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Is Mediation Effective in Workers’ Comp?

Babe Ruth’s lifetime batting average was .342. Studies in states with a history of workers’ compensation mediation suggest your success rate with it is likely to be a whole lot better.

In Florida, parties must mediate workers’ compensation claims within 130 days of the filing of a petition for benefits. Results for the fiscal year ended June 30, 2013, showed a 74% success rate, defined as partial or complete resolution of the issues.

The Minnesota Department of Labor and Industry reported that the state’s mediation resolution success rate between June 2007 and September 2008 was never less than 60%. The success rate was 100% in four of those months.

The Maryland Judiciary’s Mediation and Conflict Resolution Office conducted a study where half of Baltimore’s workers’ compensation filings were referred to mediation. The 2002 report details the results. Measured at various points in the litigation process, the mediated cases were consistently found to conclude more quickly and with less discovery than the control group. For example, 83% of cases in the workers’ compensation mediation group were disposed of before their scheduled trial date, compared with 70% in the control group.

In 1992, the Dallas Mediation Project reviewed 981 mediated cases. Workers’ compensation, contract disputes and collection cases showed the highest level of resolution—87% of these workers’ compensation cases settled through mediation. Motor vehicle claims settled 85% of the time, and other personal injury claims settled 77% of the time.

Don’t be afraid to step up to the mediation plate. You might hit a home run.

Winning the Zero Sum Game

Value-Added Negotiating

Many negotiators approach resolution as a zero sum game. Each side’s gain or loss is exactly equal to the other party’s gain or loss. Viewing the resources available as limited can obstruct getting to settlement.
 
Particularly when one or more parties have hit their dollar authority limit, adding non-monetary benefits to the discussion creates a larger number of benefits to divide. Some people call this “enlarging the pie.”

When there are more issues to discuss, parties can “log roll,” i.e., swap benefits across a number of issues, not just fixate on more or fewer dollars.

Different kinds of cases call for different solutions. Unique facts can inspire creativity. Here are some tried-and-true ways to add value.

Resignation
In workers compensation and wrongful termination cases, a resignation can add value. It clarifies the parties’ status and provides finality. Double-check to make sure you do not run afoul of statutory restrictions before raising this issue.

Respect 
In the right case, an apology can move negotiation forward.

Some claimants feel no one is listening. Perceived disrespect leads to resentment which prevents reasonable negotiation. All participants should make sure to show respect for the opponent’s position. One way to do this is by scheduling a mediation where everyone gets a chance to have their say.

Payments
In appropriate cases, you may be able to negotiate to characterize money as non-taxable. If some or all of the settlement can be considered payment for a physical injury or restitution for a loss such as property damage, the net benefit to the payee is greater.

Settlements usually call for a single lump-sum payment. But a different arrangement may be better for all parties. A classic way to do this is through a structured settlement. A structured settlement can provide more money for a claimant without increasing the cost to the payor. Other benefits might include Medicare Set-Aside compliance and professional investment management.

Sometimes, a defendant requests a payment plan. Even the largest defendant may need to spread a settlement over two budget years. When parties agree to a payment plan, a properly worded settlement agreement must spell out each party’s rights, obligations, and remedies.

Confidentiality 
Protection against damage to reputation can be a valuable bargaining chip whether the party is an individual, a corporation, or a government entity. Confidentiality clauses have appeared routinely in personal injury settlement agreements for decades. Defendants and their insurers don’t want to set a benchmark for future plaintiffs. Note: some jurisdictions have prohibited non-disclosure clauses in sexual harassment settlements.

Victory!
Victorious negotiators are those who walk away with a settlement. To get there, discard the zero sum approach. Find ways to add value instead

FOBO Paralysis

Most of us have seen, and maybe used, the acronym FOMO. It means Fear of Missing Out. FOMO is the fear of making the wrong decision about how to spend your time, particularly after you’ve seen internet stories about others doing better. 

Negotiation FOBO
The related condition in negotiation is FOBO, Fear Of Better Options. Fear that there may be a better option prevents negotiators from choosing any option. Seeing reports of great results in other cases, unlikely to be identical, contributes to the situation.

Some people are “maximizers”; they think they must have the perfect resolution. So they need to consider every single option. The trouble is, too many options leads to indecision. Maximizers include the attorneys who want to pursue every avenue of inquiry regardless of the expense in relation to the likely effect on evaluation of the claim.

