical bills will be paid; you will be compensated for lost wages and return to work.

That’s that and the case will be closed.

However, if the injury is more serious, and you end up either partially or permanently disabled, some sort of settlement is a near certainty.

Workers and insurance companies both like the certainty that results from a settlement. That’s why only about 5%-10% of workers compensation cases end up going to trial.

If you aren’t sure whether your case will result in a settlement, contact a workers compensation attorney. They provide free consultations to evaluate your claim and advise you on the options available for pursuing a settlement.