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The Workers’ Compensation system is a limited benefits system that can extend for months, or even years, before any discussions of settlement occur.

When a workers’ compensation doctor finds an injured worker (hereinafter “applicant”) permanent and stationary, meaning he or she is not expected to get better or worse within the next year, settlement discussions may begin. Under Workers’ Compensation, there are two types of settlements: Stipulations with Request for Award or by a Compromise and Release.

Stipulations Findings and Award

Stipulations with Request for Award (hereinafter “Stipulations”) is a settlement that occurs when the parties agree to all the issues, resulting in an award of permanent disability and future medical care. An award for future medical care is appealing to many applicants because it is a way of avoiding having to pay ongoing, out-of-pocket medical expenses for a work-related injury.

Settling by way of Stipulations is also beneficial in that an applicant may petition to reopen their claim for new or further disability within five years from the date of injury.

Certain information is required when drafting stipulations, including: the date of the accident, the nature and extent of the injured worker’s disability, the amount paid or due on account of compensation, and the duration of any further payment.

A settlement award must also account for any lien claimants. Any third party that may have provided benefits to an injured worker that should have been provided by the workers’ compensation system has a right to a lien on a settlement award.

Once drafted, the applicant is required to sign and date the Stipulations. If the applicant is represented by an attorney, the attorney must also sign the Stipulations along with the adjuster and/or defense attorney.

Signed Stipulations are then submitted to a Workers’ Compensation judge in a walk-through process to finalize the process of getting the settlement agreement approved. If the settlement terms are found to be consistent with medical records and evidence, a Workers’ Compensation judge will approve the Stipulations, making the agreement binding on the parties.

A Workers’ Compensation judge will also review a settlement to ensure that the defendants are given credit against a settlement award if disability compensation was advanced to the injured worker.

Payments under Stipulations are paid on a biweekly basis over a specified number of weeks at the rate of $290 per week.

Compromise and Release

A Compromise and Release is a settlement that terminates an employer’s liability for a work-related injury in exchange for a lump sum paid to the injured worker. Unlike Stipulations, a Compromise and Release usually does not provide future medical benefits. The specific terms of a Compromise and Release are also written into the settlement.

However, both types of settlements have virtually the same filing and format requirements and both must be accompanied by the same information regarding adequacy of award and proof of service on any and all lien claimants. (See LC §5003).

Previously, a Compromise & Release had to be signed by the applicant and two disinterested witnesses or by a notary public. However, effective as of 1/1/2020 in response to the COVID-19 pandemic, Cal. Code Regs., Title 8, §105000(b)(6) was suspended therefore eliminating the needs for witnesses or notary.

If either party has representation, their attorney must sign the Compromise & Release before submitting it for review by a Workers’ Compensation judge. Once submitted, the judge will review the Compromise & Release for adequacy of benefits being awarded to the applicant. (See LC §5001).

Signing away the right to future medical benefits is a serious decision, so a judge will want to ensure that an applicant understands that they will bear the costs to treat their injury once the settlement is approved.

When an applicant has representation, he or she is protected by their attorney who will ensure that an informed decision is made and ensure that the settlement is adequate for purposes of a workers’ compensation judge’s approval.

An unrepresented injured worker has no such advocate therefore their settlements typically receive greater scrutiny by the judge, which can cause settlement proceedings to be delayed. However, a Workers’ Compensation judge will generally find a Compromise and Release adequate and order approval if the settlement amount is supported by medical reports and other evidence.

Of course, each individual case will have its own set of facts, which will dictate what options an injured worker may have. The above explanation is a broad overlook of what the two main type of settlements look like under the workers’ compensation system but the information is not exhaustive.

The Workers’ Compensation system can be confusing and an injured worker may not understand his or her rights after they are injured on the job. A beneficial solution to getting questions answered is to obtain a Workers’ Compensation attorney. A Workers’ Compensation attorney knows the labor code and can help navigate through the Workers’ Compensation system and explain in plain terms what the process is for settling a worker’s compensation claim.

Mastagni Holstedt, A.P.C. is the largest firm in Northern California that represents injured workers and offers a free consultation to those seeking representation. If you have been injured at work and want to discuss your case and the possibility of representation, please call our office at 877-212-6907 to set up a phone appointment with a Workers’ Compensation attorney.

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