Happier, more successful people are “satisficers”; they know how to recognize an acceptable deal and move on. Satificers aren’t pushovers. They do their homework.  In mediation, they’re the people who have evaluated the claim based on historic data, expert reports, and their own experience. They present cogent, coherent arguments in their mediation brief. They have considered the downside of walking away from a deal though they might consider it barely acceptable.

To avoid FOBO, negotiators need to prioritize their needs and wants. For most mediation participants, the highest priority is closing the claim with an acceptable outcome. Continuing to litigate means months or years of additional expense and stress. Well-prepared negotiators know the status of the case today and realize that things could get worse in the future.

A Mediation Story

The claim was decades old; indemnity was supposedly fully paid. The carrier hadn’t paid a medical bill in years. The applicant had dismissed her attorney, but continued to pursue the claim.

The carrier wanted the claim off the books, so they called me. Without prompting, the adjuster disclosed his authority limit to me in an email.

The applicant, the carrier’s hearing rep, and I met for mediation.

While there was no question the applicant was disabled, the dispute was whether the disability was industrial. Thankfully, the applicant had a very good alternate form of medical insurance which had been providing and continued to provide full coverage.

I spent time with the parties separately, allowing each of them to vent about how they had been taken advantage of by the other. Issues were raised, demands and offers exchanged. While remaining neutral, I empathized with both parties, discussing pros and cons. Finally, the hearing rep made what he said was an offer of his full authority.  I showed him my print-out of the email which showed authority for an additional $15,000. 

He stared at me.  “I have to make a call.” 

“Let’s make it together,” I said.

We got on the phone to the adjuster who said the hearing rep was correct. “Mike” (not the real name), I said, “Are you able to take a look at your email to me of [the email date]?”

“Yes, I see it.”

“That says your authority is $15,000 more.”

“Oh, I didn’t have that authority. I never had that authority.” 

I did NOT say, “Then why did you tell me that’s what you had?”

Instead, I went to the room where the applicant was waiting and put the hearing rep’s offer on the table.

“I have to call my spouse.” I left the room to give her some privacy.

After a little while, the applicant told me her spouse said the offer was an absolute non-starter.

The hearing rep stated he had to leave for another commitment, and the mediation adjourned without resolution.

A few days later, the applicant called me to ask if the offer was still open.  I said I would check.

The case settled by Compromise & Release for the amount of the hearing rep’s offer.

The Lesson

Parties sometimes need time to process everything that happened at mediation. They may have learned about new issues or gained new insights about the basis for the opponent’s position. People often have a negative kneejerk reaction to a demand or offer. After some time to cool down, they may be able to understand a different point of view, even if they don’t agree with it.

Think about why this case settled. What did the applicant gain by being able to talk about the claim with the mediator? What do you think happened between her and her spouse once she got home? What can you conclude about pre-mediation communication between the adjuster and the hearing rep, between the adjuster and the applicant?

How important is it to have everyone who will participate in making the settlement decision attend the mediation?

Four Necessities for Mediation Success

These four attributes are integral to an effective mediation.

Fairness
The process and the person conducting the process must be fair. What’s more, all participants must perceive them as fair. Mediation is a level playing field. This safe, neutral environment is a good place to test the validity of an argument.

The mediator is a professional neutral. Without preconceptions, she can serve as a sounding board for every person’s position. 

Respect
Agreeing to mediation shows respect for others. It signals a willingness to listen. This signal is reinforced by exercising courtesy and diligence in the scheduling process and following through up to, at, and after the meeting.

Communication
Any credibility earned before mediation is squandered if parties demonstrate they are not listening during negotiations. Failure to listen is shown by an inappropriate response, such as shouting at or insulting the opponent or refusing to continue participation.  It may seem counter-intuitive, but the mediator can facilitate communication between parties by separating them and using shuttle diplomacy to calmly convey each party’s message.

Trust
No negotiation result is satisfactory if the parties do not trust the other side to follow through. If mistrust has arisen due to past misunderstandings and broken promises, part of the mediator’s job is to re-build enough trust to resolve the dispute.

One solution to this problem may be to use a different negotiator at mediation, someone who does not incite personal animosity. Another solution is to make sure all agreements are specific and documented before parties leave the mediation. Particularly when the relationship has been hostile, the mediator is the linchpin in parties’ trust in a negotiated agreement.

