The Difference Between Awards and Settlements

Howard J. Stevens
Certified Specialist, Workers Compensation, State Bar of California
[email protected]
Phone 619-930-5748 FAX 619-937-5746

A person wearing a suit and tie  Description automatically generatedAmong the questions we get most often is: What is the difference between an Award of Workers Compensation benefits and a settlement of a Workers Compensation case?. Both represent the potential end of a Workers Compensation claim, but they are very different in the benefits they provide and the legal effect each might have on your case. Our hope is that this brief article will explain the differences between the two in order to help in the decision process at the end of the case.

An Award of benefits can be obtained by agreement or court order. An award can deal with any benefit available in a Workers Compensation matter, but for the purposes of this discussion, we will consider awards that can come once there is agreement that an injured worker's medical condition has stabilized and is not likely to change in the near future. This is referred to as "maximum medical improvement" or "permanent and stationary." When the injured worker reaches this level of stability, there will usually be some amount of money due for permanent disability payments, although generally these payments are quite modest ( currently a maximum of $290 per week),, and payable in biweekly installments for a limited period whose length is proportionate to the percentage of disability to be awarded pursuant to the medical reports. In contrast to settlements, Awards come with lifetime access to medical care for treatment which the doctor believes may be needed to cure or relieve from the effects of the work injury. Awards can be potentially increased after they are first issued if the original disability worsens within 5 years of the date of the injury.

Unlike Awards, settlements are negotiated, cannot be involuntarily awarded, and both sides must agree to the amount. Settlements are paid in a lump sum (unless the settlement is very large). Unlike Awards, settlements foreclose access to further medical care at the employer's expense. Settlements are almost always significantly more money than Awards because Awards are only for the value of the permanent disability (strictly defined under the Labor Code) but settlement amounts must take into consideration the value of medical care that might be reasonably anticipated. Settlements cannot be reopened later even if the disability becomes significantly worse.

It is up to the injured worker to decide which is the best option. However, we do tell our clients that medical care under the Workers Compensation case is fraught with "ifs," "ands" or "buts" including slow authorizations from insurance carriers and utilization review reports from doctors who routinely disagree with the recommendations of treating physicians. Therefore, it is often advantageous to settle a case and obtain treatment outside the compensation system, especially where there is available insurance coverage to avoid going bare once the Workers Comp case has resolved.