Factors to Consider When Deciding Whether to Settle a Claim in Louisiana Workers Compensation

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When Does a Settlement Make Sense in Louisiana Workers Compensation?

In Louisiana workers compensation, settlements are possible - and occur in most claims - but they are not guaranteed.

Instead, settlements in Louisiana workers compensation are optional.

In other words, an injured employee can agree to a settlement or leave his or her claim open, and the workers compensation insurance company can offer a settlement or instead just continue to pay the claim.

So then the obvious question is: should the injured employee settle his or her workers compensation claim?  Does it make sense to settle? When does it make sense to settle?

The short answer is: it depends, and it depends on how much the workers compensation insurance company is willing to pay.

But much can be done in order to maximize the amount that the workers compensation insurance company is willing to pay, including:

    1. Timing the settlement correctly;
    2. Knowing the true value of a claim; and
    3. Using skillful negotiation tactics.

So for these reasons, an injured employee should always hire an experienced Louisiana workers compensation attorney to handle his or her settlement; not only will the attorney be able to obtain much more money for the employee even after a 20% attorney's fee, but the attorney will handle everything and provide the employee with peace of mind that everything was handled properly in order to maximize the settlement amount.

But in any case, it is important to recognize that most workers compensation claims do settle, and in most cases a settlement is in the best interest of the employee.

So in most cases, yes, the injured employee should settle, but it needs to be at the right time and for the right amount.

Cost-Benefit Considerations in Settlements 

An excellent way to determine whether a workers compensation settlement make sense is to consider a simple cost-benefit analysis.

In other words, is there is more to be gained from settlement than from leaving the claim open?

For simple cost-benefit analysis, simply determine:

    • What are the costs (or negatives) of a settlement?
    • What are the benefits of a settlement?
    • At what amount of settlement money do the benefits outweigh the costs?

The main costs of a settlement include the end of medical benefits and and the end of lost wage (indemnity) benefits.

The main benefits of a settlement include the tax-free lump sum cash payment, the end of dealing with workers compensation, and the ability to move on with life, including getting a new job without worrying about a deduction in lost wage benefits.

Of course, a cost-benefit analysis will determine the point at which the employee should settle, but that does not mean that the employee's attorney cannot get more than that amount, because the insurance company's own cost-benefit analysis likely will come up with a higher number for the employee.

For example, following a thorough evaluation of the claim by the employee's attorney, the employee may determine that the employee should settle if he or she can get a $100,000 settlement.

But the workers compensation insurance company may determine that it should settle if the employee would accept a $200,000 settlement.

So from that perspective, even though the employee's attorney will advise the employee to settle if the employee can get $100,000 or more, the employee's attorney can and should aim for, fight for, and negotiate for, much more, and hopefully get the $200,000 settlement in order to maximize the employee's settlement.

But the workers compensation insurance company will likely know that the employee should settle if the employee can get $100,000, so that is why it is important to have an experienced attorney properly handle the settlement evaluation and negotiations.

Other Considerations in Workers Compensation Settlements 

Besides a cost-benefit analysis, there are other considerations for an injured employee to keep in mind when considering settlement, even though the primary issue remains whether there is more to be gained from settlement than from leaving the claim open.

For example, many settlements occur in the context of a claim in which at least one issue is disputed, including when the workers compensation insurance company might contend (and the employee of course disagree) that:

    1. There never was a compensable accident;
    2. The employee was injured but can return to work;
    3. The employee committed fraud;
    4. The claim is prescribed or expired under time limits; or
    5. The claim is denied under any other possible defense.

Depending upon the strength of the defense, such defenses can greatly diminish (or even eliminate) the value of the claim to the employee, so they must be properly evaluated and considered when deciding whether or not to settle.

In another consideration, the injured employee may have reasons of his or her own to settle, even though the medical evidence may support an ongoing disability.

For example, the employee may know that he or she is capable of returning to another job and may even have a job lined up; in that situation, the employee may be better off settling the workers compensation claim (which yields relatively low weekly benefits) and then taking a higher-paying job once the settlement is concluded.

In another consideration, the employee may be so seriously injured that the employee will never work again and will need extensive and expensive medical care in the future.

