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COMPROMISE AND RELEASE

The "C & R" generally ends the employer's liability in exchange for a lump sum, but permutations on the theme may allow all issues to be resolved other than future medical treatment or some other benefit, such as the Supplemental Job Displacement Benefit, or the settlement may be structured with monthly and/or yearly payments (see Structured Settlement).

All settlement agreements must be approved by a workers' compensation judge in order to be binding (Labor Code §5001). They must be in writing and witnessed (Labor Code §5003) and on an official form (8 CCR §10874).

The current form contains "boilerplate" that limits the scope of the settlement (see p. 5):

1. Not a general release; no waiver of Civil Code §1542:

"Upon approval of this compromise agreement by the Workers' Compensation Appeals Board...the employee releases and forever  discharges the above-named employer(s) and insurance carrier(s) from all claims and causes of action, whether now known  or ascertained or which may hereafter arise or develop as a result of the above-referenced injury(ies), including any and all liability of the employer(s) and the insurance carrier(s) and each of them to the dependents, heirs, executors, representatives, administrators or assigns of the employee. Execution of this form has no effect on claims that are not within the scope of the workers' compensation law or claims that are not subject to the exclusivity provisions of the workers' compensation law, unless otherwise expressly stated."

2.  Limited to body parts, conditions, or systems and for the dates of injury set forth in Paragraph No. 1 and further explained in Paragraph No. 9:

 "This agreement is limited to settlement of the body parts, conditions, or systems and for the dates of injury set forth in
Paragraph No. 1 and further explained in Paragraph No. 9 despite any language to the contrary elsewhere in this document or any addendum."

3.  Release of dependent's death benefits claims:

"Unless otherwise expressly stated, approval of this agreement RELEASES ANY AND ALL CLAIMS OF APPLICANT'S
DEPENDENTS TO DEATH BENEFITS RELATING TO THE INJURY OR INJURIES COVERED BY THIS COMPROMISE
AGREEMENT. The parties have considered the release of these benefits in arriving at the sum in Paragraph 7. Any addendum duplicating this language pursuant to Sumner v WCAB (1983) 48 CCC 369 is unnecessary and shall not be attached."

4.  Does not release supplemental job displacement benefits without express order:

"Unless otherwise expressly ordered by the Workers' Compensation Appeals Board..., approval of this agreement does not release any claim applicant may have for...supplemental job displacement benefits."

On page 7 is a list of issues with instructions:

"The parties wish to settle these matters to avoid the costs, hazards and delays of further litigation, and agree that a serious dispute exists as to the following issues (initial only those that apply). ONLY ISSUES INITIALED BY THE APPLICANT OR HIS/HER REPRESENTATIVE AND DEFENDANTS OR THEIR REPRESENTATIVES ARE INCLUDED WITHIN THIS SETTLEMENT.

Page 7 further notes: "Any accrued claims for Labor Code section 5814 penalties are included in this settlement unless expressly excluded."

The Board has the right to reject a settlement as inadequate:

Page 10: "the judge may in its discretion set the matter for hearing as a regular application, reserving to the parties the right to put in issue any of the facts admitted herein and that if hearing is held with this document used as an application, the defendants shall have available to them all defenses that were available as of the date of filing of this document, and that the workers' compensation administrative law judge may thereafter either approve this Compromise and Release or disapprove it and issue Findings and Award after hearing has been held and the matter regularly submitted for decision."

A final warning, all in caps, appears on page 8:

"WARNING TO EMPLOYEE: SETTLEMENT OF YOUR WORKERS' COMPENSATION CLAIM BY COMPROMISE AND
RELEASE MAY AFFECT OTHER BENEFITS YOU ARE RECEIVING TO WHICH YOU BECOME ENTITLED TO RECEIVE IN THE FUTURE FROM SOURCES OTHER THAN WORKERS' COMPENSATION, INCLUDING BUT NOT LIMITED TO SOCIAL SECURITY, MEDICARE AND LONG-TERM DISABILITY BENEFITS."

In sum, as evident from the form, the state has gone to considerable lengths to protect the injured worker even before the agreement is submitted to a judge for approval. Unrepresented workers' settlements are reviewed by an Information and Assistance officer. Permanent disability ratings also require that a workers' compensation judge "determine whether the apportionment is inconsistent with the law" (8 CCR §10163).

Adequacy: The Board's Policy and Procedural Manual details what the WCJ must consider and what is required if setting the case for an adequacy hearing purusuant to Board Rule §10882. If the worker is not represented, at the hearing the judge may encourage retention of an attorney. It is a long standing policy that:

"Agreements that provide for the payment of less than the full amount of compensation due or to become due and undertake to release the employer from all future liability will be approved only where it appears that a reasonable doubt exists as to the rights of the parties or that approval is in the best interest of the parties. No agreement shall relieve an employer of liability for vocational rehabilitation benefits unless the Workers' Compensation Appeals Board makes a finding that there is a good faith issue which, if resolved against the injured employee, would defeat the employee's right to all workers' compensation benefits." See 8 CCR §10870

Label Item Links Comments
Labor Code "Every release or compromise agreement shall be in writing and... shall specify...."  LC §5003   
  "No release of liability or compromise agreement is valid unless it is approved by the appeals board...."
LC §5001  
Regulations/Rules WCAB rules on settlement

WCAB Policy and Procedural Manual: rules on submission of pro per settlements and consideration of adequacy of all settlements
WCAB regs

Policy and Procedural Manual
 
Cases   
Forms Compromise and Release

Compromise and Release (Dependency claim)

Compromise and Release (Third Party)
C&R

C&R (Dependency)

C&R (3rd Party)
 
Websites    
Practice Tips  Attorneys on both sides need to pay close attention to all details involved in the settlement process and memorialized on the official form. The applicant's attorney should also obtain a signed Informed Consent before the settlement agreement is signed.

As the law changes, your informed consent form needs to change. This is the place to provide written warning about the benefits of settling future medical treatment or leaving it open; use of the SJDB "voucher"; effect of settlement on Social Security and other benefits; retention of files, etc.

It is a good idea to send the form to the injured worker before the Mandatory Settlement Conference: this gives the client time to digest the warnings and prevents a possible later claim of being pressured into signing.
   
Articles
Stipulated Agreements – When Can You Back Out?  When Can You Back Out?   
Magazine Articles
 
Roundtable    
Miscellaneous      

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