Stipulated Award vs. Compromise and Release: How Your California Workers' Comp Case Settles
Key Takeaways
Stipulated Award: You receive payments over time and keep your medical care open for life (subject to insurance company doctors typically within their Medical Provider Network and the Utilization review process)
Compromise and Release: You receive a single lump sum payment, but your case is closed forever. (Almost always more money than a Stipulated Award, but with a cost)
The Choice: "Stips" offer security for future surgeries; "C&Rs" offer freedom, control of your funds, and larger payment amount.
If you are an injured worker in California, your case will generally resolve in one of two ways: a Stipulated Award or a Compromise and Release.2
Choosing between these two paths is often the most stressful decision you will face during your claim. The right choice depends entirely on your specific medical needs and financial goals. This guide explains the mechanics, benefits, and risks of each settlement type.
When Does a Case Settle?
Settlement discussions typically begin when your condition has medical condition has plateaued and reached amximum medical improvement. Definition of Maximum Medical Improvement
Maximum Medical Improvement (MMI) is defined in the California Code of Regulations as the point when the employee has reached maximal medical improvement, meaning his or her condition is well stabilized, and unlikely to change substantially in the next year with or without medical treatment.
At this stage, your Primary Treating Physician or a Qualified Medical Evaluator (QME) determines that your condition is unlikely to significantly improve or worsen in the near future. They will issue a final report assigning you an impairment rating based on the AMA Guides.
Option 1: The Stipulated Award
A Stipulated Award is an agreement between you and the insurance company regarding your level of disability and your right to future medical care.
How It Works
The doctor’s impairment rating is put into a formula that adjusts the number based on your age, your occupation at the time of injury, and the specific body part injured.
This results in a final Permanent Disability percentage. Both parties—you and the insurance carrier—must agree on this percentage.
The Payout
You are paid based on that percentage at a fixed weekly rate (currently capped at $290 per week for most recent injuries) until the total dollar amount is paid out.
The Medical Care
The defining feature of a Stipulated Award is that medical care stays open. You are entitled to medical treatment for the injured body parts for the rest of your life.
Reopening Award
A big advantage over a Compromise & Release is that if your condition worsens, you are allowed to “Reopen” the Award within five years from the date of injury and go back to the neutral doctor to reassess if your condition has worsened potentially entitling you to greater Permanent Disability.
The Catch
While your medical care is paid for, you do not have total freedom. You must generally treat within the insurance company’s Medical Provider Network (MPN), and all treatment requests are subject to Utilization Review. This means the insurance company still has significant control over what treatments are approved.
Option 2: Compromise and Release
A Compromise and Release (C&R) is a "buyout" of your claim. You agree to close your case forever in exchange for a single lump sum payment.
How It Works
Unlike a Stipulated Award, a C&R can resolve a case at any time—whether it is one day or ten years after filing. The settlement amount typically includes the value of your permanent disability plus the estimated value of your future medical care.
The Advantage
You receive the money upfront in one check. This eliminates the weekly payments and removes the insurance company from your medical care. You no longer have to deal with utilization review or restrictive networks. You can use the settlement money to pay any doctor you choose.
The Disadvantage
The case is closed permanently. If your condition worsens significantly, for example, if a lumbar sprain evolves into a need for spinal fusion surgery ten years later, the insurance company is not liable. That money is already gone, and you must pay for the surgery out of pocket or through private insurance.
Settling Contested Issues
A C&R is often used when there are factual disputes. For example, if you claim you have hypertension due to work stress, but the insurance company claims it is genetic, parties may "compromise" on a lump sum to settle the disputed parts of the claim without final medical reports. Your case does NOT have to be admitted even to settle by way of Compromise & Release. It is essentially a Compromise between the parties and you are working out to resolve all issues.
The Supplemental Job Displacement Benefit
Regardless of which settlement type you choose, if you have permanent work restrictions and your employer does not offer you a job, you are entitled to the Supplemental Job Displacement Benefit voucher.
This provides a $6,000 voucher for retraining, education, or tools. Crucially, receiving this voucher qualifies you for an additional one-time payment of $5,000 from the State of California’s Return-to-Work Supplement Program.
Frequently Asked Questions
Which option is better for serious injuries?
If you anticipate needing expensive surgery (like a joint replacement or fusion) in the future, a Stipulated Award generally protects you from that financial risk. If you prefer to control your own funds and medical treatment without insurance interference, a Compromise and Release may be superior.
Can I switch from a Stipulated Award to a C&R?
It is possible to settle via Stipulated Award now and negotiate a Compromise and Release later (for example, five years down the road). However, the insurance company is not required to agree to a buyout later; it is a voluntary agreement.
About Lee Partners Law
Lee Partners Law was founded by brothers and law partners, David A. Lee and Michael Lee, to provide aggressive, high-level representation for injured workers across California.
David A. Lee is a California Certified Specialist in Workers’ Compensation Law, a designation earned by a small percentage of attorneys in the state. As former defense attorneys for large insurance companies, we use our inside knowledge of the insurance industry to maximize settlements for our clients.
We understand that choosing between a Stipulated Award and a Compromise and Release is one of the most significant financial decisions you will make. We analyze every medical report and settlement offer to ensure you are not leaving essential medical care or compensation on the table.
If you have questions about your settlement options, contact us for a consultation at 310-295-0822