Why is the settlement check smaller? Liens and deductions, line by line

The gross and the net

Two numbers, and you are owed both.

The gross is the settlement. It is the figure the parties agree to and the judge approves: the permanent disability, any temporary disabilityTD / TTD / TPD Temporary Disability, Total or Partial. Wage replacement while recovering. Two-thirds of average weekly earnings; 2026 maximum $1,764.11/week. still owed, the value of future medical care if a Compromise and ReleaseC&R — Compromise and Release A lump sum that closes future medical treatment permanently. closes it, and whatever else the agreement resolves.

The net is what arrives. In most cases five kinds of thing stand between the two:

• Permanent disability already advanced, if the insurer paid it while the case was pending. It is credited against the total, not deducted: you already received it. It is the largest single surprise, and it is almost always legitimate.
• The attorney’s fee, approved or set by a workers’ compensation judgeWCJ Workers’ Compensation Judge. Decides your case. There is no jury..
• Liens, chiefly medical treatment, EDD for State Disability you received, health plans and Medi-Cal, and in some cases child support arrears.
• A Medicare set-aside, if one applies. It is still your money, held for treatment of the injury.
• Medical-legal costs, such as QMEQME Qualified Medical Evaluator. A state-certified physician who resolves disputes. Unrepresented workers get a panel of three by random draw. and AMEAME Agreed Medical Evaluator. A physician both sides agree on. Available only to represented workers, and practically very hard to move away from. report fees, deposition costs and interpreter fees. These are usually the insurer’s responsibility, but check where they landed.

Every one of them is knowable before you sign. A worker who sees the arithmetic in advance can question it. A worker who sees it first on the check usually cannot.

A judge has to approve the settlement. No settlement is valid until the Appeals Board approves it, and the judge must find it adequate, not merely signed. In Gaines v. ABM Aviation, an en banc decision of the Appeals Board in June 2026, the Board confirmed that the judge assesses a settlement’s validity and adequacy independently. Do not plan on being rescued at approval, though.

• Reading a workers’ comp settlement offer, line by line
• Settlements: C&R and Stipulations
• My settlement check is less than I expected

What the law lets attach

A closed list, and a few things outside it.

The list. The Labor Code lists what the Appeals Board may allow as a lien against compensation, and the list has nine entries:

• Attorney’s fees for legal services on the claim.
• Medical treatment expense incurred by or for the injured worker, and medical-legal costs.
• Living expenses of the worker or dependents after the injury.
• Burial expenses, within the limit the law sets for them.
• Living expenses of a spouse or minor children, where the worker has abandoned or neglected them.
• State Disability Insurance benefits already paid.
• Unemployment compensation paid for the same days.
• Paid Family Leave benefits already paid for the same days as temporary total disability.
• California Victims of Crime Program indemnification.

The list ends there. One more lien comes from a different chapter: the Asbestos Workers’ Account, which the law directs to file a lien to recover what it spent, makes it a first lien against compensation, and gives it priority over all other liens.

Outside the list. Three more claims can reach a settlement without being one of the nine: child support arrears, Medicare’s interest, and, where there is also a recovery from someone other than your employer, the workers’ compensation carrier’s own lien against that recovery. Each is its own subject below.

What comes out of my settlement

The attorney’s fee

Set by a judge, and taken from indemnity.

No fee until the judge approves it. The law prohibits an attorney from demanding or accepting a fee until the amount “has been approved or set by the appeals board.” It comes out of the recovery, not out of your pocket.

The ranges. The state’s own guidance, as the Appeals Board applies it:

• 9% to 12% of the permanent disability, death benefit or compromise and release awarded in a case of average complexity. The DWCDWC Division of Workers’ Compensation, part of the Department of Industrial Relations. Administers the system. Information Services Center: 1-800-736-7401.’s Form 3 says fees “normally range from 9% to 12%”.
• Above 12% where the case involved new legal theories, heavily disputed facts or medical issues, extensive investigation, lengthy hearings or several defendants. 15% is what judges commonly approve in a genuinely contested case.
• Below 9%, as low as 1%, where the case was essentially uncontested and required little work.

What the judge weighs. The responsibility assumed, the care exercised, the time involved and the results obtained. A fee the work does not justify gets reduced.

