To Settle or Not to Settle?
“To be or not to be” is a question that Hamlet was confronted with in the legendary Shakespeare play. “To settle or not to settle” is a difficult decision that injured workers are often faced with in their workers’ compensation cases.
Imagine you are in this position: you have injured yourself at work, and the insurance company has denied the claim. You hired a lawyer who filed a petition for benefits on your behalf. At the first hearing before the workers’ compensation judge, you testified about your job duties, injury, and medical treatment you have received. At the conclusion of the hearing, the judge scheduled a mediation – also known as a settlement conference – which occurs three months after the first hearing.
By the time of the mediation, you have undergone an independent medical evaluation with the doctor for the insurance company, who is of the opinion that if you sustained an injury at work it was minor and you have fully recovered from it; and you are able to return to your job without restrictions. You are appalled by the doctor’s opinion because you continue to experience constant pain which prevents you from doing your job, and one of your doctors has recommended surgery.
By the time of the mediation, it has been four and a half months since your injury, and you still have not received any income. A different judge than the one which you testified before presides over the mediation. You, your lawyer, and the lawyer for the insurance company attend; the claims adjuster for the insurance company is available throughout the mediation by phone.
Let’s add to the hypothetical that you earned $750 per week in your job, which translates to a weekly compensation rate of $500 (2/3 of your wages; your benefits are non-taxable). After negotiating back and forth for an hour and a half, the insurance company lawyer makes a final offer to you: $40,000 (20% attorneys’ fees will come out of that), which based on your workers’ compensation rate, equates to about one and a half years of benefits. In other words, you would have to receive workers’ compensation benefits for a year and a half from the time of your injury to receive that amount. Do you accept the offer or decline it? There are several advantages and disadvantages to weigh.
The primary advantage of accepting the settlement offer is that you will receive the money fairly quickly – within a few weeks of the mediation. The judge assigned to your case will be notified that a settlement has been reached and will hold a hearing, probably in the next two weeks, at which a settlement agreement – called a Compromise and Release Agreement in Pennsylvania – will be submitted to the judge. You will be asked a few questions to ensure the judge that you understand the terms of the settlement, and the judge almost certainly will approve the settlement. You will then receive your settlement check, usually within two to three weeks. If you do not agree to the settlement and opt to have the judge decide your case, you will have to wait as long as nine months to a year before you receive the decision. Doctors will give depositions, the judge will hold additional hearings, and the lawyers will file legal briefs arguing their positions. So you will receive money much faster if you agree to a settlement, as opposed to letting the judge decide your case.
Another advantage of settling is that you eliminate the risk of the judge ruling against you. While you know that you hurt yourself at work and cannot handle the duties of your job, nothing is a sure bet in workers’ compensation. It’s possible that the judge will find that you did not sustain a work injury, or if you did, it was minor and you fully recovered by the time that you were evaluated by the insurance company doctor. Under these scenarios, you would receive $0 or a fraction of what you would get in the settlement.
However, there are disadvantages to settling your case. By entering into a Compromise and Release Agreement, you will be giving up your right to any wage loss benefits or medical benefits in the future, even if your condition worsens. So after receiving the settlement check, you will not be able to file another petition, asking that your employer or the insurance company pay you additional money. The settlement money isn’t going to last you forever, so you will have to find a way to generate income in the future, either by returning to work, prevailing on a Social Security disability claim, or some other means. Also, you won’t be able to get the insurance company to pay any of your future medical bills, so if you need treatment in the future you will have to pay out-of-pocket or submit the bills to insurance that you had before you settled your case or obtained after your settlement.
Another disadvantage of settling is that you might not receive as much money than you would if you wait for the judge to decide your case and obtain a favorable decision. You will then be in a better position because the insurance company will have to pay you back benefits and issue you a check weekly or bi-weekly. This will provide you with leverage which you didn’t have while your claim was being denied and the insurance company wasn’t paying you, which is likely to lead to a larger settlement.
Settling or not settling your case is a very important decision. Our advice: as soon as you get injured, call Pearson Koutcher law, and one of our experienced workers’ compensation lawyers will guide you through the process, file a petition on your behalf if necessary, and explain to you the advantages and disadvantages of entering into a settlement of your case.
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Pearson Koutcher Law
1650 Arch Street
Philadelphia, PA 19103
Bethlehem Office serving the Lehigh Valley
528 Maple Street,
Bethlehem, PA 18018