EVALUATING A WORKERS COMPENSATION CLAIM THE DEFENSE PERSPECTIVE. Diana L. Wann, J.D.

Transcription

1 EVALUATING A WORKERS COMPENSATION CLAIM THE DEFENSE PERSPECTIVE Diana L. Wann, J.D Workers Compensation Midwinter Seminar and Conference AMERICAN BAR ASSOCIATION Labor and Employment Law Section Tort, Trial and Insurance Practice Section March 16-17, 2017 Phoenix, Arizona

2 EVALUATING A WORKER S COMPENSATION CLAIM THE DEFENSE PERSPECTIVE Overview Settlement analysis in a case will occur at various stages in the course of a claim. If a claim is wholly denied, not compensable, and no benefits have ever been paid, a settlement analysis will typically take place upon file referral. Settlement analysis in a case which has been accepted as compensable, benefits paid, the claimant has reached maximum medical improvement or medical quiescence, and has an impairment rating, can also be done at the initial stages. Settlement analysis in a case which has been filed while claimant is still treating, the medical condition resulting from the injury is still in flux or treatment options are in dispute, or claimant has reached MMI from the injury but has gone off and begun treatment on his or her own, may not be in the settlement stage for months or years. The practiced attorney can identify the ripeness of settlement upon initial file review and a conversation with the adjustor and opposing counsel. The Beginning A Very Good Place to Start One can get the lay of the land upon initial review of the medical records and case notes. I like to start from most recent treatment records and move back to the injury. A medical record review gives a good foundation of the bones of the case followed by review of the case manager notes and any nurse case manager summaries. Following file review a conversation with the adjustor reveals the expectations. If that conversation begins with something similar to I just want to get this case settled, the employer wants to know why this guy is still treating, or I want this case closed, a good settlement analysis should be undertaken, even if early in the case and frustration is evident in the correspondence between client and employer. Often I have a gut response to the file and a settlement amount develops in my psyche. Often a case settles for that amount. But, more often than not, reaching settlement is done after a dance with the client and a dance with opposing counsel. Reality for the Unrealistic Practicing in the area of worker s compensation defense in a very conservative state such as Indiana brings challenges from clients who have expectations that can be unrealistic. Many case managers are located outside the state and as we all are aware many have multi state responsibilities. As a result they may have fewer contacts with a particular state and experience

3 with hearing results and little knowledge of case law. Their expectations for resolution may be lofty --- or minimal. For these clients, a lengthy discussion of the potential of loss is helpful. If expectations for settlement are unrealistic an exposure analysis on a worst case scenario is most helpful to help open the adjustor s viewpoint to the possibilities of a significant dollar award downside. Following that options for the various potential awards depending on interpretation of facts, witness credibility, witness strengths and weaknesses and the judge s general propensities and handling of the issues can be explored. After the case manager and employer have a range of options and have had the time to consider those options, the dollar discussion can take place. A little time for contemplation is helpful. Typical Case Resolution Analysis A typical case will have medical concluded, a PPI rating, and an eager case manager seeking closure on the defense side with a plaintiff awaiting payout. These should be easy to resolve but often are not. A case is analyzed for both litigation and settlement on the basis of worst case exposure. That figure is then massaged by comparing exposure to strength of the case. Scenario 1: For example, plaintiff has an injury which has reached maximum medical improvement (MMI) with a PPI rating by the treating physician of 10% of the whole person. However, he did not agree with the rating so returned to work for 10 days, then was taken off by his personal physician and pursued treatment on his own for an additional 3 months. His personal physician has increased his PPI rating to 15% whole person. The exposure is the dollar amount between 10%, or (for simplification) $10,000. His 15% rating is $15,000. The logical compromise for settlement is $12,500 but maximum exposure is $15,000. He has an additional $9,000 in medical expenses and an additional 12 weeks of TTD, or $12,000. Maximum exposure is $36,000. That is the number we provide the client as litigation risk. To settle we consider our chances of prevailing at hearing and in this case we have a very favorable medical report documenting his ability to work full duty upon release to return to work initially, an increased PPI following medical care indicating his condition is actually worse than better and the medical care was not reasonable and necessary, and was actually provided by plaintiff s massage therapist rather than a physician. Our chances of prevailing at hearing on the issues of maximum medical improvement, PPI rating, and whether additional alleged medical care is related to the injury are 95%, or $1800. Cost of litigation through the hearing stage is $3200. We discuss with client (who hates to pay litigation costs) and receive authority to settle the case for no more than $7500. We begin settlement negotiations at $1,000. Scenario 2: Plaintiff had a compensable accident when his ankle was crushed by a forklift. He has had a better than expected recovery after significant and lengthy reconstruction of his foot and ankle during extensive and excellent medical care. He slowly returned to work by increasing hours and work duties and is now full time in his former position as a parts inspector. His

