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Q: I have been asked whether I will accept a “compromise and release” agreement for my Pennsylvania workers’ compensation claim. Can you tell me what that is?

A:

A compromise and release (C&R) agreement is a type of contract between an injured worker and a party—usually an insurance company—that is paying workers’ compensation benefits to the injured person. By signing the agreement, the injured party settles his workers’ compensation claim in exchange for a lump-sum check.

The insurance company is making a wager here. It is betting that the total amount it surrenders in the check will be less than the amount of money it would have paid the injured worker over the long haul for his medical care, rehabilitation expenses, and lost wages. The insurance company also gets to tidy up its accounting, because a settlement allows it to put a fixed value on the claim.

There are a number of reasons why injured workers prefer a large settlement rather than collecting Pennsylvania workers’ compensation benefits on a regular schedule. These include:

  • The power to spend the money as they want, and not set aside specific amounts for medical care.
  • The ability to invest some or all of the money and collect a good rate of return on those investments.
  • Avoiding the requirement to attend regular doctor’s visits to assess medical progress, and also avoiding the worry that a doctor’s decision could cut off their benefits.
  • The option of returning to work in a limited capacity or opening a new business without terminating benefits.
  • The ability to afford higher education or work training for a new job.
  • The possibility of passing on some of the settlement money as a bequest, if the workplace injuries ultimately prove fatal.
  • The chance to avoid courtroom battles over money.

The Risks from Signing a C&R Agreement

While a few states forbid compromise and release agreements for workers’ compensation cases, Pennsylvania permits them and gives insurance companies wide freedom in drafting these contracts. It’s important to understand the provisions of any C&R agreement you have been asked to accept. Unless you have had extensive legal training, you will find the agreement difficult to understand. You should be very cautious about signing any document you don’t understand.

Another consideration is the amount of the settlement offered. There is no guarantee that the amount of money offered will be sufficient for your future. We know of many cases where an individual could not foresee the cost of his future health expenses and accepted a settlement that was too low to meet his needs down the road.

In short, you need skilled and trustworthy legal advice before you settle your workers’ compensation case. Schmidt Kramer is proud of our team of workers’ compensation attorneys. They have been highly successful in meeting clients’ needs for financially secure futures, and we have testimonials from satisfied clients to prove it. You can call us at 717-888-8888 or 888-476-0807 toll-free to schedule a free, no-obligation case review, and also order a FREE copy of our book, Who Pays The Bills When You Are Injured At Work?

Please don’t sign a compromise and release agreement without having the document reviewed by an experienced attorney. Even if you choose another law firm to represent you, it’s important that you consult someone about the implications of the agreement before you sign it.