It goes without saying that everyone is ready for 2020 to be over. Before we start thinking about the new year, it should be time to think about settling legacy workers’ compensation cases and other claims that are likely ready for settlement. Now is the time to take steps to settle workers’ compensation claims, so you can be ready for the new year.
Benefits of Settling Work Comp Cases
Settling cases can reduce workers’ compensation program costs, and make your program more efficient. Here are some reasons why settling workers’ compensation files can benefit your program:
- Settling claims reduces administrative overhead and allows members of the claim team to focus on more important cases;
- Legacy claims account for a significant portion of reserves in workers’ compensation programs. Settling these cases can allow for claim teams to settle other cases; and
- Settling even the indemnity portion of a workers’ compensation claim can have savings. Countless studies indicate an injured employee will significantly reduce the frequency of their medical care following a settlement (including only the indemnity portion of their claim), and nearly cease after two years.
Now is the time to consider settlement in your workers’ compensation program.
Other Factors to Consider
There are other factors to consider when settling a workers’ compensation claim. These factors include:
- Structured Settlements: A structured settlement is a financial tool that allows the employer and insurer to settle a case for the “full amount,” but pay less money based on the cost of the annuity contract. There are countless structured settlement brokers available to assist claim professionals with these products. Their services are technically “free,” as they receive a commission based on the purchase of the contract from a life insurance carrier.
- Medicare Set-aside: A Medicare Set-aside is a tool used to consider Medicare’s interests, and protect the parties from future adverse action. These allocations are provided by service providers who provide full services related to Medicare compliance.
- Social Security Offset: Offsets in some jurisdictions allow parties to reduce the amount of future workers’ compensation benefits paid based upon a coordination with the injured employee’s Social Security benefits.
- Professional Administration: There is a great value-add to any settlement when the part of the agreement includes paying for professional administration of the Medicare Set-aside. Getting a professional administrator involved, and making sure it’s the right one, extends advocacy-based claims efforts beyond the claim to make sure the injured worker is taken care of for life.
Time to Take the Next Steps
Members of the claim management team need to have a good grasp on their files when preparing for settlement. This includes understanding the strengths and weaknesses of their settlement position, and ensuring that reserves are properly set. A careful review of legacy claims should include looking for files that have gaps in medical care or the medical care requested is becoming sporadic.
Once claims are identified, they should be reviewed to determine the best strategy. Items to consider should include whether the employee is represented by counsel or any cautionary markers from the past that may impede settlement. Initiating settlement may include:
- Coordinating with defense counsel. This is not always required, and may sometimes draw unnecessary concern from the employee. This may be an opportunity to work informally with a defense attorney – not necessarily retaining them on the file.
- Looking to alternative dispute resolution methods such as mediation. Private or government mediators have flexibility in their schedules and generally make themselves as available as possible toward the end of the year when others may be seeking to resolve their disputes.
- Forcing settlement by initiating an independent medical examination (IME). Claim files that linger may be allowing employees to continue to receive unnecessary medical care and treatment. While an insurance carrier should never abuse this process, the IME can be used as a tool to encourage settlement.
Get Settlement Team Involved Early
It is essential to get your settlement team and other interested stakeholders together early on in the process. This includes the defense attorney, MSA Vendor, Structure Settlement broker, and Professional Administrator. It is important to seek to leverage the expertise of everyone to address common concerns such as agreeing on a total settlement value, overcoming barriers, and ensuring reserves are correctly set. Never be afraid to pick up the telephone, or send an email to initiate the settlement process.
Now is the time to consider settlement. Proactive members of the claim management team can get ready for a fresh start in the new year by taking steps now. This will produce efficiency with workers’ compensation programs and free up reserves to settle more troublesome cases.
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.
Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/
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