Tag Archive for: settlement

Tactics vs. Strategy

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Tactics are steps you take to win short term goals on the way to achieving your strategic objective. Sometimes tactical skirmishes distract workers compensation professionals from pursuit of their strategic goal. On the other hand, you can’t reach your strategic objective without well-thought-out tactics.

The Disputed Doctor’s Deposition
Take the case where an attorney insisted that the deposition of the doctor who provided the most recent report had to precede settlement discussions. The problem was that by the time that could happen, all the permanent disability would be paid out. After providing for future medical expense, that would leave no cash for the applicant or the attorney fees, jeopardizing the chance of a future Compromise & Release. When I pointed this out, the parties realized that a tactical victory could prevent achieving the strategic goal. The case C&R’d.

The Tale of the Two Interpreters
I arrived at a recent mediation to find the attorneys at loggerheads because both had ordered an interpreter. Both interpreters were court-certified. I convinced one of the attorneys that agreeing to dismiss the interpreter that attorney’s office had ordered would create a negotiating advantage. In the give-and-take of negotiation, opposing counsel might well feel beholden to make the next concession. Conceding the interpreter battle demonstrated the attorney’s reasonableness and set the stage for a productive mediation. The case C&R’d.

A litigation plan should be more than a checklist. Every tactic should further the effort to achieve the strategic goal.

Understanding Insurance Reserves

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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.

Get “In Pro Per” Claims Off The Books

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You know the claims I’m talking about: the really old claims where the Injured Worker is representing himself/herself. Let’s call them “in pro per”s.  Active in pro pers file one court paper after another, causing the insurer or self-insured employer to fund what seems like a never-ending stream of money to send a representative to the Board. The in pro per’s papers may not state a recognizable claim. Pressed for time, the Information and Assistance officer may give the in pro per short shrift.  Defense attorneys with varying degrees of patience usually do, too.

But what if what the parties really need is a sort of an interpreter, a mediator.

Mediating an in pro per’s claim demonstrates respect for the in pro per.  The feeling of lack of respect and inability to get heard is often what drives the in pro per to keep summoning the employer to court.

“Why would I waste time and money on a worthless claim?” you may ask. Because you’re spending time and money now, and mediation is a way to end that endless cycle.

Sometimes the in pro per has a bona fide complaint, but without professional assistance has not been able to communicate it. The neutral mediator is often able to re-state the concern in a way the parties can address and put past them. The mediator can help each party see the other side’s point of view.

Are You A Rule-Breaker?

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Workers Compensation professionals have to know a lot: the California Labor Code, Title 8 regulations, state and federal rules governing health care entitlements. To make things even harder, the rules of this highly-governed road keep changing. Workers Compensation may be the most intricate, heavily regulated area of practice. These rules can constrain the parties’ ability to negotiate satisfactory settlements.

You only have to know one rule about mediation: everything that happens within the mediation, including pre-mediation and follow-up communication, is confidential.  You don’t have to share your mediation brief with the other side if you don’t want to. In mediation, in contrast to WCAB practice or arbitration, you can get creative. You can break the rules.

 Mediated agreements can include provisions a WCJ could never order, such as agreements relating to actions in other forums.  You can settle claims which haven’t been made yet.  Parties can use creative solutions like structured settlements and medical care trusts. The mediator can help you brainstorm.

As mediator, I help parties settle cases.  There are no rulings in mediation, so no one loses.  Go ahead, let’s break some rules– and settle the case.

HOW POLITICS DRIVES UP THE COST OF YOUR MSA

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For President George W. Bush and Congress to get Medicare Part D drug coverage passed in 2003, they had to make significant concessions to big business, including the drug industry. One of the law’s provisions forbids the government from setting rules for negotiating better drug prices. The “noninterference” section says:

In order to promote competition . . . the Secretary [of Health and Human Services]:
(1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP [Prescription Drug Plan] sponsors; and
(2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.
42 USC 1395w-111(i)

The result according to a new policy brief from the Carlton University School of Public Policy and Administration is that Medicare Part D plans pay on average 73% more than Medicaid and 80% more than the Veterans Health Administration for brand-name drugs. If Part D plans could negotiate drug costs the way Medicaid and the VA do, savings could reach $16 billion a year.

The study shows that the average per capita expenditure by Americans for pharmaceuticals is more than double the average of 32 other industrialized nations. Contrary to their publicity, American drug companies do not devote the wealth gained from Part D on new research initiatives. Half of new medical research initiatives come from non-profit entities such as universities. Rather, drug companies have spent their millions in recent years on increased lobbying. If drugs costs decreased, Medicare beneficiaries could expect Part D premiums to also decrease.

