Workers’ compensation benefits are ordinarily paid on a weekly basis. There are a number of circumstances, however, under which workers can receive a payment of benefits in a single lump sum.
When an employer has denied benefits and a case is eventually decided in favor of the worker, the worker is usually entitled to receive a large payment for past due benefits. Under these circumstances the worker receives a large lump sum payment but it is not in any way a “settlement” of the case.
Under the circumstances described above, the worker keeps his or her right to file a new claim if he or she has additional trouble in the future. In other words, if the worker has more medical bills or another period of disability involving that same injury, the claim can be reopened.
Sometimes cases are settled by a redemption. If a case is redeemed, the worker receives a single, lump sum payment from the employer and in return gives up all of his or her future rights to workers’ compensation benefits. Redemptions are valid only if they are approved by a magistrate after a formal hearing. At such a hearing papers are prepared that show exactly how much the settlement will be, where the monies will go and how much the worker will receive. The case and reasons for the settlement are then explained to the magistrate by the parties. The magistrate makes certain that the worker understands his or her rights. Only then will a magistrate approve such a redemption settlement.
If an employer is represented by an insurance company, it must be notified of any proposed redemption at least ten days before the hearing. It has a right to come to the hearing and object to the settlement.
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