Around the States

Settlement Agreements • Approval Requirements • Medical Benefits • Lump-Sum Payments

Current reference: September 2026

Workers' compensation settlements can take many forms. Depending on the jurisdiction and claim circumstances, a settlement may resolve indemnity benefits while leaving medical benefits open, close future medical benefits, commute future payments into a lump sum, or resolve disputed compensability and other issues.

The biggest practical difference among states is how much governmental review is required before a settlement becomes effective.

Some states require a workers' compensation agency, commission, board, court or judge to approve settlements. Other states permit settlements without substantive agency approval in certain circumstances—particularly when the employee is represented by counsel.

This chart focuses on the principal settlement framework in each state.

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50-State Settlement Chart

State	Settlement Approval	Can Settlement Close Future Medical?	Principal Settlement Feature / Authority
Alabama	Generally no routine commission approval	Yes, subject to settlement terms and applicable law	Settlements are permitted; court approval may become relevant in particular cases involving minors, incompetents or disputed rights. Ala. Code § 25-5-56
Alaska	Workers' Compensation Board approval required for agreements releasing future liability	Yes	Board reviews agreed settlements and approves only when supported by evidence that approval is in the employee's best interest. 8 AAC 45.160
Arizona	Industrial Commission approval required	Yes	Compromise and settlement agreements are submitted to the Industrial Commission; statutory and administrative requirements apply. Ariz. Rev. Stat. § 23-941
Arkansas	Workers' Compensation Commission approval required	Yes	Compromise settlements must be submitted to and approved by the Commission. Ark. Code Ann. § 11-9-805
California	Workers' compensation judge approval required	Yes	Compromise & Release may resolve future medical; Stipulations with Request for Award generally leave medical open. Cal. Lab. Code §§ 5000–5006
Colorado	Generally no routine preapproval of represented-party settlements; statutory requirements apply	Yes	Settlements are subject to statutory restrictions; Division/ALJ involvement may be required in particular circumstances. Colo. Rev. Stat. §§ 8-43-204, 8-43-207
Connecticut	Workers' Compensation Commission approval generally required	Yes	Stipulation agreements are reviewed by the Commission; settlements may resolve future indemnity and medical rights. Conn. Gen. Stat. § 31-315
Delaware	Industrial Accident Board approval generally required	Yes	Lump-sum agreements and settlements are submitted to the Board for approval. 19 Del. C. § 2353
Florida	Depends on representation	Yes	Represented claimants may settle all benefits subject to attorney-fee approval; special statutory approval rules apply to unrepresented settlements. Fla. Stat. § 440.20
Georgia	State Board approval required	Yes	Stipulated settlements and lump-sum advances are reviewed and approved by the State Board. O.C.G.A. § 34-9-15
Hawaii	Director approval required	Yes	Compromise settlements generally require approval by the Director of Labor and Industrial Relations. Haw. Rev. Stat. § 386-78
Idaho	Modernized system: most settlements no longer require routine approval	Yes	Since July 1, 2022, most settlement agreements need not be affirmatively approved, but must be filed with the Industrial Commission. Commission review remains required for pro se parties, minors and legally incompetent persons, and may occur at either party's request. Idaho Code § 72-404; Idaho Industrial Commission guidance
Illinois	Workers' Compensation Commission approval generally required	Yes	Settlement contracts are submitted to the Commission for approval; Commission approval is important to finality. 820 ILCS 305/16
Indiana	Workers' Compensation Board approval required	Yes	Compromise settlements must be submitted to the Board; Board approval is required for enforceability. Ind. Code § 22-3-4-5
Iowa	Workers' Compensation Commissioner approval required	Yes	Iowa recognizes agreement, compromise, contingent and combination settlements; all settlements must be approved by the Commissioner. Iowa Code § 85.35
Kansas	Workers' compensation settlement subject to statutory approval requirements	Yes	Settlements resolving compensation generally require appropriate filing/approval; Kansas distinguishes settlement from award procedures. Kan. Stat. Ann. § 44-512c
Kentucky	Administrative Law Judge approval required	Yes	Settlements must be submitted for approval; ALJ reviews the agreement for statutory compliance. Ky. Rev. Stat. § 342.265
Louisiana	Workers' compensation judge approval required	Yes	Lump-sum or compromise settlements must be presented to a workers' compensation judge. La. Rev. Stat. § 23:1272
Maine	Workers' Compensation Board approval generally required	Yes	Agreements resolving future benefits are submitted for Board review; represented and unrepresented claims receive different procedural treatment. Me. Rev. Stat. tit. 39-A, §§ 221, 222
Maryland	Workers' Compensation Commission approval required for settlement of disputed claims	Yes	Settlement agreements are submitted to the Commission; Commission considers adequacy and statutory compliance. Md. Code, Lab. & Empl. § 9-722
Massachusetts	Department of Industrial Accidents approval required	Yes	Section 48 agreements require administrative approval; settlement cannot circumvent statutory benefit protections. Mass. Gen. Laws ch. 152, § 48
Michigan	Workers' compensation magistrate approval required	Yes	Redemption agreements are submitted for approval and can close future liability, including medical, depending upon agreement. Mich. Comp. Laws § 418.835