Indemnity, not medical. The percentage attaches to indemnity and the settlement, not to the value of treatment. If your attorney wins authorization for your surgery, you do not pay a percentage of the surgery.

How it is taken. On Stipulations with Request for AwardStips — Stipulations with Request for Award An agreed percentage paid over time, with future medical left open, and reopening available within five years of the date of injury. These are not two prices for the same thing., the fee is customarily commuted from the far end of the award, so you receive full payments every two weeks from the start.

When the deductions should stop. In Rader v. Ticketmaster Corporation, a significant panel decision of the Appeals Board in January 2026, the Board held that a fee commuted from an award of lifetime benefits is limited to the amount the judge approved. Once that amount has been withheld, the reductions stop and the weekly payments return to full. Significant panel decisions are not binding precedent, but if a fee is still coming out of a life pensionLife pension Payable at 70%–99% after the PD award is exhausted. § 4659(a): 1.5% of average weekly earnings per point above 60 — with earnings capped at $515.38 since 2006. years later, check it against Rader.

No recovery, no fee. There is nothing to pay to find out whether you have anything worth doing, and if there is no recovery, there is no fee and you are not responsible for the costs this office advanced.

What a workers’ comp lawyer costs

EDD and the days State Disability paid

Repaid from the comp case, for the same days only.

Why it happens. While a comp claim is denied or delayed, State Disability Insurance can pay you in the meantime. EDD lists the situations itself: your employer or its insurer denies benefits, delays them, pays less each week than State Disability would, or pays only medical expenses. If comp later accepts the claim, or a judge finds it owed, State Disability has paid for days comp should have paid for.

This is not a penalty. SDI paid you while comp did not, and the comp award covers the same days. You are not paid twice for a day, and EDD is repaid by one of two routes.

Directly, by the employer. An employer or insurer that later accepts liability, or is found liable, is assessed by EDD for what it paid in place of comp, plus interest, and must reimburse EDD within 60 days. Those charges fall on the employer, not on you.

Or through a lien in your case. Once EDD gives the insurer written notice, its claim is a lien against what is afterward payable as temporary or permanent disability, subject to the Appeals Board’s approval. The lien is limited:

• The same days. It covers State Disability paid for the same days for which temporary disability, or permanent disability resulting solely from the same injury, is awarded.
• Not twice. It does not cover anything the employer has already reimbursed.
• From either kind of disability. The lien can be paid from permanent disability for the same injury, not only from temporary disability. That is why it so often surfaces at settlement.

An illustrative case. A claim is delayed, and State Disability pays for twenty weeks. The insurer then accepts the claim, and temporary disability is awarded for twenty-six weeks. EDD’s lien reaches the twenty weeks the two share. The other six weeks of temporary disability belong to the worker, and nothing in the lien reaches them.

In a settlement. The insurer has to keep EDD informed, including when a stipulated award or a compromise and release is filed. In a Compromise and Release, you and the defendant may propose how much goes to EDD, and if EDD objects, the judge decides.

Paid Family Leave works the same way. If it was paid for days that temporary total disability also covers, EDD has the same kind of lien.

Workers’ comp or State Disability? My claim is delayed

Medical liens and health plans

A claim against the case, not a bill to you.

Who files them. Providers who treated you and were not paid file liens in your case. So does a health plan that paid for treatment of the injury while the claim was denied or delayed. Using your own insurance when you needed treatment was the right thing to do; the lien is how the plan is repaid by the party that always owed it.

It is filed against the case, not against you. A lien claimant is a separate party to your case. It files, it can appear, and its claim is resolved with the insurer, by agreement or by a judge. You are not being sued.

The number on the letter is a starting position. Liens are negotiated down routinely, and a substantial share do not survive the procedural rules at all:

• A filing fee. A lien claimant must pay a filing fee, and it has to be paid.
• A deadline. Liens have their own statute of limitations, and a lien filed outside it is barred.
• A declaration. A lien filed without the required declaration is subject to dismissal.
• A stay on fraud charges. When a provider is charged with certain crimes, any lien filed by or for that provider, and any interest on it, is automatically stayed until the criminal case ends.

