How to Negotiate a Workers Compensation Settlement

A lawyer and insurance adjuster agree on a workers compensation settlementWhen the subject of workers compensation comes up, many people only think about how big a pot of $$$ the worker is going to get (hint: in most cases, it’s not very big), but there are plenty of side issues involved that must be negotiated, things like:

  • Am I still going to have a job when this is over?
  • Is it going to be the same job or do I have to accept something less?
  • Do I have to allow that surgery their doctor recommended?
  • How are we going to handle past and future medical bills?

Those issues – and potentially much, much more – are what workmans comp settlements are all about. Both sides want to reach the point where the employee has accepted the insurance company’s offer of compensation and the case is over, but getting there isn’t always easy.

It’s a back-and-forth, step-by-step process that starts the day an employee files a workers comp claim. It can end in a matter of days (unusual) or a matter of months (usual). The timing difference in the two is usually the presence of a lawyer.

People on all sides of workers compensation hearings agree that having a lawyer involved is a good thing.

“I would say that way more than 50% — probably more like 80% — of the people who come into my court without a lawyer would have been a lot better off if they had one,” said Neal Pitts, a workers comp Judge in Orlando, FL.

Pitts was a workers compensation lawyer representing employees before being named a judge.

“I’ve told many individuals they need to go talk to a lawyer before I’ll accept the settlement they bring me,” Margaret Sojourner, another Florida workers comp judge, said. “If they go see a lawyer and still want to accept the deal, that’s fine, but workers comp law is really tough if you’re not experienced with it.”

Sojourner was a workers comp lawyer representing insurance companies before being named a judge.

A survey by the law firm of Martindale-Nolo found that 73% of workers received payouts on their claims. Those who hired a lawyer to negotiate, received an average payout of $23,500 while those who accepted the insurance adjuster’s first offer were paid $10,700.

With or without an attorney, you will find the process plenty complicated. Here is a look at what you’re in for if you want to negotiate a settlement in a workers compensation case.

When Will Workers Comp Offer a Settlement?

That’s an easy one: As soon as possible! You may not be thrilled with the insurance company’s  first offer, but the folks who write workers compensation do not want to dawdle. They would like to wrap things up as quickly as possible.

In fact, as soon as an employee hires a lawyer, negotiations on a settlement can begin. That can be a day after the injury, a week, a month … it’s up to you and your lawyer when you want to start negotiating a settlement.

However, in most cases, there are a few bases that need to be touched along the way, especially if you choose to represent yourself.

Maximum Medical Improvement 

The first step in the settlement process with an injured worker begins after the doctor treating the case declares the patient to be “as healthy as he is going to get.” That is referred to as Maximum Medical Improvement – designated as MMI – and understanding it is vital to everyone involved in workers compensation.

MMI does not necessarily mean the employee is 100% healthy or even back to where he was before the injury. If you severely injured a shoulder in a work-related accident or suffer with a chronic illness because of your work environment, obviously you won’t be back to 100%.

However, treatments, rehab and rest that aids your recovery will push you toward Maximum Medical Improvement. When doctors determine that your condition can’t be improved any further with treatment or medication, they will say you have achieved MMI, which is their way of saying the patient’s health has stabilized and is no longer improving.

Disability Rating 

The next base for both sides to touch before negotiating a settlement is for the employee to receive a disability rating.

A disability rating is an assessment by doctors of the severity of damage that resulted from your work-related injury and how that affects your ability to earn a living. The rating is based on a scale of 0%-100%. The disability can be temporary (a construction worker broke an ankle but returned to work eight weeks later) or it can be permanent (a roofer fell and injured his back so severely he can’t ever get on a roof again).

Doctors use disability ratings to calculate how much the injury affects the worker’s earning capacity. The ankle injury may receive a 1% rating, while the roofer might be rated at 90% or even 100% disabled.

The disability ratings are used to help calculate the benefits you will receive because of your disability. The higher your disability rating, the more compensation you will recover.

There is no universal disability rating system. Each state has its own guidelines or follows its own rules in deciding how much an injury is worth. For example, some states have statutory framework based on the American Medical Association’s Guides to the Evaluation of Permanent Impairment. Other do not. Some states have a hybrid system and some have devised their own system to rate disabilities.

Your examining doctor will know what guidelines apply and can advise you on the methodology used to calculate a disability rating. It is an extremely important number and an injured employee should do whatever is required to get an accurate rating.

Impairment Rating

Impairment ratings have to do with the loss or use of a normal body function. An impairment rating is given to an injury that is permanent, but may not affect your ability to do a job.

For example, a construction worker may lose a thumb in a work-related accident. He has received treatment, but the loss of a thumb is permanent and he is seeking compensation.

He may have to learn to swing a hammer with his other hand or learn to use tools without a thumb, but he can still do his job.

Doctors will examine him and, using the same 0%-100% scale used in disability ratings, give him a percentage rating on how this impairs or impacts his ability to do the job. The doctor doing the examination is usually the same one who has been treating him, but if the insurance company disagrees with the rating, they can ask that the employee be seen by one of their doctors.

The insurance company factors that percentage rating into a benefits formula and determines the employee’s compensation.