New Mediation Disclosure Law

Effective January 1, 2019, California attorneys must provide a written mediation disclosure statement to clients or face potential disciplinary consequences.

What Does the New Law Do?
The disclosure does not protect clients so much as inform them about mediation confidentiality. Under changes to the Evidence Code, attorneys must have clients sign off on a mediation disclosure form as soon as reasonably possible before the client agrees to participate in mediation. If the attorney is hired after the client has agreed to mediate, the attorney must get the client’s sign-off as soon as reasonably possible after being retained. If the client signed off on a disclosure with prior counsel, new counsel should get another acknowledgement naming the current attorney. All clients should sign it.

The disclosure must be on a single page not attached to any other document and must be printed in the preferred language of the client in at least 12-point font. It must include the names of the attorney and the client and be signed and dated by the attorney and the client.

The law specifically contemplates an “attorney disciplinary proceeding to determine whether the attorney has complied with Section 1129.”

Unh-Unh, Not Me
What if the Evidence Code doesn’t apply to your practice area? You work in administrative law, such as Workers Compensation, or limit your practice to federal court.

Even if you never handle a case with a state civil court aspect nor a federal case with diversity jurisdiction, observing the new rule is the safe choice.That this amendment passed at all started with concerns about legal malpractice suits founded on communications within the mediation process. Legal malpractice suits are filed in state court or rely on diversity jurisdiction using state rules. Mediation confidentiality rules apply to all types of practice.

What Does the Disclosure Do—And Not Do?
The disclosure lays out the basics of the mediation disclosure rules, i.e., an almost total evidentiary exclusion of communications. This includes legal advice provided to a client during the mediation. Absence of the client’s signature or that the client did not receive the form is not a ground for invalidating a settlement agreement.

The “safe harbor” disclosure form in Evidence Code 1129 assures clients they can still sue for malpractice or report misconduct to the State Bar, just not using any evidence relating to a mediation.

How To Comply
Attorneys who regularly mediate should consider obtaining the disclosure at the beginning of the representation. The safe harbor form doesn’t limit the disclosure to a single case. Nonetheless, attorneys working on multiple cases under an ongoing or tripartite relationship may wish to add language to make it clear that the client is executing a blanket sign-off.

Litigation Status Reports from the Confederate States of America

THINGS ARE GOING GREAT – LET’S KEEP FIGHTING

The fall of Atlanta “is not a calamity that endangers our cause.”
Montgomery, Alabama Advertiser, September 1864

 

“No former period of the war has contained such elements of encouragement for the South as the present.”
Richmond, Virginia Examiner, February 1865, 60 days before the surrender at Appomattox

 

Many clients receive litigation status reports that parallel the unfounded optimism in the South in the final months of the U.S. Civil War. People who try to settle cases often see litigants with that same willful refusal to recognize a failing battle effort. Parties and lawyers who have been living with a case for a long time may delude themselves about their chances of winning.

 

Lawyers in the Front Line
Typically, the lawyer is the front-line soldier with the best ability to assess how things are going. The client expects reliable status reports and guidance in choosing the best course for the litigation. Corporate and insurance clients usually require reports to include an evaluation.Clients want a lawyer who believes in their case. And lawyers have a duty both to the client and the legal system to represent the client “zealously within the bounds of the law.” But sometimes lawyers prepare status reports which mislead clients to pursue expensive and futile choices.Some lawyers seem to think they are litigation superheroes who can’t be beat. Dig deeper and you will find they settle most of their cases, but at what cost? The justification that the client would have gotten a worse deal without the lawyer’s extreme tactics may not be sound.Many lawyers are like animals burrowing a tunnel who never stick out their head to see where they are. They have a playbook they think they need to follow before even considering settlement. It seems like there is always one more report, one more deposition, one more motion they have to have.Lawyers also fear telling clients the unvarnished truth about their cases because the lawyers want to keep the gig. I’ve seen cases where it is the third lawyer on the case on each side. In one instance, the lawyer told me that both prior lawyers had counseled that the opponent’s settlement proposal was reasonable; each was fired. The current lawyer said, “You and I both know those lawyers were right, and they were fired. I am going to try the case.”
Those battles at Lookout Mountain and Missionary Ridge? According to the Mobile Register, union casualties were “ten times greater than ours.” In fact Confederacy casualties numbered 6,687 to the Union’s 5,815.
 
