Deciding whether to settle your workers compensation claim is one of the most important decisions you’ll make during your recovery. As a workers comp lawyer in Baton Rouge, I help injured workers understand settlement offers and negotiate fair settlements that protect their long-term interests. Before you accept any settlement, you need to understand what you’re agreeing to and what you’re giving up.
What Is a Workers Comp Settlement?
A workers comp settlement is an agreement between you and the insurance company to resolve your claim. Instead of continuing to receive ongoing benefits, you receive a lump sum payment or structured settlement and your claim is closed. Once you settle, you generally cannot reopen your claim or seek additional benefits for that injury, even if your condition worsens.
Settlements can be advantageous in certain situations, providing closure and certainty, avoiding ongoing disputes with insurance companies, receiving a substantial sum of money upfront, and eliminating the stress of continued medical appointments and legal proceedings. However, settlements also carry significant risks if not structured properly.
Types of Workers Comp Settlements in Louisiana
Louisiana allows several types of settlements. A full and final settlement resolves all aspects of your claim including past and future medical benefits, temporary and permanent disability benefits, and any vocational rehabilitation benefits. Once signed, you give up all rights to future benefits for that injury.
A medical-only settlement resolves just the medical portion of your claim while preserving your right to disability benefits. Conversely, you might settle disability benefits while keeping medical benefits open. Partial settlements resolve some issues while leaving others open. The type of settlement appropriate for your case depends on your specific circumstances, prognosis, and future medical needs.
Stipulated Settlement vs. Compromise Settlement
In Louisiana workers comp, there are two main settlement structures. A stipulated settlement involves agreement on the medical facts and disability rating. The parties agree on the extent of your disability and the settlement amount is calculated based on that agreed rating. These settlements generally must be approved by the Office of Workers’ Compensation to ensure they’re fair.
A compromise settlement involves disputed facts. Perhaps the parties disagree about the extent of disability or causation. You compromise by accepting less than you might win at a hearing in exchange for certainty and avoiding trial. These settlements require OWC approval to ensure you understand what you’re giving up.
How Settlement Amounts Are Calculated
Several factors affect your settlement value including the severity and permanency of your injury, your future medical needs, your age and remaining work life, your earning capacity before and after injury, whether you can return to your previous job, the strength of medical evidence supporting your claim, and the risks of continued litigation.
An experienced Baton Rouge workers compensation lawyer can accurately value your claim by analyzing medical records and prognosis, consulting with medical experts, calculating future lost earning capacity, estimating future medical costs, and understanding how workers comp judges typically value similar injuries.
Common Settlement Mistakes to Avoid
Too many injured workers make critical mistakes when settling including settling too early before knowing the full extent of their injury, accepting the first offer without negotiation, failing to account for future medical needs, not understanding what benefits they’re giving up, signing without legal representation, and trusting that the insurance company is offering a fair amount.
Insurance companies make money by paying out as little as possible. The first settlement offer is almost never the best offer you can get. Their initial offer often doesn’t account for future complications, undervalues permanent disability, assumes you’ll return to work sooner than realistic, or simply lowballs you hoping you’ll accept without fighting.
When Settlement Makes Sense
Settlement may be appropriate when you’ve reached maximum medical improvement and no further treatment will help, your disability rating has been established and isn’t likely to change, you have another job or employment opportunity, the risks of continued litigation are high, or you need a lump sum for specific purposes like starting a business or paying off debt.
However, you should never feel pressured to settle. If you’re still treating and improving, if your condition might worsen, if you haven’t returned to work, or if the settlement offer doesn’t adequately compensate you, you should think very carefully before accepting settlement.
Medical Settlements vs. Disability Settlements
One of the biggest decisions is whether to settle your medical benefits. If you settle medical benefits, the insurance company will no longer pay for future treatment related to your injury. You’ll be responsible for all future medical costs yourself. This is extremely risky if your injury requires ongoing treatment, if complications might develop, if you might need future surgery, or if your condition could worsen over time.
Many workers comp lawyers, including myself, advise against settling medical benefits unless you’re certain you won’t need future treatment. Even a seemingly healed injury can cause problems years later. Keeping medical benefits open protects you if your condition deteriorates.
Lump Sum vs. Structured Settlements
If you do settle, you’ll need to decide between a lump sum payment and a structured settlement. A lump sum gives you all the money at once, which provides immediate access to funds and allows you to invest or use the money as needed. However, lump sums carry risks. You might spend the money too quickly, lose it through poor investments or bad advice, or find yourself without resources if unexpected medical needs arise.
