What Is A Lump Sum Settlement? When Is It Advantageous?

A lump sum settlement is when an individual settles their workers’ compensation case and receives one sum. It is different than an annuity where the settlement usually involves a certain amount of cash upfront with additional payments over a period of time. They could be monthly payments for a set number of years, or they can be a one-time per year payment for a set number of years, but that would be the annuity situation versus the one-time cash lump sum. When you look at the two, very rarely are there lower settlement amounts which lead to an annuity. Quite often it’s the opposite. When you have a permanent total disability settlement those may include some type of annuity.

Is The Settlement That I Agree To Going To Be Final?

The settlement that you agree to is going to be final. In Colorado, it is extremely difficult to re-open a settlement once you have completed a full and final settlement and it’s been approved by the Division of Workers’ Compensation. In Colorado, whether it’s the smallest injury up to the most traumatic injury, the full and final settlement has to be signed off by the Division of Workers’ Compensation or a workers’ compensation administrative law judge. In other words, they review the settlement documents to confirm that the terms that are required to be part of the settlement documents are included. In fact, in Colorado, we have the Division of Workers’ Compensation settlement documents that are used in every single case.

If the parties want to put some additional terms into the settlement documents, they either need to be added to paragraph nine, or in certain situations added as an exhibit to the settlement documents. But, in any case, the work comp settlement is not final until it’s approved by either the division or an ALJ. Once that happens, the only way you can reopen a full and final settlement is through fraud or mutual mistake of material fact. Fraud is pretty self-explanatory. If it’s determined that the injured worker reported a fraudulent claim, the insurance carrier can move to reopen the claim. Alternatively, if for some reason, the injured worker can show that the insurance company was somehow fraudulent, then the injured worker can petition to reopen the claim. The other term, “mutual mistake of material fact,” is very specific. When somebody settles their case on a full and final basis, one of the terms they are absolutely considering is that their medical condition may worsen, but they’re choosing to take the risk and settle the case anyway. Generally speaking, a worsening of the work-related condition after the full and final settlement is not “mutual mistake of material fact”, and not a basis to reopen the full and final settlement.

Can I Still Obtain A Settlement If I End Up Going Back To Work?

You can still obtain a settlement even if you end up going back to work. There are two different types of permanent benefits. One is permanent partial disability and the other is permanent total disability. When somebody settles their case based on permanent partial disability, it’s acknowledged that they have some permanent impairment, but are still capable of working. When there’s a permanent total disability settlement, the injured worker walks away, and the insurance company walks away. If the injured worker can find work again, they are entitled to do so.

The only time an injured worker will not be able to return to work is if the workers’ compensation insurance carrier files a final admission of liability for permanent total disability benefits where the insurance company acknowledges that the individual is incapable of working as a result of the injury. Cases where that happens are rare. In that situation, the claim is not settled, but there’s an admission for permanent total disability benefits, so the injured worker can’t go back to work because he is receiving weekly permanent total disability benefits instead.

Does Everyone Involved In A Workers’ Comp Case Have To Agree On A Settlement?

Everyone involved in a workers’ comp case has to agree on a settlement. Specifically, the workers’ compensation insurance company and the claimant have to agree to a settlement, then it has to be approved by the Division of Workers’ Compensation.

For more information on Lump Sum Workers’ Comp Settlements In CO, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (303) 420-8080 today.