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Employees who are injured by another person while working are entitled to two claims: worker compensation and personal injury. These separate claims overlap and affect the strategy for each of their cases. As such, you should understand how settling the worker compensation claim can affect the personal injury claim.

Worker Compensation Settlement

Injured workers are entitled to settlement money in worker’s compensation claims because they have been hurt on the job and have incurred medical expenses and lost wages as a result. These settlements are intended to compensate the injured worker for their losses and help them cover the costs of their recovery.

The settlement amount that an injured worker may receive in a worker’s compensation claim is referred to as a “compromise and release” settlement. The compromise and release settlement is a legal agreement between the injured worker and their employer or their employer’s worker’s compensation insurance carrier. This agreement allows the injured worker to receive a lump-sum payment in exchange for giving up their right to future benefits related to the injury.

Understanding Worker Compensation Settlement

In California, the worker’s compensation insurance carrier and the injured worker must agree to the settlement, and the agreement must be approved by a workers’ compensation administrative law judge (ALJ) to ensure that the settlement is fair and reasonable. The settlement amount will be based on the nature of the injury, the worker’s medical expenses, and the worker’s lost wages.

It’s important to have the assistance of an attorney who specializes in worker’s compensation claims, to ensure that the settlement amount is fair and reasonable and that the worker’s rights are protected.

Why Worker Compensation Awards Settlements

Workers’ compensation carriers pay a lump-sum settlement in exchange for giving up the right to future benefits related to the injury for a few reasons:

Certainty: A lump-sum settlement allows the carrier to know exactly how much they will have to pay out, rather than potentially having to pay out benefits over an extended period of time. This can be more cost-effective for the carrier in the long run.

Closure: A lump-sum settlement also allows the carrier to close out the case and move on to other claims. This can be beneficial for the carrier’s workflow and case management.

Incentive for the injured worker: A lump-sum settlement can be appealing to the injured worker as well, as it provides them with a lump sum of money that can be used to pay for medical expenses, lost wages, and other expenses related to the injury. It also allows the injured worker to have control over the money and use it as they see fit.

Financially beneficial for the worker: A lump sum settlement can also be financially beneficial for the worker, as they may be able to invest the money and potentially earn more over time than they would have received in ongoing benefits payments.

It’s important to keep in mind that the worker’s compensation carrier’s right to seek a lump-sum settlement is limited by the laws of the state and the agreement must be approved by a workers’ compensation administrative law judge (ALJ) to ensure that the settlement is fair and reasonable.

Worker Compensation Subrogation

In California, if a worker’s compensation insurance company settles a worker’s comp claim, they may have the right to seek reimbursement for the benefits they paid out in the event that the injured worker receives a settlement or judgment in a personal injury claim related to the same incident. This is known as the “right of subrogation.” The amount of reimbursement that the worker’s compensation insurance company can demand will depend on the specific terms of the settlement or judgment in the personal injury claim and the amount of benefits paid out under the worker’s comp claim.

Typically, the insurance company is entitled to be reimbursed for the full amount of benefits paid out, but in some cases, the reimbursement may be limited to a percentage of the personal injury settlement or judgment. It is important to consult with an attorney to determine the exact amount that the insurance company may be entitled to seek in reimbursement.

Legally Entitled to Subrogation

The law that allows worker’s compensation carriers to seek subrogation is known as the “right of subrogation.” This legal principle allows a worker’s compensation carrier to recoup benefits paid out to an injured worker if that worker receives a settlement or judgment in a personal injury claim related to the same incident.

The right of subrogation is based on the principle that an injured worker should not be able to receive double recovery for the same injury. In other words, if an injured worker receives compensation for their injuries from both a worker’s compensation carrier and a third party, the worker’s compensation carrier should be able to recoup the benefits they paid out.

The right of subrogation is not automatic and varies from state to state. In California, the worker’s compensation carrier must prove that the permanent disability payments were causally related to the work injury and that the employee has recovered damages from a third party that are related to the same injury. Additionally, the worker’s compensation carrier’s right to subrogation is limited to the proportionate share of the employee’s recovery that is representative of the compensation carrier’s payments.