Obtaining the fair and reasonable resolution of the workers compensation claim often involves an element of negotiations between the work comp adjuster and the employee or the employee’s attorney [for the purpose of this blog, the focus will be on negotiations with the employee’s attorney]. While a few states still use a permanency rating combined with the average weekly wage to determine the settlement value of a work comp claim, most states/jurisdictions have evolved into a negotiated settlement of the work comp claim.
The primary responsibility of all work comp adjusters is the fair and reasonable settlement of claims. Throughout the course of the claim, the file disposition/settlement should be addressed in every action plan of the adjuster. Every contact with the employee’s attorney should include efforts to move the file toward conclusion.
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The settlement negotiations with the employee’s attorney start with the first notice of representation by the attorney. The adjuster should acknowledge the attorney’s letter of representation with the adjuster’s own letter advising the adjuster looks forward to working with the attorney to be sure the employee receives all appropriate medical care and any rehabilitation needed to return the employee to full employment with the employer. The purpose in sending this letter is to establish the adjuster as the one controlling the work comp claim, not the employee’s attorney.
The settlement negotiations will be impacted by how the adjuster handles the claim. In the states where the employer selects the medical provider, the work comp adjuster should monitor the medical treatment and make timely inquiries with the medical provider(s) on the employee’s ability to return to work either full duty or modified duty.
In the states where the employee selects the medical provider, the adjuster also needs to make timely inquiries about the employee’s ability to return to work either full duty or modified duty. If the medical provider is non-cooperative with the adjuster on arranging for the employee to return to work, the adjuster needs to use peer reviews, independent medical examinations and any other tools at her/his disposal to insure the employee returns to work as soon as the employee is able.
The work comp adjuster should be inquiring about the employee’s medical recovery with every contact with the treating physician’s office or with the employee’s attorney. If the injury justifies it, the use of a nurse case manager to monitor and control the medical care should be done. By close monitoring of the progress of the claim, the adjuster will keep the claim from being inflated unnecessarily.
Every step to assist the employee in medical recovery and returning to work will impact the overall disability rating given when the employee reaches maximum medical improvement. By asserting influence on the return to work and the overall disability rating, the adjuster is lowering the initial settlement demand made by the employee’s attorney and is lowering the final settlement value.
Once the work comp claim has reached the point where the employee is ready to settle the claim, the adjuster should create a settlement negotiations action plan. Any claim that warrants a settlement offer should have a settlement range that will be a part of the negotiation strategy. The action plan should outline what the adjuster believes the settlement value or settlement range of the claim is and how the adjuster plans to reach that value in the settlement negotiations. If the settlement range is above the adjuster’s authority to settle the claim, the adjuster should obtain settlement authority from the appropriate party prior to the start of any settlement negotiations.
A mistake often made by work comp adjusters is to make a settlement offer before any settlement demand is received. While the adjuster may feel her/his settlement evaluation is correct, whatever the amount offered, the employee’s attorney will negotiate up from that amount. It is better to let the employee’s attorney make his settlement proposal and negotiate down from that amount.
After the employee’s attorney has made his initial settlement demand, the adjuster should evaluate how reasonable or unreasonable the employee’s attorney is in his settlement demand. Depending on where the attorney’s demand is in relation to the settlement range established by the adjuster, the adjuster’s settlement offer should be at least as far below the settlement range’s midpoint as the attorney’s demand was above the midpoint of the adjuster’s settlement range. With this approach the adjuster can raise the settlement offers to match the attorney’s drops in settlement demands until the settlement negotiations reach a conclusion within the settlement range established by the adjuster prior to the start of the negotiations.
In some settlement negotiations the employee’s attorney will stop negotiating or state they have reached their bottom offer. This is often a ploy to get the adjusters to bid against themselves by getting the adjusters to raise their settlement offer more than once without the attorney lowering demands. The purpose of this tactic is for the attorney to reach a higher settlement figure than the case might justify. Of course this tactic can also be used by the adjuster. The adjuster can advise she/he has reached her/his top settlement offer. The employee’s attorney may decide to accept the adjuster’s “top offer” or at least lower their settlement demand in an effort to continue the settlement negotiations.
The employee’s attorney will have discussed the settlement value of the claim with the employee prior to entering settlement negotiations. A favor tactic of many attorney’s is to say they believe the adjuster’s offer is too low, but will discuss the matter with the employee and get back with the adjuster. When the attorney calls the adjuster back, the offer is too low, but the employee is anxious to settle and they will consider taking such and such amount, higher than the offer made. Again, this is a settlement tactic to get the adjuster to raise the settlement offer.
The adjuster can use the tactic of telling the employee’s attorney that the settlement demand by the attorney is too high, but the adjuster will discuss it with the claims manager, the self-insurer or whoever. When the adjuster recontacts the employee’s attorney, the adjuster will advise the attorney that the demand is too high, but in interest of getting the claim settled, the settlement offer is increased to a higher number than the prior offer.
A settlement tactic used by some attorneys when the negotiations are not going the way they want, is to tell the adjuster that the employee has had a relapse or his condition is worsening and send the employee back to the treating physician for medical treatment. The adjuster should resist this effort to force a higher settlement offer. The adjuster should immediately arrange for an independent medical examination of the employee to determine if there is really any deterioration in the employee’s condition. If the employee’s condition has truly worsened, the adjuster should reevaluate the settlement range. If not, the adjuster should resist this effort to force a higher settlement.
In summary, regardless of what the employee’s attorney says or does, the adjuster is responsible for obtaining a fair and reasonable settlement of the work comp claim. The adjuster should approach the settlement value from the low side at the same pace the employee’s attorney approaches the settlement value from the high side. By taking this incremental approach, the work comp adjuster should negotiate a settlement that is fair to both the employee and the employer.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. See www.LowerWC.com for more information. Contact: [email protected] or 860-553-6604.
WORK COMP CALCULATOR: http://www.LowerWC.com/calculator.php
MODIFIED DUTY CALCULATOR: http://www.LowerWC.com/transitional-duty-cost-calculator.php
WC GROUP: http://www.linkedin.com/groups?homeNewMember=&gid=1922050/
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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