After a workers’ compensation settlement is approved, payment commonly arrives within two to six weeks. Some workers receive their money sooner, while others wait longer because payment deadlines and approval procedures vary by state.
Signing the settlement agreement does not always start the payment clock immediately. In many states, the agreement must first be approved by a workers’ compensation judge or board. The insurer’s payment deadline usually begins only after the settlement becomes final.
When Does the Payment Period Begin?
The payment timeline normally begins after all required parties have signed the settlement and the appropriate state agency or judge has approved it.
For example, California requires workers’ compensation settlements to be reviewed by a workers’ compensation administrative law judge. A Compromise and Release usually provides one lump-sum payment and generally closes the worker’s right to future benefits covered by the agreement.
A delay between signing and approval does not necessarily mean that the insurer is late. The insurer may still be waiting for the judge to review the documents, approve attorney fees or issue the final order.
How Long Does the Insurance Company Have to Pay?
There is no single federal deadline covering every workers’ compensation settlement. Each state controls its own workers’ compensation system.
In New York, a Section 32 settlement generally becomes final after the applicable 10-day withdrawal period. Once it is final, the insurer has 10 calendar days to have the settlement check postmarked. A late payment may result in a 20% penalty.
In Florida, a lump-sum settlement involving a represented worker generally must be paid within 14 days after the judge of compensation claims mails the order approving the attorney fee.
Massachusetts law generally expects payments required by an approved lump-sum agreement to be made within 14 days after the insurer receives the approved document. Increasing penalties may apply when payment remains unpaid for longer periods.
These deadlines normally concern payment by the insurer. They do not always mean that the worker will personally receive spendable funds on the same day.
What Happens After the Check Is Issued?
When you have an attorney, the settlement check may be made payable to both you and the law firm. It is normally deposited into the lawyer’s client trust account.
The law firm may then need to:
- Wait for the check to clear;
- Deduct the court-approved attorney fee;
- Deduct authorised case expenses;
- Pay workers’ compensation, medical or government liens;
- Fund any required Medicare Set-Aside;
- Prepare the final settlement statement; and
- Issue the remaining amount to you.
Professional-conduct rules generally require lawyers to deliver funds promptly and provide an accounting. When part of the money is disputed, the lawyer may hold that portion but should normally distribute the undisputed funds.
Why Might Your Settlement Payment Be Delayed?
An unresolved lien is one of the most common causes of delay. A medical provider, Medicare, Medicaid, child-support agency or another party may have a legal right to receive money from the settlement.
Medicare may seek repayment for injury-related medical expenses it paid before the settlement. A workers’ compensation settlement may also include a Medicare Set-Aside that reserves money for future injury-related treatment. These issues may need to be addressed before the settlement can be fully distributed.
Other possible delays include an incomplete settlement document, missing signatures, an appeal or withdrawal period, incorrect payment information, a returned check or disagreement about attorney fees.
How Much Will You Actually Receive?
The gross settlement amount is not always the amount delivered to you.
Before payment, the law firm may subtract:
- Attorney fees;
- Legal expenses;
- Medical liens;
- Medicare reimbursement;
- Child-support arrears; and
- Other deductions authorised by the settlement or required by law.
For example, a $100,000 settlement may produce a much smaller net payment after these deductions. Ask your lawyer for a written settlement statement showing the gross amount, every deduction and the exact amount payable to you.
What Should You Do If Payment Is Late?
First, ask your lawyer or claims adjuster for the date the settlement became final. Do not rely only on the date you signed it.
Request written answers to these questions:
- Has the judge or board approved the settlement?
- When did the insurer receive the final order?
- Has the insurer issued the check?
- Are any liens still unresolved?
- Has the check cleared the trust account?
- What is my expected net payment?
When the insurer misses a state payment deadline, a penalty or interest may apply. Your lawyer may need to file a request with the workers’ compensation board or judge.
When your lawyer has already received cleared, undisputed funds but will not provide an accounting or release your money, send a written request to the firm. Continued unexplained withholding may justify contacting the attorney disciplinary authority in the state where the lawyer is licensed.
The Bottom Line
Many workers receive their settlement money approximately two to six weeks after final approval, but the exact period depends on state law and the circumstances of the claim.
The insurer may have only 10 or 14 days to issue payment in some states, but check clearance, attorney processing, medical liens and Medicare requirements can extend the time before the worker receives the net settlement. The most important date is usually the date the settlement became final—not the date it was signed.
