When you file a workers’ compensation claim, your employer’s insurance company may approach you with a settlement offer. Iowa workers’ compensation law provides for four general types of work comp settlements. In deciding whether to take the offer before you, it’s important to understand which type of settlement is being offered and how it could affect your compensation in both the long and short term.
Open-File Work Comp Settlements
Also called an “agreement for settlement,” this type of resolution establishes the fact that an employee’s injury is work related as well as the nature and extent of damages the employee is entitled to receive for that injury. In an open-file settlement, the worker is entitled to lifetime medical benefits for the injury and preserves rights to further compensation in the event the condition worsens in the future.
The way Iowa law allows employees with open-file settlements to obtain additional compensation is by bringing an action for review-reopening. This process allows more money to be awarded if the impairment caused by the employee’s original injury has increased or, in the case of unscheduled injuries, if the employee’s earning capacity has further decreased. If applicable, review-reopening may be brought within three years of the last benefit payment.
Closed-File Work Comp Settlements
A closed-file settlement, also referred to as a compromise settlement, differs from an agreement for settlement in that the employee gives up all rights to further compensation in the future. Both parties agree on a stipulated amount that the employee will be paid for the injury as a “full and final disposition,” and the case is closed.
It is possible to combine the effects of open- and closed-file settlements in a hybrid (or “combination”) settlement. Under this structure, the employer’s liability for part of the claim is established in an agreement for settlement, but other parts of the claim are given a full and final disposition.
As the name suggests, a contingent settlement is conditioned upon a subsequent event, such as approval by a court or government agency like Medicare. The contingency must be expected to occur within one year of the settlement date. If it turns out that the anticipated event will likely not occur within one year, then either party may file a petition to vacate the settlement, and applicable statutes of limitations are reset so the claim has the same status that it had when the settlement was approved. Alternatively, either party may petition to extend the time allowed for the contingency. In either case, the petition to vacate or extend must be brought within one year after the contingent settlement was initially approved. Otherwise, the settlement becomes final and fully enforceable.
Because open-file settlements leave the employer’s insurance company open to an uncertain amount of future liability, insurers have a natural incentive to make these offers lower. It’s important to carefully weigh the benefits of the added protection of an open settlement against the potentially higher value of a closed settlement as well as the potential benefits of taking your case to court. Likewise, it’s critical that contingent settlements be carefully constructed and any necessary petitions be brought in a timely manner to preserve your rights. All types of workers comp settlements must be submitted to and approved by the workers’ compensation commissioner before they become legally binding.
An experienced Iowa workers’ compensation attorney can provide you with valuable guidance as you consider your options and navigate the legal complexities (and potential pitfalls) of workers’ compensation. Platt Law Firm has extensive experience helping hundreds of Iowa workers get the medical care they need and the compensation they deserve after suffering work-related injuries. See our FAQ page for answers to common questions about Iowa workers’ compensation law, or contact us for help with your case.