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The One Word to Keep Negotiation Going

How do you react when your negotiating opponent says something completely outlandish? Some negotiators walk out. Some blow up, screaming invective. Some stoop to insult. In short, they do everything but negotiate.

Keep negotiating
You can’t reach a negotiated settlement if you’re not negotiating. Sometimes you must react to the nonsense you have just been offered. But how to respond when you are actually biting your tongue?

Wow.

There it is. The single word that keeps you non-committal.

The Perfect Rejoinder
The injured person has spent 20 minutes weepily telling a tale of woe. You may believe the person has problems, but they are unrelated to the cause of action under discussion. Your respectful response: wow.Opposing counsel has just literally laid on the table proof that your side has concealed evidence for more than a year and lied about it in discovery responses. You know you need to round up your team and figure out what has been going on. Your dispassionate response: wow.

Defendant insists that their personnel were nowhere near the alleged incident at the critical time. You have just uncovered video footage that shows this is false, but you are not quite ready to disclose this. Your calm response: wow.

Wow Works Wonders
A startling, emotional, or angry statement could tempt you to respond in kind. But ratcheting up the emotion index can interfere with the parties’ ability to keep things in perspective. While others around you are heating up, staying cool as you observe the dynamic keeps you in control. Wow.

3 Tips for a Successful Mediation

Assessing your case from your side’s point of view is critical. But it won’t get you far if you don’t pay attention to your opponent’s needs as well.

Here are three tips to help you move from conflict to resolution.

  1. Spend time sizing up the case from your opponent’s point of view. They are most likely to see things your way if you can pitch your case to match their needs.
  2. Mediation may be the only opportunity to direct information to the client without the attorney filter. Present information in joint session or through the mediator to appeal to the client.
  3. Assess your litigation budget—and your opponent’s. Look beyond the dollars. Before you head to mediation, draft a plan for discussing the time and energy that will be required as well as the emotional investment.

Every negotiator would love to get everything they want. That’s not likely to happen. Try to fashion a compromise that appeals to the parties’ needs.

3 Logic Skills to Favorably Settle Your Case

Most of the cases I mediate are fact-dependent. The law is settled; it is up to the parties to correctly apply the law to these facts. Yet, lawyers sometimes show up with little understanding of what the relevant law is. When the applicability of statutes and regulations is cloudy, case law provides interpretation. Reconsider how these three logic skills apply to that case you know just needs to be settled before parties spend any more time or money.

Analogize /Extrapolate/Distinguish
Every individual is different; hence, every case is unique in some ways. Legal analysis involves  researching legal precedents to see the similarities to and differences from the facts of this dispute.

If case law favors your position, fashion your arguments to show why the precedent is an analogy for the facts of the present case. Instead of understanding this basic legal skill, I see advocates argue against their client’s interest that there are differences.

To create an analogy, one must extrapolate, i.e., show how the court deciding this case should apply the reasoning of the previously decided case to different facts to rule in favor of the client. This argument requires thoughtful preparation and creativity.

An attorney who argues that a precedent is so different that it has little bearing on the present dispute is distinguishing that precedent. This is an analysis of degrees of difference.

If you dig deep enough, you can probably find cases that could suggest opposite results for your case. Don’t ignore the unfavorable ones. The skillful practitioner will show why the favorable cases are analogous to the one being negotiated and the unfavorable ones should be distinguished.

Remember, you can direct your mediation statement solely to the mediator, and it will remain confidential. Whether in a court memo, a mediation statement, or a demand letter, a reasoned presentation is more persuasive than a bombastic declaration.

How the Inflation Reduction Act Does- and Doesn’t- Affect Your Injury Settlement

The Inflation Reduction Act of 2022 is packed with provisions about tax calculation and collection and climate change. It’s also got provisions worthy of the attention of anyone handling injury cases. Some of these provisions have been widely, but not fully, publicized.

