Teddy Snyder

Category: Risk Management

  • Tricks of the Settlement Trade

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    Negotiations can founder when parties (and some mediators) don’t know the tricks that remove settlement obstacles.

    Structured Settlements

    Structured settlements are ideal for funding Medicare Set-Asides. Structured settlements provide tax-free periodic payments over a specified period of time, which can be for the life of the injured worker. The structure costs less than lump-sum funding, freeing up the balance of the employer’s authorized settlement amount for the injured worker’s other needs. What’s more, unlike with lump-sum funding, lifetime payments cannot be exhausted. The injured worker receives the amount paid by the employer plus income earned from professional investment management. This trick can help bridge a negotiation gap.

    From time to time I hear that a structured settlement broker was not called in order to avoid expense. This reflects a fundamental misunderstanding of how structures work. There is no cost to consult a structured settlement broker. The structured settlement life insurance company (not any party) pays the broker a commission if a structure is placed.

    A structured settlement is not the right choice for every case.  But workers compensation professionals should always investigate this no-risk option.

    Special Needs Trusts

    Many injured workers and their families rely on Medi-Cal for their non-industrial medical needs.  However, receipt of a large sum pursuant to a Compromise & Release can disqualify the injured worker’s entire family from receipt of these benefits until funds are spent down. Placing settlement funds in a Special Needs Trust allows the injured worker to retain public benefits and still C&R the claim.

    Pooled Special Needs Trusts are similar to an attorney trust account in that the trustee pays expenses from a fund holding money for many participants. Compared to a single-beneficiary trust, pooled special needs trusts are inexpensive and quick to set up and administer.

    Professional MSA Administration

    Did you know professional MSA administration which protects the injured worker’s continued access to Medicare benefits is available for little or no cost? One of the biggest faults of the Medicare Set-Aside system is its reliance on self-administration. Administration mistakes can jeopardize the injured worker’s continued access to Medicare.

    Injured workers are more often laborers than MBA’s.  Determining which expenses are Medicare-eligible is complicated and requires constant vigilance as policies change. To retain benefits, the MSA beneficiary must submit an annual report, a burden many injured workers cannot handle. Knowing who to call to obtain free or low-cost professional administration, including reporting, can mean the difference between an open claim and a Compromise & Release.

    Reversionary Trusts

    The reversionary trust is probably the least used settlement trick.  When parties disagree about future medical needs, a reversionary trust can satisfy both sides’ interests.  A reversionary trust can pay for claim-related medical expenses over a specified time.  If the money is not needed, at the conclusion of the trust the money reverts to the payer.

    Some adjusters object that there is no way to account for refunded amounts without leaving the claim open. Applicants may balk at the lack of unfettered access to trust funds. I had one case where the prospect of a reversionary trust caused the claimant to reduce the demand on condition the money was paid in cash now; the case promptly settled.

    With the right parties, a reversionary trust is a solution which allows everyone to be right. Or just raising the possibility can get parties to settle.

    There Are Many More Tricks

    Every workers compensation professional in the process from Notice of Injury to Compromise & Release has a distinct role. If you are considering closing the claim, it’s time to bring in the person whose focus is settlement, a knowledgeable mediator.

  • Does This Mediation Make Me Look Fat?

    Nobody wants to look bad. Turns out some workers compensation professionals think recommending mediation makes it look like they couldn’t get the claim settled themselves. Mediating a claim doesn’t make you look bad. It makes you look smart.
    Are You A Litigation Expert?
    Most claims settle. Mediation makes it happen sooner.Litigation experts realize that going to trial on an issue risks losing it all. It takes a long time to get to trial; meanwhile the claim gets expensive (how many medical exams do you really need?) Facts may become less favorable.Parties in mediation retain control of the outcome rather than surrender to an unpredictable result.  Often I help parties invent a solution they had never previously considered.

    A Safe Place for Bad News
    Attorneys may be hesitant to deliver bad news. One fear is that the client will get new counsel. Mediation provides a forum for a neutral person, the mediator, to deliver the message.  The attorney can commiserate with the client, look like a hero, and yet get the case settled.

    How Good Do you Want To Look?
    I have successfully helped parties settle even when negotiations stalled in prior informals.  With a mediator’s help, parties (even skeptical ones) who come to mediation willing to settle on acceptable terms generally do settle. The next time the professional who mediated comes up for evaluation, that person doesn’t look bad—that person looks great.

