Reading a Workers’ Comp Settlement Offer in California

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Line one: which kind of settlement is it?Line two: the permanent disability number Line three: is a life pension owed?Line four: future medical care Line five: the other money that belongs in it Line six: what comes out before you are paid Before you sign Questions to ask about any offer Key takeaways Frequently asked questions Tell us what happened

In thirty seconds

First, find out which kind of settlement it is. A Compromise and Release is a lump sum that closes your future medical care for this injury permanently. Stipulations with Request for Award pay the same permanent disability over time and keep future medical open.
The permanent disability number is arithmetic you can check, from a rating string in your file. The rating bands are steep, and at 70% or higher a life pension is owed on top of the award.
Before you are paid, a judge-approved attorney fee and any liens come out, and liens are negotiated, not simply paid. A judge must find the settlement adequate, but do not plan on being rescued at approval.

By the time a settlement offer arrives, most injured workers have been waiting a long time: months of treatment, a rating, letters they did not fully understand. The offer usually comes as a number, sometimes with a deadline attached, and the pressure to say yes is real. In Southern California, where rent does not wait for a case to finish, a lump sum can look like the end of a long problem.

A settlement is not a number read off a chart. It is built from parts, and each part can be checked. This article walks through an offer the way a careful reviewer reads one, line by line: which structure it is, how the permanent disability figure is built, whether a life pension is owed, what future medical care is worth, what other money belongs in it, and what comes out before you see a dollar. It is written for the person holding an offer, or expecting one, who wants to understand it before they sign.

A settlement is not a number read off a chart. It is built from parts, and each part can be checked.

Line one: which kind of settlement is it?

The structure decides more than the number does.

California workers’ compensation cases end in one of two ways, and the choice between them is permanent. The permanent disability money is the same under both. What differs is your future medical care and your right to come back if things get worse.

Figure 1. Two ways a case ends. A Compromise and Release pays a lump sum and closes future medical care for the injury for good. Stipulations with Request for Award pay the permanent disability over time, keep future medical open, and leave five years from the date of injury to reopen if the condition worsens.

Compared

COMPROMISE AND RELEASE

Payment: One lump sum
Future medical for this injury: Closed and bought out
Reopening if it gets worse: Essentially never
Medicare set-aside: Often required
Usually best when: Future treatment is limited, or you need capital now

STIPULATIONS WITH REQUEST FOR AWARD

Payment: Every two weeks
Future medical for this injury: Stays open
Reopening if it gets worse: Within five years of the date of injury
Medicare set-aside: Rarely required
Usually best when: You will need ongoing care, or the condition may worsen

Not two prices for the same thing. A Compromise and Release that is larger than a Stipulations offer may still be worth far less, because in the Compromise and Release you are also selling your future medical care. Compare what each one buys, not only the two numbers.

Neither is always right. The right answer turns on the injury itself, your age, your realistic future treatment needs, whether you are on Medicare or heading toward it, and what your life requires. Anyone who tells you one structure is always right is not looking at your case.

WHAT THE LUMP SUM REALLY BUYS

The lump sum is attractive, and the closed future medical is permanent. Both are true at once. A prosthesis, an implanted device, a joint that will need revision, ongoing medication, or a condition that is likely to progress are the situations where closing future medical without a careful cost projection does the most damage.

Settlements: C&R and Stipulations Already settled?

Line two: the permanent disability number

The rating string, read field by field, and the dollars it becomes.

Somewhere in your file is a line of numbers called the rating string. It looks like this: 15.03.01.00 – 8 – [1.4]11 – 340G – 13 – 15. Nobody explains it to injured workers, and every field in it can be checked.

Read aloud, it says this. The first field is the body part and the method: chapter 15 of the AMA Guides is the spine, region 03 is the lumbar spine. The 8 is the doctor’s whole person impairment. The bracket shows the adjustment for injuries on or after January 1, 2013: the impairment is multiplied by 1.4 and rounded, so 8 becomes 11. The 340G is the occupational group and its variant, which raises the rating to 13. The last field, 15, is the final permanent disability after the age adjustment.

The occupational group is assigned by what you did. Your occupational group is supposed to reflect what you actually did all day, not your job title. Titles are written by human resources departments; groups are supposed to reflect duties. A “logistics associate” may be a warehouse worker. Correcting the group is one of the highest-value, lowest-cost arguments in a California case.

The age adjustment. Your age on the date of injury moves the rating. Older workers rate higher and younger workers lower, with the neutral bracket between 37 and 41. In the schedule’s own example, a 30-year-old maintenance mechanic’s occupation-adjusted rating of 13 drops to 11. Same injury, same job, a lower number.

