Members of the claim management team need to focus on settling workers’ compensation cases. This includes identifying claims that are ripe for settlement, engage members of the claim management team via roundtable, and negotiating a reasonable settlement. When done right, it can help your claim team “move on up” the settlement ladder.
First Step – Identify Claims for Settlement
The identification of claims for settlement should not be a random process. Instead, it should be a focused approach that selects the right cases for settlement. This should be a focused process where members of the claim management team look for selected criteria. Important factors to consider should include:
- Instances where the employee is near, or at maximum medical improvement. This is the best time to consider a settlement. The employee is nearing a healing plateau where future medical care will no longer be required, or will only include maintenance medical care. This usually signals a time when wage loss benefits can be terminated, which motivates a person to settle their workers’ compensation claim.
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- Cases where the employee has not received medical care and treatment for a period of time. An employee in this position is likely at maximum medical improvement, but a formal opinion has not been given. If this is the case, it may be time to schedule an independent medical examination or contact the treating doctor regarding the employee’s status.
- Legacy claims where the injured employee is receiving consistent medical services over a period of year. Cases like this can present an opportunity to settle by using a Medicare Set-aside, or medical allocation to project the employee’s future medical care, and including that sum of money into a settlement offer. Settlement can be approached as an opportunity for the employee to “opt-out” of the workers’ compensation system, and have more control over their medical care.
Second Step – Use a Roundtable to Discuss Strategy
Every settlement negotiation should have a strategy. Using a roundtable with other members of the claim management team, including the employer, adjuster, a settlement advisor, MSA vendor, and defense attorney. This discussion is an excellent tool to use when it comes to a review of a strengths and weaknesses of a defense, develop a strategy, and determine reserve settings for a claim. These sessions can also give an added perspective on how a settlement should be approached.
When developing a strategy, it is important to take into consideration the following issues:
- Review of the claim regarding issues in dispute, and whether it involves a denial of primary liability;
- Analysis of the strengths and weaknesses of the issues in dispute, if any;
- Other factors present in the case such as whether it will include a global release that will require the employee to resign his or her employment from the employer. There is generally a “premium” to be paid when the employee will no longer be employed post-settlement. The employer should be consulted on these matters in advance; and
- Use of various settlement tools such as mediation, need for a Medicare Set-aside, and involvement of a structured settlement broker.
Third Step – Finding a Reasonable Settlement Amount
Claim analysis starts following a work injury. It requires careful evaluation and constant re-evaluation. This includes a review of the nature and extent of the work injury, the medical care the employee received in the past, and what they will likely receive in the future, the ability of the employee to return to work, and do so without a wage loss, and other intangibles. These intangibles include:
- The claim history of the employee – are they an “experienced” claimant with prior work injuries;
- Do they have any pre-existing medical conditions that complicate a full recovery;
- Whether the employee has been receptive to return-to-work efforts; and
- Other financial pressures and issues the employee may experience prior to and during their claim.
It is also important to understand who their attorney is, and whether that person has any tendencies toward settlement or litigation. The bottom line is that taking steps to analyze a claim early and often pays dividends.
Reaching the Top – Initiating Settlement Negotiations
The final step is taking the time to initiate a settlement. This can be informal discussions or using mediation to resolve the dispute. The worst thing the employee can say is, “No.”
Successful settlement of any workers’ compensation claim requires engagement by members of the claim management team to review cases. It is a process that includes careful review, strategy, and engagement. It also requires claim handlers to be proactive in taking steps, and picking up the phone to see if the employee is ready to resolve their dispute.
Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a 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 the founder & lead trainer of Amaxx Workers’ Comp Training Center , which offers the Certified Master of Workers’ Compensation national designation.
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