Medical Insurance Premiums
Remember those three ways to evaluate future medical expenses? People who get their health insurance through health exchanges like Covered California were scheduled to see a major rise in premium expense at the end of this year. The Department of Health and Human Services projected that three million people would lose their health insurance coverage. The Inflation Reduction Act continues the subsidies that make premiums under the Affordable Care Act actually affordable through 2025.

2025?, you may say. That’s not very long when computing a person’s lifetime medical expense. True, but it is also true that once a public benefit is entrenched, Congress would find it very difficult to take it away. Skilled negotiators know how to fashion settlements which anticipate these events.

Downward Pressure on Medication Expense
Drug companies’ profits are soaring. One reason is that when Part D coverage became law, the compromise was a ban on Medicare being able to negotiate drug prices with drug companies. This contrasts with the way the Veterans Administration manages their drug costs. Medicare accounts for one-third of all prescription spending in the United States.

While there has been a lot of publicity about the new law granting Medicare negotiation power for the first time, the benefit is more meager than at first glance. First, it doesn’t start until 2026, and even then it’s not a blanket change. It applies to 10 drugs in 2026, 15 in 2027, 30 in 2028 and 40 in 2029 and after. The affected medications are to be chosen from the 100 most expensive pharmaceuticals (50 from Part D, 50 from Part B). What’s more, the drugs subject to price negotiation cannot include conventional drugs that have been approved for marketing for nine years, biotech products with marketing approval for13 years, or “orphan” drugs — those with exclusive FDA approval to treat certain rare conditions. This brings most drugs close to the end of the life of their patent, after which lower-cost generics will become available.

Those of us who have been evaluating future medical expenses for a while have learned not to rely on prescription costs decreasing because the injured person’s current medications are going off-patent. Drug companies are always innovating. Just when it seems like the availability of a generic will reduce ongoing prescription expense, the injured person gains access to a new, better drug with a high price tag.

Other Part D Limits
The Inflation Reduction Act limits out-of-pocket spending by Part D enrollees to $2,000 per year. Premium increases are limited to 6% a year from 2023 through 2030. These limits provide better insurance coverage, but due to the collateral source (civil) and primary payer (WC) rules, won’t change case evaluation without meaningful price reduction. On the other hand, the limitation on how much the injured person will actually have to pay can encourage greater negotiation flexibility.Stay Vigilant
Depending on how the political winds blow, these changes might be just the first step toward changing how Americans pay for healthcare. Or it may take decades before more important changes occur. News reports typically ignore the effect of such laws on dispute negotiations, so you will have to read between the lines and stay alert. Working with a skilled, experienced mediator can help you navigate these shoals.

Confidentiality Agreements, Zoom, and Procrastination

Confidentiality is a hallmark of the mediation process. Information introduced exclusively at the mediation, whether oral or tangible, cannot be introduced in any other civil forum. The Evidence Code spells this out for civil cases; the Government Code applies in administrative cases. Guaranteed confidentiality promotes frankness, especially when people are in caucus with the mediator without the presence of other parties, which in turn facilitates settlement.
Get It in Writing
Each person who is present at the mediation, regardless of their role, needs to sign a joint confidentiality agreement. This can be executed in counterparts.

Though the statutes spell out the confidentiality provisions, executing an agreement assures that each person is aware of the provisions and has consciously committed to abide by them. Many mediation services specifically require execution of a prescribed mediation confidentiality form. The U.S. District Court Approved Mediators Panel for the Central District and the Center for Conflict Resolution which provides mediators for certain state Superior courts have such forms. I am a member of both these panels.

When a mediation is set up, participants will usually receive a packet, including a copy of a confidentiality agreement with instructions about returning it. Participants can expect to receive the document weeks or months in advance.

Though there may be plenty of time to obtain parties’ signatures, attorneys and claim professionals seem to lack the organization necessary to return the agreement in a timely fashion. The demands of the most pressing matters can turn the most efficient of us into procrastinators.

