Follow these simple suggestions and you will have better success in mediations:
Defendant should have the person who controls the money present and participating. Not having full settlement authority is the single most important reason mediations do not result in resolution.
Applicant should have key advisers such as a spouse or child present as well. Applicant may be called upon to make decisions with profound personal consequences. Having an adviser present helps make the right decision.
Defendant should have up-to-date and accurate information about TD (including dates and amounts), PDAs and earnings. If there is a claim for overpayment of TD, be prepared to discuss dates and amounts as well as the basis for the claim.
Applicant needs to understand that in most cases PDAs will be deducted from the settlement amount, and that applicant’s attorney has earned a fee on the PDAs as well as for any “new money.” If applicant challenges defendant’s calculation of earnings for indemnity benefits, be prepared to provide records of overtime, wages in the twelve months preceding the injury, a contract showing expected future wages or other documents that substantiate the claim of higher earnings.
Defendant shouldn’t claim that all of applicant’s covered future medical needs are subsumed in the MSA and limit the settlement offer accordingly. That wastes everyone’s time. If applicant is claiming extensive future medical needs outside the MSA, be prepared to justify them with medical reports or a life-care plan documenting the basis for the claim
Applicant needs to be educated about what can and cannot be achieved through workers’ compensation. Someone who used to earn $80,000 per year has to understand that WC doesn’t cover lost wages or pain and suffering as does the civil tort system.
BE FAMILIAR WITH SETTLEMENT OPTIONS BEFORE THE MEDIATION
Make sure applicant understands the difference between a C&R and a stipulated award. At least be prepared to discuss a settlement that includes resolution of future medical as defendant may make an attractive proposal that may have advantages especially if applicant has alternate sources for medical. In that mediation offers options for creativity that do not exist in an award, in a large value case, be familiar with structured settlement options and consider having a structured settlement professional attend.
LET THE MEDIATOR KNOW WHAT YOU WANT EARLY ON
Go into the mediation with a good idea of what you want. Are you looking for a C&R? Will defendant require a resignation as part of any deal? If so, don’t wait till you’re writing up the settlement agreement to spring it on the applicant and the mediator. If applicant needs to have EDD reimbursed so that future EDD benefits may be obtained, bring that up early. Does the employer need to do something to facilitate COBRA or some other benefit? The same goes for self-procured medical expenses and mileage. No one wants the process to get derailed at the end. Each party needs to express what they need for a complete deal as early as possible.
COLASDefendant has to understand that the so-called COLA adjustment for life-pension and 100% PD cases in Labor Code section 4659 is based on increases in the state average weekly wage. It is not, as insurance company representatives continue to mistakenly argue, tied directly to inflation. There may be low inflation, but still a high SAWW—especially if trends continue to increase the minimum wage substantially. Also, the SAWW calculation cannot go down—only up under the statutory scheme.
Applicant also needs to understand that even though a case can be made for a 4.6% SAWW modifier based on historical data, no carrier is going to pay that as part of a settlement. A defendant, like the applicant, doesn’t have to settle. It can pay out an award on a weekly basis. If applicant wants a lump sum settlement, it is necessary to entice the carrier into parting with its money by incentivizing the company with compromise on the COLA/SAWW adjustment, being mindful of what the carrier’s return on investment is likely to be if simply keeps the money and pays an award.
Come to the mediation with an MSA prepared by a reputable vendor—even if it’s not approved by CMS. The mediation is not the time to get Medicare releases and start the MSA process. In its memorandum of May 11, 2011, CMS states: “Submission of a WCMSA to CMS for review and approval is a recommended process. There are no statutory or regulatory provisions requiring that a WCMSA be submitted to CMS for review.”
Though not required, some parties still prefer having CMS approval. Even if CMS approval is not sought, the interests of Medicare still need to included and an MSA employed. Your mediation has a much greater chance of success if you know going into the mediation what the value of the MSA is. That helps the defendant assess what the settlement cost will be and the applicant know what he or she will be netting.
Note: an MSA may also be structured which may present advantages to all parties.
BE PREPARED WITH THE PAPERWORK
Defendant should come to the mediation with a draft settlement. If the case settles, you can get necessary signatures and witnesses on the spot. Delay risks a change of heart. Applicant should also come to the mediation having been advised that at the end of the day, settlement papers may be available for signature. If all goes well, the settlement can be present to a WCALJ for prompt approval on a walk-through basis.
© 2015 by Robert G. Heywood
Robert G. Heywood is a certified specialist in worker’s compensation and works exclusively as a mediator and arbitrator in worker’s compensation and related matters. His office is in Oakland, and he handles cases throughout California He can be reached at firstname.lastname@example.org.