The majority of workers settle their workers’ compensation cases in California. Settlement has several benefits: Workers can often resolve their claims more quickly, without the hassle of going through an evidentiary hearing. But, it also means making some compromises, especially when it comes to the amount that they receive in benefits.

Before agreeing to a settlement, you should carefully consider what you are getting and what you are giving up in exchange. (For more information, see our article on the pros and cons of settlement.)

When Can I Settle My Workers’ Compensation Case?

You can settle your workers’ compensation case at any time in California. However, as a practical matter, you should wait to settle until you can accurately estimate the value of your claim. This means waiting until you have reached maximum medical improvement (MMI)—the point at which your condition has stabilized and is not expected to improve further—and you have received an impairment rating from your doctor. Until then, you won’t know the full extent of your disability or how much you should receive in benefits.

What Types of Settlements Are There?

In California, there are two types of settlements. The first type of settlement is called a “Compromise and Release.” With this type of settlement, you agree to give up all rights to collect further benefits on your workers’ comp claim, in exchange for a lump sum payment from the insurance company. Once you sign a compromise and release, your medical treatment will no longer be covered by workers’ comp, and you can’t go back and ask for more money if your condition worsens.

The second type of settlement is called a “Stipulations With Request for Award.” With this type of settlement, you will receive your benefits in installments, usually on a biweekly basis. Your future medical treatment will still be covered by workers’ comp, and—if your condition worsens—you can file a petition to reopen your claim to receive additional compensation.

The type of settlement that is appropriate in your case depends on several factors, including the severity of your injuries, the likelihood of needing future medical treatment, your financial situation, and more. You should consult with a workers’ compensation lawyer about which type of settlement is right for you.

How Much Should I Settle For?

Before you can evaluate a settlement offer from the insurance company, you need to have an idea of how much your claim is worth. Among other things, you should consider:

• how much you might be owed in permanent disability benefits
• how much you might be owed in life pension benefits
• the estimated cost of any future medical treatment that you may need
• the cost of any outstanding medical bills or mileage reimbursements for travel to doctors’ appointments
• any temporary disability payments the insurance company failed to pay while you were off work, and
• any penalties that the insurance company owes you for failing to pay your benefits on time.

At the same time, you should consider the weaknesses in your case and how likely you are to win at a hearing. For example, if there’s strong evidence that your condition may have been caused by a non-work related incident, you may want to meet the insurance company in the middle. A lawyer can help you determine your odds of success at a hearing and how much your claim is worth.

Before agreeing to a specific sum, you should also have an idea of what will be taken out of your settlement amount, such as:

• attorneys’ fees and legal costs
• permanent disability advances (the insurance company can often get a credit for permanent disability payments it has already made), and
• a Medicare set-aside (if you are receiving Medicare, or will in the near future, you may need to reserve a portion of the settlement funds to cover the cost of future medical care related to your injury).

Getting a Settlement Approved

All workers’ compensation settlements must be approved by a California workers’ comp judge. To start the approval process, either a Compromise and Release or a Stipulations With Request for Award will need to be filed with the California Workers’ Compensation Appeals Board (WCAB). The insurance company will likely prepare the necessary paperwork, which you should carefully review for any errors. If your settlement is a compromise and release, in which you are giving up all rights to future benefits, it’s best to have a lawyer look over the settlement forms before you sign.

Once the necessary forms are filed, the WCAB will schedule an adequacy hearing. A workers’ comp judge will review the settlement documents and make sure that you understand what rights you are giving up. If you have a lawyer, the judge will likely approve the settlement without too much scrutiny. If you do not have a lawyer, the judge will take a closer look to make sure that the terms are fair. If the judge approves the settlement, you will usually receive payment within 30 days.