Is the Workers’ Compensation Insurance Carrier Required to Settle My Claim?

If you’ve been hurt on the job in North Carolina, you may be receiving weekly workers’ compensation checks. As your treatment progresses, you might start wondering: “Will my case end with a lump sum settlement?” This is one of the most common questions we hear at Johnson & Groninger PLLC.

The most direct answer is no – workers’ compensation insurance carriers are not legally obligated to settle your claim with a lump sum payment.

Settlement in workers’ compensation cases is entirely voluntary. Both you and the insurance carrier must agree to the terms. This is a crucial fact that many injured workers don’t realize until they’re deep into the claims process.

How Workers’ Compensation Payments Work Without Settlement

Without a settlement, here’s what typically happens:

• The insurance carrier can continue paying your benefits on a weekly basis
• They might pay these weekly checks for the duration of your disability period
• In North Carolina, the maximum period for temporary disability benefits is 500 weeks (about 9.6 years)
• The carrier may pay for your ongoing medical treatment as required by law
• They can simply wait and hope you’ll eventually return to work, which would end most benefits

This approach often benefits the insurance company because they can:

1. Spread out payments over time rather than paying a larger sum upfront
2. Stop payments if your condition improves and you return to work
3. Potentially pay less overall than they would in a settlement

Why Would a Carrier Choose to Settle?

Given that carriers aren’t required to settle, why would they ever agree to do so? The answer comes down to basic business math.

Insurance carriers approach settlement as a business decision focused on their bottom line. They calculate:

• The maximum potential cost of your claim if paid over time
• The potential savings from settling now for a discounted lump sum
• The estimated cost of any future medical treatment they can avoid through settlement
• The administrative costs of keeping your claim open for years

For example, if there’s a good chance you’ll be out of work for the full 500 weeks allowed under North Carolina law, the carrier might offer to settle for somewhat less than the total value of those weekly payments. This saves them money while providing you with a lump sum now.

Similarly, if your injury will require expensive ongoing medical treatment, the carrier might agree to a settlement that includes enough money to cover those future medical costs, but at a slight discount compared to paying for each treatment as it occurs.

How We Can Encourage Settlement Without Forcing It

While we can’t force a carrier to settle, experienced attorneys have strategies to encourage settlement:

• Filing hearing requests to ensure you receive all benefits you’re legally entitled to
• Demonstrating the full potential value of your claim if it continues long-term
• Showing how settlement benefits both parties by creating certainty
• Using mediation to facilitate productive settlement discussions

Sometimes, making the carrier fully comply with all their legal obligations can make the settlement look more attractive to them. If they have to pay all appropriate benefits and provide all required medical care, settling might become the more economical option from their perspective.

What Settlement Actually Means

When a settlement is reached in a workers’ compensation case, it typically means:

1. You receive a single lump sum payment
2. This payment replaces all future weekly checks
3. The settlement usually resolves all medical treatment obligations as well
4. Your case is closed permanently
5. The payment is generally not taxed as income (under section 104(a)(1) of the Internal Revenue Code)

This finality is both the benefit and the drawback of settlement. You gain immediate financial security but give up the potential for ongoing benefits if your condition worsens.

Negotiating a Fair Settlement

Since settlement requires mutual agreement, negotiation is a critical part of the process. In mediation, both sides work toward a number that makes financial sense for everyone involved.

The reality is that good settlements often leave both parties feeling they’ve compromised. You might want compensation for the full 500 weeks, but settle for 260 weeks’ worth because it’s more than the carrier initially offered. The carrier might not be thrilled either, but they’ve avoided the risk of paying the maximum benefit period.

This give-and-take is normal in the settlement process. It’s rare for either side to get everything they want.

Is Settling Right for You?

Remember that settlement is voluntary for you, too. You don’t have to settle if the offered amount doesn’t meet your needs. Consider:

• Your ongoing medical needs and whether you trust the carrier to approve future treatment
• Your financial situation and whether you need a lump sum now
• The likelihood of returning to work in your field
• The hassle of dealing with the workers’ compensation system long-term

Some injured workers prefer the certainty of a settlement, even if the total amount might be somewhat less than what they could theoretically receive over time. Others may prefer to keep their case open, especially if they have significant ongoing medical needs.

The Workers’ Comp Settlement Process

If both sides are interested in a settlement, the process typically involves:

1. Evaluating the potential future value of your claim
2. Negotiating with the carrier, often through mediation
3. Reaching an agreement on a specific dollar amount
4. Formalizing the agreement in legal documents
5. Getting approval from the North Carolina Industrial Commission
6. Receiving your lump sum payment

Talk to an Attorney About Your Options

If you’re considering the settlement of your workers’ compensation claim, talking with an attorney who handles these cases can help you understand the true value of your claim and negotiate effectively.

At Johnson & Groninger PLLC, we help injured workers understand their options and work toward the best possible outcome, whether that’s a fair settlement or continuing to receive benefits over time.

Contact us for a free consultation about your workers’ compensation claim. While we can’t force the carrier to settle, we can help you navigate the system to maximize your recovery.

This blog post is based on North Carolina workers’ compensation law. The information provided is general in nature and should not be considered legal advice for your specific situation.