litigation management: negotiations, settlements, judging case value & documenting the agreement...

 Litigation Management:

Negotiations, Settlements,

Judging Case Value &

Documenting the Agreement

Presented by:Thomas F. Coleman, Esq.

Determine Case Value

• Know Applicable Law – – Law in effect on date of injury controls (Joyce v. Lewis Bolt &

Nut Co., 412 N.W.2d 304 [Minn. 1987])

• Temporary Total Disability – DOI pre-October 1, 1995: no cap– DOI pre-October 1, 1995 to September 30, 2008: 104/week

cap– DOI on/after October 1, 2008: 130/week cap

 Temporary Partial Disability–  DOI pre-October 1, 1992: no cap–  DOI on/after October 1, 1992: 225-450/week

Determine Case Value (cont.)

• Permanent Total Disability

– Retirement Presumption• DOI prior to 1/1/84 – none

• DOI 1/1/84 to 9/30/92 – presumed retired if receiving social security old age or retirement benefits (rebuttable)

• DOI 10/1/92 to 9/30/95 – none

• DOI on/after 10/1/95 – Age 67 retirement presumption (rebuttable)

– Social Security Disability, Survivor’s Retirement Offset after $25k paid in PTD

Determine Case Value (cont.)

• Permanent total disability thresholds

– DOI on/after October 1, 1995• Irrebuttable presumption• Thresholds

– 17% PPD– 15% PPD and employee at least age 55 on DOI– 13% PPD; employee at least age 55 on DOI; not high school graduate/no GED

Minn. Stat. § 176.101, subd. 4 and 5

• Is employee permanently totally disabled, i.e. given age, education, transferrable skills, disability, and relevant labor market, is employee capable of nothing other than sporadic employment with insubstantial income?

•  

Determine Case Value (cont.)

• Permanent Partial Disability

– DOI January 1, 1989 to September 30, 1995: Impairment compensation (IC) and economic recovery compensation (ERC)

– DOI on/after October 1, 1995: Impairment compensation only

– DOI on/after October 1, 2000: New PPD schedule increases dollar multiplier for PPD ratings (Minn. Stat. § 176.101, subd. 26)

Determine Case Value (cont.)

• Cost of Living Adjustment (COLA) (Minn. Stat. § 176.135)

– DOI prior to October 1, 1992: First COLA on first anniversary date of injury; maximum COLA 6%

– For DOI from October 1, 1992 to September 30, 1995: First COLA on second anniversary date of injury; maximum COLA of 4%

– For DOI on or after October 1, 1995: First COLA on fourth anniversary date of injury; maximum COLA of 2%

Determine Case Value (cont.)

• Medical Benefits (Minn. Stat. § 176.135)

–  Reasonable and necessary for cure or relief

–  Medical treatment parameters (Minn. Rule 5221.6010 to .8900) not applicable if:

•  Primary liability denied; or

•  Secondary primary liability denial

–  Medical Fee Schedule (Minn. Rule 5221.0100 to .4070)

Determine Case Value (cont.)

• Vocational Rehabilitation/Retraining (Minn. Stat. § 176.102)

Determine Case Value (cont.)

• Dependency Benefits (Minn. Stat. § 176.111)

Know the Claim• Benefits paid to date

– TTD/TPD caps

– Attorney fee paid/withheld

– PPD

– Overpayments to recoup per Minn. Stat. § 176.179

•  Employee’s background

 Future earnings capacity/employability

•Age•Educational background•Employment history •Transferrable skills•Disability/restrictions•Relevant labor market

Employee credibility/claim savvy  •Prior claims/litigation •Criminal record•Surveillance

Know the Claim

• Available Defenses

– Primary liability

– Causation

– Apportionment

– TTD defenses per Minn. Stat. § 176.101

– Nature and extent of injury

– Contribution

– Fee Schedule

– Whether employee is qualified employee for vocational rehabilitation under Minn. Stat. § 176.102

– MMI post 90 days

– Exclusion of medical provider under managed care plan

Know the Claim

• Review

–  Medical records

–  Vocational rehabilitation records

–  Job logs

–  Personnel/wage record

–  DOLI file

–  Social Security file

–  Discovery

–  Employee’s deposition/deposition résumé/recorded statements

–  IME reports

–  Independent vocational evaluation reports

–  Witness statements/depositions

Know the Claim

• Is Case Ripe for Settlement?

–  Restrictions – permanent or fluid?

–  Medical treatment – done or pending?

