“Return to Work” Lump Sum Settlements: What You Need to Know

Most indemnity benefits paid out under New Mexico’s Workers’ Compensation program are paid out over time. However, there are limited circumstances in which benefits can be paid in a lump sum, or all at once. One of those circumstances is what’s known as a “Return to Work” lump sum settlement.

As the name implies, a “Return to Work” lump sum settlement is a settlement and payment of all indemnity benefits at once after the worker has gone back to work. It is available and permitted only if:

  • the worker has been back at work for at least 6 months, and;
  • the worker is earning at least 80 percent of his former wage.

Return to Work lump sum settlements need to be approved by a workers’ compensation judge, but typically, the amount of the settlement will be based on the anticipated amount of future indemnity benefits the worker would be entitled to based on the worker’s “impairment rating,” which is a number assigned by a doctor to express the limitation in the use of the worker’s body as a result of the injury. That sum will then be discounted, or reduced, to account for its payment earlier than would otherwise be the case, much in the same way that lottery winners can accept a lump sum that is less than what they would receive if they received their winnings over the course of many years.

There are three important things to know about this kind of settlement:

  • After a Return to Work lump sum settlement is approved by the judge, the worker will not be entitled to any more indemnity benefits in the future based on that claim, though the worker will still be entitled to payments for any “reasonable and necessary” medical care if required;
  • If the worker has retained an attorney, the attorney’s fees will likely be deducted out of the lump sum settlement amount and paid to the attorney, and;
  • If the worker owes child support payments, the state’s Child Support Enforcement Division can move to stop the settlement until arrangements are made to pay any outstanding child support amounts out of the settlement proceeds.

Given the finality of agreeing to a lump sum settlement and the consequences that it may have if your injury returns and renders you disabled in the future, it is important to speak with an experienced New Mexico workers’ compensation attorney who can help you understand your options and determine whether accepting a lump sum settlement is the right course of action for you.

The Law Offices of Jeffrey C. Brown: Fighting for New Mexico Workers

We know how hard you work, and we’ll work just as hard for you. Call the Law Offices of Jeffrey C. Brown & Derek Thompson today at (505) 275-6600 or fill out our online form to arrange for your free initial consultation to discuss your workers’ compensation matter. We look forward to helping you get back on your feet, and back to work.

This website has been prepared by the Law Offices of Jeffrey C. Brown for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.