The Limited Settlement Options in a Texas Workers’ Compensation Claim–Texas Insurance Defense Attorneys

The Workers’ Compensation Act provides a four-step dispute resolution process—a benefit review conference, a contested case hearing, review by an administrative appeals panel, and judicial review. Tex. Lab. Code §§ 410.021, 410.151, 410.202, Tex. Lab. Code § 410.251; see generally Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 437 (Tex. 2012). At each step, settlements are tightly controlled and limited. First, there is the benefit review conference, a non-adversarial, informal dispute resolution proceeding to discuss the facts, review available information to evaluate the claim, delineate the disputed issues, and, if possible, “resolve disputed issues by agreement of the parties in accordance with this subtitle and the policies of the division.” Tex. Lab. Code § 410.021. An agreement or settlement should be reduced to writing and signed by the parties and the benefit review officer, and the settlement does not take effect until “it is approved by the director in accordance with section 408.005.” Tex. Lab. Code § 410.029. Section 408.005 provides further that “[a] settlement must be signed by the commissioner and all parties to the dispute,” and that “the commissioner shall approve a settlement if the commissioner is satisfied that . . . the settlement reflects adherence to all appropriate provisions of law and the 6 policies of the division.” Tex. Lab. Code § 408.005(d), 408.005(e)(2).

Thus, at the very first step, settlements must adhere to all appropriate provisions of law. If the benefit review conference fails to produce a settlement, the matter proceeds to a contested-case hearing that is generally limited to the issues raised at the benefit review conference. Tex. Lab. Code § 410.151(b). After a hearing, the hearing officer issues a written decision that includes findings of fact and conclusions of law, and determines whether benefits are due, and awards benefits due. Tex. Lab. Code § 410.168. Then the matter may proceed to an appeals panel that considers the record and the hearing officer’s decision. Tex. Lab. Code § 410.203. The decision of the appeals panel is final in the absence of a timely appeal for judicial review. Tex. Lab. Code § 410.205. Last, an aggrieved party may seek judicial review of the final decision of the appeals panel “regarding compensability or eligibility for or the amount of income or death benefits.” Tex. Lab. Code § 410.301(a). At this last stage settlements are still tightly controlled and limited:  The party who initiated the proceeding must file any proposed judgment or settlement made by the parties to the proceeding, including a proposed default judgment, with the division not later than the 30th day before the date on which the court is scheduled to enter the judgment or approve the settlement. Tex. Lab. Code § 410.258(a). 

The commissioner shall review the proposed judgment or settlement to determine compliance with all appropriate provisions of the law. If the commissioner determines that the proposal is not in compliance with the law, the division may intervene as a matter of right in the proceeding not later than the 30th day after the date of receipt of the proposed judgment or settlement. Tex. Lab. Code § 410.258(c).  If the division intervenes in the proceeding, the commissioner shall inform the court of each reason the commissioner believes the proposed judgment or settlement is not in compliance with the law. The court shall give full consideration to the information provided by the commissioner before entering a judgment or approving a settlement. Tex. Lab. Code § 410.258(e). Ultimately, the court may not approve a settlement except on a finding that “the settlement adheres to all appropriate provisions of the law,” Tex. Lab. Code § 410.256(b)(2), and “[s]ettlement of a claim or issue must be in compliance with all appropriate provisions of the law.” Tex. Lab. Code 410.256(g). Otherwise the settlement is void. Id. Notably, the restrictions on settlements apply equally across the four-step process: before the Division and a court, a settlement should only be approved if (1) the settlement accurately reflects the agreement between the parties; (2) the settlement adheres to all appropriate provisions of the law; and (3) under the law and facts, the settlement is in the best interest of the claimant. Compare Tex. Lab. Code § 408.005(e) with Tex. Labor Code § 410.256(b). Additionally, the requirement that settlements adhere to the law is mandatory because subsection 410.256(g) specifies that settlements that do not comply with section 410.256’s requirements are void. See Tex. Lab. Code § 410.256(g); see generally Crosstex Energy Servs. v. Pro Plus, Inc., 430 S.W.3d 384, 392 (Tex. 2014) (discussing when statutes are mandatory). Thus, in matters of workers’ compensation, settlements are tightly controlled and limited, and settlements must comply with all appropriate provisions of the law.


Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]