Buying Out Worker’s Comp Awards
When settling a workers’ compensation case, the judge might issue either a Findings and Award or Stipulations with Request for Award to the defendant, the workers’ compensation insurance carrier. When this occurs, the carrier may offer the plaintiff a lump sum settlement to “buy out” and completely close out the compensation claim. This is not done out of the goodness of the insurer’s heart. Instead, a workers’ compensation insurer might do this because the plaintiff’s claim is costing their company too much money and it reduces their liabilities owed on the company’s financial statement.
Pros and Cons of a Workers’ Compensation Buy Out
Accepting a buyout for a compensation claim is not always beneficial for the plaintiff. Often, the injured party is offered a lump sum of cash. Sometimes he or she is given a hybrid lump sum with the remainder dispersed over several years through an annuity. Once a claim has been settled for a lump sum, the insurer will no longer cover medical treatment through the workers’ compensation system. For some patients, this is a positive because it allows them to seek treatment from a doctor of their choice.
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