Minnesota	Workers' Compensation Division approval generally required	Yes	Stipulation agreements are submitted for approval; settlements can resolve future indemnity and medical benefits. Minn. Stat. § 176.521
Mississippi	Workers' Compensation Commission approval required	Yes	Lump-sum settlements and agreements are subject to Commission approval. Miss. Code Ann. § 71-3-37
Missouri	Division of Workers' Compensation approval required	Yes	Settlements are filed and approved through the Division; final settlements can release future liability. Mo. Rev. Stat. § 287.390
Montana	Workers' Compensation Court/Department procedures apply	Yes	Compromise settlements may resolve future benefits, but approval requirements depend upon the type of claim and parties involved. Mont. Code Ann. §§ 39-71-741, 39-71-2905
Nebraska	Workers' Compensation Court approval required	Yes	Compromise settlements require Court approval; settlement must be found to be in the employee's best interest. Neb. Rev. Stat. § 48-139
Nevada	Division of Industrial Relations approval required	Yes	Compromise and release agreements require administrative approval. Nev. Rev. Stat. § 616C.235
New Hampshire	Labor Commissioner approval required	Yes	Lump-sum settlements require approval under the state's workers' compensation statutes. N.H. Rev. Stat. § 281-A:37
New Jersey	Workers' Compensation Court approval required	Yes	Settlements are commonly resolved through formal orders/judgments; Section 20 settlements can provide a full and final release. N.J. Stat. Ann. § 34:15-20
New Mexico	Workers' Compensation Administration / judge approval required	Yes	Compromise settlements are submitted through the Administration and may resolve future benefits. N.M. Stat. §§ 52-5-12, 52-5-7
New York	Workers' Compensation Board approval required	Yes	Section 32 agreements require Board approval; Board reviews the proposed agreement before it becomes effective. N.Y. Workers' Comp. Law § 32
North Carolina	Industrial Commission approval required	Yes	Compromise settlements must be approved by the Commission; Commission must determine that settlement is fair and just. N.C. Gen. Stat. § 97-17
North Dakota	Workforce Safety & Insurance approval required	Yes	Lump-sum and settlement arrangements are subject to WSI statutory procedures. N.D. Cent. Code § 65-05-37
Ohio	BWC/Industrial Commission approval generally required	Yes	Settlements involving state-fund claims are submitted through BWC/Industrial Commission procedures; self-insured claims follow applicable Commission requirements. Ohio Rev. Code § 4123.65
Oklahoma	Workers' Compensation Commission/Court approval required	Yes	Compromise settlements are submitted for approval under Oklahoma's post-2013 workers' compensation system. 85A O.S. § 47
Oregon	Workers' Compensation Division / Workers' Compensation Board procedures apply	Yes, but restrictions are significant	Claim disposition agreements and disputed claim settlements are governed by detailed statutory and administrative rules. Or. Rev. Stat. §§ 656.236, 656.313
Pennsylvania	Workers' Compensation Judge approval required for compromise & release	Yes	C&R agreements require WCJ approval; judge must determine employee understands the agreement and that it is adequate. 77 P.S. § 1000.5
Rhode Island	Workers' Compensation Court approval required	Yes	Lump-sum and structured-type settlements require Court approval and must satisfy the statutory best-interest standard. R.I. Gen. Laws § 28-33-25
South Carolina	Workers' Compensation Commission approval required	Yes	Agreements and settlements are submitted to the Commission for approval. S.C. Code § 42-17-90
South Dakota	Department approval required for lump-sum/compromise settlements	Yes	Settlements are subject to statutory approval procedures and requirements. S.D. Codified Laws § 62-7-36
Tennessee	Workers' Compensation Appeals Board/Court approval required	Yes	Settlements must be approved under the Tennessee workers' compensation statutory framework. Tenn. Code Ann. § 50-6-240
Texas	DWC approval generally required for disputed claims; different procedures for agreements and networks	Yes	Texas distinguishes agreements, contested cases and benefit-review procedures; settlement of workers' compensation benefits is subject to statutory restrictions. Tex. Lab. Code § 408.005
Utah	Labor Commission approval required	Yes	Compromise settlements must be approved by the Utah Labor Commission. Utah Code § 34A-2-420
Vermont	Department of Labor approval required	Yes	Agreements settling future workers' compensation liability are subject to Department approval. Vt. Stat. tit. 21, § 662
Virginia	Workers' Compensation Commission approval required	Yes	Agreements are submitted to the Commission; Commission approval is required before a compromise agreement becomes effective. Va. Code § 65.2-701
Washington	Department/Board approval depends upon settlement type	Limited	Washington's structured settlement system is unusual: qualifying structured settlements can close wage-loss benefits while medical benefits generally remain available; other settlement mechanisms have different requirements. Wash. Rev. Code § 51.04.063
West Virginia	Workers' Compensation Office procedures apply	Yes	Settlement of workers' compensation claims is permitted subject to statutory requirements and agency approval. W. Va. Code § 23-5-7
Wisconsin	Department of Workforce Development approval generally required	Yes	Compromise agreements are submitted to DWD; department approval is required for agreements that resolve disputed benefits. Wis. Stat. § 102.16
Wyoming	Division/Office approval required for compromise settlements	Yes	Compromise settlements are subject to approval and statutory limitations. Wyo. Stat. § 27-14-601

