Not all workplace accidents lead to workers' compensation benefit claims, even if the underlying injury is one that would lead to benefits eligibility. Sometimes from the perspective of the employer and its workers' compensation insurer, it is more practical to offer the injured worker a settlement in lieu of going through the claims process.
For a settlement agreement to be valid, though, it must meet specific requirements that are set forth in the North Carolina Workers' Compensation Act. Most importantly, no settlement agreement can be operative unless the parties submit it to the North Carolina Industrial Commission for approval and the commission in fact approves it.
The commission will base its decision to approve or reject the settlement agreement on criteria including the following:
- Are the agreement's terms and conditions fair and just? Have all of the interests of all of the parties (the employee, the employer and the insurer) been adequately considered?
- If the employer has not agreed to pay all medical expenses connected to the workplace injury, does the agreement spell out all of the employee's known medical expenses, including the ones that the employer disputes as well as the ones to be compensated?
- Does the agreement include a finding that all of the parties have been reasonable with regard to the payment of medical expenses? That is, has the employer either admitted or reasonably denied the compensation claim, and is any compensation reasonable, considering the known medical expenses of the employee?
If the commission approves the settlement agreement, then it becomes final and binding on all parties to it; it is not subject to appeal or challenge unless the party disputing its provisions can demonstrate that the agreement was the product of misrepresentation or fraud, undue influence or mutual mistake. If a party successfully makes such a challenge, the commission can then set aside the agreement.
As with any contractual agreement that affects your rights and well-being, it is a good idea to review a workers' compensation settlement agreement with an attorney before entering into it. A law firm that practices in workers' compensation law would be a logical choice for such a review.