Lump sum settlements in Texas workers compensation law: Settlements vs. Agreements

Texas workers compensation law generally prohibits lump sum settlements and requires that medical benefits stay open for life. However, there are legal guidelines which allow for dealing with disputed issues that can allow resolution of disputes within that framework.

First, some terminology. In Texas workers compensation law, a "settlement" is a resolution of a dispute regarding any and all issues in the claim. When the parties "settle" a workers compensation claim, they forfeit the right to additional hearings except to enforce the settlement. The settlement cannot foreclose or limit the right to future medical care. It can and must define what specific medical conditions are covered in the claim (which, in effect, will limit the right to future medical care by excluding medical care for diagnoses not part of the claim). It cannot allow for future income benefits to be paid in a lump sum. Past due disputed income benefits will be paid in a lump sum. Future income benefits will be paid as scheduled by law without further action.

Here is the Labor Code section involved in Texas workers compensation agreements and settlements:

Sec. 408.005. SETTLEMENTS AND AGREEMENTS. (a) A settlement may not provide for payment of benefits in a lump sum except as provided by Section 408.128.

(b) An employee's right to medical benefits as provided by Section 408.021 may not be limited or terminated.

(c) A settlement or agreement resolving an issue of impairment:

(1) may not be made before the employee reaches maximum medical improvement; and

(2) must adopt an impairment rating using the impairment rating guidelines described by Section 408.124.

(d) A settlement must be signed by the commissioner and all parties to the dispute.

(e) The commissioner shall approve a settlement if the commissioner is satisfied that:

(1) the settlement accurately reflects the agreement between the parties;

(2) the settlement reflects adherence to all appropriate provisions of law and the policies of the division; and

(3) under the law and facts, the settlement is in the best interest of the claimant.

(f) A settlement that is not approved or rejected before the 16th day after the date the settlement is submitted to the commissioner is considered to be approved by the commissioner on that date.

(g) A settlement takes effect on the date it is approved by the commissioner.

(h) A party to a settlement may withdraw acceptance of the settlement at any time before its effective date.

The Division of Workers Compensation has given written guidance on settling workers compensation claims.

A few comments. One, the exception listed for 408.128 has to do with taking benefits from an impairment rating in a lump sum when you have already returned to work. I address that in another post. 

This section confirms you cannot foreclose future medical care in a settlement. The Division has discretion to approve or deny a settlement based on its determination of the best interest of the claimant. Essentially, the Division has determined that it will rarely, if ever, approve a settlement of workers compensation claims because of the risk that an employee will regret enter into such a deal.

An agreement only resolves issues listed on the agreement. It does not remove the right to additional hearings. So, for example, an agreement could be entered on one day that the employee sustained a compensable workers compensation injury. Then three months later the parties could enter into another agreement at a hearing that the employee was disabled for January and February, but not March. Then the parties could enter into another agreement correcting the average weekly wage, and still another indicating that the injury includes the right shoulder rotator cuff tear but not the lumbar herniated disc. Each agreement is approved or denied on its own and only covers what is listed. An agreement has to be signed by the parties and approved by a presiding officer, which normally will be a benefit review officer or administrative law judge.

Comments

[Steve]

I have been seriously injured for three years and the workers comp insurance company keeps sending me to their designated doctors that are not even qualified to diagnose my injuries,can a judge do away with the most severe injuries just because the insurance company doesn't want to claim responsibility .I have documentation.I hope I can take my situation to a district court for r justice that I deserve.