Both the employer and injured worker often approach settling workers’ compensation claims with trepidation. Is the time right? Should future benefits be left open? Will a settlement increase the chances of other employees filing claims and trying to get paid through a settlement? The actual answers often reside in a gray area, but there are often circumstances where settling a claim can benefit everyone involved.
“The optimal time for all parties to consider settlement as an option is when there is a dispute regarding future medical care, return-to-work options, retirement plans, or it is simply time for the injured worker and insured to part ways,” said Chris Wigginton, Regional Claims Manager at Safety National. “Each party involved must be willing to compromise to reach a resolution, but once settlement values are fully understood, it can help a claim move forward to closure.”
Consider the following benefits of settling workers’ compensation claims:
1. The injured worker can choose medical care outside of what the workers’ compensation claim allows.
For the injured worker, a full and final settlement provides financial security and additional funds to pay for future medical treatments. Once the claim has been settled, the injured worker can choose any physician for continued care. They are no longer bound by the restrictions of the workers’ compensation laws regarding which specialists can continue to treat them. This can be particularly beneficial when their choice of continued care is closer to home and someone they have trusted for regular care in the past.
2. The employer can avoid the uncertainty of increased future medical costs and litigation expenses.
A settlement can help an employer avoid paying the potential full value exposures of any future total, permanent total, or permanent partial disability through a present cash value option.
Additionally, litigation is expensive, and jury awards are impacted by social inflation. For some businesses, a lawsuit could lead to reputational harm from the publicity. An early, confidential settlement can avoid any further negative attention.
3. Closed claims can prevent premium increases due to an improved experience modification rate (MOD rating).
When calculating initial workers’ compensation premiums, an insurance carrier will leverage specific expertise in utilizing an organization’s MOD rating based on the number of Occupational Safety and Health Administration (OSHA) filings from a business. This rating helps determine the overall risk for employees on the job. Organizations with higher-than-average workplace injuries will typically face an increased MOD rating and, thus, a more sizable premium.
Full and final closure of a file can reflect positively on the employer’s insurance MOD rating, including self-insured retentions and premiums.