introduction about gitter & associates
TRANSCRIPT
WWW.GITTERASSOC.COM
Introduction
About Gitter & Associates
WWW.GITTERASSOC.COM
WORKERS’ COMPENSATION CLAIMS: TO SETTLE OR NOT TO SETTLE?
• Why Settle?• Approach & Methodology
• Indemnity• Medical• Medicare• Non-Medical
• Structured Settlement• Case Studies• Determining Overall Value
WWW.GITTERASSOC.COM
Why Settle?
• Resolution of all claim issues• Indemnity• Medical• Etc.
• Extinguish future exposure• Avoid potential (further) escalation
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Indemnity• Valuation
• Permanent Partial • Permanent Total Disability
• Present Value (PV) calculation• Today’s dollars relative to future dollars
• Importance of utilizing PV and Discounting
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical
• Valuation of Medical• Inflationary Factors• Medicare• Medicare Set Asides (MSA’s)
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Valuation of Medical• Historical review
• 2-3 year history of treatment/expenses
• Review of future needs• Treatment modalities• Surgeries• Medications
WWW.GITTERASSOC.COM
Medical: Valuation of Medical• Co-morbidity factors
• Hypertension, Obesity, Diabetes, History of Smoking, Congenital Conditions, etc.
• Co-morbidity as a Cost Driver • Delayed healing process• Failure to recover from surgery• Inability to regain strength, ROM, etc.• Acceleration of degenerative condition(s)
Settlement: Approach & Methodology
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Inflationary Factors
• General 2-3% per year (normal goods and services)
• Medical 6-8% per year• Medication 10-12% per year• “8 by 8 Rule”
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Discounting for Present Value
• Present Value Calculation of Medical• Determination of Annual• Projection of Future Needs (treatment, surgeries, etc.)
• Discounting factor• Variations based upon Life Expectancy• One time and future needs
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Medicare• Brief history and Medicare Secondary Payer
Statute (MSP)• $43B in liability transferred to Medicare in a 7 year
span leading up to the change (1995-2001)• “Consideration” of Medicare’s interests• Memoranda issued by the Center for Medicare
Services
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Medicare Set Asides (MSA’s)• Medicare Part A & B
• Part “A”: Inpatient Hospital care, skilled nursing facilities, LIMITED home health care (stemming from a hospitalization)
• Part “B”: MD visits, diagnostics, physical therapy, supplies, etc.
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical: Medicare Set Asides (MSA’s)• Medicare Part “D”
• Medications (“labeled” usage only)• Coverage for 2013
• Medicare Pays $1,983.50 of the first $6,733.50• Catastrophic Coverage above this amount is 95%*
*(weighted cost brand vs. generic)
• Beneficiary out of pocket exposure INCREASED by 29% ($1,150) from 2006 to 2013
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Medical
• What is not covered by Medicare?• Most attendant/Home Care• “Off-label” medications• Chiropractic Care (unless prescribed by a MD)• Acupuncture• 20% Deductible
WWW.GITTERASSOC.COM
Settlement: Approach & Methodology
Non-Medical
• “Other” items to consideration in valuing a case• Home care (housekeeping, lawn services, etc.)• Attendant Care• Retroactive benefits• Misc.
