Tag Archives: negotiations

Why Phones Are Bad for WC Negotiations

A litigation analysis found that lawyers used telephone negotiation in 72% of the cases studied, resulting in settlement only 35% of the time. That means that phone negotiation sessions or other processes had to be used multiple times to get to settlement. We can assume that repetition resulted in a loss of time and money for the participants.

In contrast, mediation resulted in resolution 100% of the time in the studied cases. Yet, lawyers used mediation in only 2% of the cases.

Here are some of the problems with telephone negotiations:

Lack of Visual Information

You can’t share documents or other visuals over the phone. Even if all participants to the call are supposed to have the documents in their possession, you can’t be positive they are actually looking at a document, even if they say they are, or if it’s the right one.

Body language provides visual cues to the negotiator about how things are going. Facial expressions can show surprise, anger or anxiety as parties exchange information. You can’t look someone in the eye over the phone. Without the visuals, it may be easier for people to dissemble. Likewise, over the phone you are unable to enhance your own message with gestures or other body language. In mediation, the mediator interprets participants’ body language to better facilitate negotiation.

See also: Work Comp: Mediation or an ‘Informal’?  

Getting Negotiators to Pay Attention

Listening is hard work. When negotiators use the phone, they may not be focused. There could be active interference, e.g., flashing lights and text messages on the phone, incoming emails, other notifications from multiple devices or co-workers coming by. Even without those distractions, people’s attention may drift.

Technology Can Get In the Way

What about using Facetime, WhatsApp, Skype or another video call utility? Theoretically, this could overcome some of the deficits of voice-only negotiation. On the other hand, have you seen the hilarious Tripp & Tyler video about video conference calls? Even when the technology is working perfectly, body language can be difficult to interpret or convey through video.

It’s true that video conferencing might be helpful during mediation if, for example, the adjuster or injured worker is in another state and unable to travel to the mediation, assuming the principal negotiators are physically present.

See also: Tips on Mediation in Workers’ Comp  

Settlement of High-Exposure Workers’ Comp Claims, Part Three

Part I (Identification) and Part II (Valuation) of this series provided insight into identifying and correctly valuing the appropriate cases to approach for settlement. In Part III, we will turn an eye toward successful negotiation and resolution. 


Beyond the financial aspect of the negotiation are underlying factors that are not always obvious. The most important aspect to understand is that there is an individual whose life has been seriously affected by an industrial injury. Many times this fact is lost in the volumes of reports, bills and correspondence.


After the valuation of the case has been completed, several elements still remain that need to be addressed before proceeding with negotiation.

First, the future indemnity exposure and its value must be evaluated. Next is consideration of the injured workers’ Medicare status. Criteria have been outlined in various memoranda put out by Centers for Medicare and Medicaid Services (CMS); critical elements include:

  1. Is the individual receiving Medicare benefits?
  2. Is there a reasonable expectation in the next 30 months that the individual will be entitled to Medicare benefits, and the settlement is in excess of $250,000?

If the answer to either question is “yes” then the parties should conduct a Medicare Set-Aside analysis. Is it best to fund the MSA with cash or an annuity? In most high-exposure cases, the MSA is substantial, and the use of an annuity is critical to settlement. Once the MSA is completed, submission to CMS for review and approval should be sought as soon as possible. At present, the turnaround time is approximately four to five weeks, though it sometimes takes considerably longer. 

The next consideration is the value (future and discounted) of items such as home/attendant care, non-covered equipment and off-label medications. These are all the “medical” items that cannot be paid for through the MSA and would become the responsibility of the injured worker. 

Finally, as each case is unique, are there any other factors specific to the individual’s case that must be considered, such as retroactive or unpaid benefits, disputed costs or out-of-pocket expenses?

In most high-exposure settlements, a combination of cash and annuities are going to be the critical elements. At a minimum, most MSAs are funded via “seed” (initial payment) and annual payments via an annuity. The balance in some instances is paid in cash; however, in most cases, some form of future income stream should be created to ensure the injured worker has funds to pay for non-Medicare-covered items as well as some level of income replacement for either a fixed period or for the remainder of his life. 

Human Element

The human element cannot be overlooked. Many times, the individual needs to “vent” by telling his story. This can be a cathartic moment that forms a bond with the injured worker and establishes a level of trust. 

Bringing all parties together face-to-face to lay out the issues from all sides is crucial. This creates an environment of understanding and illustrates a seriousness about resolution, and the intelligence gained is invaluable. Many times, an injured worker makes a seemingly benign comment that is the key to resolving a case. For example: “I want to make sure my family is taken care of after I die.” Or, “All I want to do is move to my house in Oregon and spend the rest of my days bass fishing,” or “I would like better living arrangements for myself and my Rottweilers.”

