Full and Final Settlements

Full and Final Settlements

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.

Understanding Downsides of a Full and Final Settlement

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.

Insurance Company Full and Final Settlements Incentives:

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.

DO I HAVE TO SETTLE MY CLAIM OR DOES THE INSURANCE COMPANY HAVE TO SETTLE?

DO I HAVE TO SETTLE MY CLAIM OR DOES THE INSURANCE COMPANY HAVE TO SETTLE? 

By Founding Partner/Attorney Chad Snow

Snow, Carpio & Weekley 

Many clients simply want to put the matter of their work injury behind them and get on with their life.  However, we cannot force an insurance company to settle a claim.

Insurance companies only settle a claim if they think they will pay less in the long run by giving the injured worker a lump sum of money now.  Likewise, an insurance company can’t force an injured worker to accept a settlement that the worker doesn’t feel is in his or her long term best interest.

All settlements of any issue in a work injury claim in Arizona must be reduced to writing in what is called a “compromise and settlement agreement”, must contain specific language, and must be approved by an administrative law judge from the industrial commission of Arizona.

If you have questions about settling a claim or seeing if an offer made to you is fair, you should definitely consult with an experienced Arizona work injury lawyer like those at Snow, Carpio, & Weekley.  In my experience, engaging an attorney usually results in a settlement at least double what the carrier would be willing to pay an unrepresented applicant.


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.

CAUTION TO CLAIMANTS ON WORKERS’ COMPENSATION SETTLEMENTS

CAUTION TO CLAIMANTS ON WORKERS’ COMPENSATION SETTLEMENTS

By Attorney Dennis Kurth

Snow, Carpio & Weekley

The Industrial Commission was given jurisdiction to approve settlements of workers’ compensation cases by virtue of a Supreme Court case in 1986[1] followed by the adoption in 1987 of a set of administrative rules for ALJ’s to follow in approving settlement agreements.

A bona fide dispute and a written settlement agreement signed by the parties with the claimant certifying that they have read and understand the terms of the settlement agreement and were not signing under duress or coercion, are required.  (ICA policies and procedures as published in the ICA Manual, however, do not have the force and effect of the Industrial Commission Rules of Procedure or the workers’ compensation statute).

The question of whether a purely verbal agreement to settle a workers’ compensation case is enforceable against an insurance carrier arose in the context of a claimant who died in a car crash while on his way to his attorney’s office to sign a settlement agreement.[2] The claimant’s heirs sought to enforce the verbal agreement but the carrier, of course, claimed that it could not be enforced because the written agreement had not been signed.

The Industrial Commission, in Tabler, refused to enforce the verbal settlement agreement and the claimant’s heirs appealed.  The Court of Appeals held that a verbal agreement could be enforceable if the parties intended to be bound by the verbal agreement and set aside the Industrial Commission’s award.  The case was remanded to the Industrial Commission to hold hearings to determine the intent of the parties.  In an important footnote, however, the Court held that it was not addressing the issue of whether a verbal settlement could be enforced against an injured worker. 

The case was then settled between the heirs and the insurance carrier.  Since then no changes have been made to the statue or the Industrial Commission rules regarding settlements.  Still, except for the Industrial Commission policies and procedures, no written agreement is required.

Recently, in a memo decision, the Court of Appeals held that an oral settlement could be enforced against the claimant who had simply changed her mind about settling her case and refused to sign the written settlement agreement.[3] In the True Value case, the claimant, whose attorney had withdrawn when she changed her mind about the settlement, was unrepresented in the Court of Appeals and did not even file an answering brief, thereby confessing error.  In addition, the Court felt that, “on this record”, the verbal agreement should be enforced.

The True Value case, even though not a legal precedent, creates a dilemma for claimants, represented or unrepresented. While the carriers and their attorneys, in euphoria over the ruling, will seek to enforce verbal settlements, claimants and their attorneys must now be extremely cautious in settlement negotiations to anticipate every eventuality that could affect their decision as they may not have the luxury of reconsidering their decision before the settlement documents arrive.

True Value will probably not be the last word in the enforce-ability of verbal settlements against claimants and should not be taken as such.  It would be very bad policy for the Industrial Commission to follow for many reasons including that facts can change quickly and injured workers should not be held to verbal agreements under the workers’ compensation law, which is solely designed to help them, until they have read and understood the language of the settlement agreement. 

All claimants contemplating settling their cases should seek the advice of experienced counsel first.  For claimants’ attorneys, the best policy is to advise the carrier or their attorney that they do not intend to be bound by the settlement until the C & S is fully executed and the claimant certifies that they understand all the terms.

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.

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[1] Safeway Stores v. Industrial Commission, 152 Ariz. 42, 730 P.2d 219 (1986).

[2] Tabler v. Industrial Commission, 202 Ariz. 578 (App. 2002).

[3] True Value Company v. Industrial Commission, (Ct. App. 10/4/16).