  • 3 Signals It’s Time to Close the Claim

    Some Workers Compensation Claims seem to have a life of their own. Before you know it, years have passed since the Date of Injury. Here are 3 signals telling you to take a hard look at settling now.
    The Injured Workers is 61 years old.
    Once an injured worker reaches age 62½, any buy-out of future medical care must include a Medicare Set-Aside. (Buy-out of medical benefits for an injured worker already on Medicare also requires a Medicare Set-Aside.) This adds extra work and delay. Sometimes the MSA evaluation changes the parties’ view of the case. Stories abound about how the MSA process has torpedoed a settlement.

    Check your case inventory. If the injured worker is 61 years old, take steps now to close the claim before Medicare becomes a party to the proceedings.

    Litigation has become a way of life
    You’re in court every month. The number of claimed body parts keeps increasing; every treatment request is denied. Everyone mistrusts everyone else, including their own lawyers. Take a deep breath. Step back. This claim has a settlement value. The parties just need help figuring out what it is.

    Trial is Imminent
    Nothing makes people think about settlement more than an upcoming trial date. You’ve lived with these facts for a long time; how can you be sure the judge will see things your way in the limited time available to put on the case?  Often, a judge’s order is just the gateway to even more litigation.

    Going to trial is a risk.  Most people are uncomfortable with the lack of control. They are happier with a negotiated settlement reached through compromise. You won’t get everything your way, but you won’t lose on every issue either. Most importantly, litigation can end.

    Take the First Step
    Approach the other side about scheduling a mediation.  If communication has broken down, contact the mediator first, and let her work on bringing the parties together.

  • Ghosts, Goblins and Mediators

    Halloween is just around the corner, a time when people love to be scared. It’s fun, because everyone knows there’s really nothing scary at all.

    Mediation isn’t scary. Yet some claim and legal professionals fear it.

    Fear of losing control
    Adjusters and attorneys know their jobs. They may bristle at the idea of someone else getting involved in the settlement process. Yet, they don’t hesitate to call in other experts.

    Claim and legal professionals retain control in mediation. Only the parties can choose an outcome. The mediator cannot order anyone to take any action. What the mediator can do is help parties define issues, resolve differences, and see new routes to settlement.

    Fear of looking bad
    Some professionals worry that calling in a mediator makes them look like they couldn’t do their job. On the contrary, professionals who use every tool in their arsenal look smart. Referring a claim for mediation can short-cut litigation, saving time and money. This makes you look like someone who knows how to get things done.

    What are you scared of?
    You don’t need a costume, and you don’t need a candy bucket to get started.  Treat yourself to mediation to move that difficult case forward.  Mediation can benefit all parties, and that’s no Halloween trick.

  • Teaching Risk Management to an Eight-Year-Old

     

    “Grandma, why did you move my chopsticks?”

    My extended family was dining on Cashew Chicken, Mongolian Beef, and fried wantons. Without missing a beat I answered, “Well, Ashley, I’m all about risk management. I noticed your chopsticks were sticking out over your lap, and there was a risk you or I might knock them to the floor [notice the diplomacy there], so I initiated a safety program. I rotated the chopsticks on your plate to stick out over the table instead of the floor.”

    Dead silence.

  • Get “In Pro Per” Claims Off The Books

    You know the claims I’m talking about: the really old claims where the Injured Worker is representing himself/herself. Let’s call them “in pro per”s.  Active in pro pers file one court paper after another, causing the insurer or self-insured employer to fund what seems like a never-ending stream of money to send a representative to the Board. The in pro per’s papers may not state a recognizable claim. Pressed for time, the Information and Assistance officer may give the in pro per short shrift.  Defense attorneys with varying degrees of patience usually do, too.

    But what if what the parties really need is a sort of an interpreter, a mediator.

    Mediating an in pro per’s claim demonstrates respect for the in pro per.  The feeling of lack of respect and inability to get heard is often what drives the in pro per to keep summoning the employer to court.

    “Why would I waste time and money on a worthless claim?” you may ask. Because you’re spending time and money now, and mediation is a way to end that endless cycle.

    Sometimes the in pro per has a bona fide complaint, but without professional assistance has not been able to communicate it. The neutral mediator is often able to re-state the concern in a way the parties can address and put past them. The mediator can help each party see the other side’s point of view.

  • HOW POLITICS DRIVES UP THE COST OF YOUR MSA

    For President George W. Bush and Congress to get Medicare Part D drug coverage passed in 2003, they had to make significant concessions to big business, including the drug industry. One of the law’s provisions forbids the government from setting rules for negotiating better drug prices. The “noninterference” section says:

    In order to promote competition . . . the Secretary [of Health and Human Services]:
    (1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP [Prescription Drug Plan] sponsors; and
    (2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.
    42 USC 1395w-111(i)

    The result according to a new policy brief from the Carlton University School of Public Policy and Administration is that Medicare Part D plans pay on average 73% more than Medicaid and 80% more than the Veterans Health Administration for brand-name drugs. If Part D plans could negotiate drug costs the way Medicaid and the VA do, savings could reach $16 billion a year.

