There are basically two types of workers compensation settlements: A Stipulated Finding and Award or “Stipulation,” and a Compromise & Release.
Stipulation: When a workers’ compensation claim is settled by Stipulation, the employer and employee stipulate legally as to what exactly the industrial injuries are, which parts of the body are involved, and the amounts of the permanent or temporary disability payments (usually paid out bi-weekly in most states). It is also agreed that ongoing medical claims from the injury will also be paid, if needed and as approved by designated personnel. The main benefit of a Stipulation agreement is that it allows “both parties to voluntarily agree to a settlement without the need to take the work comp case to court and wait for the judge to make a decision following a hearing or trial,” according to the website MyAttorneyHome.com.
In many states, including California, for example, a Stipulation also allows an injured worker to:
• Reopen their case at a later date,
• Follow upon the first Stipulated award with another one or
• Request a Compromise and Release at a later date.
A Stipulation may also require an injured worker to adhere to certain conditions in order to continue receiving compensation. Violating this aspect of a Stipulation can be costly.
Here’s an example: A workers’ request for reimbursement for a back surgery that was medically necessary was denied by a Florida appellate court in early January 2022 because in obtaining the surgery, the employee failed to follow the terms of a Stipulation agreement. The city of Hialeah, Fla., accepted liability for the injured firefighter and agreed to pay his medical expenses. However, the Stipulation agreement between the firefighter and the city specified that the city would only pay medical expenses if they were first approved by the city’s doctor. The firefighter proceeded to undergo spinal fusion surgery without obtaining authorization first from the city’s doctor and then applied for reimbursement. Even though the procedure was medically necessary, the prior approval requirement of the stipulation was not met, so the reimbursement was denied. The appellate court upheld the verdict.
Compromise and Release Under a Compromise and Release (often referred to in the lingo as a “C&R”): The injured worker and employer/insurance company agree that no matter what the injury is and no matter what the state workers compensation schedule says the medical and indemnity payouts for the injury should be, the insurance company will make a lump sum settlement to resolve the entire case. This is calculated based on future permanent or temporary injury payouts and also typically includes an estimate for all future medical treatment. Upon payment of the lump sum, the insurance company is absolved of or “released” from any future liabilities for the case.
Keep in mind these definitions apply only broadly and there are a lot of variables, depending on the state’s workers compensation regulations and individual circumstances. Also, as a practical matter, workers’ compensation claimants faced with the choice of a Stipulation, or a Compromise & Release often obtain counsel from applicant workers comp attorneys to decide which alternative will best suit them.
For more information or help, contact the Insurance professionals of EPIC’s CRA ProRental™ Insurance Program. Call us at: 800.234.6363.
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