These are actual comments made during initial discussions that, with a little creativity, let the parties craft a settlement that fit the needs of injured workers. This is not to suggest that these cases could not have otherwise settled, but the key to resolving them was to find what was important and unique to the injured workers.

Many workers are frustrated by the workers’ compensation system and are seeking a way to move on to the next chapter of their lives. 


There is no such thing as “one size fits all” in high-exposure claims. Crafting the most beneficial settlement for the injured worker is the key. Gone are the days of a fixed amount of cash plus the funding of the MSA.

For the worker who wanted to bass fish, for example, a settlement was crafted to include a bass boat, a small amount of cash and a lifetime income stream through an annuity. The agreement was reached in a very short time. For the worker who wanted to be sure his family was cared for after his death, a settlement was crafted — again, within the framework of the value of the case — to provide him an upfront sum of cash, an annuity to fund his MSA and a tax-free annuity referred to as a “Joint and Survivor Benefit” that produced income for him and his wife as long as either was still living. For the worker worried about her pets, a creative solution provided for housing accommodations for her and her two very large dogs. 

The point is to pay close attention and understand what is important to an injured worker. While we all may have opinions about the best way to craft a settlement, ultimately it is the injured worker who has to live with it. Providing workers with settlements that meet their specific needs and wants will not only engage them in the settlement process but will leave them with the satisfaction that they got what they wanted.  


Once terms are agreed on, we arrive at the resolution phase. At this point, jurisdictional requirements need to be considered, and they are quite variable. 

The first issue is to ensure that Medicare’s interests have been adequately considered. Then, aside from any conditional payments by CMS that may exist and will need to be addressed post-settlement, the remaining issue is to ensure that settlement documents are drafted that meet the requirements of the specific jurisdiction (state, federal, etc.). Typically, this is handled by defense counsel.


If the parties are prepared, the negotiation and resolution phase moves rather quickly from an initial discussion to an agreement of terms, to the preparation of settlement documents and finally to submission to the appropriate entity for approval. Beyond preparedness, the keys to success include understanding the human element and being creative about addressing the needs and concerns of the worker while staying within the value of the case.

Addressing the three elements covered in this series on high-exposure workers' compensation claims — Identification, Valuation and Negotiation/Resolution — will benefit all parties. The carrier/self-insured will reduce projected exposure. For the injured worker, while a settlement cannot replace what he lost, it will let him move forward with his life based on an adequate, fair settlement. 

Subrogation Settlement Options

As an experienced subrogation professional, you’re all too familiar with settlement negotiations and the pitfalls you encounter every day that are inherent in the process of securing money from an at-fault party. Be encouraged. Statistically, the vast majority of subrogation opportunities settle through direct negotiations. Although technological improvements dot the landscape, don’t be fooled into thinking that sometimes a simple phone call can’t help arrive at an end-result you, your company, and maybe most importantly your insured, will be happy with.

When direct negotiations do fail however, a subrogation opportunity is likely destined for an alternative form of dispute resolution. Litigation, mediation, and arbitration are the venues most commonly thought of when attempting to ultimately resolve the unresolved.

Your most complex subrogation matters might be best served by litigation. When you need to employ the expertise of a law firm, understand that some distinguish themselves by the type of loss; others have chosen to only work the higher-dollar matters. They have the resources available to absorb the costs and time it takes to reach the right conclusion. Don’t discount those firms. They can prove invaluable.

If less complex, or matters seeking fewer dollars, are at stake, some firms specialize in “fast-tracking” throughput … and they do it without sacrificing quality. This can be a huge benefit for those of you dealing with high volumes of claims, or backlogs.

Don’t discount mediation.

Mediation may prove to be your best available option. Did you know that some law firms at your disposal focus a significant portion of their practice on mediation? The key to being successful in mediation is to know your proverbial “drop-dead” point, and be willing to adhere to it at all costs, especially if the facts regarding negligence are in your favor. Seek the most (of course), but know what you’re willing to accept. Sometimes accepting slightly less is a better outcome than actually receiving more, if receiving more costs you additional time and financial resources to get it. Consider the “net” amount you’ll recover based on the costs and the potential for complete relief.

