If you have an Arizona workers’ compensation claim, you may be interested in a settlement. Workers settle these claims for a variety of reasons. Sometimes, an injury has stabilized, and the worker no longer wants to deal with the insurance company. Other times, the worker decides that taking a disputed case to trial is too risky and accepts a lump sum instead. (For more information, see our article about the risks and benefits of settlement.)
Accepting a settlement offer in your Arizona workers’ compensation case is a big decision. Before signing a settlement agreement, you should consider what you will be getting and what you will be giving up in return.
In the past, Arizona did not allow workers to settle their workers’ comp claims. Today, the state permits settlements but limits when you can settle a workers’ comp claim. Due to these limitations, settlement is less common in Arizona than in other states.
If you have a valid dispute with the insurance company, you may settle your claim at any time. (This is sometimes called a “compensability settlement.”)
However, if your claim is approved, most workers wait to settle until their medical conditions are stable and not expected to improve any further. This is called maximum medical improvement (MMI). It is risky to settle before MMI because it might not be clear whether you will need additional medical treatment or whether your condition will be permanent. Without knowing the full extent of your injuries, it can be very difficult to accurately value your claim.
In Arizona, like in all other states, settlements are voluntary. No one can force you, or the insurance company, to settle; both parties must agree to the terms of the settlement.
If your claim is legitimately disputed, your settlement may require you to release all claims against your employer arising out of your work injury—including the right to any additional medical treatment, wage loss benefits, and vocational rehabilitation services.
However, once your claim has been approved, you cannot give up certain rights. While you can settle your wage loss claim and some medical benefits, the settlement only covers known injuries. If you discover another work-related injury, you may receive additional benefits post-settlement. Additionally, you retain the right to open your medical claim post-settlement.
Every workers’ compensation claim is different, and there is no simple formula for valuing a claim. Due to the complexity of Arizona workers’ compensation law, most workers hire lawyers to help them evaluate settlement offers and negotiate with the insurance company.
When evaluating a settlement offer, you should consider several factors, including:
You should also consider the weaknesses in your claim if it is being disputed. When you take a case to trial, there is always a chance that you will lose. If there is a major dispute about whether you’re entitled to benefits, and it is unlikely that you will win your case at trial, you may want to compromise and accept a lower lump sum settlement instead.
Because you are the one with the claim, you (or your attorney) will typically start the process by giving the insurance company a settlement demand. The insurance company will respond to your demand by accepting it, rejecting it, or making a new offer in response. This negotiation process can continue until you agree on a settlement amount.
Mediation is another opportunity to try to settle your case. Mediation is an informal conference where you and the insurance company will present your sides of the dispute to a neutral party (called a mediator). The mediator will guide you through negotiations and try to help you reach an agreement.
Once you and the insurance company have agreed to a settlement, the Industrial Commission of Arizona must approve it. The Commission will review a series of signed documents and forms that set out the terms of your settlement. It will not approve your settlement unless it is convinced you understand the terms of your settlement.
The settlement documents and forms set out the terms of your settlement and how your settlement money will be distributed. Attorneys’ fees, unpaid medical bills, and unpaid child support payments may be subtracted from your settlement, for example. Additionally, if you are a Medicaid or Medicare recipient, you may have to set aside a portion of your settlement money to pay for future medical treatment related to your work injury. (For more information, see What Will Be Taken Out of My Workers’ Compensation Award or Settlement?)
You can cancel the settlement at any time before approval by the Industrial Commission of Arizona, even if the settlement paperwork has already been filed. However, if your case was disputed, your settlement is full and final once it is approved. In other words, you cannot change your mind or reopen your claim.
If your workers’ comp claim was approved, your settlement is full and final for all known benefits. If you discover a new condition, you may request additional workers’ compensation benefits from the insurance company.
Do not sign settlement paperwork if you have concerns about the terms of the settlement. You should also consult with a lawyer before signing the settlement paperwork.
Workers’ comp settlements require a great deal of legal knowledge and skill—you must be able to give your claim a monetary value, negotiate with the insurance company, complete settlement forms, and comply with other state and federal laws. While you are not required to hire a workers’ comp lawyer to settle your claim, it’s probably in your best interest to do so.
As noted above, a settlement usually means that you’re agreeing to give up all rights to collect additional workers’ compensation benefits related to your injury. At the very least, you should have a workers’ comp lawyer review any settlement agreement that you are thinking of signing.
