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Most worker's compensation claims are resolved prior to litigation. Even those claims that proceed to litigation are most often resolved via settlement before trial is required. In general, most worker's compensation claims in the State of Iowa can be resolved if the parties are reasonable, realistic, and put forth a good faith effort to resolve disputes.
However, in order for claims to be resolved amicably, the parties need to understand the various types of settlements available and the ramifications of each type of settlement so there can be informed and mutually beneficial negotiations. This article is intended to introduce the reader to the various types of settlements that can be used to resolve a worker's compensation claim in the State of Iowa. A subsequent article will follow to explain the pros and cons of various settlements for both the employee and the employer.
In Iowa there are four general types of settlement agreements that can be used to resolve a worker's compensation claim amicably without the time, expense, and necessity of trial. Those settlement types include:
1. The Compromise Settlement. This settlement results in a "closed file" settlement and closes all past and future claims that the injured worker may have, including medical rights. This settlement is the most commonly used settlement. All that is required to obtain approval of this settlement is a bona fide dispute on some issue. Nearly every claim has some identifiable dispute. Otherwise, the parties would not have likely proceeded to litigation on the claim. Yet, the Compromise Settlement has pros and cons, which will be discussed in a subsequent article. In general, this settlement is used to resolve disputed claims and to finalize all disputes and issues between the employee and the employer.
2. The Full Commutation. This settlement also results in a "closed file" settlement. This settlement is only available if the parties agree that there was a compensable work injury, and the parties agree to the total benefits to which the employee is entitled. There are specific requirements that must be met to obtain a full commutation, which will be the subject of a subsequent article. The full commutation is most useful when the employee continues to work for the employer and there is concern about subsequent injuries to the same body parts.
3. The Agreement for Settlement. This settlement requires the parties to agree to the total benefits to which the employee is entitled to receive. However, this settlement results in an "open file." The employer must admit liability, concede liability to lifetime medical treatment for any treatment related to the initial work injury. Employees favor these types of settlements because the ensure coverage for future medical treatment, if ultimately needed.
4. The Partial Commutation. This settlement is rather rare in Iowa. It results in an open file settlement. Employers have little or no incentive to agree to this type of settlement. Employees can pursue a partial commutation once they prove entitlement to the underlying claim. However, the partial commutation is not utilized often in the State of Iowa.
In addition to the above settlements, the State of Iowa also recognizes a "Combination Settlement." A Combination Settlement is a combination of a Compromise Settlement and an Agreement for Settlement. Again, a more in depth review of this type of settlement will follow in a subsequent article. However, this type of settlement is most likely to be used when the parties can agree on all issues pertaining to one alleged injury, while there remains an irreconcilable dispute on another part of the claim. For instance, the employer may concede liability for a knee injury, while disputing any claims for a low back injury. Under the Combination Settlement, the employer can concede liability for the knee injury, including future medical treatment, while the employee could relinquish and provide a "close file" on the low back injury to get the claim resolved amicably.
The State of Iowa also permits the parties to enter into Contingent Settlements. This type of settlement permits the parties to agree to the terms of a Compromise Settlement (based on a valid dispute) and make the final consummation of the agreement contingent upon some future event. Often, this contingency is approval of a Medicare Set Aside amount by the federal government. This settlement generally arises only when there are considerations of Medicare interests and can often become complicated settlements. In some situations, however, this manner of settlement permits the parties to reach an amicable settlement agreement while there remain some "unknowns" that need to be worked out before the settlement is completely finalized.
Each of these settlements will be reviewed and discussed in subsequent articles. However, if there are any questions about the types or ramifications of the various types of settlements identified above, an employee and/or employer should consult competent legal counsel.
Posted by William H. Grell on February 28, 2008 7:56 AM
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