Closing Out Your Workers' Comp Case

The Stipulated Agreement

When an employee sustains a recognized work related injury for which disability benefits are paid, a Voluntary Agreement should be issued by the insurance carrier for workers' compensation benefits. This agreement, even when issued for permanent partial benefits, is not a final settlement. The compensation case remains open and benefits may be provided later for future medical treatment, incapacity from work, wage loss because of lower earnings caused by the injury, or increased physical impairment.

In some cases, however, either the insurance carrier or the employee - or both - wants a final settlement that closes out the claim. An agreement reached to accomplish this is called a stipulated agreement or stipulation, or in comp jargon, a stip.

In most stipulations, the employee and the insurance carrier agree on a one-time lump sum payment as a final settlement. In such cases, the employee has no further claim to benefits from the insurance carrier, even if other problems develop which are related to the injury in question. Stipulations are not binding unless approved by a Commissioner, who may deny approval if he or she feels that the agreement is potentially detrimental to the employee.

A stipulation to date is possible to close out a certain aspect of a claim, but keep other issues open. For example, an employee and an insurance carrier could agree to close out the issue of 31-308a benefits (wage differential benefits paid at the discretion of the Commissioner) while keeping the case open for future medical treatment or temporary total benefits. However, it is fair to say that the overwhelming preponderance of stipulations involves closing out a case totally.

Some stipulations have several schemes of payments, such as a lump sum payment at the time of the agreement, then additional payments earmarked for different times. This type of stipulation is called structured settlement and is not very common.

In considering an appropriate sum for a stipulation, the employee should carefully review the potential for future benefits in his or her case. Is there a reasonable chance for future surgery? Is there the probability or possibility of some period of total incapacity in the future? Will there be future wage loss directly related to physical limitations imposed by the injury? What about the cost of group medical insurance the employee loses when there's a stipulation? What about the fact that a group insurance company will probably not pay any benefits for an injury that was stipulated?

Stipulations should never be agreed to hastily without the employee seriously considering all the factors. Once a stipulation is approved, it is almost impossible to reopen the case, unless there were material facts that would have affected the claim that were not known to both parties prior to the stipulation.

No one can be forced to agree to a stipulation. It must be entered into voluntarily by both parties, with the approval of a Commissioner. There are some circumstances, however, in which an employee may decide to agree to a stipulation, even though he or she is not satisfied with it. For example, if an employee's claims is contested and there is some doubt as to whether the employee would prevail after a Formal Hearing, that employee might consider agreeing to a stipulation for considerably less than his or her claim would be worth if it was not disputed.

Some stipulations are also made by employees who will soon retire or who have retired. This is certainly not uncommon in hearing loss cases, in which the claimant is often near retirement age and where the principal issue is payment for the loss of hearing, rather than extended medical treatment or total incapacity benefits.

It is probably reasonable to assert that some employees are attracted to a stipulation because there is an immediate lump sum payment, often for a considerable amount. However, employees considering stipulations should be cautious and make sure that they understand both the advantages and the drawbacks of closing out their compensation cases. Upon careful review of all of the factors involved, an employee may decide that it is more prudent to keep his or her case open and seek additional benefits as he or she become eligible for them.

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Our main offices are located in Stamford, Connecticut, but you can reach us at any of our three convenient Fairfield County locations by calling 1-888-522-2821 or by contacting us online with a brief description of your situation. You can speak with a lawyer directly about your case.  Initial consultations are always provided free of charge and appointments can be made for evenings, weekends, and off-site locations.

You will pay no fees or costs unless we recover compensation in your case.