For example, it is almost always best to leave a claim open for a quadriplegic claimant, because it is likely extremely difficult to anticipate the value of future benefits; it is possible to settle the “high cost” claims, such as the paraplegic, but extreme care must be taken to ensure that the amount paid in settlement is enough to take care of the claimant for life, including medical expenses.

In another consideration, if the injured employee is on Social Security Disability (SSDI), a Medicare Set Aside (MSA) may be needed. And in any case involving long-term disability and significant future medical expenses, it may be best to structure the settlement payments so that the claimant receives periodic payments over time and not a single, lump sum, which can disappear very fast.

In another consideration, it is always possible that an injured employee's medical condition could get worse, or could improve, and when considering settlement, the injured employee should take into account the likelihood of both.

Third Party Sources of Income in Settlements 

Another consideration for an injured employee to keep in mind when considering settlement is whether there are any other sources of income from a third party.

The third-party claim may be one of good or bad quality, and if the third party claim is strong on liability, damages and applicable insurance, then the injured employee may prefer to leave at least the medical portion of the claim open, so as to provide a source of payment for medical expenses which will be incurred while the third party claim is pending.

If, on the other hand, the third party claim is relatively weak, then it may have more value as a bargaining chip in settlement negotiations with the workers compensation insurance company, since the workers compensation insurance company has the right to recover from any liable third party.

If the value of the third party claim is extremely high, it usually makes sense for the employee to settle his or her workers compensation claim at a discount if he or she can retain all of the proceeds of the third party claim.

In some cases, the employee may have self-funded disability insurance, and (depending on the terms of the disability policy) the value of the insurance may be significant enough to provide additional incentive for the employee to settle his workers compensation case and continue to collect disability insurance.

Social Security Disability (SSDI) is another source of income commonly seen with significant injuries, but SSDI will take an offset for money received by the injured employee from the employee's workers compensation payments, unless the employee is permanently and totally disabled, in which case the workers compensation insurance company is entitled to a “reverse offset.”

Finally, in the case of a death claim, though periodic payments are owed to eligible dependents of a deceased employee, there may also be available life insurance.

Depending on the amount of life insurance, there may or may not be enough proceeds to replace the employee's expected future income, in which case, the dependents may well prefer to liquidate and settle the death claim, while retaining the life insurance proceeds. 

The Employee Should Always Hire an Experienced Workers Compensation Attorney Before a Settlement in Louisiana Workers Compensation

As stated above, an injured employee should always hire an experienced Louisiana workers compensation attorney to handle his or her settlement.

Again, not only will the attorney be able to obtain much more money for the employee even after a 20% attorney's fee, but the attorney will handle everything and provide the employee with peace of mind that everything was handled properly in order to maximize the employee's settlement amount.

An experienced Louisiana workers compensation attorney can maximize the amount that the injured worker will receive in settlement through a number of ways, including:

    1. Timing the settlement properly;
    2. Determining the true value of a claim;
    3. Using skillful negotiation tactics; and
    4. Properly handling a mediation.

An Experienced Attorney Knows How to Time a Settlement for Maximum Recovery 

Timing a workers compensation settlement is extremely important in order to maximize the employee's settlement amount, and really the only way that an injured employee can properly time a settlement is to retain an experienced Louisiana workers compensation attorney to handle his or her settlement.

From the perspective of an injured employee, it is important to understand that the value of a workers compensation claim continues to steadily decline, unless additional surgeries are required.

In fact, from the point of view of the employee, there is a real incentive to settle at the "optimum" value (or rather as soon as the employee has sufficiently recovered from surgery but not yet returned back to work) in order to maximize the employee's recovery, due to the serious negative effects that vocational rehabilitation can have on the value of a claim.

Nonetheless, it is usually in the best interest of an injured employee to have any recommended surgeries before consideration of settlement, since: 

    1. It can be difficult to accurately estimate the potential cost of a surgery, due to ever-shifting costs of medical facilities, providers, and/or surgical supplies;
    2. It can be difficult to accurately estimate any pharmacy charges necessary for pre-surgery and post-surgery discharge needs; and
    3. It can be difficult to accurately estimate any unforeseen developments and consequences related to the surgery.

