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Tricks of the Settlement Trade

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Negotiations can founder when parties (and some mediators) don’t know the tricks that remove settlement obstacles.

Structured Settlements

Structured settlements are ideal for funding Medicare Set-Asides. Structured settlements provide tax-free periodic payments over a specified period of time, which can be for the life of the injured worker. The structure costs less than lump-sum funding, freeing up the balance of the employer’s authorized settlement amount for the injured worker’s other needs. What’s more, unlike with lump-sum funding, lifetime payments cannot be exhausted. The injured worker receives the amount paid by the employer plus income earned from professional investment management. This trick can help bridge a negotiation gap.

From time to time I hear that a structured settlement broker was not called in order to avoid expense. This reflects a fundamental misunderstanding of how structures work. There is no cost to consult a structured settlement broker. The structured settlement life insurance company (not any party) pays the broker a commission if a structure is placed.

A structured settlement is not the right choice for every case.  But workers compensation professionals should always investigate this no-risk option.

Special Needs Trusts

Many injured workers and their families rely on Medi-Cal for their non-industrial medical needs.  However, receipt of a large sum pursuant to a Compromise & Release can disqualify the injured worker’s entire family from receipt of these benefits until funds are spent down. Placing settlement funds in a Special Needs Trust allows the injured worker to retain public benefits and still C&R the claim.

Pooled Special Needs Trusts are similar to an attorney trust account in that the trustee pays expenses from a fund holding money for many participants. Compared to a single-beneficiary trust, pooled special needs trusts are inexpensive and quick to set up and administer.

Professional MSA Administration

Did you know professional MSA administration which protects the injured worker’s continued access to Medicare benefits is available for little or no cost? One of the biggest faults of the Medicare Set-Aside system is its reliance on self-administration. Administration mistakes can jeopardize the injured worker’s continued access to Medicare.

Injured workers are more often laborers than MBA’s.  Determining which expenses are Medicare-eligible is complicated and requires constant vigilance as policies change. To retain benefits, the MSA beneficiary must submit an annual report, a burden many injured workers cannot handle. Knowing who to call to obtain free or low-cost professional administration, including reporting, can mean the difference between an open claim and a Compromise & Release.

Reversionary Trusts

The reversionary trust is probably the least used settlement trick.  When parties disagree about future medical needs, a reversionary trust can satisfy both sides’ interests.  A reversionary trust can pay for claim-related medical expenses over a specified time.  If the money is not needed, at the conclusion of the trust the money reverts to the payer.

Some adjusters object that there is no way to account for refunded amounts without leaving the claim open. Applicants may balk at the lack of unfettered access to trust funds. I had one case where the prospect of a reversionary trust caused the claimant to reduce the demand on condition the money was paid in cash now; the case promptly settled.

With the right parties, a reversionary trust is a solution which allows everyone to be right. Or just raising the possibility can get parties to settle.

There Are Many More Tricks

Every workers compensation professional in the process from Notice of Injury to Compromise & Release has a distinct role. If you are considering closing the claim, it’s time to bring in the person whose focus is settlement, a knowledgeable mediator.

Does This Mediation Make Me Look Fat?

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Nobody wants to look bad. Turns out some workers compensation professionals think recommending mediation makes it look like they couldn’t get the claim settled themselves. Mediating a claim doesn’t make you look bad. It makes you look smart.
Are You A Litigation Expert?
Most claims settle. Mediation makes it happen sooner.Litigation experts realize that going to trial on an issue risks losing it all. It takes a long time to get to trial; meanwhile the claim gets expensive (how many medical exams do you really need?) Facts may become less favorable.Parties in mediation retain control of the outcome rather than surrender to an unpredictable result.  Often I help parties invent a solution they had never previously considered.

A Safe Place for Bad News
Attorneys may be hesitant to deliver bad news. One fear is that the client will get new counsel. Mediation provides a forum for a neutral person, the mediator, to deliver the message.  The attorney can commiserate with the client, look like a hero, and yet get the case settled.

How Good Do you Want To Look?
I have successfully helped parties settle even when negotiations stalled in prior informals.  With a mediator’s help, parties (even skeptical ones) who come to mediation willing to settle on acceptable terms generally do settle. The next time the professional who mediated comes up for evaluation, that person doesn’t look bad—that person looks great.

What You Don’t Know About EAMS

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The lawyer told me, “I can only see the cases where I’m the attorney of record.”

The hearing rep told me, “I don’t have access to EAMS.”

Wrong and wrong.

It’s a Government Database

EAMS is a PUBLIC database of filed California Worker Compensation cases. Anyone can log in to https://eams.dwc.ca.gov/WebEnhancement/ to see case information. You might only need the Applicant’s name at the initial search screen. Often, though, you need another piece of data, such as the Applicant’s date of birth, to distinguish among people with the same name. The system shows where the Applicant resides, so that might help you sort through Applicants with common names.

