There are two types of workers compensation settlements. They are called a Stipulated Finding and Award and a Compromise and Release. A Stipulated Finding and Award is an agreement which reaches the same decisions that a judge would make after a trial. A Compromise and Release completely closes the case.
What is a Stipulated Finding and Award?
A “Finding and Award” is what the judge’s decision is called. A “Stipulated Finding and Award” is an agreement that has the same effect as the judge’s decision. It is entered into voluntarily by both sides rather than being imposed on the parties by the judge.
The main components of a Finding and Award are the percentage of disability and whether or not the applicant needs further medical care. The percentage of disability derives from the doctor’s opinion as to your level of disability. There is a formula for determining disability from the language in the medical report, combined with your age and occupation. Usually we have a dispute as to the level of your disability since it is the percentage of disability that determines the amount of money you receive. The benefits awarded by a judge are paid out over time. They are not paid in a lump sum unless the payment has already ended.
Permanent disability is paid at different rates for different dates of injury and for different percentages of disability. For example, an injury after July 1, 1996 is paid at $140.00 per week if the disability is less than 14.75%, $160.00 per week if the disability is between 15% and 24.5%, $170.00 per week if the disability is between 25% and 69.75% and $230.00 per week if the disability is over 70%. The rates are lower for earlier years of injury and higher after January 1, 2003. For injuries after that there are only 2 rates. For 2003 the rates are $185 for less than 70% and $230 for disability of 70% or more. For 2004 the rates are $200 per week for under 70% and $250per week for over 70%. For injuries in 2005 the rates are $220 and $270. For 2006 and after it will be $230 per week for disability less than 70% and $270 per week for disability of 70% or more.
A Stipulated Finding and Award will set forth the percentage of disability which we agree to as well as the number of weeks to be paid and the rate. Each specific percentage of disability is paid for a certain number of weeks. For example, 10% is paid for 30.25 weeks and 50% is paid for 266.25 weeks (for injuries before 1/1/04). As you can see, a disability of 50% is worth more than five times as much as a disability of 10%. After 1/1/04, 10% is paid for 40.25 weeks and 50% is paid for 286 weeks.
Permanent disability benefits should begin within two weeks after the last payment of temporary disability benefits. Therefore, if it has been some time since your benefits should have begun and they have not, and if we agree that they should have begun some time ago, then there may be some money accumulated already that is due to you. For instance, if your injury was before 1/1/04 and we agree that you had a 10% disability and this agreement was made more than 30.25 weeks after you had stopped receiving temporary disability and you had not received any permanent disability advances then the entire amount of the award would have already be due to you.
Permanent disability advances may have begun before your settlement. These advances will be counted as credit against the number of weeks that the employer is suppose to pay you. However, the amount you receive per week may go up or down by 15%, depending on whether your employer has over 50 employees and whether they offer you a job.
An important part of the Stipulated Finding and Award is the agreement as to whether or not you are entitled to future medical care. There are three choices. Either that you are or are not or that you may be entitled to future medical care. If there is a dispute, we often agree that you “may be entitled to medical care.” If you are entitled or may be entitled to medical care you will need to notify the insurance company before you receive medical care. Usually the doctor will do this for you. Be sure that it is done. Usually you should just call your adjuster or the person at your company which handles workers’ compensation. If you have already elected a primary treating doctor you should continue to treat with that doctor, but you do have a right to change treating doctors.
After January 1, 2005, you may be required to obtain all medical care from the employer’s or the insurer’s Medical Provider Network.
Attorney’s fees on a Stipulated Finding and Award are often “commuted” from the far end of the award. This means that the fees are paid to the attorney now but credited to the employer against the last payments that they would have to make. Since attorney’s fees are usually 15%, you would receive approximately 15% less payments then you are scheduled to receive. For instance, if you were to receive 100 weeks of benefits, you would only receive about 85 weeks. The last 15 weeks of payments would have already been paid to the attorney for attorney’s fees.
Because the insurance company is paying the benefits now to the attorney which would not be paid to you for some time, they are allowed to take a small percentage of interest which they might have earned on that money while they are waiting for the payments to be due. The interest is computed at 3% and there are tables for determining the amount of interest. In the previous example you might receive only 83 or 84 payments rather than 85. The difference would be because of the commutation of the award. Most people prefer this to paying the attorney first and having to wait for their benefits to begin.
What is a Compromise and Release?
A Compromise and Release closes the entire case and eliminates the need for payments over time. It also closes any right to future medical care. If you have a right to future medical care but would rather pay for it yourself or have some other means such as other health insurance to pay for it, then you may want to consider a Compromise and Release. If you close your future medical care, you are usually compensated to some degree for relieving the insurance company of having to pay for future medical care. Most applicants prefer to have their case be completely over if there is no definite need for continuing medical care.
