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‘Twas the Night before Mediation

(c) Teddy Snyder WCMediator.com

‘Twas the night before mediation
And all through the firm
Not a creature was stirring,
Not even a worm

But then one lawyer
Asleep on a couch
Shot up, hit his head
And said with an “Ouch”

Oh my, I’ve got
That mediation tomorrow
I didn’t do a brief
Much, much to my sorrow

Then what to his exhausted eyes should appear
But WCMediator with news of good cheer

You don’t need it fancy
You don’t need it long
Just give me some clues
So the time’s not spent wrong

Just send me an “e”
It’s all confidential
Tell me the issues
What’s the dollar potential?

With that she was gone
The lawyer banged out a brief
He’d be ready tomorrow
Oh what a relief.

This holiday season
When your time seems too short
Turn to mediation
And stay out of court.

Happy Holidays!

 

Understanding Insurance Reserves

 

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.

WHY YOUR WORKERS COMP CLAIM EVALUATION IS WRONG

Contradictory dynamics involving life expectancy affect your large-exposure workers compensation claim evaluations. The industrial injury plus co-morbidities may decrease the injured worker’s life expectancy. But medical advances and heredity may mean your estimate of the injured worker’s life expectancy is too low.
The Mortality Table Isn’t the Whole Story
Parties typically use a mortality table to compute the likely cost of future medical care over an injured worker’s lifetime. Several entities publish summaries of life expectancy data. The longer a person lives, the longer their life expectancy. A table might predict that the average 35-year old black male will not live past his 72nd birthday. But once that same man survives to his 55th birthday, the table extends that prediction to 76. The life expectancy prediction is a moving target, growing longer as the injured worker ages. Workers compensation professionals who rely solely on a mortality table to project life expectancy may be making a mistake.Why the Life Expectancy Estimate Is Too Low
Many circumstances can affect how an individual’s life expectancy compares to the average. An important factor is heredity, but many workers compensation professionals do not ask about this issue. How old are the injured worker’s parents, or how old were they when they died? 

Then there’s this interesting phenomenon. A study showed that for adults over 40 years old, receipt of a periodic payment such as a bi-weekly disability check increased their life expectancy. People literally lived for the check. An injured worker may be on the long end of the life expectancy bell-shaped curve.

Add to all of this advances in medical science. People are living longer, and some mortality tables are out-of-date.

These factors require workers compensation professionals to think twice before assuming the injured worker’s life expectancy is shorter than normal. To avoid stair-step reserving, one needs to approach the issue cautiously.

Why the Life Expectancy Estimate Is Too High
On the other hand, an injured worker by definition has some disability, and it might shorten life expectancy. An orthopedic injury in itself may not shorten life expectancy, but pain medication can. A holistic evaluation of lifetime medical care should consider co-morbidities as well as the industrial injury.

One More Thing to Talk About
In settlement negotiations parties may differ about how an injured worker’s life expectancy projection affects case evaluation. Add this to the list of issues to be discussed at mediation.

Why Mediation Is Like Sex

YOU THOUGHT MEDIATION AND SEX HAD NOTHING IN COMMON?
NOT SO!

Both mediation and sex should:

Happen between persons committed to the process as an essential part of the big picture

Occur with appropriate frequency

Stimulate participants to contribute their best selves

Continue until mutual satisfaction

Make participants feel better at conclusion

Empower parties to turn to other areas of life with renewed vitality and creativity.

Six Biggest Mediation Misconceptions

The Mediator might rule against me.

Mediators do not make any rulings. The role of the mediator is to help the parties resolve the issues.

If I go to mediation, I will have to give up something.
Negotiation is about compromise. Each side usually gives up something. You won’t give up anything unless you, and only you, make the choice to negotiate a deal.
 
Mediation is too expensive.
Mediation is cheaper than litigation. It is efficient and eliminates other procedures which use up time and money.
 
Mediation is a waste of time.
Mediation has been shown repeatedly to be effective in resolving all issues. But even if you don’t conclude your case at the mediation, mediation typically allows parties to learn more about their opponent’s case—and their own. Issues are narrowed, setting the stage for further negotiation or more efficient litigation.
 
There is no reason to mediate—our case is a sure winner.
Mediation might be a place to test that hypothesis—or convince the other side. Presumably you wouldn’t be in litigation if there weren’t two sides to the story. If there is counsel on both sides, your opponent is spending time, money and effort for a reason. Applicants representing themselves might just need a forum to tell their story. Litigation is always uncertain. Settlement is the only way to retain control over the outcome, rather than let a judge impose a resolution on you.

We look like push-overs by suggesting mediation.
Mediation is the rule rather than the exception in most areas of law in the United States. The fact is that most cases settle at some point. Smart claims professionals and lawyers use every tool at their disposal to conclude cases as early as possible.

Do You Speak MSA?

“MSA” stands for Medicare Set-Aside.  Settling a Workers Compensation claim often calls for consideration of Medicare’s interests.  MSA-speak has its own language.  The problem is that the term “MSA” is used to mean different things.  Understanding the 4 different items which may be referred to as “MSA” is critical to success in this area:

MSA Report

MSA Allocation

MSA Approval

MSA Account

The MSA Report is prepared by an MSA allocation company.  It is an analysis of medical reports and paid medical benefits resulting in a recommendation for an MSA allocation.  The report typically provides both lump sum and annuitized funding options.   The report is not “the MSA”.  Multiple versions of a report may be prepared during evaluation and negotiation.  Nothing has been “set aside” just because there is a report.

The MSA Allocation must be in good faith.  The parties can agree on an allocation without a report, though this is usually limited to cases brought by Medicare beneficiaries which settle for less than $25,000 and denied cases where the settlement is unrelated to medical expenses.  An allocation in a settlement document can be as simple as “The parties have taken Medicare’s interests into account and set aside $800 for future Medicare-eligible claim-related expenses.”