Two more strings, read the same way. 15.03.01.00 – 10 – [1.4]14 – 380H – 18 – 18 is the same body part and the same method. An impairment of 10 becomes 14 after the 1.4, the heavier occupational group takes it to 18, and the age bracket is neutral: 65.50 weeks of payments, or $18,995 at the maximum rate. The occupational group did most of that work.

15.01.02.02 – 8 – [5]10 – 470H – 13 – 11 has a single digit in the bracket instead of the 1.4. That marks the older future earning capacity system, used for injuries from 2005 through 2012. The same 8 becomes only 10, rises to 13 on occupation, and falls to 11 because the worker was 30.

Apportionment. Disability that a doctor attributes to causes other than work reduces the award proportionally. The law allows apportionment even to a pre-existing condition that caused no symptoms, but the doctor must explain how and why; a percentage without that reasoning is not substantial evidence. Read the apportionment paragraph of the report before you accept the rating built on it. Apportionment must also be medical, not vocational.

More than one body part. Ratings for several body parts are combined through a chart, which produces less than simple addition. The Appeals Board held in 2024 that the chart can be rebutted, and there is a line of argument for adding ratings where the impairments interact. Whether that applies is a question for the medical reports, not an assumption.

From percentage to dollars. The percentage becomes weeks of payments, in bands that grow steeper as the rating rises, and the weeks become dollars at a weekly rate between $160 and $290. Both of those figures have been frozen since January 1, 2014, so a worker injured in 2026 is paid permanent disability at rates set twelve years earlier.

Figure 2. Weeks of payment for each percentage point, by band. Three weeks a point at the bottom of the scale; sixteen a point from 70% up. At the $290 maximum, a point above 70% is worth $4,640, and a point between 15% and 24.75% is worth $1,450.

CHECK THE CREDITS

Permanent disability advances already paid are credited against the award. Overstated advances are one of the most common quiet errors in a settlement, so the credit deserves the same checking as the rating.

Why the slope matters. Each point above 70% is worth $4,640 at the maximum rate. Each point between 50% and 69.75% is worth $2,320. Each point between 15% and 24.75% is worth $1,450. So a rating dispute near the 70% line is worth fighting hard, and a case sitting at 68% deserves a very careful look. A 30% rating at the maximum rate is 131 weeks, or $37,990. A 70% rating is 433.25 weeks, or $125,643, and that is before the life pension.

Permanent disability, step by step Decode your rating string

Line three: is a life pension owed?

From 70%, a pension for life is owed on top of the weeks.

If your permanent disability is 70% or more, but less than 100%, you are owed a pension for the rest of your life, on top of the permanent disability award, starting when the award’s weeks run out. It is the single most expensive thing to miss at settlement.

How it is calculated. The weekly pension is 1.5% of your average weekly earnings, multiplied by the rating minus 60, with earnings capped at $515.38 for injuries on or after January 1, 2006. At 70% that is $77.31 a week, or about $4,020 a year; at 75%, $115.96 a week; at 80%, $154.61.

And it grows. Life pension payments increase every year with the state average weekly wage, which rose 4.98826% in the year ending March 2025. The increase begins the January 1 after you actually start receiving the pension, and compounds from there.

THE SETTLEMENT THAT GETS THIS WRONG

A 75% case for a 45-year-old is not a $148,843 case. It is $148,843 plus a weekly pension of $115.96, escalating every year, starting around year ten and continuing for the rest of that worker’s life, potentially decades of compounding payments. A Compromise and Release that pays the chart value and quietly extinguishes the life pension is a catastrophic settlement, and it is also a common one.

Line four: future medical care

What the insurer counts, and what your care will actually cost.

In a Compromise and Release, future medical care is the biggest variable and the hardest to price. In Stipulations, it stays open and is not part of the number.

How the insurer prices it. The carrier usually takes what it actually paid for your treatment over the last twelve to twenty-four months, annualizes it, and projects it forward at a discount. That has a consequence people do not expect: a worker who stopped going to treatment, because of the pain, the drive or the copays, has handed the carrier its best argument that future care is worth very little.

Add it up over a lifetime. What future care is worth to you is what it will cost over your remaining lifetime: surgery you may need, injections, medication, physical therapy, a device or prosthesis that will need replacing, imaging and office visits. In any case with a prosthesis, an implanted device, a joint replacement that will need revision, ongoing medication or a progressive condition, a Compromise and Release without a professionally prepared lifetime cost projection is how a worker ends up paying for their own care later.