The number they arrive at is usually the primary source of disagreement at settlement negotiations and one of the primary reasons you should have a lawyer representing your case.

Whole Person Impairment

If the injury the worker suffered affected numerous parts of his body, then a whole person impairment rating is needed to help determine the level of disability and its effect on future earning capabilities.

Each injured part of the body is given a separate rating based on the how severe the injury is. In some states, they add the percentages together to determine the overall percentage of impairment your whole body has suffered.

Some states use the whole person impairment in helping factor how long the injured person will receive workmans comp benefits. If, for example, a 100% whole person impairment rating meant 300 weeks of benefits and you received a 50% whole person rating for your injury, you would receive 150 weeks of benefits.

Independent Medical Examination

When the insurance company disagrees with a doctor’s rating of an injured employee, they can order an independent medical examination or IME.

The IME is supposed to be an objective evaluation of a worker’s health, or as objective as one can expect when the insurance company chooses the doctor.

The outcome of an IME can have a significant impact on benefits awarded. Insurers will use the results to argue against treatment received during recovery or to dispute the level of disability assigned to a case.

“Judges are aware that the IME doctor is acting as an expert for one side or the other,” Sojourner said. “Judges are also aware that the EC gets to choose the authorized physician. These factors are considered along with others when determining the weight given to their opinion.”

IME’s also are used when an employee is denied workers comp benefits and no medical care benefits are given. The insurer would need evidence from IME physicians to support their case.

Mediation

The reason for workers compensation mediation is the two sides can’t agree on a settlement, so they bring another adult in the room and hope everybody is ready to get this matter resolved. The mediator’s job is to act on behalf of both sides and push the process toward a settlement.

There is one mediator assigned to every workers compensation judge. However, if the case has some difficult issues and large amounts of money are involved, the two sides could agree to hire a private lawyer to mediate the matter.

The mediator takes one side into a room – alone! – and sounds them out on what they really want from this. Then, he takes the other side into another room – alone! – and asks the same questions.

It is best to have as much paperwork as possible regarding your case so you have good arguments to present to the mediator. The mediator will go back-and-forth between the two rooms until both sides agree enough to put the deal on paper and sign it so it can go to a judge.

The sessions with the judge’s mediator usually last about one hour so things move quickly. Private mediation sessions last longer, usually 3-5 hours, because there are moving parts that need to be settled.

That’s the primary reason lawyers involved in difficult cases agree to hire their own private mediator.

Percent of Workers Comp Cases That Settle During Mediation

In most states, mediation is mandatory. You can’t have a settlement, unless you’ve gone through the mediation.

There is not definitive survey to verify this, but both Judge Sojourner and Pitts agreed that 99% of workers’ compensation cases are settled during mediation.

“I’d say less than 1% of workers compensation cases end up going to trial,” Judge Pitts said.

Workers Comp Hearings

The 1% of cases that end up in front of a workers compensation judge get there for one of two reasons:

  1. The insurance company has denied the worker’s claim for benefits
  2. There are difficult legal issues involved that fall into gray area’s of the law and the two sides want a judge to decide

“The cases we see are what you might call ‘Outliers’ “ Judge Pitts said. “Some novel facts probably are involved, some really, really hard claims are made and the parties are so entrenched they want a judge to decide who’s the winner and who is going to lose.”

What to Expect

The trial in a workers compensation case looks and acts very much like the court room scenes you see on TV or in a movie with one very notable exception: There is no jury!

All the testimony, depositions and arguments are made to the presiding judge, who ultimately rules in favor of one side or the other.

Lawyers for each side call their own witnesses, argue the merits of their case and are permitted to cross-examine witnesses and testimony from the other side.

Hearing Questions

The questions in a workers compensation trial usually are meant to challenge the authority of expert witnesses provided by one side or the other. If a worker is called upon, it usually is to substantiate his claims or challenge them, depending on which side is asking the question.

The judge also is permitted to question the worker and witnesses presented by either side, but usually only does so to clarify a statement of fact or time frame.

“Rarely will a judge ask a question that changes the outcome of the litigation,” Pitts said. “It’s not our job to do the lawyer’s work for him.”

Judge’s Decision

Judges have 30 days to make their decision and most use the entire time.

If a case has been through mediation and not been resolved, there are reasons that neither side will budge. Since most of the cases involve a worker being denied benefits from a workers compensation claim, you can expect that both sides feel very strongly that they are right.

The judge ultimately must settle the matter and write an opinion that explains his ruling. Judge Pitts said he uses the time to write opinion that “both sides come away with a belief that I understood what the issues were and what the evidence presented was.”

“They may not agree with my decision,” Judge Pitts added, “but I do hope they believe I applied the law fairly in their case.”

Once, the judge has signed off on a decision – or agreed to the settlement that came from a mediation – the only thing left to do is check to see whether the fee the lawyer charged his client was reasonable and see whether the worker owed any child support money.

If the worker is behind on child support payments, the judge will direct the insurance company to settle that before making any payments to the worker.

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About the author

Bill Fay has touched a lot of bases in his 45-year career. He started as a sports writer, gaining national attention for work on college and professional sports. He had regular roles as an analyst on radio and television and later became a speech writer for a government agency. His most recent work is as an internet content marketing specialist. Bill can be reached at [email protected].