The influence of compensation on recovery from low-back pain was assessed in a retrospective controlled cohort study. One hundred fifty compensable and 150 noncompensable back injury patients were invited for review between 1 and 5 years from presentation. A 91.3% follow-up was achieved, and there was no difference in the median age, follow-up, and initial injury score between the two groups. The incidence of reported pain, disability, psychological disturbance, unemployment, and length of time off work was greater in the compensation group (P < 0.001). Settlement of the claim did not result in any reduction in morbidity, even up to 5 years later. These results demonstrate that the payment of compensation delays recovery from low-back injury.