Arizona Workers Compensation Settlements

Arizona Injury Law Group

Work Compensation Insurance Company

In most states, a workers’ compensation insurance company can settle a case with an injured claimant. As in ordinary civil litigation, the settlement typically requires the insurer to pay the claimant a lump sum in exchange for the claimant’s agreement to never seek additional benefits related to the same injury or illness.

Nearly every participant in the worker’s comp system has reason to encourage reasonable and final settlements in lieu of litigation. An insurer may lack confidence in its case or may simply wish to avoid the expense of a lengthy appeal process. An injured claimant facing mounting bills may happily accept a single lump sum payment in lieu of possible award months or even years down the line. Finally, since every case settled is one fewer on the Industrial Commission of Arizona (ICA)’s appeals docket, settlements help maintain a manageable volume of appeals.

Those not intimately familiar with Workers Compensation law in Arizona are therefore often surprised to learn that until recently an Arizona compensation claim could never be considered truly “full and final”. A claim could be reopened by the claimant at virtually any time in the future if he or she could show that additional medical treatment related to the work injury was needed. This lack of finality naturally discouraged insurers from making settlement offers, even where the claimant was likely to be receptive.

This situation changed as of November 1, 2017, the effective date of Arizona Senate Bill 1332. The bill amends the Workers Compensation Law to expressly permit settlements in which the injured employee with an accepted claim waives any future benefits. For a settlement to be effective, the Arizona Industrial Commission must determine that its terms are in the claimant’s best interests. The settlement agreement itself must describe the claimant’s then-current medical condition and provide a reasonable projection of necessary future medical treatments.

SB 1332 brings Arizona’s stance on comp settlements into line with a majority of states insofar as approved claims are concerned. What the bill does not address is the finality of settlements of  denied claims. Such claims naturally comprise the bulk of appealed decisions.

Although SB 1100, introduced in January 2018, would have permitted full and final settlement authority to denied claims, a later floor amendment removed this provision. The amended legislation does retain language eliminating SB 1332’s requirement that claimants be represented by legal counsel. Under SB 1100, it would be up to an ICA Administrative Law Judge to determine whether an unrepresented claimant’s proposed settlement satisfies all legal requirements.

At last report, SB 1100 had been referred to the House Banking and Insurance Committee.


There’s no “one size fits all” answer to this question. That’s why it’s so important for a claimant to speak with an experienced Arizona workers compensation lawyer before signing away future benefits. As noted, the Arizona legislature thought so too – a claimant must have access to legal advice before a settlement can be made final. Let an Arizona Injury Law Group expert attorney review your circumstances in depth, including the following considerations:

‒ What is your current medical status? If your injuries haven’t been stabilized, a lump sum settlement may not be adequate to cover future medical expenses.

‒ What is the projected impact of the settlement on future Medicare benefits?

‒ Is a structured settlement a viable alternative to a lump sum cash payment?

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