–  MMI

–  IME

–  IVE

–  Potential future claim – retraining/medical/PPD/indemnity

Know the Claim

• Know Judge

–  Petition for Judicial Reassignment – 10 days

–  Petition for Judicial Reassignment – cause

–  Minn. Stat. § 176.312

– Minn. Rule 1420.2600

Know the Costs of Litigation• Defense attorney fees•  Costs of medical expert/vocational expert•  Disruption of insured’s business•  Discovery•  Cost of maintaining reserves/open file•  Opposing counsel’s:

–  Costs– Attorney fees:

• Contingent• Hourly• Roraff • .191 fees• Heaton • Edquist

Exposure/Settlement Evaluations

• Get Realistic

Settlement Conclusively Presumed To Be Reasonable, Fair, and In Conformity With Act – No Judicial Approval Required

• All parties represented by legal counsel (not applicable to intervenors)

• Medical and vocational rehabilitation benefits are NOT closed out full final.

•  Legal guardian or conservator NOT required

  Minn. Stat. § 176.521, subd. 2

Negotiations With Opposing Counsel

• Know Thine Enemy

– Experience

– Caseload

– Ability to try a case

– Willingness to:• Try a case

• Settle

– Financial position

– Calendar conflicts

– Negotiating techniques

Negotiations With Opposing Counsel

• Know settlement authority– WCRA approval necessary?

• Be reasonable– Do not overreach on pro se employees

• Do not bid against yourself

Deal with Intervenors Appropriately• Know extent of claim, apply Fee Schedule, be aware of

Spaeth claims

•  Give intervenors Notice of Right to Intervene– Failure to do so may result in 100% liability

– Intervenor’s failure to timely intervene after notice may extinguish their claim (Minn. Stat. § 176.361)

• 30 days after notice of administrative conference; or• 60 days after service of notice of right to intervene.

• Both Employee and Employer/Insurer have obligation to investigate intervention claims and give notice to potential intervenors

•  Fee schedule bills when appropriate

Documentation of Settlement

• Utilize attorney

•  Contents of Stipulation (Minn. R. 1420.2050, Subp. 1)

– Statement of admitted material facts

– Matters in dispute/employee claims – attach supporting documentation

– Employer and Insurer’s claims/defenses – attach supporting documentation

– Stipulated facts (e.g. DOI, nature of injury, MMI)

– Establish settlement is fair and reasonable

– Preserve subrogation rights per Minn. Stat. § 176.061

Documentation of Settlement

• Contents of Stipulation (Minn. R. 1420.2050, Subp. 1)– Intervenors 

• Claim itemization

• Extinguish intervention rights – failure to timely intervene

– Settlement terms• Payments

• Close outs – be precise, explicit; specify with particularity all benefits closed out*

• Cannot close out unknown claims as claims not yet in dispute, i.e. consequential injuries

* A stipulation need not explicitly reserve the age 67 retirement presumption as a defense to a PTD claim. Frandsen v. Ford Motor Co., 801 N.W.2d 177 (Minn. 2011)

Contents of Stipulation (cont.)

• Attorney Fees

–  Previously withheld fees

–  Contingent

–  Hourly – Roraff, Heaton, .191, Edquist

•  Costs

Social Security (SSDI) Language

• Of the $________ settlement, the sum of $_______ is to be paid to the Employee’s attorney as and for attorney’s fees. The Employee is currently ___ years old having been born on _______, and has a life expectancy of ___ years, ___ months. The balance of $________ shall be paid to the Employee and shall represent a compromise payment of weekly indemnity benefits over the projected term of the Employee’s life expectancy of ____ months, at the rate of $_____ per month, or $_____ per week.

 - Or -

Social Security (SSDI) Language

• That it is stipulated by and between the parties that had the Employee proceeded to trial and been successful with his permanent total disability claim, he would have been found to be permanently and totally disabled as of (_________). It is further stipulated by and between the parties that in arriving at the lump sum figure, the parties utilized the social security offset provision found in Minn. Stat.§ 176.101(4). Specifically, it is stipulated by and between the parties that Employee would have been paid $25,000.00 in weekly permanent total disability benefits as of (___________), had this case been actually litigated and an Award of permanent total disability benefits entered by a compensation judge. In calculating a lump sum payment, Employer and Insurers applied the social security offset as of (__________). In other words, the money being paid to the Employee in connection with this Stipulation for Settlement was arrived at by reducing Employee’s permanent total disability benefits by the monthly amount of social security. Employee has opted to receive reduced permanent total disability benefits in the form of a lump sum pursuant to the Stipulation for Settlement rather than receiving them on a periodic basis, having accepted a discount to present value. Additionally, it is recognized that the offset provisions of Minn. Stat.§ 176.101(4) (and Minn. Stat.§ 176.132(2)(e)) have been applied to this case, arriving at the lump sum.

