What’s the Difference Between a Lump Sum Settlement With & Without Liability in Massachusetts?

In Massachusetts, when a worker is injured on the job, he or she is entitled to workers’ compensation benefits. These benefits include disability benefits and medical benefits. The disability benefits replace a portion of the wages the injured worker is unable to earn due to his or her injuries. The medical benefits will cover the cost of the injured worker’s treatment.

Most Massachusetts workers’ compensation claims settle by way of a lump sum agreement. There are two types of lump sum settlements, however. They can be settled with liability or without liability. All injured workers should understand the differences and the impact of the lump sum agreement before settling their claim.

Brief Summary of The Lump Sum Settlement

A lump sum agreement is where the injured worker and the workers’ compensation insurance company reach an agreement to settle the claim. As part of the settlement the insurer agrees to pay the employee a one-time lump sum payment of future disability benefits in lieu of making weekly disability payments. The payment of medical benefits will depend on whether liability is accepted or has been established in the workers’ compensation case. 

For a more detailed explanation see: Lump Sum Settlement in Massachusetts Workers’ Compensation Cases.

The Difference Between Settlements With & Without Liability

There is a very significant difference between a lump sum settlement with liability and a lump sum settlement without liability. Injured workers in Massachusetts should have a complete understanding of the differences before agreeing to accept a lump sum settlement.

With Liability: When a workers’ compensation claim is settled after the insurer accepted liability or liability has been established by a decision of an administrative judge, the insurer will continue to be responsible for the payment of medical benefits and vocational rehabilitation benefits with respect to the injury. The medical benefits, however, must still satisfy the “related, reasonable and medically necessary” standard. So, just because a claim is settled by lump sum with liability, doesn't mean the insurer will automatically pay for all medical treatment. But the injured worker still has the right to file a claim for medical benefits if the insurer denies certain medical treatment. Also, the injured worker has up to two-years from the date of the approval of the lump sum settlement with liability to seek vocational rehabilitation.

Without Liability: A workers’ compensation claim that is settled by a lump sum agreement without liability will close out all aspects of the employee’s claim and redeem all aspects of the insurance company’s liability. This means that the insurer is not responsible for any medical benefits or vocational rehabilitation benefits. This is very important, especially for injured workers that will continue to require medical treatment for their injuries.

If You Don’t Completely Understand: Seek Legal Advice

As stated above, a lump sum settlement (either with or without liability) will close out disability benefits in a workers’ compensation case forever. I have received many calls from injured workers who have previously settled their workers’ compensation claims asking if they have an opportunity to receive additional disability benefits for their injuries. The unfortunate answer is no. Once the lump sum settlement is approved by the Department of Industrial Accidents, the claim is closed with respect to disability benefits.

Additionally, with the cost of medical treatment being very expensive these days, all injured workers should be aware of the differences between settling their claim with and without liability. If you settle your claim without liability, the insurer is not responsible to pay for your medical treatment. This could be a costly mistake.

Therefore, if you have been injured on the job and the insurer is offering to resolve your workers’ compensation claim by way of a lump sum settlement, you should seek legal advice before agreeing to any type of settlement.

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