4 attitude is good and he plugs away. His PPI rating is 65% of the leg below the knee, or $65,000. He has future medical expenses in orthotics estimated at $20,000 lifetime costs. He obtains a second opinion PPI rating by his own physician at 80% of the leg below the knee, or $80,000. In addition his attorney demands the future medical expenses plus an additional $50,000 as consideration to settle the claim on a full and final basis. Total demand is $150,000. Client contends they have paid substantial medical expenses to get him to a very reasonable functional ability which allows him to continue to work and holds fast at $65,000. If plaintiff proceeds to hearing the most he will take away is $80,000 for his PPI rating (in my state the judge will now award a lump sum for speculative future care) and his downside is $65,000. In order to bring finality to the case and because claimant is a well-regarded employee they authorize $90,000. Initial offer to plaintiff s $150,000 demand is $67,500. Case will not settle above $90,000. Scenario 3: Claimant has herniated cervical disc not reported as a work accident until after her personal neurosurgeon scheduled surgery within one week of the initial examination. Claimant then reported the injuries (2 alleged) to the employer who advised her to forego surgery until the insurer had an opportunity to investigate. Claimant proceeded with surgery. The claim was eventually denied due to claimant having provided absolutely no history of work injury to any of three physicians consulted by the claimant within 3 weeks of her initial injury date. Claimant had a poor surgical outcome leading to implantation of a spinal cord stimulator. Claimant continued to work for employer in a professional capacity and filed her claim for benefits following her two surgical procedures. After approximately two years of the case pending, Plaintiff demanded over $900,000 in past medical expenses, PPI, TTD and future medical expenses. (Client freaked out and transferred the case to our firm.) Our analysis was done in which we highlighted plaintiff s expert report which contained a very high PPI rating from a known Plaintiff s physician (not specialist) who whose only income is from this type of report, we recommended our own evaluation by a neurosurgeon on the mechanism of injury and a causation opinion, and pointed out the maximum award which could be recovered by the plaintiff following hearing at only $58,000 (self-insured employer with credit against medical insurance payments and wage replacement paid to claimant instead of TTD, so low out of pocket medical and TTD exposure as future medicals would not be ordered in a lump sum, naturally. (Client breathed huge sigh of relief.) We obtained a causation report from a well-regarded neurosurgeon. His opinion was that the mechanism of injury for the two alleged work incidents as reported by the claimant did not cause a herniated cervical disc. Further, that surgery was inappropriate in that medical signs did not support surgery and certainly not without a trial of conservative care. Since the risk of exposure following a hearing would be a fraction of plaintiff s demand, the client decided to acquiesce in the mediation process which was being advanced by opposing counsel. My suggestion for settlement was in the range of $60,000 to $90,000 and I received authorization to resolve in that range. Client representative attended the mediation and would

5 have made the call if a final demand, within reason of the top number, was made. Case settled at $70,000. The client was very happy. Concluding Thoughts As early as possible learn the case manager s expectations as well as those of the employer. This will involve a thorough analysis of the medical records, conversations with both the employer and the case manager and recognize that the two may not have the same expectations. If there is a conflict between the insurer or TAP and the employer, make every effort to take the high road and try to lead both parties to reach the same decision as to outcome. Have a conversation with opposing counsel and try to disarm them in your discussion of the case, their expectations and their client s expectations. Most attorneys are pretty candid with me. If you can develop a relationship where you can have a frank discussion with opposing counsel, without giving away confidential information or negotiation points, it will pay off. Following such a discussion, in most cases it will pay off by you having an idea of the numbers it will take to resolve the case. With the information you learn from both parties you are armed with the information needed to prepare an analysis of the hard evidence, the merits of the case from both sides, the chances of prevailing based on experience and statutory provisions and case law. If you can add experience with both the judge and opposing counsel to disclose some insight from both, you are ahead of the game. After a thorough analysis the attorney should have a very good idea of the recommendations to make to the client for opening settlement discussion, negotiations points, and final numbers. Initially in my practice an evaluation was done by taking the percentage of our chances of prevailing, i.e. 20%, 50%, 90%, of the exposure and making that recommendation to the client. More often than not after years of negotiations, my settlement number is the number I ask of my clients. Some clients are unhappy with that method of negotiations and object. In that case, I revert to the old school method. Most, however, seem happy with the result which tends to be very reasonable. If you have a reasonable analysis which can be presented to both the client and opposing counsel, it makes it hard to argue the result.