Medical Closeouts• Typical “soft” medical expenses

– Chiropractic– Acupuncture/acupressure– Chronic pain clinic (inpatient/outpatient) – Psychiatric/psychological– Chemical dependency treatment– Health club– Durable medical equipment– Durable exercise equipment– Household remodeling– Home nursing services by family members– Massage therapy– Treatment with certain healthcare providers– Motor vehicle modification– Certain medications, e.g. narcotics.

MSA Trust• Must account for and reasonably allocate to Medicare’s

interests if:– Employee receiving SSDI– Employee over age 65– Reasonable expectation of Medicare enrollment within next 30

months

•  CMS approval of MSA Trust required if:– Employee:

• Medicare eligible; and

• Settlement is $25,000.00 or more; or• Reasonable expectation of Medicare enrollment within 30 months

and settlement exceeds $250,000.00

• Bifurcate work comp settlement from MSA Trust approval

Medical Closeouts

• Be aware of the employee’s situation regarding Social Security and whether or not a Medicare set aside is required.

• Consult with your client to determine if the best way to go is establish a Medicare set aside, or if you should simply leave various medicals open. Certain medical expenses are not covered by Medicare and could be closed out in a Stipulation without having to establish the Medicare set aside.

Hold Harmless Language

• Do not include hold harmless language in the Stipulation wherein the employee agrees to hold the employer and insurer harmless as and against any third-party intervenors who may have a right of intervention.

• The courts have consistently found these provisions unenforceable. Van Den Einde v. Henry’s Candy Store, 1992 WL 39271 (W.C.C.A. 1-30-1992).

Settlement of Non-Workers’ Compensation Claims • Sometimes as part of overall workers’ compensation settlement, the

employee will agree to voluntarily resign his or her employment and will agree to waive any non-work compensation related employment law claims.

• These claims cannot be closed out under a workers’ compensation Stipulation as the compensation judge lacks jurisdiction to consider and determine claims outside of Minn. Stat. § 176.

• Have the employee execute concurrently with the Stipulation, an employment law Release and Voluntary Resignation of Employment. Be sure to allocate adequate consideration to the close out of employment claims and a voluntary resignation. See Karnes v. Quality Pork Processors, 532 N.W.2d 560 (Minn. 1995).

Settlement of Non-Workers’ Compensation Claims (cont.)

 – Separate consideration

– Employment Release

–  Voluntary resignation

Question and Answer Language

• Purpose: to ensure that the employee knowingly and willingly consents to agreement

Sample Language

• The Employee agrees and represents to the Office of Administrative Hearings, Workers’ Compensation Section, that he/she freely and without reservation has answered and initialed the questions following in his/her own handwriting:

Question and Answer Language (cont.)

Employee must answer and initial all questions.

•Have you read the entire Stipulation for Settlement?

•Do you understand it?

•Do you realize and understand in entering into this Stipulation for Settlement that the difficulties you have had with your (injury) might change in the future and become substantially worse than they are at present?

•Do you realize and understand in entering into this Stipulation for Settlement that if your (injury) condition should unfortunately become worse in the future, it could involve a disability of a very serious and

prolonged nature and even surgery?

Question and Answer Language (cont.)

• Do you acknowledge and stipulate that your attorney, (Full name), has reviewed and explained the provisions of this Stipulation regarding (supplementary benefits and) adjustments and do you further acknowledge that you understand that this Stipulation for Settlement forever precludes claims for (supplementary benefits and) adjustments?

• Do you acknowledge and stipulate that your attorney, (Full name), has reviewed and explained the provisions of this Stipulation for Settlement to you and that you fully understand and comprehend the terms and scope of this Stipulation for

Settlement?

Question and Answer Language (cont.)

• Do you wish to have the Office of Administrative Hearings, Workers’ Compensation Section, approve this settlement on the terms and understanding set forth above?

• Further Recommendation: – In cases where surgery has been recommended or discussed, it would also

be advisable to add an additional question wherein the employee acknowledges that a certain type of surgical procedure has been discussed or recommended by his treating doctor or other doctors, and that this surgery could result in further additional disability.

– You would also want to attach as an additional Stipulation exhibit the medical report, chart note, or correspondence from the medical provider documenting the need for or possibility of surgery.

• Contribution Claims

Settlement Due Dates

• Filing of Stipulation within 45 Days of settlement

• Payment per Award within 14 days from the date of service and filing of Award (Minn. Stat. § 176.521, subd. 26)

–  Consequences of late payment:

• Penalty per Minn. Stat. § 176.221 to Division

• Penalty per Minn. Stat. § 176.225 to Employee

• Questions?

• Thank you.