The amount of the Compromise and Release is usually more than the amount of the permanent disability which you would have received over time. The difference is intended to compensate you for future medical care. If all of the doctors agree that you do not need any future medical care then your settlement would be about the same as the amount of permanent disability. Technically, the insurance company has the right to reduce the amount by 3% per year for “commuting” the entire award. In practice, this is not usually done, although some insurance companies do insist on it. For instance, if you had a disability of 10% you would be entitled to $4,235.00 paid over 30.25 weeks under a Finding and Award. However, if you Compromise and Release your case you would receive the $4,235.00 all at once. (Less attorney’s fees)
Depending upon the amount of future medical care the doctor describes as being necessary and the probability of you actually obtaining that medical care, a Compromise and Release of that 10% disability might be anywhere from $4,500.00 to $10,000.00. For instance, if the doctor says that you might have flare ups that would require brief periods of physical therapy, this would be worth more than a statement of future medical care that only said you could control your pain with aspirin and over the counter medication. On the other hand, if the doctor says that you will probably need a total knee replacement within 10 or 15 years, the future medical care has much more value. Under those circumstances you may not want to settle by Compromise and Release.
A Compromise and Release is not always possible. If you are continuing to work with the same employer and they are insured by the same insurance company then they normally do not want to settle by way of Compromise and Release. The reason is that they cannot buy the end of the case. If you continue to work there you could be re-injured the day after the settlement and they would have to begin paying medical benefits again.
How will my settlement affect Vocational Rehabilitation?
There is no vocational rehabilitation for injuries after January 1, 2004.
It is possible to settle your case either by Stipulated Finding and Award or by Compromise and Release while you are in Vocational Rehabilitation or before you even begin Vocational Rehabilitation. However, you cannot receive vocational rehabilitation benefits and permanent disability benefits at the same time except under certain circumstances. Therefore, your permanent disability payments under a Stipulated Finding and Award may not begin until after you have completed vocational rehabilitation. However, you may receive partial payments to supplement your Vocational rehabilitation Maintenance Allowance up to the amount of your temporary disability.
The more common problem is a settlement by Compromise and Release during vocational rehabilitation. A settlement by Compromise and Release will not effect your vocational rehabilitation benefits. You can continue to participate in vocational rehabilitation and to receive your Vocational Rehabilitation Maintenance Allowance even if you have settled your case by Compromise and Release. However, there is one important issue if you do that. As long as your case is open, either not settled or settled by Stipulated Finding and Award, any injury which occurs during vocational rehabilitation is considered to have been a compensable consequence of your work injury. So if you are, God forbid, hit by a car on your way to your vocational rehabilitation training or job searching, and paralyzed for life, the insurance company will have to provide you with medical care and benefits just as if the injury happened at work. However, the insurance companies uniformly require that as a condition of the Compromise and Release you release them from that obligation.
For this reason, I usually recommend to my clients that they do not settle their case by Compromise and Release until they are finished with vocational rehabilitation. While the changes are very slim that you will receive an injury in vocational rehabilitation, the unlimited coverage provided by workers’ compensation is something to be held on to as long as you can. Ideally, we come to an agreement about the value of a Compromise and Release and sign the paperwork at the end of your vocational rehabilitation so that you receive the money promptly after your rehabilitation is complete.
Can’t I get all of the money and keep the medical open?
While it would be theoretically possible to Compromise and Release the permanent disability but keep future medical care open, it is basically unheard of in Southern California. The whole point of a Compromise and Release from the insurance companies point of view is that they get rid of you. They know how much the case costs and they get it over with rather than having to keep the case open and wonder when you will be going to the doctor again. They also avoid having to keep the case open to send checks every two weeks. Therefore, there is really only the two choices of keeping your medical open and being paid over time or closing everything including your future medical.
What if the insurance company won’t make a reasonable offer?
Remember that it takes two sides to settle a case. The reason we have judges and trials is to make the decisions when the two sides of the case cannot agree on what is fair. Your attorney can make the argument to the insurance company but if they do not think the case is worth as much as you or your attorney think it is then they will not settle the case. At some point if the insurance company will not accept your demand and you will not change or if you will not accept the insurance company’s offer and they will not change then the only alternative is to go to trial.
What happens if the case is settled?
The attorneys will complete forms provided by the court; either a Compromise and Release or a Stipulated finding and Award agreement. There will be presented to the judge who must review the documents and medical reports to be sure that it is adequate for your injuries. The judge will then sign either and Order Approving Compromise and Release or the Award made pursuant to the Stipulated Finding and Award. These documents, when signed by the judge, have the effect of an order by the court. Generally speaking, when you receive the order, you should receive your check for the amount of the settlement less attorney’s fees and less any permanent disability advances within 30 days. With a Stipulated finding and Award, you are often already receiving benefits by the time we enter into the agreement. The agreement just determines when those benefits will end.
If you have any other questions regarding the settlement process, please contact your attorney.