You Have To Play To Win

–How Mediation Is (Not) Like the Lottery–

No, I’m not advocating you play the lottery, but the slogan does apply: you have to play to win. The odds of winning the California Super Lotto Jackpot are 18 million to 1 against you. The likelihood you will be able to resolve your workers compensation issue in mediation is more like 80-90% in your favor providing you participate.

Take a Calculated Risk
The only settlement offer without a chance of acceptance is the one you never make. Some parties complain that they can’t settle the case. Yet, those same parties refuse mediation or come to mediation unwilling to negotiate. You cannot expect resolution in mediation if your position is to never move off the number that was refused pre-mediation. You have to play to win.

Playing the lottery is the classic example of a blind risk. A blind risk embodies an irrational hope, an action based on nothing more than emotion, expecting something for nothing. A person who takes a calculated risk, on the other hand, has objectively assessed the situation and examined the upside and downside potential. This is true for investors, explorers, world leaders, and negotiators.

First evaluate, then negotiate
Before you can effectively negotiate, you have to do your homework, i.e., run the numbers to evaluate the claim. Once you have considered the best and worst alternatives to a negotiated agreement, you are ready to proffer your demand or offer. You have to play to win.

Mediation allows the people with the most knowledge about the claim to take control of resolving it. During mediation, the mediator can help you calculate your risks and negotiate resolution.

Heartsink Patients

Heartsink” is the term for how the treater feels when it is difficult if not impossible to help patients with chronic pain and disability. A 1989 Toronto Star editorial placed these patients into four categories: dependent clingers, entitled demanders, manipulative help-rejecters, and self-destructive deniers.
You know these injured workers. They are the ones whose life is wrapped up in their claim. The only way they will give up that obsession is to replace it with a plan for life after claim closure.Injured workers need to feel that a settlement is the just result. They need adequate compensation to create a safety net for future medical care. A WCAB hearing is often just a prelude to more conflict.

Mediation can provide the forum to help the injured worker create a plan for life without an ongoing claim.

 

How Minimum Wage Laws Affect Indemnity Payments

SAWW is going up. The California State Average Weekly Wage determines the annual adjustment of the minimum and maximum payments to persons receiving temporary disability benefits per Labor Code 4453(a)(10). The State Average Weekly Wage also determines the adjustment to payments to persons receiving a life pension or total permanent disability indemnity per Labor Code 4659(c).

In June, the Department of Industrial Relations Division of Workers Compensation announced an increase for payments starting January 1, 2017. The minimum TTD rate will increase from $169.26 to $175.88 and the maximum TTD rate will increase from $1,128.43 to $1,172.57 per week.

In a separate development, a new rule gradually raising the minimum hourly wage to $15 by January 1, 2023 was signed into law in April. A rising minimum hourly rate will increase the State Average Weekly Wage over the next seven years and in consequence some workers compensation indemnity benefits.But there’s a safety valve. After January 1, 2017, the governor can delay any scheduled increase for one year if certain economic or budget conditions exist. The economy has been expanding. Some experts predict a collapse.

Effect on Settlements
When evaluating claims for settlement, parties may have to consider how the expected SAWW increases will affect the value of future indemnity benefits. The minimum hourly wage increases are small, 50 cents the first two years and a dollar a year thereafter. Is this enough to affect the historic rate of increase we have seen for life pensions? Claims subject to minimum and maximum TD increases are most likely to be affected. An across-the-board increase in claim value will also increase attorney compensation.

Predicting is hard.  Settling sooner rather than later avoids uncertainty.

THE ONE THING TO DO TO MAXIMIZE WORKERS COMP MEDIATION SUCCESS

Preparing a mediation brief is the one thing you can do to maximize the likelihood of a successful mediation. The goal in mediation is to define issues and resolve them. You can get a head start by alerting your mediator to the issues and suggesting why those issues tilt in your favor.

