Settlement Agreement FAQs


A Settlement Agreement is a final settlement between the injured worker and the surety/employer, which allows benefits to be paid all at once instead of over time. Most settlements close all benefits forever. However, it is possible to finalize some types of benefits and leave other benefits (usually medical) open. Once a Settlement Agreement is agreed to by all parties, the claim finalized by the settlement cannot be reopened for future workers’ compensation benefits.


A Settlement Agreement is a legal and binding agreement. It is recommended that you consult an attorney to either assist with developing the settlement or to review a settlement that has previously been developed.


  • Your medical benefits will remain available.
  • Your income benefits may be resumed if you are disabled again by your work injury within applicable limitations. The surety may choose to make a lesser offer should you later decide to settle.

Since a settlement agreement will forever close the claim, injured workers may consider any future costs they believe will arise. Most common are:

  • Medically verified future medical costs
  • Unpaid impairment balance
  • Money for disability related to decreased wage-earning capacity OR retraining costs (TL, books, tuition)

Subrogation is the right of one party to be reimbursed for something that was the responsibility of another party. If there is third-party liability, the workers’ compensation surety has a legal right to reimbursement for all or a portion of the benefits paid. The surety may waive all or part of its rights to recover the money as part of the settlement.  Other health care payers who paid for care denied by the workers’ compensation surety may also have a legal right to reimbursement if the Settlement Agreement includes consideration for the disputed treatment.


Effective July 1, 2022, most Settlement Agreements no longer require approval by the Industrial Commission.  All Settlement Agreements must be filed with the Commission before they are considered effective.  The Commission is required to conduct a review of all Settlement Agreements entered into by non-represented persons (pro se), minor children, or legally incompetent persons.  Either party may also request the Commission’s review.  The Commission shall approve the agreement if it determines that the approval is in the best interests of the parties.


If a third party is found to be responsible for the accident, a separate claim may be made and legal action may be taken. (Your employer cannot be a third party.) However, if recovery is made against a third party, it is subject to subrogation.


If the Commission declines to approve a Settlement Agreement under its discretion, it must issue a written decision, including factual findings, conclusions of law, and an order declining to approve the agreement.


Money paid for your permanent impairment rating is not a final settlement. The money for your impairment rating is yours, whether you agree to a settlement or not. In most situations, once the impairment is paid in full the claim is placed in an inactive or closed status. The claim can be reopened if additional treatment is related to the original injury. No time limitation applies to medical benefits, but income benefits are limited to five years from the date of injury unless a complaint is filed with the Commission.


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