Although private insurers pay Part D medical expenses, workers compensation professionals are painfully aware that anticipated Part D-covered expenses must be included in a Medicare Set-Aside. The increased use and rising cost of pharmaceuticals has torpedoed many a proposed workers compensation buy-out. If the purpose of an MSA is to protect Medicare, why are Part D expenses which are paid by private insurers included in the allocation anyway?

Casualty insurance companies and the American Association for Justice are big political players. With the 2016 election cycle coming up, now would seem to be the time for their lobbyists to twist some arms to modify the noninterference provision for the benefit of all Americans.

WHAT TO EXPECT AT MEDIATION

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Mediation remains unfamiliar to most California Workers Compensation professionals. To succeed, you– and your client– need to know what to expect. While all mediations share some similarities, each mediator has a unique style. Here’s what you can expect at one of my mediations.
We usually start in joint session. The discussion might be limited to the logistical: introductions, bathrooms, lunch, etc.  People get to look each other in the eye.The first real step will be for the Applicant to tell how the injury happened and how things are going now. The purpose of this is to allow catharsis and to build empathy and trust between the injured worker and the mediator. Usually this is in a separate session known as a “caucus,” but if the defense needs to hear this information or wants to ask questions, it might happen while the parties are still in joint session. If the defense has heard the Applicant’s story many times, I may have Applicant do the venting in caucus.

I usually start negotiations with the Applicant’s side. If there were prior offers and demands, I will review those to make sure we are all at the same starting point. Then comes exploring the positions which support those offers and demands. The parties’ briefs should explain the issues; the more complicated the case, the more important the briefs. Defining issues for the mediator in the brief makes for a more efficient mediation. But the briefs do not limit the number of issues; sometimes new issues emerge in mediation.

I might speak with one or more attorneys outside the hearing of their clients, for example, to discuss a point of law.  All parties might reconvene to brainstorm solutions to an issue.  If parties are disrespectful of one another, I will stop a joint session.
In the give and take of numbers, issues will be discussed and swapped.  Cases do not settle without compromise.  Parties should expect give and take to finalize the settlement terms.
Participants may be surprised by the amount of time spent in caucus with the other side.  As mediator, my job is to give all parties adequate time to express their concerns.   While there are certainly exceptions, a typical workers compensation mediation lasts three to five hours.

5 BEST BENEFITS OF WORKERS COMPENSATION MEDIATION

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venn settlement colors
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.

Settlement Ethics

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Ethics are the moral principles that govern behavior. Every workers compensation professional has ethical rules to follow. For attorneys, these are spelled out in Codes of Professional Responsibility, statutes and sometimes case law. Despite some differences among the states, the basic principles governing settlement ethics are mostly the same

Duty to Communicate to the Client
Lawyers must keep clients reasonably informed about significant developments (CA Rule of Professional Conduct 3-500). CA Rule 3-510 tells lawyers to promptly communicate the specifics of a written settlement offer. In other words, a California lawyer need only pass along a verbal settlement offer if the lawyer deems the offer significant. The lesson for negotiators is to make all settlement offers in writing to ensure the client learns about them. The bonus: a written offer avoids confusion about the offer’s terms.

In an unpublished Texas case, Grillo v. Harris Hospital, a former client sued for legal malpractice damages for the alleged failure to communicate a settlement offer. The suit claimed that the attorney’s failure to convey a structured settlement offer resulted in the plaintiff’s loss of public benefits worth millions of dollars. The law firm paid a $1.6M settlement.

Duty of Competence
A lawyer must be competent, defined as having the diligence, learning and skill, and mental, emotional and physical ability to practice (CA Rule of Professional Conduct 3-110). That means the lawyer should be conversant with all the factors impacting settlement, including access to public benefits and tax. If the lawyer is not expert in a subject, the lawyer can notify the client to obtain such an expert.

Duty of Honesty
Lawyers must act honestly in litigation, including settlement negotiations. California Business and Professions Code Section 6068(d) requires an attorney to “employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth…“ Business & Professions Code 6128 imposes misdemeanor criminal liability on a lawyer who intends “to deceive the court or any party.” The maximum penalty is a six-month jail sentence, a fine up to $2,500 or both.

Why Mediation Is Like Sex

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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

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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.