    The study shows that the average per capita expenditure by Americans for pharmaceuticals is more than double the average of 32 other industrialized nations. Contrary to their publicity, American drug companies do not devote the wealth gained from Part D on new research initiatives. Half of new medical research initiatives come from non-profit entities such as universities. Rather, drug companies have spent their millions in recent years on increased lobbying. If drugs costs decreased, Medicare beneficiaries could expect Part D premiums to also decrease.

    Although private insurers pay Part D medical expenses, workers compensation professionals are painfully aware that anticipated Part D-covered expenses must be included in a Medicare Set-Aside. The increased use and rising cost of pharmaceuticals has torpedoed many a proposed workers compensation buy-out. If the purpose of an MSA is to protect Medicare, why are Part D expenses which are paid by private insurers included in the allocation anyway?

    Casualty insurance companies and the American Association for Justice are big political players. With the 2016 election cycle coming up, now would seem to be the time for their lobbyists to twist some arms to modify the noninterference provision for the benefit of all Americans.

  • WHAT TO EXPECT AT MEDIATION

    Mediation remains unfamiliar to most California Workers Compensation professionals. To succeed, you– and your client– need to know what to expect. While all mediations share some similarities, each mediator has a unique style. Here’s what you can expect at one of my mediations.
    We usually start in joint session. The discussion might be limited to the logistical: introductions, bathrooms, lunch, etc.  People get to look each other in the eye.The first real step will be for the Applicant to tell how the injury happened and how things are going now. The purpose of this is to allow catharsis and to build empathy and trust between the injured worker and the mediator. Usually this is in a separate session known as a “caucus,” but if the defense needs to hear this information or wants to ask questions, it might happen while the parties are still in joint session. If the defense has heard the Applicant’s story many times, I may have Applicant do the venting in caucus.

    I usually start negotiations with the Applicant’s side. If there were prior offers and demands, I will review those to make sure we are all at the same starting point. Then comes exploring the positions which support those offers and demands. The parties’ briefs should explain the issues; the more complicated the case, the more important the briefs. Defining issues for the mediator in the brief makes for a more efficient mediation. But the briefs do not limit the number of issues; sometimes new issues emerge in mediation.

    I might speak with one or more attorneys outside the hearing of their clients, for example, to discuss a point of law.  All parties might reconvene to brainstorm solutions to an issue.  If parties are disrespectful of one another, I will stop a joint session.
    In the give and take of numbers, issues will be discussed and swapped.  Cases do not settle without compromise.  Parties should expect give and take to finalize the settlement terms.
    Participants may be surprised by the amount of time spent in caucus with the other side.  As mediator, my job is to give all parties adequate time to express their concerns.   While there are certainly exceptions, a typical workers compensation mediation lasts three to five hours.

  • Six Biggest Mediation Misconceptions

    The Mediator might rule against me.

    Mediators do not make any rulings. The role of the mediator is to help the parties resolve the issues.

    If I go to mediation, I will have to give up something.
    Negotiation is about compromise. Each side usually gives up something. You won’t give up anything unless you, and only you, make the choice to negotiate a deal.
     
    Mediation is too expensive.
    Mediation is cheaper than litigation. It is efficient and eliminates other procedures which use up time and money.
     
    Mediation is a waste of time.
    Mediation has been shown repeatedly to be effective in resolving all issues. But even if you don’t conclude your case at the mediation, mediation typically allows parties to learn more about their opponent’s case—and their own. Issues are narrowed, setting the stage for further negotiation or more efficient litigation.
     
    There is no reason to mediate—our case is a sure winner.
    Mediation might be a place to test that hypothesis—or convince the other side. Presumably you wouldn’t be in litigation if there weren’t two sides to the story. If there is counsel on both sides, your opponent is spending time, money and effort for a reason. Applicants representing themselves might just need a forum to tell their story. Litigation is always uncertain. Settlement is the only way to retain control over the outcome, rather than let a judge impose a resolution on you.

    We look like push-overs by suggesting mediation.
    Mediation is the rule rather than the exception in most areas of law in the United States. The fact is that most cases settle at some point. Smart claims professionals and lawyers use every tool at their disposal to conclude cases as early as possible.