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You are here: Home / Claims Resolution and Settlement / Settling WC Claims / Tighten Up Your Settlement Agreements

Tighten Up Your Settlement Agreements

February 22, 2023 By //  by Senior Editor

Settling a workers’ compensation claim is hard work. Once you have accomplished it, the agreement needs to be reduced to writing – commonly referred to as a settlement agreement or stipulation for settlement. This process requires care, especially when the claim handler is working without the assistance of legal counsel. Now is the time to recognize this can be a minefield that will create problems and issues. Addressing these issues before they become a problem will promote better agreements and reduce needless future litigation.

Reduce the Agreement to a Document

Workers’ compensation claims are a creation of statutes. Statutes governing workers’ compensation claims have specific requirements that need to be followed. Failure to follow these precise statutory requirements can result in delay and money being paid incorrectly. Now is the time to be aware of the correct processes.

  • Understand the requirements of approval by a compensation judge or industrial commission. A review of the jurisdictions workers’ compensation act should occur if proceeding without an attorney and understanding the form and content required under the law.

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“8 ‘Think Outside the Box’ Tactics to Settle Workers’ Comp Claims”

  • Avoid delays with rescission periods. Some statutes allow for the parties to back out of a settlement. If monies are paid before this time frame, it may be difficult or impossible to recoup them paid under an agreement. Care should also be used in global settlements involving voluntary employment resignation.
  • Request a status conference if there is a delay in the settlement. These conferences can usually be requested where a compensation judge will review the proposed terms and ask questions of the parties as to why there is a delay. Common delays include dealing with intervenors and Medicare compliance issues.

A claim handler needs to be proactive when resolving workers’ compensation disputes. Prompt resolution means closing another file.

Think Outside the Box!

Claims where the employee may require future medical care and treatment present many problems when settling a workers’ compensation claim. This can include the consideration of a Medicare Set-aside, the need for future surgery, or ensuring all interested parties have received notice of their rights to intervene. Different types of settlements can be used as tools to address these situations.

  • Complete settlements: This is the gold standard of settlements. All past, present, and future benefits, including future medical care, are closed out. When settling a claim under this type of agreement, it is critical to consider Medicare’s interests and ensure all interested parties have been given a chance to intervene.
  • Partial Settlements: This type of settlement is often used when parties want to close out entitlement to all past, present, and future indemnity benefits but leave open future medical care for the employee. The benefit of this is that it would not shift the burden to Medicare. On the other hand, there is still exposure for future medical care that may be reasonable and necessary.
  • To-Date Settlements: This is a settlement where all past and present workers’ compensation benefits are closed. Future entitlement to medical and indemnity benefits remain open. These are settlements best used when the injured employee has some wage loss, permanency, and/or medical benefits that are in dispute. It “cleans things up” and allows the parties to consider additional agreements closing out benefits.

Understand what you are closing out and what benefits remain open when using these settlements. Failure to understand it can leave the claim management team exposed.

Issues Relate to Stipulation Drafting

Never forget that basic rules of contract construction apply when it comes to settlement agreements in workers’ compensation claims. This means that the stipulation or settlement agreement will be constructed against the party who drafted it.

Members of the claim management team should pause when attempting this on their own. They should also highly scrutinize something drafted by the attorney for the injured employee. In situations like this, it may be effective and reduce future exposure to retain defense counsel to review the agreement and draft all documents.

Build Your Settlement Team

Workers’ compensation stakeholders are not looking for more tasks to complete in the claims management process. Building out and defining responsibilities of each settlement team member will allow each individual to accomplish more in less time.

FREE DOWNLOAD: “8 ‘Think Outside the Box’ Tactics to Settle Workers’ Comp Claims”

Claims Adjuster

The claims adjuster is the backbone of the claims handling team. The adjuster leverages the expertise of various settlement team members to ease their workload and settle claims more effectively.

Employer

The employer owns the relationship with the injured worker and is an integral part of maintaining communication, rapport, and a connection to the workplace. The employer-employee relationship will also provide insight into the desires, hopes, and dreams of the injured worker to help create a win-win settlement plan.

Settlement Advisor

A settlement advisor acts as a resource to the claim’s adjuster, risk manager, and attorney in the settlement process. They help the parties understand the settlement options available, the needs of both sides, and offer negotiation tools to help bridge the gap for a successful settlement.

Medicare Set-Aside Partner

A Medicare Set-Aside partner manages compliance with the Medicare Secondary Payer act. Leveraging the expertise of an MSA provider saves time and cost in the settlement process.

Professional Administrator

Professional administration is a support system for the injured worker AFTER the claim has settled. This service can often help bridge the gap and alleviate fears and concerns that prevent a claim from settling.

Defense Attorney

The defense attorney relationship is a key team member in facilitating settlement. Your attorney should be a fiduciary, meaning he treats you and your interests better than his own.

Conclusions

Countless problems can arise with claim handlers resolving claims without the assistance of legal counsel. When resolving something without an attorney, it is essential to remember that the statute controls the process of settling a dispute correctly. It is also vital to determine the agreement’s objective and where the settlement type is the correct approach. Consideration of all interested parties is the final step toward a successful agreement. Now is the time to consider these matters.

Michael Stack, CEO of Amaxx LLC, is an expert workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employer and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: https://blog.reduceyourworkerscomp.com/

©2023 Amaxx LLC. All rights reserved under International Copyright Law.

Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.

FREE DOWNLOAD: “8 ‘Think Outside the Box’ Tactics to Settle Workers’ Comp Claims”

Filed Under: Settling WC Claims

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