I often get asked, how does a workers' comp settlement work? In Texas, there is no true "settlement" of a workers' compensation claim. The 1989 Workers' Compensation Act reformed the law to prohibit settling out a workers' compensation claim for money in exchange for the loss of the right to ongoing medical care for an injury.
The beneficial effect of this was to focus the system on medical care rather than financial compensation, which often resulted in short-sighted settlements that offered financial relief but left a worker impaired and without recourse to treatment to get back into the workforce.
However, one can also easily see that not all injuries, and therefore not all employees, fit the scenario of requiring lifetime medical care.
What Texas allows is two types of resolutions for benefit disputes. One is called an "agreement." This is a technical term which allows for specific issues to be resolved in writing. Every other issue not addressed is left open. So for example, the parties could agree that the injury does not include a herniated disc at L5-S1. This would not prevent someone from requesting another hearing to determine if the injury includes a herniated disc at another level of the spine, or a shoulder injury, etc. The parties could agree that the employee was not disabled from August 1, 2019 through December 1, 2019. This would not prevent the employee from claiming he was disabled from January 1, 2019 through July 31, 2019. The goal of an agreement is to resolve disputes quickly but leave what is not in dispute untouched. An agreement must be approved by the benefit review officer or administrative law judge.
A "settlement" in Texas workers' compensation also has a technical meaning. A "settlement" resolves all issues in a claim and forecloses the right to seek any additional monetary compensation other than stated in the settlement. The employee retains the right to lifetime medical benefits. Such settlements are now rarely approved and must be submitted to the Commissioner. A local ALJ or BRO cannot approve a settlement. These benefits are still paid out as otherwise stated in the law (weekly, monthly, etc.) and not in a lump sum.
Written guidance has been provided to show what is necessary for a settlement to be considered.
Although these are the only two official means of resolving such disputes, the courts have also held that a contract or Rule 11 agreement when the case is in court can be specifically enforced to require payment of benefits and execution of workers' compensation paperwork to essentially effectuate a settlement of the claim. This still must comply with the Labor Code, but allows more latitude in resolving disputes.
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