Is It Convenient for an Insurance Company to Close a Workers’ Compensation Case?

By Steve Franco

In the workers’ compensation system, both injured workers and insurance companies have conflicting interests. For workers, the primary goal is to receive appropriate medical care, wage replacement for lost income, and in cases of permanent disability, fair compensation. On the other hand, insurance companies seek to minimize the costs associated with claims. A frequently asked question is: Is it convenient for an insurance company to close a workers’ compensation case?

The answer is not simple and depends on several factors. Below, we analyze the pros and cons for an insurance company when closing a case, as well as the legal considerations they must keep in mind.

Advantages of Closing a Workers’ Compensation Case

1. Reduction of Long-Term Costs

Closing a workers’ compensation case can be beneficial for insurance companies if done at the right time. Prolonging a case may mean incurring additional costs, such as continued medical expenses, temporary disability payments, and the administrative costs of managing the case over an extended period. By reaching a global settlement, the insurance company can settle all these costs at once, reducing the risk of future expenses.

2. Avoiding Future Medical Complications

When an injured worker continues to receive medical treatment, there is a risk that additional complications may arise, significantly increasing the cost of the claim. For example, an employee who initially suffered a minor back injury could develop a chronic condition requiring ongoing treatment. By closing the case before new complications arise, the insurance company can avoid additional costs that were not initially anticipated.

3. Control Over Settlement Negotiations

In many cases, an insurance company prefers to close a case through a negotiated settlement. This allows them to maintain some control over the total amount they will pay. Additionally, settlements often include a waiver of future claims by the worker, providing financial security to the insurer, knowing they won’t have to deal with additional demands related to the same injury.

Disadvantages of Closing a Workers’ Compensation Case

1. Potential Underestimation of the Case’s Value

Closing a case too early can lead to an underestimation of the real cost of the claim. In some situations, the full extent of a worker’s injury may not be evident until months or even years after the incident. If the insurance company agrees to a low settlement amount but the worker’s condition worsens, they could face a bad faith case or legal liability if they did not provide the necessary resources for adequate recovery.

2. Impact on the Company’s Reputation

If the insurance company is perceived as too aggressive in trying to close cases quickly, this could damage its reputation. Workers, unions, and workers’ compensation lawyers may view the insurer as insensitive or unfair, which could lead to more litigation and an increase in cases ending up in court rather than being settled.

3. Risk of Errors in Medical Evaluation

When closing a case, the insurance company must be sure that the medical evaluation conducted is accurate and complete. If the worker still needs treatment or if the disability is more severe than initially estimated, the company could face future problems. For this reason, it is essential that insurers work with qualified and experienced physicians in the workers’ compensation system to avoid errors in evaluating the extent of the injury.

Legal Aspects to Consider

Under the California workers’ compensation system, there are strict regulations that protect the rights of injured workers. Insurance companies cannot simply close a case without following certain legal procedures. Workers have the right to continue receiving medical care if they need it, and insurers must ensure that any settlement or case closure is fair and complies with the law.

Additionally, Compromise and Release (C&R) is a common way to close a case. In this type of settlement, the worker agrees to a lump sum payment in exchange for waiving any future claims related to the injury. However, insurers must be careful when drafting these agreements because any omission or ambiguity could open the door to future legal disputes.

When Is It Convenient to Close a Case?

The decision to close a workers’ compensation case must be made on a case-by-case basis. If the worker’s injury has reached maximum medical improvement (MMI) and the future prognosis is clear, it may be convenient for the insurer to reach a settlement and close the case. However, if there is uncertainty about future treatment or the severity of the worker’s disability, it may be more prudent to keep the case open until there is a clearer understanding.

Conclusion

In summary, closing a workers’ compensation case can be convenient for an insurance company if managed carefully and with all the necessary medical information. However, making this decision too hastily or without proper consideration can lead to additional costs and long-term legal problems. Each case is unique, and insurers must carefully weigh the risks and benefits before making this decision.

If you are an injured worker needing advice on workers’ compensation cases, the Franco Muñoz Law Firm is here to help. With our experience in this field, we can provide you with strong legal representation and protect your rights. For more information, visit our resources pages on workers’ compensation, where you will find detailed articles and examples of recent cases we have handled.

About the Author: Steve Franco

Steve Franco is one of the founding partners of the Franco Muñoz Law Firm, specializing in workers’ compensation and personal injury cases. With a solid track record of helping injured workers obtain the compensation they deserve, Steve has distinguished himself through his client-focused approach and deep understanding of labor laws in California. Throughout his career, he has recovered millions of dollars in settlements and verdicts for his clients.

For more information about Steve Franco and his background, visit his full biography here.