They both are right... Ending time loss is a little different than closing the claim and dealing with PPD. Once they have made a determination that you are able to work them time loss can be stopped. You have the right to appeal that determination. It doesn't sound like you have yet had an IME but one is coming shortly. Your doctor will have a chance to comment on that and time loss as well. They do not have to keep paying you time loss during the ppd process if they have determined you are able to work. You need to have a free consultation with a Labor and Industries Lawyer asap....
This may be an illustration of the old adage that doctors make lousy lawyers and lawyers make lousy doctors. I'm sure your doctor was only trying to help, but you are at a critical crossroads in your claim. The following answers assume that you have a Washington claim.
There is a crucial difference between termination of time loss compensation [TLC] payments to you and claim closure. Your doctor is partially right that your claim cannot be closed until you are medically stable.
However, the Washington State Department of Labor and Industries can make a vocational determination that you are employable [that is, capable of minimum wage work on a reasonably continuous basis] and thereupon terminate your TLC. You would then be entitled to further proper medical care until claim closure, but you would not receive benefits. To make matters worse, there is only a 15 day period to gather all your information and file a dispute.
You need to do several things right away: (1) go to https://secureaccess.wa.gov and get online access to your claim file; (2) if your claim is self-insured, write a letter to the service company requesting a complete copy of your claim file, send the letter by certified mail with a return receipt postcard, and, most importantly, (3) contact a competent local workers' compensation attorney at once!
The simple answer is claim can close when you have reached "maximum medical improvement" and are "employable" on a reasonably continuous basis. Your own doctor's opinion on this is entitled to special consideration.