NO DEAL - Why You Would Not Want to Settle a Workers Comp Claim

When litigation comes around, the first thought may be to try and settle the claim as soon as possible. After all, for every day that goes by with a claim in litigation, wages owed accrue and legal costs add up. Depending on the claim, if it is higher exposure with a higher wage earner, it is worthwhile to try and defend the claim should it be deemed not work related or if there is another dispute. On the other end of the spectrum, if the claim is of smaller exposure then it is probably better to wrap it up before the costs to defend the claim outweigh the costs to dispute and the file. It may also be the other way around, which proves that there is no blueprint to handling a litigated claim.

Below we discuss a few factors on why to not settle a claim.

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The claim was denied from the very beginning

Some cases are denied right from the start. When fighting a claim early on, whether it is due to a statutory defense, or by other means that deem the case not work related, it is usually a good idea to stick to your guns. The consequence if you decide to roll over and accept the claim after initial denial can be costly. Sometimes surgeries fail, workers are unmotivated to return to work, or key evidence may be discovered later that leads to the claim being disputed or suspended. This just sends the case back in litigation. Whatever the case may be, if there was enough tangible evidence to deny the case upon receipt, do what is possible to maintain that denial and try to shift the injured worker to file for short term disability or to medically treat under their health insurance. If they refuse to do so, then let the legal wheels turn. As long as the claim is denied early on properly, there should be enough ammo to uphold the denial.

The worker is no longer an employee of the company

A lot of litigation includes employers being added to an existing claim for another employer involved in litigation. Injured workers that attempt to file for workers comp due to cumulative injury usually add all of their employers into their Petition for Hearing. This is because they are trying to show that an extensive work history is what ead to the injury. Just because the employer is added in to existing litigation does not mean that the company has to automatically start paying on the claim. In fact, if the worker was a short term employee, it actually can help the defense to not have to contribute anything to the treatment or lost wages. The argument can be made that the other employers with longer tenure with this employee are the ones responsible. This leaves you possibly contributing a nominal amount towards a global settlement between all of the employers.

If a Petition in the mail is received, do not panic! Instead refer the claim to the Carrier, and the Carrier will assign legal counsel. The important thing to remember is if a Petition is received is to send it to the Carrier right away. If there is indeed a delay, there may be fines or penalties that can hinder the defense and cost a significant amount of monies.

The claimant has unrealistic demands for settlement

Sometimes the injured worker feels a sense of entitlement and turns to their employer as the responsible party. If you were able to deny or suspend a claim, that means there should be enough evidence to defend it. Even when trying to be realistic with a fair settlement offer, this may not be what the injured worker is looking for in the long run. If this person is offered $10,000 and the counter demand is $100,000, then consider that a significant gap in negotiations. It is doubtful that this will resolve itself on its own, so it is best to involve litigation and let the Judge figure out what is fair. Rarely, if ever, should an unjustified settlement go forward. In extreme cases like this, even plaintiff attorneys’ can do little to talk reason into the claimant. Let the Judge help in the defense of the claim.

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The case has little to no value due to wage coordination through Pension or Social Security payments or near-future payments.

When an injured worker turns 65, or nears turning 65, the value of the claim can drop considerably. In most states this is due to the fact that the Pension or Social Security payments will take over as being primary income, and the workers compensation pay is considered secondary. Once a claimant enters age 63 or 64, plaintiff counsel will start to push to settle before the value of the claim drops. It is important to recalculate current and future exposure. If a claim drags on, before you know it, the injured worker is retirement age. Workers are staying in the workforce longer than ever, and this scenario is becoming more and more popular.

Do not be fooled by the worker having a sudden change of heart. Chances are if the worker has been slow to negotiate in the past and all of the sudden tries to push a settlement figure, then something is amiss. It can certainly happen that someone has a change of heart. However, it is more likely due to the claimant finding out that once an age milestone is hit such as 65 or 66, their case drops considerably in value. It is always good practice to be sure to make recalculations at least a few times per year, and reflect those changes in the offers to settle.

Summary

No one likes to be involved in litigation, other than attorneys. As an employer, open ongoing litigation is a question mark of unknown value, and every day that goes by the values increases. It is good practice to try and limit exposure whenever possible, but there are cases where it is in your best interest to let the litigation run its course. And hopefully when it is all said and done, a decision is made that benefits all parties fairly.

Author Rebecca Shafer, JD, President of Amaxx Risk Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker, and 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. She is the author of the #1 selling book on cost containment, Workers Compensation Management Program: Reduce Costs 20% to 50%. Contact: RShafer@ReduceYourWorkersComp.com.

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. Contact: Mstack@ReduceYourWorkersComp.com.

WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
MODIFIED DUTY CALCULATOR: www.LowerWC.com/transitional-duty-cost-calculator.php

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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