The site requires users to identify themselves (though there does not seem to be any way to verify the i.d.) and choose from a list of reasons for making the request. I always choose Case Information Search, but you get the same information regardless of which reason you choose.

The next screen shows you the employer, the Date of Injury including if it was cumulative, and the case location. You can then click through to see the next hearing date, the claimed body parts, and the parties of record including lien claimants. Clicking again on “View Events” will show you what has been filed and on what date, including stipulations and Compromise & Release documents.

How EAMS Research Helps

Workers Compensation professionals may want to check on other claims by the same Applicant for a number of reasons. Right at claim intake, attorneys may want to confirm whether the Applicant has prior (or later) filings, the claimed body part, and the case status. Perhaps you want to see if there were prior attorneys on the file, or just make sure you are aware of all the players. There is no reason to be unaware of apportionment issues when this data is publicly available. Once you realize the extent of information available, you will want to research the public EAMS database regularly.

How Did You Get To That Number?

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Case evaluation is part art and a lot of math. We’re not talking calculus; we’re talking arithmetic.

A surprisingly large number of lawyers tell me they’re bad at math. They’re not alone. CNN anchor Chris Cuomo recently got his math corrected by his co-anchor Michaela Pereira while discussing Powerball lottery numbers.
 

You can’t come up with a realistic evaluation of a Workers Compensation claim if you can’t quantify the component parts: Permanent Disability, Life Pension, and Medicare-eligible and non-Medicare-eligible Future Medical.

In mediation caucus, when parties give me their offer or demand I often ask, “How did you come up with that number?” I want their best argument that will convince the other side. The first answer I get is often vague, like “We thought it would settle the case.” Workers compensation professionals often neglect running the numbers. Getting parties to see the same numbers moves them to settlement.

I recently got a call about an offer in a personal injury case. I questioned the plaintiff’s attorney about what he thought this number represented. It didn’t sound right to me. “Did you ask them how they came up with that number?” No, he hadn’t. I suggested the attorney ask opposing counsel that question to allow movement forward toward settlement.

Random demands and offers are unlikely to settle a claim. Before you assume the other side is being unreasonable or you respond, ask: How Did You Get To That Number?

Mediation or Arbitration

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Confusion continues about mediation compared to arbitration. The processes are very different.

Mediation
Parties come to mediation to achieve settlement. A mediator helps people negotiate to that end. I spend most of a mediation with parties in separate confidential sessions. I help them define issues, understand alternatives, and compose offers and demands. I convey information between parties in a way that will promote settlement. A mediator has no power to order anyone to do anything. With the mediator’s help, parties come to an agreement. Sometimes a mediated settlement includes promises outside the scope of the dispute originally submitted for mediation and it is compromise on one of these outside issues that settles the case. A mediation can end without settlement, and the case goes on.

Arbitration
Parties come to arbitration for an adversarial proceeding where a professional neutral will decide who is right. An arbitrator is a private judge. Arbitration is subject to many rules. Proceedings are similar to a trial with witness testimony and submission of evidence limited to the defined dispute. It would be improper for an arbitrator to meet privately with a party or to suggest ideas. At the conclusion of an arbitration, the arbitrator declares a winner; the ruling is called an “award.” If the parties, individually or through a group such as a union, have submitted the dispute to binding arbitration, the arbitrator’s award is the end of the case.

Different skills for different processes
Mediation and arbitration require different sets of skills. Mediators encourage collaboration. An arbitration is an adversary proceeding—no collaboration. Mediators may suggest a creative solution. Arbitrators do not suggest anything; it is up to each party to present their case and for the arbitrator to judge it. By definition, arbitrators are judgmental; mediators are not.

Some professional neutrals can successfully switch hats, conducting both mediations and arbitrations. But participants often report that some mediators, particularly those with judicial experience, are, well, judgmental. When choosing a mediator or arbitrator parties should be cognizant of the differences in the processes and choose the neutral best suited for the task.

3 Signals It’s Time to Close the Claim

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Some Workers Compensation Claims seem to have a life of their own. Before you know it, years have passed since the Date of Injury. Here are 3 signals telling you to take a hard look at settling now. The Injured Workers is 61 years old. Once an injured worker reaches age 62½, any buy-out of future medical […]

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Tactics vs. Strategy

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Tactics are steps you take to win short term goals on the way to achieving your strategic objective. Sometimes tactical skirmishes distract workers compensation professionals from pursuit of their strategic goal. On the other hand, you can’t reach your strategic objective without well-thought-out tactics.

The Disputed Doctor’s Deposition
Take the case where an attorney insisted that the deposition of the doctor who provided the most recent report had to precede settlement discussions. The problem was that by the time that could happen, all the permanent disability would be paid out. After providing for future medical expense, that would leave no cash for the applicant or the attorney fees, jeopardizing the chance of a future Compromise & Release. When I pointed this out, the parties realized that a tactical victory could prevent achieving the strategic goal. The case C&R’d.