Psychological Reasons for Unfounded Optimism
There are psychological reasons why people refuse to settle. For example, people need to justify past expenditures, known as “sunk costs.” So they feel the need to keep fighting, even when settlement is the best way to stop that drain. Another is reactive devaluation, where people refuse to credit information from the opponent which conflicts with the belief system they have created for themselves.When litigation status reports only offer a choice among battle plans, clients may not realize settlement could be their best option.

Pass the Buck to the Mediator

Mediation is a good way to get the most belligerent parties to talk about settlement. Opposing sides don’t even have to sit together. Caucus sessions take place among the mediator and representatives of a single side. Nothing said in caucus gets repeated elsewhere without the party’s permission, so caucus is a safe place to discuss the weaknesses of a case as well as its merits.The mediator is a professional neutral. Parties can get the opinion of someone who comes to the case without preconception. This is closest to what could happen in court. The mediator can ask pertinent questions and bring the parties to partial or full agreement.When parties can’t bring themselves to agree, the mediator can suggest a mediator’s proposal to close the case. This allows everyone to save face and does not damage the attorney-client relationship.If you are creating or receiving litigation status reports that don’t consider mediation, an essential part of the plan may be missing. Mediation offers a timely, cost-effective way to end whatever war you’re fighting.

Mediation Phases

Like the moon, mediation proceeds in phases. Here’s a primer on what happens when.

Phase 1: Investigation
The first phase of a mediation consists of fact gathering and defining the issues. When the parties provide exhaustive briefs, time spent on fact-finding may be minimal. We can quickly pin down which facts and issues the parties agree or disagree on.Sometimes people agree on the facts, but not how to interpret those facts. Ferreting out those disagreements is part of defining the issues. Usually case resolution will turn on fewer than five pivotal issues.

As we drill down, disagreement about a fact may emerge, but a participant may be able to get the evidence to resolve the question during the mediation. Perhaps the information was not previously shared because it was not obvious this was an issue, or someone may have been playing hide-the-ball. The employer’s side in a workers compensation case should bring a copy of the indemnity and medical payment print-outs to the mediation.

If no one can access the needed information during the mediation, we can usually put that issue aside and continue to mediate to resolution. But if that piece of the puzzle is critical, we might adjourn the mediation to allow time to gather those details with a commitment to resume on a specified date.

Mediation is not the time to declare you need additional discovery. For purposes of negotiation, let’s assume that each side’s discovery efforts would produce information favorable to that party. If the case settles, no one need undertake that expense.

Phase 2: Working With The Numbers
Now that we know what we’re dealing with, it’s time to talk about value. Sometimes parties have exchanged offers and demands prior to mediation, but often they were waiting for this meeting. If everyone was together in joint session until this point, now may be the time to go into caucus, separate private meetings with the mediator.

Once in caucus, parties can be candid about the strong and weak points of their case. Nothing said in caucus will be shared with the other side unless you authorize it to be shared. Moreover, per statute, no communication between any participants made exclusively within mediation can be used in any civil forum.

Occasionally, a party has a secret reason for wanting to settle that has nothing to do with the case itself. Here are some real-life examples from my mediations that show the importance of confidentiality. An injured person planned to move to another country. A defendant company was negotiating a buy-out; they were undergoing a fiscal review and wanted to get this potential liability off the books. In each case they told me these things, but the information went no further.

While remaining neutral, the mediator gently helps each side form their offers of settlement and communicates them to the other party. Sometimes this entails restating a party’s position in a way to avoid unnecessary antagonism.

As information and offers are exchanged, parties converge on resolution. If everyone is unwilling to go one step further, and it seems resolution is close, the mediator may suggest a “mediator’s proposal.” This allows parties to settle while saving face and can reduce dissatisfaction within the attorney-client relationship.

Phase 3: Documenting the Agreement
We have a deal, and now everyone gets back together. Parties are encouraged to bring a draft agreement to the mediation. If they must return to their offices to hammer out the final document, before leaving the mediation everyone should sign a Memorandum of Understanding which recites the agreed-upon terms.

Putting words to paper can call parties’ attention to missing details. Now is the time to consider the What If’s.