WWW.GITTERASSOC.COM
Structured Settlements• Description• Components
• Cash• Annuities (creativity is the key)
• Internal Rate of Return• Benefits to the Parties
• Employer• Applicant
WWW.GITTERASSOC.COM
Case Study #1“Dogs”
• 59 Year-old Registered Nurse sustained injuries to her spine, bilateral upper/lower extremities, psyche and internal systems
• Permanent Total Disability• Extensive Future Medical Care• Assisted Living Facility• Future value established at $2.1M• Settlement at $1.25M• SAVINGS: $900,000.00
Anticipated Exposure
Settlement Value
Savings$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$2,100,000
$1,250,000
$900,000
WWW.GITTERASSOC.COM
PAYMENT DESCRIPTION COST EXPECTED PAYOUT
TOTALS: $1,250,000 $1,476,441
CASH AT SETTLEMENT $460,185 $460,185
MEDICARE SET-ASIDE ALLOCATION
MSA “seed” Money $40,282 $40,282
MSA Annual Payments ($16,141 $144,058 $225,974
due annually, if living for 14 years)
ANNUAL ANNUITY PAYMENTS $605,475 $750,000 $75,000/year for 10 years Certain
SETTLEMENT PROPOSALCLAIMANT: ROT W. EILER
DOB: JUNE 14, 1940 (AGE 66)NORMAL LIFE EXPECTANCY: 19.5 YEARS
WWW.GITTERASSOC.COM
Case Study #2“The Boat”
• 58 year-old School Maintenance Worker sustained multiple orthopedic and internal injuries (strokes/heart attacks)
• Permanent Total Disability• Medical care at $10k annually
– significant co-morbidity issues• Value established at $1.3M• Settlement of $330,000.00• SAVINGS: $975,000.00
Anticipated Ex-posure
Settlement Value Savings$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
WWW.GITTERASSOC.COM
PAYMENT DESCRIPTION COST EXPECTED PAYOUT
TOTALS: $329,957 $663,695
CASH DUE AT SETTLEMENT $72,500 $72,500
MEDICARE SET-ASIDE ALLOCATION
MSA “seed” Money $7,435 $7,435
MSA ANNUAL PAYMENTS ($3,485
due annually, if living for 16 years) $26,897 $55,760
LIFETIME INCOME PAYMENTS $223,125 $528,000 $2,000 monthly, guaranteed to Age 65, and payable monthly thereafter for life.
SETTLEMENT PROPOSALCLAIMANT: BASS MASTER
DOB: AUGUST 27, 1948 (AGE 58)NORMAL LIFE EXPECTANCY: 22 YEARS
WWW.GITTERASSOC.COM
Case Study #3
• 36 year-old Machine Operator sustained a closed-head trauma after being struck by an ejected board
• Permanent Total Disability• Substantial Future Medical needs• Valuation established at $2.4M• Settlement at $750,000.00• SAVINGS $1.65M
Anticipated Ex-posure
Settlement Value Savings$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$2,400,000
$750,000
$1,650,000
WWW.GITTERASSOC.COM
Case Study #4
• A 52 year-old Forklift Operator sustained injuries to his spine, left hip and psyche
• Substantial Permanent Partial Disability
• Ongoing medical care at $10,000.00/year
• Valuation established at $525,000.00• Settlement of $100,000.00• SAVINGS $425,000.00
Anticipated Ex-posure
Settlement Value Savings0
100000
200000
300000
400000
500000
600000
WWW.GITTERASSOC.COM
Anticipated Exposure
Settlement Value
Savings0
20000
40000
60000
80000
100000
120000
140000
Case Study #5
• 48 year-old Office Supervisor sustained injuries to her neck and bilateral upper extremities
• Limited Permanent Partial Disability • Ongoing medical care at
$4,300.00/year• Valuation established at
$133,000.00• Settlement of $68,000.00• SAVINGS $65,000.00
WWW.GITTERASSOC.COM
Determining Overall Case Value
• Computation & Utilization of PV• Indemnity• Medical/Medicare Set Aside (MSA)
• Discount rates used to estimate Future Value• Indemnity • Medical (MSA and non-covered items)
WWW.GITTERASSOC.COM
TO SETTLE OR NOT TO SETTLE?
• Benefits of Claim Resolution• Future Cost Savings• Mitigation of Expansion of Claim• Reserve Reduction/Removal• CLOSED FILE!
WWW.GITTERASSOC.COM
Questions?
WWW.GITTERASSOC.COM
Gitter & Associates, Inc.1820 S. Escondido Blvd., suite 201
Escondido, California 92025PHONE: (877) 448-2772
Fax: (760) 740-0449
www.gitterassoc.com
Thank you!