Finalizing A Lump Sum Settlement in a Massachusetts Workers’ Compensation Case

When a worker suffers a personal injury that arose out of and in the course of his or her employment, the laws of Massachusetts provide that he or she shall be paid workers’ compensation by the insurer. In many workers’ compensation cases the injured worker and the insurer reach an agreement to settle the claim by way of a lump sum settlement.  There are many things that must be done, however, to finalize a lump sum settlement.   

An Overview of Lump Sum Settlements

There are many different avenues a workers’ compensation claim can take in Massachusetts. In some cases, a worker is injured on the job, receives weekly incapacity benefits, gets reasonable and necessary medical treatment, recovers from the injuries and then returns to work. In many other cases, however, the claim is settled by a lump sum agreement. This is true for claims that are either voluntarily paid by the workers’ compensation insurer or denied and then litigated.

A lump sum settlement is an agreement between an injured employee and the workers’ compensation insurance company to redeem any liability for compensation, in whole or in part, with the payment by the insurer of a lump sum amount. In other words, the injured worker will agree to accept a one-time, lump sum payment of future disability benefits in lieu of receiving weekly disability checks.  A claim that is settled by way of a lump sum settlement will close a workers’ compensation claim forever with respect to disability payments. The medical benefits that cover related, reasonable and medically necessary treatment will remain open and cannot be redeemed or released in a lump sum settlement where liability is either accepted or established.

What is Required to Finalize a Lump Sum Settlement?

When a claim is settled by a lump sum agreement, the injured employee’s lawyer and the insurer’s counsel will negotiate and draft certain forms and documents to be filed and reviewed by a judge at the Department of Industrial Accidents.  The main form is an Agreement For Redeeming Liability By Lump Sum. This form is designated as Form 117 by the Department of Industrial Accidents. Along with the 117, the employee will prepare and file an Addendum to the to the Lump Sum Settlement Agreement (Form 116B) and a Lien Disclosure Form (Form 116C). The Insurer will need to obtain and file the Consent of Employer to Lump Sum Agreement (Form 116A).

In Massachusetts, all proposed lump sum settlement agreements must be approved by an administrative judge or an administrative law judge. In some cases, a conciliator may also review and approve as complete the lump sum agreement. In order to have a settlement approved, the injured worker will be required to appear at a lump sum conference before a judge at the Department of Industrial Accidents. The judge will review the terms of the lump sum agreement, hear from both the injured worker’s attorney and the insurer’s attorney, address the injured employee directly to explain certain terms and effects of the settlement and approve or disapprove the settlement. The reason that all lump sum settlements must be approved by a judge in Massachusetts is because M.G.L. c. 152 § 48(1) mandates that “a lump sum agreement shall not have been perfected until and unless approved by…a judge as being in the claimant’s best interest.”

The “In The Claimant’s Best Interest” Standard

Generally, lump sum settlements are a compromise by both the injured worker and the workers’ compensation insurer. The compromise is that the injured worker will typically receive a bit less than he or she believes they are entitled to and an insurer will pay more than they think they should. Either way, the judge reviewing the settlement agreement will consider many factors when deciding whether to approve or disapprove the settlement. Such factors considered include whether the injured worker is still totally disabled, if he or she had a pre-existing injury, whether the pre-existing injury, if any, is the major cause of the disability, among many other factors.

In all cases, the judge must determine if the settlement is in the claimant’s (injured worker) best interest. The facts of the accident and injury are taken into consideration. If the claim is pending litigation for a conference or a hearing, the judge will consider the strengths and weaknesses of the claim. For instance, if a case appears weak for the injured worker, a judge may find that settlement is in the claimant’s best interest because if he or she goes forward to a conference or hearing, there is a chance the worker could lose and not receive any benefits.

An experienced Massachusetts workers’ compensation attorney can help an injured worker determine whether a proposed lump sum settlement is favorable or not. A lawyer that has settled many workers’ compensation cases will be able to determine whether a proposed settlement is fair and reasonable as well as whether it is likely to be approved or not by a judge. Therefore, an injured worker should strongly consider having his or her case reviewed by an experienced attorney before making a decision on a settlement.

How Long Will it Take to Receive My Settlement Check?

When a lump sum settlement is found to be in the injured employee’s best interest and all of the necessary documents and forms are filed, the judge will approve the settlement. After the lump sum settlement is approved, the workers’ compensation insurer must pay the injured employee his or her settlement within fourteen (14) days of the date of approval.

If the injured worker is receiving disability benefits at the time of the settlement, after the lump sum is approved and during this fourteen day period, the weekly benefit checks will stop. The employee will receive a prorated check for the weekly period of disability up until the day the settlement was approved.

Get Legal Help If You Have Been Injured On The Job

For over a combined 35 years, Mahaney & Pappas, LLP  has helped injured workers get the disability and medical benefits they deserve.  Our experience and knowledge of the law provides employees with an advantage in workers’ compensation cases and pursuing and obtaining satisfactory lump sum settlements.  If you are hurt on the job, feel free to call us at (508) 879-3500 or contact us online to schedule a free case evaluation.