Every dollar off a lien reaches you. Provider liens in particular are often resolved for a fraction of their face value, and reducing them is one of the most direct ways a net improves.

Medi-Cal is different. The Department of Health Care Services has statutory recovery rights, and they are handled differently from a private plan’s lien.

Where it does touch you: the Compromise and Release. In a Stipulated Award, the insurer remains responsible for medical treatment, and its liens are its problem. In a Compromise and Release, you settle everything for one number, so who is responsible for known liens has to be written into the agreement. A well-drafted C&R says so. A poorly drafted one leaves you exposed to something you thought was resolved.

DO NOT PAY A LIEN LETTER Do not send money, do not ignore the letter, and do not sign anything that came with it. Keep it, write the date you received it on it, and give it to whoever is handling your case. A lien claimant collecting directly from an injured worker is not how this works.

I got a letter about a lien My health insurance wants to be paid back

Child support, creditors and taxes

Support can reach comp. Ordinary creditors and the tax man usually cannot.

The protection is strong. The law provides that a claim for compensation cannot be assigned before it is paid, and that compensation is not subject to attachment or execution and is exempt from creditors’ claims. A credit card judgment, a medical debt collector or an ordinary civil creditor generally cannot reach your workers’ compensation benefits.

Support is the exception. Child and spousal support obligations can reach workers’ compensation benefits, and support arrears are among the things resolved out of a settlement. It is not discretionary, and a settlement cannot be structured around it.

Say so early. If you owe support arrears, tell whoever is handling the case at the start, not at signing. It does not make your case worth less. It is a number that has to be in the calculation from the beginning, so that the net you are shown is real.

If you are in bankruptcy, or considering it. A pending workers’ compensation claim is an asset, and exemptions apply, but the sequence matters. Get specific advice before filing either one.

Taxes are not withheld. Workers’ compensation benefits, including a settlement, are generally excluded from income, and nothing is withheld from the check. The exception is Social Security disability: where you receive both, the SSDI is reduced, or offset, because of the comp, and the part of your comp that causes that reduction is treated as Social Security benefits for tax purposes, which can be taxable depending on your total income.

How the settlement is worded can change the offset. A lump sum is prorated as if periodic payments had continued, and medical and legal expenses can be excluded from that calculation. A settlement drafted without proration language and those exclusions can cost a worker months of SSDI they were entitled to keep. This office does workers’ compensation, not tax: if SSDI is involved, or you are settling a case of any size, talk to a tax professional before you sign.

• Can my settlement be garnished?
• Do I pay taxes on workers’ comp?
• I’m on Social Security disability

Medicare: looking back, and looking forward

Two different obligations. Both have to be handled.

The rule underneath it. Medicare is a secondary payer. Under the Medicare Secondary Payer Act, Medicare does not pay for treatment that a workers’ compensation settlement was meant to cover.

Looking back: conditional payments. If Medicare already paid for treatment that workers’ compensation should have covered, Medicare has a right of recovery for those past payments. It is resolved before or at settlement, and it is a real number that has to be requested and negotiated rather than assumed.

Looking forward: the set-aside. A Workers’ Compensation Medicare Set-Aside is a portion of the settlement allocated to future treatment of the injury that Medicare would otherwise cover. You spend it on that treatment, keep records, and when it is properly exhausted, Medicare resumes paying.

It is your money. It is not a fee, and it is not withheld from you. It is restricted in what it can be spent on: your future treatment, prepaid, with reporting obligations attached.

When CMS will review one. The Centers for Medicare & Medicaid Services reviews a proposed set-aside in two situations:

• You are a Medicare beneficiary now, and the total settlement is more than $25,000; or
• You have a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the total expected for future medical care and disability or lost wages is more than $250,000.

Those are review thresholds, not safe harbors. CMS says no statute or regulation requires a set-aside proposal to be submitted for review, though it recommends it. The obligation to consider Medicare’s interest exists regardless of the numbers. A settlement below a threshold still cannot be structured to shift care for the injury onto Medicare.

“Within 30 months” catches people. You are in that group if you have applied for Social Security Disability, been denied and are appealing, are 62½ or older, or have end-stage renal disease. A worker who is 62½ and settling a large case is in it without being on Medicare today.

