What You Forgot To Tell Your TPA

Many self-insureds and carriers use Third Party Administrators as their front-line adjusters. A set of instructions or guidelines from the actual check-writer is supposed to regulate the TPA’s procedures. Anticipating every permutation of every possible situation is impossible, but every set of instructions should include guidance on when and how to use mediation.

Recently I had the opportunity to review a set of TPA instructions. The TPA was directed to “negotiate settlements of covered claims pursuant to the authority granted by” the contracting party. No further details were provided.  However, another section of the agreement spelled out in minute detail a procedure for mediation should a dispute arise between the TPA and its client. The client knew mediation was an important tool for resolving its own disputes, but provided no direction about how to use it to resolve covered claims.

The regional risk manager of one national account tried to get their local team of TPA workers compensation adjusters to try new dispute resolution techniques, but the adjusters refused. “If they want us to do that, they need to include it in their instructions.”

What Should TPA Instructions Say About Mediation?
“At appropriate milestones in the life of a claim, adjusters and attorneys should take active steps to initiate mediation and report on the results.

“These milestones include:

-Upcoming trial date
-IW has reached permanent & stationery status
-IW has reached age 61
-70% of indemnity reserve has been paid
-4 reserve changes within 2 years
-Case is more than 4 years old

“Additionally, claims handlers should attempt to close claims with mediation in:

-Death cases
-when the IW is acting in pro per

“Adjusters and attorneys are expected to participate in mediations with a good faith intention to negotiate and resolve pivotal issues.”

Shuttle Diplomacy

Some parties refuse to meet with the other side. For whatever reason, they do not trust them. When an Applicant’s Attorney told me, “She refuses to meet with them,” my response was “She doesn’t have to.”

Overcoming mistrust
Most of my mediations start with a joint session with all the participants in one room. But it doesn’t have to be that way. When mistrust prevents parties from defining and resolving issues, I meet with parties separately, a process called “caucusing.” We use separate rooms when space permits, or parties alternately enter and exit the mediation room. While in caucus, parties can lay out their concerns in confidence. I do not disclose what anyone said without permission. One of the cornerstones of mediation is confidentiality.

Shuttle Diplomacy
The term “shuttle diplomacy” was first applied in 1973 to Secretary of State Henry Kissinger’s separate meetings with leaders of Israel and Arab nations. Now we use the term generally when a mediator  keeps a negotiation going by moving between parties who will not meet with each other directly. To parties engaged in workers compensation litigation, their conflict has the same personal importance as an international dispute.
Shuttle diplomacy is a proven technique for achieving settlement even after the parties have lost all hope.