Finally, review the timeline and commitments for wrapping up the loose ends. That typically includes court approval if required and paying the mediator.

How Much Does Mediation Cost?

You could pay $30,000 for a day with a retired state Supreme Court Justice. Or you could pay about a tenth of that amount for an effective mediator. When you’re ready to choose a mediator, check out the person’s bio (resume, CV) and request a copy of the fee schedule. A few mediators post their fees online, but usually you need to request a current fee schedule.

Who Pays?
In civil cases, the fee is typically split among the parties, though sometimes one side agrees to be the sole payer. In a typical workers compensation mediation involving only the Applicant and one Employer, the Employer pays the cost. If there are multiple parties or issues, such as a serious and willful claim or a third party claim for the same injury, the parties decide how the cost will be divided.

Holding Your Place
Some mediators, including WCMediator.com, charge an administrative fee which protects your choice of date. This fee covers all pre-mediation communications to set up the meeting. Payment confirms the parties are going forward. Some mediators charge as much as $1,000 for a cancellation within seven days of the reserved date.

Special Arrangements
Carve-outs are alternative workers’ compensation programs between employers and unions. Required mediation can be a feature of these programs. There is no cost to the injured worker to participate.

When a judge orders parties to mediate, they often benefit from a reduced-fee arrangement. Sometimes a court will provide free mediation to parties in the courthouse. Outside the courthouse, mediators on the court’s approved panel agree to abide by a fee schedule. This may get you a limited number of hours at no cost or at a reduced cost. Often when such a mediation is clearly progressing towards resolution and time runs out, parties choose to continue mediating at the full-fee rate.

Flat vs. Hourly
Some mediators charge by the hour, and some charge a flat fee for a half or full day mediation. Some mediators specify that in addition to the flat fee, hourly fees will be assessed if the mediation continues past the time allowance. One mediator quotes a “flat half-day fee” on his website which buys “1 hour preparation, 4 hours of session.”Don’t think you can book a half-day for a flat fee and simply go long. The mediator and other parties may have other time commitments.  If you use a full day of the mediator’s time, you will be charged for a full day.Clarify how charges for travel time and expense may be calculated. In addition to his hourly mediation fee, one Georgia mediator charges a flat $15,000 for travel within a five state area plus meal expense .

Features of a flat fee include predictability for the parties and payment up front to the mediator. Using an hourly fee structure assures you won’t pay for more time than you use. Workers compensation mediations are usually complex and take about five hours.

Bottom Line

At the end of the day, the bottom line may be about the same. Under either arrangement, most mediators do a lot of work without compensation, such as communicating with the parties in advance of the mediation. Additionally, if the case does not settle at mediation, mediators typically continue working with the parties by phone to reach resolution without additional charge. Unless you have submitted a human-size set of documents for review (not recommended), mediator preparation time is also free. If you are unsure, ask what the fee does and does not include and what services do not incur a charge.

If you don’t like the billing method on the mediator’s fee schedule, you can request an alternate quote that fits your comfort zone.

The real question is how much that claim will cost if you don’t settle. Mediation is highly effective and efficient in helping parties close claims, an excellent bargain compared to uncertain and expensive future litigation

When The Injured Worker Calls- Ethical Implications

I get calls at least once a month from represented injured workers who don’t know what is going on with their claims. Stop and think about that in light of the Rules of Professional Conduct.

Typically, in violation of existing rules, the AA has not communicated with the client. Sometimes the attorney has given the client false information. Recently an IW told me his lawyer said there was no such thing as mediation for workers’ compensation cases.

Many of these IW’s are reaching out directly to the employer’s counsel to try to resolve their issues. This puts the employer’s counsel in a difficult ethical position. New Rules 4.2 (represented person) and 4.3 (unrepresented person) lay out the restrictions on defense counsel for that communication.

Frustrated injured workers who want to resolve their claims are seeking information on the internet. That’s how they get to me.

I am not an advocate for anyone; I am a professional neutral. I have always made that role clear to callers. New Rule 2.4 requires mediators to inform unrepresented parties of the mediator’s neutrality. All I can do is assure the workers that I am available to mediate and to talk to their lawyers or adjusters about starting the process.

If you get a call from someone who wants to mediate, don’t brush off that inquiry. There is no charge to talk to me about whether mediation is right for your case. I’ll give you the information you need.