MEDICARE

If you are a Medicare beneficiary, or expect to be within 30 months, and you are settling future medical care, Medicare’s interests have to be protected, usually through a workers’ compensation Medicare set-aside. The set-aside is part of your settlement number, but it is reserved for future treatment and is not cash in your pocket.

Line five: the other money that belongs in it

Money that belongs in the offer and is often missing from it.

A settlement offer that shows only permanent disability and future medical may be leaving money out.

Unpaid temporary disability. Arrears of temporary disability that was late, short or never paid belong in the number, along with the penalties and interest that go with them.
The voucher and the supplement. The supplemental job displacement voucher is $6,000 for retraining if you did not return to work. The Return-to-Work Supplement is a separate $5,000, and you have to apply for it within one year.
The subsequent injuries fund. If you had a prior disability and the combined disability is severe, the Subsequent Injuries Benefits Trust Fund may owe you money that the employer does not, and that claim survives a Compromise and Release. Since July 2026 it has its own deadline: five years from the subsequent injury, or six months from the resolution of permanent disability, whichever is later.
Every injured body part, and a cumulative claim. Every body part injured, including the ones hurt later as a consequence of the first, belongs in the case, and so does a cumulative trauma claim alongside the specific injury where the work wore you down over time. A judge cannot value a body part nobody claimed.

CLAIMS THAT SHOULD NOT BE SETTLED BY ACCIDENT

A pending claim for serious and willful misconduct, which increases the award by half and is paid by the employer personally, or a discrimination claim for having filed, each have their own value. And approval of a settlement resolves all accrued penalty claims unless they are expressly excluded, so an unqualified release can give them away.

The Subsequent Injuries Fund The job displacement voucher

Line six: what comes out before you are paid

Fees and liens, and what the check actually comes to.

The settlement figure is the gross. Several things can come out of it before the check is written.

Figure 3. From settlement to check, illustrated. A gross settlement of $60,190 becomes about $43,067 after a 12% attorney fee, an EDD lien and negotiated medical liens. The figures are illustrative; every case’s deductions are its own.

The attorney fee. A workers’ compensation attorney may not demand or accept any fee until the Appeals Board has approved or set it. Fees usually range from 9% to 15% of the permanent disability and other indemnity, and they come out of indemnity, not medical care: if your attorney wins authorization for your surgery, you do not pay a percentage of the surgery. In June 2026 the Appeals Board, sitting en banc, directed judges to examine the attorney fee as part of their review of a settlement’s adequacy.

How the fee is taken. On Stipulations, the fee is customarily commuted from the far end of the award, so you receive full biweekly payments from the start. On a Compromise and Release with a large future medical component, two structures are worth discussing before you sign: a fee figured net of the future medical allocation, or a fee on the gross at a lower percentage.

Liens. If you collected State Disability Insurance, EDD is reimbursed. A child support lien is enforced against the settlement. Medical providers, health insurers and Medicare may have claims of their own. Liens are negotiated, not simply paid, and provider liens in particular are often resolved for a fraction of their face value. Every dollar taken off a lien is a dollar that reaches you.

An illustrative case. A 52-year-old warehouse worker in Fontana, rated 30% for a 2024 back injury, at the maximum rate. Permanent disability of $37,990, temporary disability arrears of $4,200 and $18,000 for future medical in a Compromise and Release make a gross settlement of $60,190. A 12% fee, an EDD lien of $6,400 and medical liens negotiated from $9,100 down to $3,500 leave about $43,067. Change one fact, the rating from 30% to 70%, and the permanent disability alone becomes $125,643, with a life pension owed on top of it. That is why the rating fight is the case.

Before you sign

After you sign, plan as if you cannot change your mind.

A judge must approve it. No settlement is valid until the Appeals Board approves it, and the judge has to find it adequate, not merely confirm that both sides signed. In June 2026, in Gaines v. ABM Aviation, the Appeals Board sitting en banc confirmed that a judge must independently assess a settlement’s validity and adequacy rather than rubber-stamp it.

DO NOT COUNT ON BEING RESCUED

Practically, you cannot change your mind after you sign. The judge’s review is a protection, but the judge works from the record in front of them, which is often the defense’s record. Plan as though the signature is final, because it nearly always is.

Figure 4. From offer to payment. The offer is read and negotiated; both sides sign; a judge reviews it for adequacy and approves it; and for a Compromise and Release the form sets payment at 30 days from approval. Stipulations keep future medical open and allow reopening within five years of the date of injury.

