4 Different Types Of Workers Comp Settlements To Be Aware Of

Posted on: 12 June 2017


Not all workers compensation settlements are the same. If the defendant in your workers comp case is proposing a settlement, you should know what the different types of settlement are so that you can be sure of making decisions that are in your best interest. 

Generally speaking, there are four major types of settlement out there that differ in terms of characteristics like how much of the related medical expenses will be covered and whether or not the employee can seek additional compensation in the future for the work related injury in question.

The following is an explanation of the difference between these four types of settlement:

Open-file settlements

An open-file settlement is particularly advantageous for employees for a variety of reasons. In an open-file settlement, the agreement clearly establishes that the employee's injury was caused or severely impacted by work. Also, the agreement will detail the full severity of the injuries that have resulted from workplace events.

Furthermore, an open-file settlement typically awards the employee for compensation for all of the medical costs that have resulted and will result from the injury. An employee who is awarded an open-file settlement is eligible to seek further compensation in the future if his or her injury should become more severe as time goes on. 

Closed-file settlements

Closed-file settlement are a bit more restrictive than open-file settlements when it comes to the employee's ability to seek compensation in the future.

Once an employee is awarded and agrees to a closed-file settlement, he or she cannot seek additional compensation for the medical costs resulting from the injury in question down the road. 

A closed-file settlement details a full and complete compensation amount, and the case is considered closed after this type of settlement is awarded. 

Hybrid settlements

In a typical workers compensation claim, it's not uncommon for there to be several different proposed liabilities of the employer that led to the injury in question. A hybrid settlement will grant that the employer is responsible for some of these liabilities but not all. 

While a hybrid settlement is typically an incomplete win for the employee with less compensation than the employee was initially seeking, agreeing to a hybrid settlement may be in the employee's best interests if a win in court may be difficult to achieve. 

Contingent settlements

In a contingent settlement, the employer agrees to award compensation only if a particular event occurs in the future. For example, a contingent settlement may be offered that hinges on whether or not Medicare or a similar government agency approves coverage for the injury in question.