The Tale of the Two Interpreters
I arrived at a recent mediation to find the attorneys at loggerheads because both had ordered an interpreter. Both interpreters were court-certified. I convinced one of the attorneys that agreeing to dismiss the interpreter that attorney’s office had ordered would create a negotiating advantage. In the give-and-take of negotiation, opposing counsel might well feel beholden to make the next concession. Conceding the interpreter battle demonstrated the attorney’s reasonableness and set the stage for a productive mediation. The case C&R’d.

A litigation plan should be more than a checklist. Every tactic should further the effort to achieve the strategic goal.

Understanding Insurance Reserves

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Understanding insurance reserves can help settle a claim. A reserve is a pot of money set aside to pay for a specific expense category. Typically, there are separate pots for indemnity, medical and med-legal expenses.

Sometimes a negotiator finds that a claim can be closed for an amount more than remains in the indemnity and medical reserves. However, part of the settlement can be classified as a med-legal expense. By spending the money from the med-legal reserve, settlement can be achieved while staying within current reserve limits.

Ghosts, Goblins and Mediators

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Halloween is just around the corner, a time when people love to be scared. It’s fun, because everyone knows there’s really nothing scary at all.

Mediation isn’t scary. Yet some claim and legal professionals fear it.

Fear of losing control
Adjusters and attorneys know their jobs. They may bristle at the idea of someone else getting involved in the settlement process. Yet, they don’t hesitate to call in other experts.

Claim and legal professionals retain control in mediation. Only the parties can choose an outcome. The mediator cannot order anyone to take any action. What the mediator can do is help parties define issues, resolve differences, and see new routes to settlement.

Fear of looking bad
Some professionals worry that calling in a mediator makes them look like they couldn’t do their job. On the contrary, professionals who use every tool in their arsenal look smart. Referring a claim for mediation can short-cut litigation, saving time and money. This makes you look like someone who knows how to get things done.

What are you scared of?
You don’t need a costume, and you don’t need a candy bucket to get started.  Treat yourself to mediation to move that difficult case forward.  Mediation can benefit all parties, and that’s no Halloween trick.

How Medical Identity Theft Affects Claim Resolution

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Medical identity theft occurs when a thief obtains treatment using the victim’s social security number or health insurance identification number. Authorities also report arrests of care providers who have stolen medical identities and submitted bills for treatment they never performed.  Cyber-attacks on medical data have produced a market for this kind of information.
Treatment 
A theft victim’s biggest risk is improper medical treatment due to provider reliance on an incorrect medical history. The victim could end up with a transfusion of the wrong blood type, an incorrect prescription, or ineffective treatment tailored to the wrong facts. If inappropriate treatment of an industrial injury results in the need for further medical care, the additional care will also be an industrial treatment expense.

Payment for Treatment 
Injured workers may not know their medical identity was stolen until their treatment request is denied. When medical records show non-industrial causation of the subject condition, a carrier may deny treatment. Records might also show a prior industrial claim for the condition now under review. If the injured worker denies such prior treatment, medical identity theft could be the cause of the discrepancy.

When an injured worker claims medical identity theft is the reason for a record of prior treatment, record reviewers should pay close attention to notes of contact information for the patient and family members, height, weight, age, and other telltale features which could confirm or weaken a claim of medical identity theft.

Employers facing a claim of medical identity theft will have to use a rule of reason and tread carefully. As with other denials, once the injured worker starts treating non-industrially, the employer loses control of the treatment and may end up paying much more than if the condition had been treated within the Medical Provider Network.

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Apportionment
When the injured worker sustained a prior disabling injury, the percentage of disability payable on the current claim will be apportioned. But what if that prior injury was to someone else using the current claimant’s identity? Parties will need evidence about the prior injury and treatment including the injured worker’s actual location and activities on the relevant dates.

Liens
Given the market penetration of some medical providers (such as Express Scripts), a claim could trigger issues relating to bills incurred for stolen treatment. CMS might respond to a submission for MSA approval with a reimbursement request for treatment provided to the thief.

Separating Medical Record Histories
The identity theft victim will bear the burden of cleaning up the medical record history, including notification to care providers, credit agencies and possibly law enforcement officials. This task is another source of stress at what is already a stressful time for an injured worker.

The employer needs a complete medical history relating to the industrial injury and usually obtains the relevant records by subpoena. Once the theft is discovered, new privacy issues may arise in obtaining those records.

What If The Injured Worker Is The Thief?
Sometimes an undocumented worker avoids detection until there is an industrial injury. Medical treatment planning can disclose a medical history at odds with the known facts of the injured worker’s life. In California, the injured worker will be entitled to treatment of the industrial injury. As with the identity theft victim, disentangling the two medical histories can complicate the treatment plan.