Form Settlements

Form Settlements

What Are Form Settlements?

A compromise settlement (also known as a clincher agreement) allows the worker to receive one lump sum payment. In exchange, the worker gives up all rights to the compensation claim.

Unlike the clincher agreement, in a form settlement, the injured worker keeps his/her job and receives future medical treatment provided by the insurance carrier for a period specified in the form. The amount of the settlement is reached by considering several factors. 

In North Carolina, there are two types of form settlements: Form 26A and Form 21. 

In form 26A, a worker gives up the right to future permanent disability benefits. In exchange, they receive the value of their disability benefits in weekly installments. The insurance carrier pays the installments based on the permanent disability rating. Sometimes, this settlement is paid in a lump sum.

Form 21 differs from Form 26A because it deals with temporary disability benefits claims. It is rarely used today.

The common characteristic of both forms is that they do not settle compensation claims fully. According to both form settlements, the worker has the right to receive medical benefits for two years after the last compensation payment. If further treatment is necessary, the worker must apply for an extension of the term before the initial period expires. 

Furthermore, the worker can file a separate petition seeking additional disability benefits, provided that they can prove a substantial change in their health condition.

Calculating Settlement Value 

Calculating the settlement value depends on the following factors: the compensation rate, the injured part of the body, and the PPD rating.

The preexisting conditions or conflicting medical reports have a critical role in determining the settlement value. Those circumstances may weaken the compensation claim.

In addition, some costs are deducted from the claim amount in settlement, including attorneys fees, unpaid child support, and unpaid medical bills.

Who Approves The Settlement?

The North Carolina Industrial Commission approves all compensation settlements. The Commission reviews agreements according to its rules. Rule 502 lists the requirements for approval of any form of the compensation arrangement. In North Carolina, the Industrial Commission does not hold hearings. The approval process involves reviewing signed documents and approving the settlements if they are fair to the worker. 

Is There A Time Limit For Settling Workers Compensation Claim?

There is no specific time frame for settling compensation claims, but the injured workers should wait until they reach maximum medical improvement (MMI). Without it, determining the severity of the injury is impossible. At that point, the effect on the ability to work and the need for future medical treatment will be much more evident.

Contact a Workers Compensation Attorney

Navigating through the worker’s compensation system can be a daunting task. Deciding between different types of settlements involves high stakes. Choosing the wrong option can cost you your employment and future medical benefits.

For that reason, contact Morrison Law Firm PLLC to find out the best solution for you. Our worker’s compensation experts will provide you with custom-tailored advice that fits your particular situation.  

Call us today to schedule your appointment. 252-243-1003

About the Author

B. Perry Morrison Jr.

Florida Family Law Attorney (The Florida Bar, admitted 2001) · Florida Supreme Court Certified Family Mediator · Super Lawyers, Family Law, 2022–2026

B. Perry Morrison Jr. is a North Carolina attorney (Bar No. 16376) and founder of Morrison Law Firm, PLLC in Wilson, North Carolina. Since 1989, he has represented injured workers, Social Security Disability claimants, and personal injury victims throughout Eastern North Carolina, handling more than 3,000 workers' compensation claims before the North Carolina Industrial Commission. He concentrates his practice on workers' compensation, Social Security Disability, personal injury, and wrongful death cases, representing claimants exclusively rather than employers or insurance companies.

Mr. Morrison is admitted to practice before the North Carolina Supreme Court, all North Carolina state courts, the U.S. Fourth Circuit Court of Appeals, and the U.S. District Courts for the Eastern and Middle Districts of North Carolina. He has held leadership roles within the North Carolina Bar Association, including serving as Chair of the Litigation Section, and has earned the AV Preeminent® peer rating for legal ability and professional ethics. Through decades of advocacy, he has helped injured and disabled individuals navigate complex legal claims while protecting their rights and access to benefits.