Alternative dispute resolution (ADR) tools such as mediation is gaining acceptance in workers’ compensation. This is due to the many benefits it provides and allows all interested stakeholders to have an active role in the process. It is also an important tool to reduce exposure in cases and allow the claims management team to concentrate their workload.
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“8 ‘Think Outside the Box’ Tactics to Settle Workers’ Comp Claims”
What is Alternative Dispute Resolution?
ADR is a non-judicial settlement process popularized in civil litigation claims that uses third parties to assist litigants to discuss the merits of their cases, evaluate the strengths and weaknesses and reach a resolution without going to hearing or trial. Attorneys have found the practice useful and brought this concept to workers’ compensation to resolve cases.
How Does It Work?
There are a number of different ADR processes in workers’ compensation. One of the most popular forms is mediation. In this undertaking, a neutral third party meets with each party either individually or together to discuss the merits of a claim. Other discussions revolve around the strength of an employee’s claim for benefits and the validity of defenses. Dialogue can also occur around the proper calculation of the employee’s average weekly wage, indemnity benefit exposure and need for future medical care and treatment, or other vocational rehabilitation services. Part of these discussions can include the closure of various future benefits, the payment of attorney’s fees and issues concerning Medicare Secondary Payer compliance.
The goal is to reach a settlement where everyone has a “win.”
Preparing for a Successful Mediation
A successful mediation starts with the selection of a mediator. Once this takes place, an agreeable time/location for the mediation needs to occur. There should also be an agreement on how long the mediation should take place.
All attorneys, members of the claim management team and the employee play an important role for a successful mediation.
- Defense attorneys: It is important to evaluate the dollar value of a workers’ compensation claim prior to mediation. This information should be communicated to the claims handler. It is important to discuss mediation expectations and receive settlement authority prior to the mediation.
- Claims handler: Attendance at the mediation is never required, but may be recommended in most instances. If the claim handler cannot attend, it is important to be available to discuss the case progress with the defense attorney and extend additional authority as needed.
- Petitioner Attorney: This attorney must also set realistic settlement expectations prior to mediation. The strength and weaknesses of the claim should be discussed and memorialized in a letter to the injured party. The submission of an initial settlement demand should occur at least one week before mediation.
- Injured Worker: Attendance at the mediation by this party is compulsory. This will allow the employee to be involved in the process. In most instances, the neutral mediator may also have questions for the employee while in the presence of their attorney.
Other Important Mediation Practice Pointers
Prior to any mediation, it is also important that both sides submit a cover letter to the mediator. This letter should be marked as confidential and outline several important points about the claim:
- Relevant background information on the claimant, the claims for workers’ compensation benefits and other legal issues;
- A brief statement concerning the actual work injury, treatment history and current medical status of the employee. Pertinent vocational rehabilitation information should be included depending on the nature of the claim. Medical and rehabilitation records can also be attached as part of the initial cover letter; and
- Information regarding prior settlement discussions, case valuations and settlement expectations.
Conclusions
ADR techniques such as mediation play an important role in settling workers’ compensation claims. While it requires preparing by all parties, it can be used to resolve all types of cases and reach cost-saving results.
Author Michael Stack, Principal, COMPClub, Amaxx LLC. He is an expert in workers compensation cost containment systems and helps employers reduce their work comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is founder of COMPClub, an exclusive member training program on workers compensation cost containment best practices. Through these platforms he is in the trenches on a working together with clients to implement and define best practices, which allows him to continuously be at the forefront of innovation and thought leadership in workers’ compensation cost containment. Contact: mstack@reduceyourworkerscomp.com.
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