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What is a commutation?

Workers' compensation in California includes the idea of a commutation, which is essentially an advance on permanent disability payments.  Consider the following scenario:  I am receiving payments every two weeks from my workers’ compensation award.  I am not able to work right now and could use some more of that money now, rather than waiting for the checks every two weeks.  I heard that there is a way for me to obtain a lump sum payment of my award. 

California Labor Code Section 5100 allows lump sum payments in certain instances.  This could apply to an injured worker who settled his or her case via Stipulations with Request for Award and is receiving bi weekly payments, or if the case went to trial and the judge awarded permanent disability.  This can be difficult to obtain and is left in the discretion of the workers’ compensation judge.  For the most part, the workers’ compensation judge will make a decision based on the best interest of the injured worker.  He or she will look to the general financial situation of the injured worker and assess the applicant’s ability to live without these payments.  They want to make sure the injured worker does not endure undue hardship. 

The insurance company is generally allowed input as well, as to whether this is in the best interest of the worker.  The insurance company will also want to ensure that any commutation of future payments is taken from the far end of the award and that calculations are made as to the present value of the future payments. 

This will require preparation by the injured worker.  The judge will want to review outstanding bills, credit debts, and records to support the commutation.  The judge may ask additional questions as well to determine if the advance is truly in the best interest of the worker, and to ensure there would be no hardship if awarded.  Once this is determined, then the judge will make a decision. 

If you have questions about your workers' compensation injury and want to talk to an attorney in Fresno, please call 559-408-7436 or fill out the form to the right.

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