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The Most Important Settlement Question

The first question should not be:

“Does this state allow workers' compensation settlements?”

Virtually every state permits some form of settlement.

The better question is:

What rights are being settled, and what approval is required for that particular settlement?

A settlement can involve several separate components:

Indemnity

Temporary disability, permanent partial disability, permanent total disability or other monetary benefits.

Medical

Future medical treatment, prescriptions, surgery, rehabilitation and related expenses.

Vocational rehabilitation

Where applicable.

Compensability

Whether the injury or condition is covered by workers' compensation.

Penalties / interest

Depending on the jurisdiction and settlement language.

Other disputed issues

Attorney fees, liens, offsets and related matters.

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Two Basic Settlement Structures

1. Indemnity Settlement With Medical Left Open

Under this structure:

Worker receives negotiated monetary benefits

↓

Future medical remains open

↓

Employer/carrier continues responsibility for authorized compensable medical treatment

This can be particularly important when the worker has a significant possibility of future treatment.

California provides a useful illustration.

A Stipulation with Request for Award generally leaves medical care open, while a Compromise & Release can resolve future medical obligations. California's Division of Workers' Compensation specifically describes these as two different ways a case can be resolved.

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2. Full Compromise & Release

Under a full settlement:

Indemnity

Future medical

Other settled rights

↓

Lump-sum settlement

The employee gives up future rights that are expressly released by the agreement.

The exact scope of the release is highly jurisdiction-specific.

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States Where Approval Is Especially Important

Alaska

Alaska provides a particularly clear example of substantive governmental review.

Under Alaska's administrative rule, the Board reviews a settlement that releases the employer from future liability and approves it only when the evidence demonstrates that approval is in the employee's best interest. The Board may also require an independent medical examination before acting on the settlement.