Lack of a brief unnecessarily lengthens the mediation. Your mediator is probably being paid according to how much time is spent in mediation. Effective resource management dictates you don’t want the mediator to have to spend the first hour—or two or three—digging out the issues.

Mediation can be an exhausting process. People get cantankerous which makes negotiation more difficult. Short-cutting the mediation by defining issues in advance can keep participants at their best.

The brief need not be formal. A letter may be adequate. If you are in doubt about how formal your brief must be, contact the mediator and ask.

A party who does not brief the issues may be allowing the other side to define the discourse. Send your brief to the mediator far enough ahead of the mediation so the mediator has adequate time to review it.

The mediation brief you send the mediator is confidential. You decide whether to share it with the opposing party. Information disclosed to the mediator during mediation is not discoverable. The mediator cannot be subpoenaed. This allows you to control when to disclose your “smoking gun”—maybe not until trial.

Some parties prepare two briefs: one for the opposing party and one for the mediator. More commonly, a party prepares just one, but may decide to waive confidentiality of the brief during mediation.

Settlement Season

settlement-seasonHere we are in the fourth quarter of the year or as some call it, settlement season. Workers Compensation cases seem to drag on, but as year-end approaches, everyone in the system suddenly wants to get claims off the books. There is good reason.

Claimants on the road to settlement often want to complete a buy-out in time to get cash for the holiday season. Carriers have to report to state insurance departments how many claims are open at year-end. Self-insureds want to avoid funding a bond for another year.

If you haven’t previously mediated a Workers Compensation claim, you might feel a bit intimidated. You don’t have to commit to a settlement in advance of mediation. In fact, many mediations start with parties insisting the claim will not settle.  Yet, the majority of those mediated claims do result in settlement.

Parties just need to agree to sit together with the mediator to discuss the issues. Once everyone is on board, a mediation can be scheduled quickly. Unlike a WCAB hearing, participants can take all the time they need.

When parties collaborate in mediation to define issues, they often find themselves resolving those issues. Minimally, everyone will be on a firmer basis to move forward.

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.

YOU HAVE TO GET OUT OF B-E-D TO SETTLE

Maybe being in BED- Blame, Excuses, Denial- is really what’s blocking your ability to close claims.
Blame
It’s easy to blame the other side. “The adjuster/ defense attorney/ applicant’s counsel isn’t paying attention.”  “They’re keeping the case going for the wrong reasons.” Whatever. The only person you can control is you. Without casting aspersions, start communicating anew keeping the end in sight. This might mean sending an email AND a letter, calling and maybe texting. Bring in your favored mediator AND file a DOR.
Excuses
Let go of the past. Maybe you made a mistake or missed an opportunity which would have set the claim on a better course. How much could you have settled that claim for 4 years ago? Resolve to start over today.

Denial
Get serious about evaluation. You can’t properly manage a claim if you shut your eyes to the true cost of keeping it open. In “old dog” cases, medical expenses almost always go up. Even when a drug is scheduled to go generic, a new, better, expensive drug becomes available. A settlement has to cover the injured worker’s future claim-related medical expense. Six percent is not a realistic discount rate. On the other hand, let’s be honest about what treatments the injured worker will actually use.

Get Out of B-E-D Now
Changing your attitude can change your results.

Maybe you made a mistake or missed an opportunity which would have set the claim on a better course. How much could you have settled that claim for 4 years ago? Resolve to start over today.

5 Best Benefits of Workers Compensation Mediation

rolling ball blue
1) Mediation Works.  In one study, 61 percent of workers compensation mediations resulted in total resolution of the disputed issues.

2) Mediation is fast- no waiting for a hearing date on an overcrowded court schedule.

3) Take as much time as you need- no rush to finish within a half-day window at the WCAB.

4) Mediation saves time and money compared to numerous, futile court appearances.

5) Presence of the neutral can help preserve the attorney-client relationship and inject a dose of reality.

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?

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.
does this mediation make me look fatAre 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.
not fat man