The laws of each state govern workers' compensation settlements. If you are currently a work comp claimant, you have a right to settle the case with the insurance company handling the claim. Settlement is optional for both parties; the law will not force you or the insurance company to negotiate a settlement. If you do reach an agreement, the time frame for your final payment is generally a subject of the agreement.
A settlement releases the insurance company for any further liability for the claim. Indemnity benefits will stop, as will medical benefits (unless you can negotiate to keep the medical benefits continuing). Your attorney will negotiate a lump-sum payment, which usually represents a discount on the stream of future benefits that the insurance company will no longer have to pay.
Terms of Payment
Some states require that insurance companies make the lump-sum payments within a time limit, in most cases 30 days. Your attorney will also be able to negotiate this deadline and will have a standard length of time written into his settlement agreement template. Fifteen or 30 days is the most common range of time for a lump-sum payment on a workers'-comp settlement. All parties have an interest in keeping to the deadline. The insurance company would like to close the case and end all future liability; the attorney wants to collect his fee, which is usually a percentage of the settlement; and you have an interest in a rapid lump-sum payment so you can get on with your life and put your workers' comp experience behind you.
Workers' comp settlements are usually accomplished outside of the judicial process; there are no hearings or litigation necessary. The parties must, however, submit the agreement for the approval of a workers' compensation court or the state's public workers' comp agency, which will render its decision and establish an effective date for the settlement. If a court sets the terms of an agreement, it will also set the deadline for any payments.
Failure to Pay
Insurance companies have a procedure in place for payment of settlements, which includes the deduction of attorney fees, accounting paperwork and the process for issuing and mailing out checks. In addition, the carrier may require Medicare approval or another contingency that will affect the delivery of your settlement money. If you do not receive payment within the agreed-upon deadline, you may file for a hearing in civil court to enforce the settlement. This rarely happens, because insurance companies don't want to face further legal costs or, in some states, lose their license to sell insurance altogether for non-payment of a settlement.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.