WorkersCompensation.com takeaway: Alaska is not merely a “file the settlement” state. The Board has substantive review authority.

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California

California distinguishes between:

Stipulations with Request for Award

The parties agree on disability benefits while medical treatment generally remains available.

Compromise & Release

The parties negotiate a lump-sum settlement that can close future medical care.

California requires workers' compensation settlements to be reviewed by a workers' compensation judge to determine whether they are adequate.

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Florida

Florida is one of the states where representation status makes an enormous difference.

Under Florida Statute § 440.20, an unrepresented claimant's lump-sum settlement releasing future medical and compensation benefits is subject to judicial approval under specified circumstances.

For a represented claimant, Florida permits the claimant to waive workers' compensation benefits through a settlement agreement in exchange for a lump-sum payment. The judge's approval is directed to the attorney's fee rather than substantive approval of the settlement itself.

This makes Florida particularly important in a national settlement chart.

It's not just:

“Florida — approval required.”

The accurate answer is:

Approval depends upon representation and the type of settlement.

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Georgia

Georgia's State Board maintains a dedicated Settlement Division to review and approve stipulated settlements and lump-sum advances. The Board provides specific filing guidance for attorneys, employers, insurers and injured workers.

Georgia Code § 34-9-15 expressly provides for settlements between the employee and employer and establishes the Board's approval role.

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Idaho

Idaho is particularly important because its rules changed significantly.

Effective July 1, 2022, most settlement agreements no longer require affirmative Industrial Commission approval.

However:

• All settlement agreements must be filed with the Commission.
• Settlements involving unrepresented parties are subject to Commission review.
• Settlements involving minors or legally incompetent persons receive Commission review.
• Either party can request Commission review.
• The Commission can approve an agreement when it determines approval is in the parties' best interests.

Editorial classification:

Idaho — Filing required; approval conditional.

That is much more informative than “approval: no.”

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Iowa

Iowa has one of the most structured settlement systems in the country.

The Iowa Workers' Compensation Division identifies:

1. Agreement settlements
2. Compromise settlements
3. Contingent settlements
4. Combination settlements
5. Full commutations
6. Partial commutations

The Workers' Compensation Commissioner must approve each settlement. Iowa also requires particular findings for commutations, including consideration of the employee's need and best interests.

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Louisiana

Louisiana requires a lump-sum or compromise settlement to be presented to a workers' compensation judge.

Where the employee is represented, affidavits can establish that the attorney explained the employee's rights and the consequences of settlement and that the employee understands those consequences. The judge then approves the settlement by order.

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New York

New York's Section 32 settlement procedure is one of the most recognizable workers' compensation settlement mechanisms in the country.

A Section 32 agreement can resolve future workers' compensation benefits, subject to Workers' Compensation Board approval.

This makes New York particularly different from states in which the parties can simply execute a private settlement agreement.

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Pennsylvania

Pennsylvania uses a Compromise and Release Agreement.

A WCJ reviews the settlement and must ensure that the claimant understands the agreement and its consequences before approving it.

The C&R can resolve both indemnity and medical benefits.

This is one of the strongest examples of substantive judicial review of a workers' compensation settlement.

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Rhode Island

Rhode Island expressly permits lump-sum or structured-type payments in lieu of future weekly benefits.

The Workers' Compensation Court must determine that the settlement is in the best interests of the parties, including the employee, employer, insurer and, where applicable, other interested entities.

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Washington

Washington deserves its own box in any national settlement resource.

Washington's Claim Resolution Structured Settlement Agreement is substantially different from the traditional “close everything for a lump sum” model.

The Social Security Administration's current state-specific guidance describes Washington structured settlements as potentially closing the claim while not including future medical benefits, meaning medical treatment may remain available under the claim.

That makes Washington an important exception to the assumption that:

“Settlement = medical closed.”

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Settlement vs. Commutation

These terms should not be treated as synonyms.

Settlement

The parties compromise disputed or future rights.