Timing. Realistically, it takes several weeks from agreement to approval, and then payment. The Compromise and Release form sets the payment benchmark at 30 days from approval, and late payment carries interest.

What a comp settlement never includes. There is nothing in a workers’ compensation settlement for pain and suffering, emotional distress or punitive damages. If someone other than your employer contributed to the injury, such as a negligent driver, a defective machine or a subcontractor, a separate third-party claim can reach those damages. The comp case cannot.

How third-party claims work

Taxes. Workers’ compensation benefits are generally not taxable income. Talk to a tax professional about your own situation, particularly if Social Security disability benefits are involved.

Questions to ask about any offer

Ask them before anyone signs.

Every one of these can be answered from the file, and every one can move the number.

Has every body part been rated? — The shoulder that failed from favoring the back, the sleep disruption, the depression. If it is not in the record, it is not in the number.
Have I reached maximum medical improvement? — A case cannot be valued before the rating exists.
Does the rating string check out? — The 1.4 arithmetic, the occupational group against what I actually did, the variant against the body part, my age on the date of injury.
Am I near 70%? — If so, is the life pension in the number, or is it being given away?
Is this a Compromise and Release, and what is future medical worth? — Built from my actual treatment history and needs, not whatever was offered.
Is anything owed that is missing? — Temporary disability arrears, the voucher, the Return-to-Work Supplement, penalties, interest, a Subsequent Injuries Fund claim.
What comes out, and has every lien been negotiated? — The fee, EDD, medical providers, child support, Medicare.
What am I releasing? — Penalty claims, a serious and willful claim, a discrimination claim. Nothing should be given away by accident.

Key takeaways

Know the structure first. A Compromise and Release closes future medical for good; Stipulations keep it open with five years to reopen.
The rating is arithmetic. Every field of the rating string can be checked, and the occupational group is the most common correctable error.
The bands are steep. A point above 70% is worth over three times a point between 15% and 24.75%, and 70% brings a life pension.
Future medical is priced from your history. A quiet treatment year before settlement makes it look worth less.
The gross is not the check. The fee is set by a judge, liens are negotiated, and a signature is final.

Frequently asked questions

How much is my workers’ comp case worth?

It is the sum of its parts: permanent disability weeks multiplied by the weekly rate, a life pension at 70% or above, temporary disability arrears, future medical if it is being closed, the voucher, and any penalties and interest. Any figure quoted without a rating is a guess.

Should I take the lump sum or keep my medical open?

It depends on whether you will need ongoing treatment for this injury, your age, whether Medicare is in the picture, and what your life requires. The lump sum is attractive, and the closed future medical is permanent.

Can I change my mind after I sign a settlement?

Practically, no. A judge must approve the settlement and must find it adequate, but you should not plan around being rescued at approval.

How long until I get paid after settling?

Usually several weeks from agreement to approval, and then payment. For a Compromise and Release, the form sets the benchmark at 30 days from approval, and late payment carries interest.

How much is the attorney fee on a workers’ comp settlement?

The fee is set or approved by a workers’ compensation judge, usually between 9% and 15% of the indemnity, and no fee may be taken until the judge approves it. It does not come out of your medical treatment.

Is a workers’ comp settlement taxable?

Workers’ compensation benefits are generally not taxable income. Talk to a tax professional about your own situation, particularly if Social Security disability benefits are involved.

Sources

Labor Code § 4453§ 4553§ 4658§ 4659§ 4660.1§ 4663§ 4664§ 4662§ 4903§ 4906§ 5001§§ 5100–5101§ 5410§ 5800§ 58148 CCR § 10700§ 10789§ 10844Baker v. WCAB (2011) 52 Cal.4th 434Gaines v. ABM Aviation (WCAB en banc, 6/24/2026)CMS WCMSA Reference GuideSB 171 (Stats. 2026, ch. 83)2005 Permanent Disability Rating ScheduleEscobedo v. Marshalls (WCAB en banc)Nunes v. State of California (2023, en banc)Vigil v. County of Kern (2024, en banc).

General information about California law, not legal advice about your case.

Impairment values described are from the AMA Guides, 5th Edition as applied under the California rating schedule; the Guides are a copyrighted medical text and figures here are summarized rather than reproduced. Your rating depends on your own examination findings.

Reviewed by Jamey Teitell, Partner & Trial Attorney · Last reviewed October 12, 2026

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Printed from https://www.solovteitell.com/articles/reading-a-workers-comp-settlement-offer/ · Last reviewed October 12, 2026