A QUICK SKIM
This article debriefs on Paul Sighinolfi's experience as a former regulator receiving the following inquiries from workers who settled their claims and found themselves in financial trouble years later. He shares his thoughts on how to best protect an injured worker from financial issues after settlement. Today he views the following questions and concerns as solvable by adequate advance planning and connecting the settling party with structured settlement brokers and Medicare Set Aside (MSA) professional administrators.
- What does it mean that a settlement is in an injured worker’s best interest?
- Should there not be a consideration for how will this money be managed into the future?
- Is giving an injured worker, one who has never managed a sizable some of money, a “lump sum” in that person’s best interest?
- How do workers’ compensation administrators and Administrative Law Judges (ALJs) protect claimants post-settlement if not by ensuring they are placed into a system that protects them?
Today, the judicial community is moving towards thinking “best interest” is bigger and broader than just a review of how many dollars are involved. Read the article to learn more about the benefits of structured settlements paired with a professional administrator.
Complex Cases and the Judicial Community
I have spent a great deal of time in recent months speaking at and attending state and national workers’ compensation conventions. I am fairly confident that I have a firm grasp of the workers’ compensation fundamentals. I know the basic compensability test; an injury must arise out of and occur in the course of a claimants’ employment. I understand some states still have a “by accident “requirement, an element many states eliminated during the major reforms of the 1970s.
One need not be in this industry very long to understand our compensability test is easily stated, but at times its application is complex. In recent weeks, I been favored with multiple opportunities to sit with judges from different jurisdictions and discuss challenging and factually complex cases they have had to decide. They hear and receive the evidence the parties offer, the evidence is evaluated, and factual findings are made. The law is then applied to the findings and legal conclusions are drawn from the result. In many cases, this a simple and uncomplicated process. In other cases, it is anything but simple.
At a breakfast a few weeks ago, I sat with four senior workers’ compensation Administrative Law Judges (ALJs). We discussed cases they had decided in recent years that involved issues of witness credibility, death presumptions and competing expert opinions. In each, the application of our seemingly straightforward test to determine compensability was applied with some difficulty. The moving party always thinks they should win, and defense counsel is frequently of the same mind.
The group also discussed the duty an ALJ has at the time a case is presented seeking approval for a full and final or lump sum settlement. In many, but not all jurisdictions, parties are prohibited from settling workers’ compensation claims without review and approval by a judge. In addition, many jurisdictions require the filing of settlement petitions and a hearing before a judge. Frequently, the state statute charges the judge with making a finding the settlement is in the parties’ best interest, or in some circumstances, in the best interest of the injured worker. The discussion on this topic was focused on the “best interest” language.
Inquiries on "Best Interest" Language
What does it mean that a settlement is in an injured worker’s best interest? Does it mean there are adequate funds in the settlement to cover lost wages going forward? Are the funds enough to cover the projected future medical expenses? Is that the limit of the analysis, or is it more expansive? It was suggested the analysis should be more comprehensive with an eye on the temporal aspect of the settlement. Is giving an injured worker a sum that is fair value for the case the end of the assessment? Should there not be a consideration for how will this money be managed into the future? Is giving an injured worker, one who has never managed a sizable some of money, a “lump sum” in that person’s best interest?
The Value of Structuring a Substantial Settlement
These valid and important inquiries caused the discussion to evolve into talking about the value of structured settlements when settlements are substantial. How do workers’ compensation administrators and ALJs protect claimants post-settlement if not by ensuring they are placed into a system that protects them? Structures protect funds into the future and ensure payments to the settling party.
How Structured Settlements Protect Injured Workers:
A structured settlement is a stream of periodic payments paid to an injured party by the defendant primarily through the purchase of an annuity issued directly by highly-rated life insurance companies. All payments from a structure are tax free and can:
- Provide valuable protection to an injured party, in the case of a costly year
- Allow payment flexibility, tailoring the scheduled payments directly to the injured party’s needs
- Ensure support and stability for the injured party’s medical care over the long-run
Professional Administration and Structured Settlements
The combination of professional administration and a structured settlement is the perfect pair to ensure injured parties are getting the best possible outcome for their life after settlement. The combination of these services in a costly scenario allows the injured party to access more coverage from Medicare and pay fewer dollars out of their own pocket. This is the best way for the injured party to preserve their settlement funds for as long as possible and allow them to focus on their health rather than finances.
Check out a real-life case study and the math behind why administration and structures are the best combination with our downloadable whitepaper.
Financial Concerns with Settled Claims and the Future
If there is a Medicare Set Aside (MSA), which there should be if a settling party is either Medicare eligible or eligibility is on the horizon, then our discussion focused on the complications associated with self-management. Is self-management of an MSA in a settling employee’s best interest? It was generally agreed that unless the injured worker could manage medical bills, properly file annual reports, pay consistent with any existing state fee schedules and maintain payment records going forward, self-management is not in a settling injured worker’s best interest. I have the sense some in the workers’ compensation judicial community are struggling with this and are moving toward thinking “best interest” is bigger and broader than just a review of how many dollars are involved.
I first started to be concerned with these issues when I was a regulator and would get calls from workers who settled their claims and years later found themselves on their own and in financial trouble. I also received calls from those who were having trouble managing their MSAs. They would call seeking help from the state workers’ compensation Board. We were at a loss to help because we had no jurisdiction once a case was settled and the claim closed. Today I view these problems as solvable by adequate advance planning and connecting the settling party with structured settlement brokers and MSA professional administrators.
Managing MSAs post settlement is what we do at Ametros and our involvement is in the settling employee’s best interest. At the same time our post settlement management of MSAs protects the interests of the employer and carrier as well. Our services reduce liability after settlement and bring peace of mind to all parties involved with closing an open medical claim, ensuring the injured individual has the resources and support they need to settle confidently.