Commutation

An existing stream of future compensation is converted into a lump-sum payment, often subject to a present-value calculation and specific statutory requirements.

Iowa provides a particularly clear example. A full commutation can terminate future rights, including medical benefits, while a partial commutation can convert only part of future benefits into a lump sum while leaving other rights intact.

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Medicare and Medicare Set-Asides

A national settlement resource should also include a prominent warning:

Medicare eligibility can materially affect settlement structure.

A settlement may need to account for Medicare's interests when future medical expenses are being resolved.

The settlement agreement may therefore contain:

• Medicare Set-Aside analysis
• Allocation of settlement proceeds
• Conditional-payment resolution
• Medicare reporting considerations
• Future medical treatment allocation

These issues are not uniform among the states, and Medicare requirements are federal rather than state workers' compensation law.

Therefore, the 50-state chart should treat Medicare as a separate federal overlay, rather than assigning a Medicare rule to each state.

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What Should Be Included in a Settlement?

A settlement checklist for claims professionals should address:

Liability

• Compensability
• Accepted conditions
• Disputed conditions
• Accident date
• Jurisdiction

Indemnity

• Temporary total disability
• Temporary partial disability
• Permanent partial disability
• Permanent total disability
• Vocational benefits
• Future indemnity

Medical

• Past medical
• Current treatment
• Future medical
• Prescription expenses
• Surgery
• Rehabilitation

Financial

• Gross settlement
• Attorney fees
• Costs
• Liens
• Child support
• Tax considerations
• Medicare considerations

Procedural

• Required settlement form
• Agency/court approval
• Employee representation
• Hearing requirement
• Settlement effective date
• Payment deadline

Release

• What claims are released?
• What conditions are released?
• Is future medical released?
• Are employment claims released?
• Are third-party claims affected?

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Five Questions to Ask

Before signing a workers' compensation settlement, determine:

1. What benefits am I giving up?

2. Is future medical care being closed?

3. What happens if my condition gets worse?

4. Does the settlement require governmental approval?

5. Are there Medicare, Medicaid, child-support or other liens/interests that must be addressed?

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Classification

Classification	Meaning
🟦 Agency Approval	Settlement requires approval by workers' compensation agency/commission
🟨 Judicial Approval	Judge/court approval required
🟩 Conditional Approval	Approval depends upon representation, settlement type or other circumstances
🟧 Filing / Review	Settlement is filed but does not routinely require affirmative approval
🟥 Private Settlement Permitted	Parties can settle without routine administrative approval
🟪 Special Structure	State has a distinctive statutory settlement mechanism

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Important Takeaway

There is no single American workers' compensation settlement model.

The major differences are:

Who can settle?

What can be settled?

Who must approve it?

Must the agreement be filed?

Can future medical benefits be released?

Can future indemnity be commuted?

Does representation change the approval requirement?

What happens if the claimant is a minor or incompetent?

What federal interests must be considered?

Those questions are much more useful to claims professionals than simply asking whether a state “allows settlements.”

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Source & Methodology

The principal cross-jurisdictional framework for this resource is the WCRI/IAIABC Workers' Compensation Laws as of January 1, 2025, which provides comparative statutory and regulatory information across U.S. workers' compensation jurisdictions. WCRI/IAIABC notes that the publication contains jurisdiction-specific footnotes and caveats because workers' compensation systems differ substantially in their definitions and procedures.

For settlement-specific rules, state agency materials and statutory sources should control where available. Examples include Florida's statutory settlement provisions, Georgia's State Board settlement procedures, Iowa's detailed settlement and commutation guidance, Idaho's post-2022 settlement rules, Louisiana's settlement-approval statute, California's settlement guidance, Alaska's agreed-settlement regulation and Rhode Island's lump-sum settlement statute.

Last reviewed: September 2026

Disclaimer: This chart is an educational and research reference and is not legal advice. Settlement requirements can depend upon date of injury, claim status, representation, settlement type, disputed issues, medical status, minors/incompetent parties, liens, Medicare interests and other jurisdiction-specific circumstances. The applicable statute, regulation, agency rule and case law should be reviewed before relying upon any entry for a particular claim.