Heartsink Patients
Mediation can provide the forum to help the injured worker create a plan for life without an ongoing claim.
Mediation can provide the forum to help the injured worker create a plan for life without an ongoing claim.
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.
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.
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.
“If a party requests that a defendant provide a computer printout of benefits paid, within twenty (20) days the defendant shall provide the requesting party with a current computer printout of benefits paid. The printout shall include the date and amount of each payment of temporary disability indemnity, permanent disability indemnity, and vocational rehabilitation maintenance allowance, and the period covered by each payment, and the date, payee, and amount of each payment for medical treatment. This request may not be made more frequently than once in a one-hundred-twenty (120) day period unless there is a change in indemnity payments.
A defendant that has paid benefits shall have a current computer printout of benefits paid available for inspection at every mandatory settlement conference.”
California Code of Regulations Title 8 §10607.
The benefits printout is the foundation of every workers compensation claim evaluation. Yet, workers compensation professionals often ignore the basic exercise of examining claim expenditures. Attorneys sometimes come to mediation with a rolling cart holding boxes of documents. Yet, when asked for the printout, they have to contact their office or the adjuster. Stranger still are the answers I sometimes get to the question, “How did you get to that number?” When I ask participants how they formulated their demand or offer, their answers may have no relation to actual claim exposure.
Showing up at a mediation or mandatory settlement conference without having scrutinized the printout numbers is inefficient, maybe even sloppy. Better practice is to obtain the printout in advance and create projections to support your claim evaluation.
Workers compensation professionals should review past medical expenses to project future expenses. Of course, parties may disagree about what expenses are reasonable and the likelihood and duration of future care. A medical recommendation for a new treatment (which may be disputed) can skew the numbers. For example, resolution of one mediated case hinged on a medical recommendation for a newly available prosthetic device.
The printout is also critical to resolving retro and overpayment disputes. When parties disagree about whether payments in a given time period should have been paid at the PD or TD rate, the printout is the best evidence of what was actually paid.
When both sides look at the printout together, they can often resolve their disagreements with a little help from the mediator.
Here 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.
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
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.
“Let’s see,” I said to the employer’s representative. “After deducting PDAs, the MSA, and attorney fees from this offer, the injured worker will end up owing you money.”
It happens more often than you might imagine. Usually it’s because the defense has forgotten the attorney’s fee. Then they wonder why the offer was rejected. Unless parties are in mediation, negotiation often stops.
Why You Need Adequacy
A settlement must be adequate. A recent case on the issue of settlement adequacy, Alvarenga v. Scope Industries, caught some workers compensation professionals off-guard. The court reversed approval of the settlement because after allowing for attorney fees it was inadequate to fund the MSA. Whether CMS approval of the MSA was sought was irrelevant.
California regulations mandate adequacy:
“The Workers’ Compensation Appeals Board shall inquire into the adequacy of all compromise and release agreements and stipulations with request for award, and may set the matter for hearing to take evidence when necessary to determine whether the agreement should be approved or disapproved, or issue findings and awards.”
8 CCR § 10882 Action on Settlement Agreement
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.
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.