The third of those above-mentioned forms of alternative dispute resolution (ADR), arbitration, offer unique advantages that other forms of alternative dispute resolution simply cannot match. Arbitration is typically a less formal process. Whether a process is chosen for its convenience or familiarity, or its technological superiority, or its decision quality, one common trait they share is timeliness. If you’ve ever dealt with the reality of Common Fund Doctrine that has cost you a significant portion of your recovery dollars, a quick turnaround time might be paramount in determining which alternative dispute resolution process you utilize. Timeliness might prove to be your important “hot button,” every bit as important as any of the other inherent benefits of such a process. Here, the arbitration candle might shine brightest.

Ultimately, options are key. Be sure to know them all. Embrace them all. All of them exist to serve the industry. All of them benefit the industry. More than likely, all of them can prove beneficial to your company to some degree. More tools in the toolbox can never be a bad option to have … a greater likelihood you’ll arm yourself with what you need to succeed.

Above all, focus on your needs. Evaluate them. Be realistic about them. Find the process that achieves the best results for you. Remember, your resources might not be unlimited, but they are numerous. Don’t make the mistake of having too few. Make the effort to align yourself with vendors and attorneys that best meet your needs. Align yourself with vendors and attorneys that focus on customer service. As “utopic” as we might wish it would be, no one vendor, no one process, no one attorney, can or will meet all of your needs. Don’t hesitate to develop an extensive roster of resources to cover all your potential situations. That will give you the best odds for a successful recovery performance.

When little money is at stake, maybe turnaround time becomes the most critical component of your decision regarding which process will best serve your needs. Because the amount sought is relatively small, expediently closing the file may be the most important criteria. You want to do it right, but you also need to get it done. The relative financial impact only warrants “x” amount of your time and effort. It’s an evaluation corporate-level executives do all the time. So should you. What’s a better use of your time: recovering $1,000 but utilizing 2 hours of your time, or recouping $5,000 while investing an hour’s worth of manpower? Easy question to answer. Be careful though. It’s rarely that cut-and-dry.

When a more substantial, yet still moderate, amount is on the line, maybe it’s a combination of timeliness and quality of end result that’ll drive your decision. This is arguably the toughest of the time management decisions to determine. The amount you’re seeking to recover is significant, but at what “cost?” This is where your resources can really pay huge dividends for you. Do you invest all of your time, or is it more prudent to seek outside counsel, pay them on a contingency an agreed upon percentage while freeing up your time to work other matters? Is 33% too much? Does 25% get you the best person for the job?

The one piece of advice I’ll share is this: don’t hesitate to purchase results. I’d rather pay an attorney a third of a six-figure settlement than collect a lesser amount while saving a few percentage points on their fee. All lawyer jokes aside, trust me … they’ll earn their fee. Remember, their incentive is twofold: 1) the more they collect for you, the more they earn; and 2) the more they collect for you, the more likely you’ll use them again in the future. Note the common denominator: the more they collect for you! It’s the proverbial win-win scenario.

And don’t forget to consider the “true” cost of bringing in outside counsel. A lot of folks look at an attorney receiving a third of recoveries and immediately think, “Wow! That’s a lot!” Is it? Factor in your fully-loaded employee costs, not just their salary; factor in the expenses associated with the collection effort; factor in what other assignments that employee, or those employees, could be working on instead. Weigh that against the amount being sought. In other words, get a true picture of the actual costs of your recovery effort … then decide your best course of action.

Another easy question to answer: there’s a lot of money at stake, so how much time do I invest? Typically … whatever it takes! When a lot of money is riding on the subrogation outcome, maybe the process, its quality and those responsible for determining that outcome become paramount in determining which avenue to pursue. Litigation is costly at first blush (both from a time invested and money expended perspective), but is it, really, when millions are at stake? I’m not an attorney, nor do I play one on TV, but there are times when litigation is absolutely the best alternative to take. Keep in mind too that there are some alternative dispute resolution options that are more legal-like in their process than others. Not just in the decision rendering either … the post-decision appellate process may be just as critical to your success in subrogation as the deciding of the originally submitted matter. Not all arbitration processes are created equally, just as not all courts of law will deliver the same result. Look at the whole picture, not just the frame.

Note the different scenarios referenced. Each is unique. Each presents its own set of challenges. Each has a “best choice” alternative or process to use. That’s why, in the previous paragraphs, you’re encouraged to focus on evaluating your needs.

Let your needs drive your decisions.

The investment of time that you take in properly vetting potential business partners will pay huge dividends once you actually employ them to meet your requirements. If you don’t feel you can trust one for a given scenario, chances are you’ll feel incredibly comfortable with another of your resources.

Most importantly, never sacrifice quality in the end-result. Your company is relying on you. So is the most valuable asset you have … your customer, the policyholder.