And open medical is an option. A Stipulated Award that leaves future medical care with the insurer avoids the set-aside question entirely. It is often worth more than the extra dollars a Compromise and Release offers, particularly with a surgery in your future.

I’m on Medicare

When there is also a case against someone else

The carrier’s lien, and why it is smaller than it looks.

The lien. If you recover in a civil case against someone other than your employer, such as a negligent driver, a defective machine’s maker or a subcontractor, your employer or its insurer has a lien on that recovery for what it paid you in workers’ compensation. That is real, and it surprises people.

It pays its share of the cost. In Quinn v. State of California, decided by the California Supreme Court in 1975, the court held that the employer must bear its fair share of the cost of the recovery. The civil recovery is distributed in an order: reasonable litigation expenses and a reasonable attorney’s fee first, then the employer’s lien, then the balance to you.

The employer’s own negligence reduces it. Where the employer’s own negligence contributed to the injury, the lien can be reduced, or eliminated entirely. On a construction site where the direct employer’s safety failures played a part, that reduction can be substantial.

The credit can be the bigger number. The lien recovers what has already been paid. The credit extinguishes what would otherwise be paid in the future: future medical, future permanent disability, future temporary disability. On a case with an open future medical award, the credit can be worth several times the lien.

Why it matters here. How that lien and credit are handled is frequently worth more than the difference between two settlement offers, and settling one case without analyzing the other is how value disappears.

Third-party claims Hurt driving for work

Ask for the net, in writing

One page, before you sign.

You are entitled to see the arithmetic, and the request is simple: show me the net. A one-page breakdown answers it. It starts with the gross, takes off permanent disability already advanced, the attorney’s fee, each lien by name and amount, and any set-aside, and ends with what arrives.

The number on the offer is not the number you take home, and every line between them can be known before you sign.

Someone who will not produce that page is telling you something. So is a settlement conference where nobody mentions the advances until afterward. The point is not distrust. The point is that a net you have seen is a net you can question while there is still time.

And ask what the settlement closes. A Compromise and Release closes future medical care permanently. A Stipulated Award does not. That difference is usually worth more than every lien on the list.

A page to ask for before you sign:

• The gross and the net — Both numbers, in writing, side by side.
• The advances — The total of permanent disability already paid, with the dates.
• The fee — The percentage, what it is taken from, and how it will be taken.
• Every lien on file — Each by name, its amount, and whether it has been negotiated.
• EDD — Whether a lien was asserted, for which weeks, and for how much.
• Medicare — Whether a set-aside is needed, what it is funded at, and how past payments were resolved.
• Who owes known liens — In a Compromise and Release, the clause that says so.
• Support and SSDI — Any support arrears, and the proration language if you receive Social Security disability.

If it is already signed. An approved settlement is hard to undo, but not always impossible. There is a 20-day window to petition for reconsiderationPetition for Reconsideration Appeal from a final order. 20 days. A non-final order takes a Petition for Removal instead. of the order approving it, and the Appeals Board keeps jurisdiction in defined circumstances. Both are time-sensitive. And a lien letter that arrives after the case closed is still not yours to pay: give it to whoever handled the case.

If you’ve already settled

When you do not need a lawyer for this

Some settlements are simple.

Not every settlement needs anyone to fight over its deductions. If you have no attorney, no liens are on file, you never received State Disability, you are not on Medicare or close to it, you owe no support, and the settlement is a Stipulated Award that leaves future medical care open, the arithmetic may be short: the gross, less any permanent disability already advanced. The state’s Information and Assistance officers answer questions about a settlement at no cost, and the judge reviews it before it is approved.

Some deductions will not move, and it is better to hear that now. An EDD lien for State Disability paid for the same days the comp award covers is usually valid, and it will be repaid. Support arrears attach whatever anyone does. Permanent disability already advanced is already yours. A lawyer cannot make those lines disappear, and anyone who promises to is not describing the law.

A consultation is worth having when a Compromise and Release would close future medical, when several liens are on file, when Medicare or Social Security disability is involved, when there is also a case against someone else, or when the net you were shown does not add up. Those lines move only before the signature. A consultation with this office costs nothing, and if there is nothing worth doing, we will tell you that.

When you don’t need a lawyer, and what changes the answer