Worker's compensation is insurance your employer provides to cover the costs associated with work related illnesses or injuries of employees. Worker's comp is regulated by State laws.
The Family Medical Leave Act (FMLA) is a federal law that requires employers to provide up to 12 weeks of leave time annually for a number of reasons, including an employee's "serious health condition."
If you have a work injury/illness and lose time from work because of it, it is perfectly okay and commonplace for your employer to attribute your leave time to FMLA if your medical situation meets the criteria of a "serious health condition." (If you need leave, it undoubtedly does.)
Sign the papers. Your employer isn't trying to pull a fast one on you if that's what you're thinking.