By Brian Weekley, Attorney/Partner
On November 1st, 2017, Senate Bill 1332 went
into effect in Arizona. This state law allows for the full and final settlement
of workers’ compensation claims. Under the current system, claimants always
retain the right file a Petition to Reopen their claim in the event that
additional active medical treatment is required for a new, additional or
previously undiscovered condition causally related to their industrial injury.
In cases which settled, carriers ( and third party
administrators) retained a credit in the amount of the settlement that applied
to future indemnity and/or medical benefits.
With unscheduled permanent partial disabilities,
claimants and carriers retain the right to Petition to Rearrange prior
ICA Awards. This process allows for the increase or reduction of an Award
With SB 1322, claimants and carriers
now have the option of entering into a full and final settlement of the
claim. This type of settlement, if approved , will bar forever the claimant’s
right to reopen or rearrange his claim. It’s a one-time deal, so getting it
right is critical.
There are two elements of value in any given workers’
compensation case; Medical benefits and indemnity ( the money that the carrier
pays the claimant). If you want to understand valuation of a claim, you need to
understand how these elements are valued.
Future indemnity benefits are based on two constants; The
claimant’s age and the monthly entitlement. The variables are how the value of
future benefits, or reserves, are calculated. Different methods produce
strikingly different values.
An annuitized value is based on the amount of money that
a carrier would pay to fund an annuity to pay the monthly award
based on prevailing daily rates of return. In Arizona, traditionally, the
total present value is calculated by using a present value table and plugging
in the age and monthly amount. The latter technique generates substantially
lesser values than the former. There is no right answer at this point.
Valuation is subject to radical differences of opinion depending on whose
interests are being pursued.
Future medical benefits should be assessed based on
projected future value, including elements like medical inflation. Carriers can
value these benefits, but the values may be grossly underestimated. A good rule
of thumb is to make sure that the claimant either gets his own valuation and/
or insists that Medicare approve the valuation. Medicare will perform its’ own
valuation when its’ interests are involved through a process called
Workers’ Compensation Medicare Set Aside ( WCMSA).
If there is a proposed full and final settlement, then we
strongly urge all claimants to treat Medicare’s interests with great care.
There are thresholds that are very liberally construed by the Center for
Medicare Studies ( CMS). CMS recommends that all proposed settlements be
approved if they meet these thresholds.
The undersigned has seen unapproved agreements submitted
by companies which call their products “ certified.” These certifications
appear to be internal, and not from Medicare, so beware.
Moreover, MSA funds should be professionally administered
with full reporting and compliance.
One benefits to resolving future medical under an
approved and properly managed MSA is that any funds remaining at death pass to
the claimant’s beneficiary. Beware of reversionary language in the agreement
that would give all or part of the remaining funds back to the carrier.
Full and final settlements are a new frontier for injured
workers and their attorneys. They require preparation and knowledge because,
once approved, the claimants’ case is over. It cannot be renegotiated. The
claimant and his attorney must understand and protect the rights of Medicare in
order for the system to work correctly and to protect the claimant’s future
medical care, both injury and non- injury related. Beware of
undervaluation an negotiate from a position of knowledge.
At Snow, Carpio & Weekley, PLC, our top-rated Arizona
workers’ compensation lawyers want to ensure
that all injured workers have the knowledge they need to protect their legal
rights and financial interests when it comes to worker’s compensation
settlements. Insurance companies may try to use the option of full and final
settlement to their own benefit, but you should know the benefits and risks
involved in agreeing to such a decision before you sign a full and final
settlement with your work’s insurance company.
A full and final settlement, while it is generally a
larger sum of money in comparison to other worker’s compensation settlements,
is often more beneficial for the insurance company providing it. This protects
them from further liability regarding your injuries, as you will lose the
ability to reopen your claim in order to seek paid medical care in the future.
As a general rule, injured workers should not reach this type of settlement
until their condition has stabilized and they have reached maximum medical
improvement.
While Arizona’s full and final settlement law requires
that any agreement must outline and explain all likely future medical costs and
treatment, there are serious concerns that insurance companies will be able to
take advantage of injured workers who are not represented by a professional.
Reaching a full and final settlement can make sense in some cases, but workers
need to know that there has been a full and accurate valuation of possible
future medical costs.
Arizona’s full and final settlement statute is still
relatively new, but this is evidence that big insurance companies are trying to
avoid making continual payments to injured workers over time, regardless the
extent of the injury. Insurers are attempting to settle workers’ compensation
claims for the exact same value as these cases would have reached under the old
law while also slipping a full and final settlement provision into the
agreement. This stipulation in the law could cripple a worker’s potential right
to healthcare paid for by the responsible company’s insurance, and taking a
full and final settlement without considering the risks to their future
healthcare could harm their chances of care if the injuries exacerbate in any
way in the future.
For more information on Workers' Compensation or Social Security Disability, please contact Snow, Carpio & Weekley toll-free at 855-325-4781 or visit our website at www.workinjuryaz.com. We serve the entire State of Arizona and have offices located in Phoenix, Tucson, Yuma and Lake Havasu City.