What Is the Most Productive Use of Mediation Time?
Before the COVID pandemic, mediations were almost always held face-to-face. Confidentiality agreements were circulated in the opening joint session. The need for remote, virtual mediation via platforms like Zoom changed this dynamic.Getting signed confidentiality agreements to the mediator is now more unwieldy. Typically, agreements are downloaded, then electronically signed; alternatively, participants can print the agreement, physically sign it, then scan, save and transmit the document. The hiccup occurs when parties do not transmit the signed document before the mediation.

The mediation will not start without submission of the confidentiality agreement. If it has not been submitted, time is spent on the administrative task of gathering the documents, rather than in negotiation.

If parties are benefiting from three free hours of a mediator’s time, is this the best use of that expertise? If this is a paid mediation, do you really want to pay for the mediator’s time spent on this mundane task rather than working on settling the case?

Shun Procrastination

To avoid wasting everyone’s time at the start of a mediation, start working on getting a fully executed confidentiality agreement to the mediator as soon as you have the form. Calendar dates to follow up with the necessary signers just as you would calendar other litigation deadlines. Not only will your mediation proceed more smoothly from the first moment, you will impress the mediator with your dedication to the settlement process.

Focus on the Future

A 2013 market study indicated that 21% of the U.S. population read science fiction. Science fiction films are even more popular.

If we’re so fascinated with speculation about the future, why do we look to the past instead of the future when we negotiate?

Instead of planning for a life without conflict, negotiating parties tend to dwell on issues of the past. For example, fixating on how much money has already been spent (called “sunk costs”) instead of on how much will be saved by settling now, can get in the way of an objective case evaluation.

Litigation creates anxiety. We know that parties are relieved once their disputes are resolved. Redirecting negotiators’ attention to a future without the ongoing investment of time, money and stress can spur settlement. That is true for how your team discusses their position and also how you present your position to your negotiating opponent.

A future without conflict is a better future. Mediation can help you get there. And that’s not science fiction.

CMS Gets Tough on Unapproved MSAs– Until They Don’t

In January, 2022, CMS created an uproar when it published Version 3.5 of its Workers Compensation Medicare Set-Aside Reference Guide stating that it would essentially ignore “non-submit” or “evidence-based” Medicare Set-Aside allocations:

Unless an MSA is submitted and approved, CMS cannot be certain that Medicare’s interests are adequately protected. Therefore, CMS will treat any non-CMS-approved product as a potential attempt to improperly shift financial burden by denying payment for medical services related to the WC injuries or illness until the claimant demonstrates complete exhaustion of the entire settlement amount, less fees and costs, rather than a CMS-approved WCMSA amount.

CMS approval of an MSA was never required. Ten years ago, the LexisNexis Legal Newsroom for Workers Compensation Law published my article “Four Reasons To Avoid The CMS Approval Process For MSAs.” You can find an abstract of that article on this blog.

Then, the MSA industry created products known as “non-submit” or “evidence-based” MSAs. Since approval has never been required of any MSA, the purpose of this new version seemed to be to low-ball the MSA. CMS took notice.

If your MSA was priced correctly, they now say, it will be adequate to cover the injured worker’s medical expenses, and this will never be an issue. One problem with this approach is that injured workers do routinely exhaust their approved MSAs. Since MSA allocations do not account for inflation, they are likely to be depleted early; the younger the injured worker, the more likely the fund will be depleted.

CMS also took the position that if the MSA was paid via a structured settlement, Medicare wouldn’t pay a dime until every structured payment had been made. If the structure was set to pay for the life of the injured worker, that would never happen.

And Then They Backed Down

On March 15, 2022, CMS revised the relevant section to say:

CMS may at its sole discretion deny payment for medical services related to the WC injuries or illness, requiring attestation of appropriate exhaustion equal to the total settlement … less procurement costs and paid conditional payments, before CMS will resume primary payment obligation for settled injuries or illnesses. . .