Structured settlements provide periodic payments over time, ensuring you have ongoing income and reducing the risk of spending the money unwisely. However, they offer less flexibility and may not keep pace with inflation or changing needs.
Tax Implications of Settlements
Workers comp benefits, including settlements, are generally not taxable as income. However, if part of your settlement compensates for other damages or involves a third-party claim, some portion might be taxable. If you receive Social Security Disability benefits, a workers comp settlement could affect those benefits due to offset provisions. Before accepting any settlement, consult with a workers comp lawyer about potential tax consequences.
Medicare Set-Asides
If you’re eligible for Medicare or will be within 30 months, you may need to establish a Medicare Set-Aside account as part of your settlement. This protects Medicare from having to pay for treatment that should be covered by your workers comp settlement. Failing to properly address Medicare’s interests can result in Medicare refusing to pay for future care related to your injury.
The Settlement Approval Process
In Louisiana, most workers comp settlements must be approved by a workers compensation judge to ensure they’re fair and that you understand your rights. The judge will review the settlement terms, confirm you’ve been advised of your rights, ensure you understand what benefits you’re giving up, and verify the settlement is reasonable given the facts of your case.
This approval process protects injured workers from being pressured into unfair settlements. However, it also means you can’t simply accept an offer and receive your money immediately. The approval process takes time, and your settlement can be rejected if the judge believes it’s not in your best interest.
Negotiating a Better Settlement
Settlement negotiation is where an experienced workers comp lawyer provides tremendous value. We know how insurance companies operate, what settlement offers are reasonable, and how to negotiate for more. Negotiation strategies include presenting strong medical evidence of your disability, demonstrating your reduced earning capacity, calculating realistic future medical costs, identifying weaknesses in the insurance company’s position, and being willing to take your case to hearing if necessary.
In my experience, having a Baton Rouge workers compensation lawyer negotiate your settlement typically results in significantly higher settlement amounts than injured workers can obtain on their own. Insurance adjusters know that unrepresented workers don’t know what their claims are worth and will often accept lowball offers.
What Happens After You Settle
Once your settlement is approved and you receive your payment, your workers comp claim for that injury is closed. The insurance company has no further obligations to you. You cannot reopen your claim if your condition worsens, you cannot seek additional medical benefits if you need more treatment, and you cannot claim additional disability benefits if you cannot work.
This finality is why settlement decisions are so critical. You must be confident that the settlement amount adequately compensates you for all past and future losses related to your injury.
Can You Ever Reopen a Settled Claim?
Generally, no. Louisiana workers comp settlements are final once approved. However, in extremely rare circumstances, settlements can be set aside for fraud, mutual mistake of fact, or if the settlement wasn’t approved by OWC as required. These exceptions are very narrow and difficult to prove.
The lesson is clear—don’t settle until you’re certain. If there’s any doubt about your prognosis, if your condition might worsen, or if the settlement amount doesn’t feel sufficient, don’t accept the settlement just because the insurance company is pressuring you.
Red Flags That a Settlement Offer Is Too Low
Watch for these warning signs that indicate an inadequate settlement offer: the offer is made very soon after your injury before your condition has stabilized, the insurance company is pressuring you to settle quickly, the amount doesn’t account for your future medical needs, the settlement doesn’t compensate you for reduced earning capacity, the offer is substantially less than what a workers comp lawyer tells you your claim is worth, or the settlement requires you to give up medical benefits when you still need treatment.
The Value of Legal Representation in Settlements
Workers comp lawyers typically work on contingency, meaning we only get paid if you recover benefits. Our fee is a percentage of your recovery, and that percentage is capped by Louisiana law. In settlement cases, the value we provide usually far exceeds our fee. We can negotiate settlements that are 50 percent, 100 percent, or even 200 percent higher than the initial offer, ensuring all your future needs are considered, protecting you from unfair settlement terms, and making sure the settlement is structured in the most advantageous way.
Before You Sign Anything
Never sign a settlement agreement without having it reviewed by a workers comp lawyer. Even if you’ve been handling your claim on your own, settlement is the time to get legal advice. A lawyer can review the settlement terms, identify any problematic provisions, calculate whether the amount is fair, negotiate for better terms, and ensure you understand exactly what you’re agreeing to.
Get Your Settlement Questions Answered
Settlement decisions are permanent and life-changing. Don’t rush into a settlement without fully understanding the implications. If you’ve received a settlement offer on your Louisiana workers comp claim, contact Attorney Ted Williams before signing anything. We’ll review your settlement offer, explain your options, and negotiate for the compensation you deserve. Visit our website to learn more about our settlement negotiation services, or see what clients say about our results on our Google Business page.# Workers Compensation Blog Posts for Attorney Ted Williams