What is a Compromise and Release Agreement?

Workers’ compensation is designed to benefit employees injured or ill due to their job duties, whether from a specific accident or the accumulation of time.

This system has various ways to resolve claims, and one of the most commonly used is the “Compromise and Release Agreement.” This note will explain the basic details, how it works, and its advantages and disadvantages.

First of all, we must define what a Compromise and Release Agreement is: it is a type of agreement in workers’ compensation where the worker and the employer (or their insurer) reach a settlement on the workers’ compensation claim, in which the worker agrees to receive a determined sum of money in exchange for releasing the employer from any future liability related to the injury or illness. In other words, once signed, the worker cannot claim benefits related to that injury.

Process of the Compromise and Release Agreement

  1. Negotiation: The interested parties, including the worker, their lawyer, employer, and insurance company, negotiate the terms of the agreement. This includes the amount to be paid and the release of responsibilities.
  2. Medical Review: Medical examinations may be requested to determine the extent of the injury and future treatment costs.
  3. Drafting: The conditions of the agreement are detailed in writing.
  4. Judicial Approval: In many states, it is necessary for a workers’ compensation judge to approve the agreement to ensure it is fair.
  5. Payment: Depending on the sum and the agreement, the payment can be settled in a lump sum or several payments.

Advantages and Disadvantages

  • Case Closure: Helps reduce stress and uncertainty about the future of the case.
  • Payment: The worker knows how much money they will receive and when, so they can use it to cover medical expenses, lost income, and other associated costs.
  • Avoid Litigation: This avoids the need for a trial, which can be lengthy and costly for both parties.
  • Future Rights: This can be problematic if the injury worsens or new medical expenses arise.
  • Adequate Valuation: If not properly advised, the employee may accept a settlement that does not adequately reflect the total value of their future medical costs and lost income.

In short, a Compromise and Release Agreement is a great tool to save time and money. However, the injured worker needs to understand the agreement’s implications and be aware of all the costs related to their injuries to reflect them properly in the agreement.

For this reason, you should not face it alone. An experienced workers’ compensation attorney can help you understand all this information and obtain a fair and favorable settlement. Do not hesitate to contact us.