Understanding How Workers’ Compensation Settlements Work: An Overview

According to the National Safety Council (NSC), common work-related injuries in the U.S. include slip and fall injuries, cuts and lacerations, crashes and collisions, and muscle strains. To protect workers from the financial burden associated with such injuries, the federal government requires all employers, except those in Texas, to carry workers’ compensation coverage for their employees. Specifically, workers’ comp coverage pays for medical expenses, lost wages, and death benefits arising from a workplace accident. To seek compensation for a workplace injury or illness, an injured worker must file a workers’ comp claim within the stipulated period. Upon receiving a workers’ comp claim, the employer’s workers’ comp insurer will investigate the matter to determine whether to accept the claim or not. Here is more information about this topic.

The Process Involved in Workers’ Comp Settlement

Workers’ comp coverage aims to assist an injured worker in returning to their pre-injury state, both physically and mentally. This means that the compensation amount should cover all medical costs, including rehabilitation expenses if needed, lost wages, and any additional benefits. It is worth noting that if the benefits you receive are inadequate to cover your medical costs and lost wages, you can file an appeal against the decision.  Some of the factors that determine the outcome of the workers’ compensation settlement process include:

  • Amount of past, present, and future medical costs
  • Amount of lost wages and potential future losses
  • Legal fees spent
  • Cost of retraining for the job
  • Disability payments
  • State laws
  • Strength of the claim

When a Workers’ Comp Claim Goes to Trial

Per the Department of Labor and Industrial Relations (DLIR), only about 5% of workers’ comp cases go to trial. When a case goes to trial, the court will first evaluate it to determine if it’s valid or not. If the case is valid, the court will propose a settlement amount that seems fair, depending on the nature of the case. If the insurance company and the plaintiff agree on the new settlement amount, the insurer will then pay this amount. If not, the insurance company or the plaintiff can decide to appeal for more favorable terms. Take note that it is possible for the appeal to be unsuccessful, in which case the insurer will have to pay the amount ruled by the court.

Once the parties involved agree on a settlement amount, the insurer can either pay it in a lump sum or through a structured settlement, say, a certain amount every month for a specific period.

The Role of the Employer During a Workers’ Comp Lawsuit

According to the Society of Human Resource Management (SHRM), an employer should assist an injured worker in completing the necessary illness/injury report. However, if the case goes to trial, the employer will have a limited role to play. If your employee is pursuing a workers’ comp settlement, you can stay up-to-date with the case and provide any support required to avoid being indicted in the case. You can also provide any necessary information that will help the court resolve the case faster.

State-mandated Rules

Laws governing workers’ comp settlements vary by state. For instance, while some states may allow a settlement to be offered at any stage of the claim, others don’t. Additionally, some states do not allow workers’ comp settlement to affect medical benefits.

This is an overview of how workers’ compensation settlements work. For all your commercial insurance needs, contact the experts at Modab Insurance Services. Our team will help you get the right insurance coverage that suits your needs.

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