Should I Take a Lump-sum Settlement?

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A study shows that lump sum settlements do not discourage return to work

A study shows lump-sum settlements of workers’ compensation cases encourage return to work. Workers’ compensation laws are designed to pay benefits on a weekly basis unless there is a lump-sum settlement. Lump-sum settlements typically involve payment of a larger single payment rather than weekly payments. Injured workers often prefer the lump-sum approach for a variety of reasons. The limited nature of workers’ compensation benefits frequently leaves workers in a financial bind, and receiving a lump sum enables one to catch up. For instance, house payments can be eliminated with large settlements. Since weekly benefits end at the death of a worker, receipt of a lump sum can create some security for spouses.

There are criticisms of lump-sum settlements as well. One of the criticisms is that lump sums end all entitlement to benefits, including medical care. Another is that they discourage continued employment or return to work. A very recent study of how lump-sum settlements affect continued employment provides evidence that settlements do not discourage return to work.

An injured worker makes the decision of whether to enter into a lump-sum settlement or receive weekly benefits. Lump-sum settlement proposals are frequently made to injured workers without lawyers. A lump-sum settlement offer should be reviewed by an experienced lawyer to be sure the proposal is fair and in the best interests of the worker and her family. Injured workers should review and discuss the choice of settlement versus weekly payments with attorneys and understand the benefits and risks of each approach before deciding.