Administratively, CMS can more easily simply ignore unapproved MSA allocations rather than spend time reviewing them in order to exercise discretion. Line by line review takes time.

CMS has sent a message that it intends to crack down on settlements designed to avoid CMS review. We may see sterner pronouncements in future revisions.

How to Proceed

Think twice before choosing to forego the approval process when it is available. Don’t rely on an MSA allocation designed to short-change CMS.

Re-think your settlement agreements. If approval was not available or not pursued, consider including a what-if clause., This would provide that if CMS denies payment of a claim-related Medicare-eligible expense, the employer will provide counsel to defend the MSA allocation. In the short term, the employer would be responsible for the medical expense of the injured worker’s immediate needs, perhaps subject to a ceiling.

One can imagine that disputes could arise about what constitutes a claim-related Medicare-eligible short-term need. Include an agreement for alternative dispute resolution. But, holy-moly, nobody wants to keep litigating long after everyone thought the claim was fully and finally settled.

These dilemmas will probably force people to seek approval whenever it is available.

Which is just what the folks at CMS want.

Playing Devil’s Advocate

The litigation section of the California Lawyers Association recently published this bon mot:

“Mediators are expected to play the role of ‘Devil’s advocate,’ questioning the strength or viability of the various legal arguments being asserted by parties and/or their counsel. In this context, mediators may dive deeply into the law applicable to the underlying dispute (and defenses). The parties may provide sophisticated though conflicting analysis of that law in the mediation briefing and during the session.”

Maybe parties don’t want me to be the devil, but I was actually asked by one attorney to “knock heads together.”

If you are serious about settling your case, please contact me. We’ll come up with some ways to make it happen– perhaps devilish, perhaps angelic .

THE ADJUSTERS’ AND LAWYERS’ REMOTE MEDIATION SECRET

COVID-19 changed our lives in oh-so-many ways. Courthouses and government buildings shut, and we were forced to suddenly embrace virtual platforms like Zoom, GoToMeeting, WebEx and Microsoft Teams.

Now that restrictions are lifting, many of us don’t want to go back to our pre-pandemic business model. We want to keep working from home, at least some of the time.

And we want mediations to stay remote.

Efficient and Effective
Remote mediation relieved attorneys and claim professionals from coping with stressful and unproductive traffic jams. Decision-makers could call in from anywhere, avoiding the obstacle of the real decision-maker not being present at the mediation. Participants with a history of vitriolic interaction particularly liked the absence of close personal contact.The Secret Benefit of Remote Mediation
Shhh! What lawyers and adjusters really want to keep secret is that they like not sitting with their clients in caucus throughout the mediation.

In traditional mediation, the parties usually break into separate caucus rooms. The mediator acts as a shuttle diplomat, walking between the rooms to confidentially discuss offers and demands and to convey information in a way to facilitate settlement. When the mediator is not in the caucus room, lawyers, adjusters and clients can review what has happened and plan their next move.

And then they sit.

They make small talk. The lawyers, especially, try to charm their clients in a way likely to encourage further referrals.

Sometimes, contrary to instruction, clients bring children to the mediation. Lawyers and adjusters find themselves literally and figuratively baby-sitting their clients during periods which can stretch on for what feels like forever while the mediator talks to the people in the other room.

In contrast, in remote mediation, the mediator electronically moves participants who physically remain in their own offices or homes into virtual, separate caucus rooms. When not talking with the mediator or their own team, participants are free to engage in other activities so long as they remain fully available for the mediation. Suddenly, adjusters and lawyers found that they could attend to other (perhaps billable) work. Clients can work or attend to other obligations.

Will We Go Back?
Some negotiators maintain that being able to physically look one’s opponent in the eye and assess body language are critical. Research shows that we are all actually poor in correctly evaluating these supposed indicators.

Most mediation veterans want to keep things virtual and productive.

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