Parties can choose to seek from the Centers for Medicare and Medicaid Services (“CMS”) Approval of an MSA allocation.  Seeking approval is optional.  Only the two classes of cases which meet CMS “review thresholds” can be submitted.   Class One includes all cases brought by Medicare beneficiaries settling for at least $25,000.  Class Two includes cases where the settlement is at least $250,000 and the worker is likely to be eligible for Medicare within 30 months.  If CMS approves the allocation, it cannot seek more than the approved amount later.

Upon conclusion of the settlement, the worker will open an MSA Account.  This must be a separate account solely for MSA funds.   It is supposed to be interest bearing, though it may be difficult to find an institution that would pay interest on smaller accounts.  If any of these concepts can be called simply “the MSA”, it is the account.  Money has in fact been set aside, separate from the rest of the settlement and separate from the worker’s other assets.  Note that the correct term is “account”, not trust.  MSA Accounts can be custodial or non-custodial.

“Do we need an MSA?” may be appropriate in referring to the entire process.  And there are plenty of times you want to use a verbal shortcut.  But vague references as to whether the subject is a report, allocation, approval or account can sometimes lead to misunderstandings.

Understanding Public Income and Medical Benefits after the Affordable Care Act

acaThere’s a lot more to the Affordable Care Act than buying private health insurance through an exchange marketplace like www.CoveredCA.com.

Four kinds of public benefits can help people get the medical care they need:

  1. Subsidized premiums and co-pays for private health insurance purchased through an exchange.  Commercial insurers issue these policies, not the government.
  2. Medicare, for people who have contributed the necessary number of quarters during their years of employment. Medicare Set-Asides are required when a Medicare beneficiary settles a claim for future medical care.
  3. Expanded Medi-Cal for people with low income; there is no asset limit, no requirement for a set-aside
  4. Traditional Medi-Cal for the indigent; there are income and asset limits, no requirement for a set-aside

These types of benefits are frequently confused, especially because the names are so similar.  For optimal settlement of a Workers Compensation case, you need to know the injured worker’s eligibility for these plans.

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The Elephant in the Room

Sometimes the issues the lawyers and adjusters are discussing are not what is most important to the Applicant.

Recently, in a pretty small case, the professionals told me the disagreements were about what had been paid and what was still due. The injured worker told me his biggest concern was that, although he had returned to modified duty, the employer had told him there was no more work for someone with his disability. The injured worker was terrified that he would be out of a job with no ability to get another one, but that is not what the lawyers were discussing.

Many times, the injured worker’s biggest issue is not one that is dispositive of any issue in the case, but, in fact, is the driver for the injured worker’s decisions– the proverbial elephant in the room the negotiators are trying to ignore.

Because these are often personal matters, the injured worker may not share these concerns with the employer’s side– or even the injured worker’s own lawyer.

  • The woman with a sick teen-aged son who desperately wanted to control her own industrial medical care, but was afraid that if she C&R’d her case, the lump sum payment would result in the family’s loss of Medi-Cal which provided care for the son.
  • The man  suffering from non-industrial cancer whose biggest concern was leaving an estate to support his wife.
  • The injured worker who wanted to return to his home country, but feared that expressing that desire would diminish the value of the claim.
These issues can often be discovered and resolved through mediation. Parties can express their concerns to the mediator confidentially. Once the mediator knows the real issue,  the mediator can often re-frame the issues to allow the parties to reach resolution– all without breaching confidentiality.
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DON’T LET POLITICS GET IN THE WAY

“AFFORDABLE CARE ACT”

NOT “OBAMACARE”

The term “Obamacare” is a nickname for the Affordable Care Act.  But sometimes politics can get in the way of clear thinking.  

The Affordable Care Act encompasses much more than the purchase of private health insurance on an exchange like Covered California, www.CoveredCA.com. When discussing settlement with counsel and clients, talk about using “The Affordable Care Act” to avoid the emotions the term “Obamacare” triggers.

Make sure you mediate with someone who understands all the options for replacing medical benefits in our new healthcare environment.

FOUR REASONS TO AVOID THE CMS APPROVAL PROCESS FOR MSAs

Many Workers Compensation professionals believe they must secure approval of a Medicare Set-Aside (“MSA”) before they can close out medical benefits.  In California terms, professionals think they cannot complete a full Compromise & Release (C&R) without going through a lengthy administrative process.  This is not true.

1)                   MMSEA reporting makes approval unnecessary for Medicare beneficiaries.  Carriers and self-insureds already report at the beginning of a claim that they are assuming Ongoing Responsibility for Medicals and will report again when the claim is closed.  By the time an MSA is done, Medicare’s systems already block payments for treatment to those body parts.

2)                  Approval is not and never has been required.  The law merely requires that Medicare’s interest be taken into account, which is what you are doing when you incorporate the MSA terms into the C&R.

3)                  Approval does not protect anyone from liability.  When a non-Medicare-beneficiary Applicant self-administers and spends the money incorrectly, all parties could be subject to reimbursement liability.

4)                  The Approval process is unnecessarily torpedoing your settlements.

Do get an MSA Allocation report.  Do create a Set-Aside in accordance with the report.  Consider a structured settlement arrangement to make sure the Medicare Set-Aside is paid over the claimant’s anticipated lifetime.  Consider custodial administration for claims where it is cost-effective.  Seek CMS approval for settlements with a gross amount in excess of $250,000, but don’t let the process ham-string your settlement. 

 

This is an abstract of an article originally published at LexisNexis® Legal Newsroom Workers Compensation Law.  Find the full article at https://tinyurl.com/7f2c8n9.