Also, the employee's attorney should always present an initial settlement demand to the workers compensation insurance company before the workers compensation insurance company initiates settlement talks, in order to prevent the insurance company from setting the parameters for settlement negotiations.

Once the workers compensation insurance company determines how much an injured employee's claim is worth - and sets insurance "reserves" in that amount - it can be extremely difficult to get the insurance company to change that figure.

And, waiting too long to settle a claim can be a big problem for the employee, because if the employee fully (or mostly) recovers or finds another job, then the workers compensation insurance company can claim that little or no settlement is required.

But settling too early usually means that the injured employee is selling himself or herself short, because likely the full extent of the employee's injuries and disabilities have yet to be demonstrated to the workers compensation insurance company.

But an experienced attorney can present a well timed settlement offer - along with the proper medical evidence and legal claim analysis - in order to recover a maximum settlement for an injured employee.

An Experienced Attorney Can Properly Evaluate a Claim to Determine Its True Settlement Value

One of the most important things an experienced Louisiana workers compensation attorney can do for an injured employee is to provide a thorough and accurate evaluation of the employee's workers compensation claim.

In other words, before settlement negotiations even start (and in order to formulate the best settlement negotiation strategy) the employee's attorney should provide the employee with a specific dollar figure (or range) and inform the employee that this is the value of the employee's workers compensation claim.

The employee's attorney should base this evaluation of the employee's workers compensation claim on the following:

    1. The employee's current medical condition;
    2. The employee's future medical treatment options and expenses;
    3. The employee's future lost wages and ability to return to work;
    4. The employee's vocational rehabilitation status; and
    5. Louisiana workers compensation law.

This evaluation of the employee's workers compensation claim can serve as the basis of a settlement demand, but the amount demanded should always be much higher than the actual value of the claim, so as to leave room for negotiation.

An Experienced Attorney Knows How to Negotiate for a Maximum Settlement

Properly handling the negotiation process is another extremely important service that an experienced Louisiana workers compensation attorney can provide for an injured employee.

Negotiation can be a very tricky process, and really the best way to know how to handle negotiation is through experience and training.

An experienced Louisiana workers compensation attorney will know when and how to initiate the negotiation process, when and how to respond to the counter-offers of the workers compensation insurance company, when and how to "test" the workers compensation insurance company, and when and how to conclude the negotiation process.

And really, an injured employee who tries to handle the negotiation process is almost always leaving a significant amount of money on the table. 

An Experienced Attorney Can Maximize Settlement During a Mediation

A mediation conference in Louisiana workers compensation is an ideal opportunity to obtain a maximum settlement, but usually that maximum settlement can only be obtained at mediation when the mediation is handled properly by an experienced Louisiana workers compensation attorney.

In Louisiana workers compensation, a mediation is an informal meeting of the injured employee (ideally with the injured employee's attorney) and the attorney for the workers compensation insurance company, with a neutral individual - called a mediator - who attempts to resolve the issues that are in dispute.

The mediator is a neutral party and does not take sides; instead the mediator's purpose is to settle the disputed issues, or even the entire claim, without the need for further litigation.

Mediation is voluntary by the parties unless otherwise ordered by the workers compensation Judge.

Mediation is an opportunity for an injured employee to settle his or her disputed issues - or even settle the employee's entire claim - within the Office of Workers Compensation (OWC) system at no cost, or at a private mediation, before those disputed issues go to trial.

However, properly handling the mediation process can be tricky, and involves a great deal of preparation (including a confidential position paper) and negotiation, and therefore should be handled by an experienced Louisiana workers compensation attorney to obtain a maximum settlement for the injured employee.

Pros and Cons of Settlements in Louisiana Workers Compensation

Before deciding whether or not to settle a workers compensation claim, an injured employee (with the advice and assistance of the employee's attorney) must thoroughly consider the pros and cons of a settlement.

The pros of a workers compensation settlement include the following:

    • The employee will receive a tax-free lump sum payment settlement upfront and immediately.
    • The employee will no longer have to receive only two-thirds (2/3) of the employee's lost wages (subject to a cap). 
    • The employee will no longer have to fight with or deal with the workers compensation insurance company.
    • The employee will no longer have to fight with or deal with the workers compensation system.
    • The employee will no longer have to deal with the uncertainty of a workers compensation claim or a Judge's potential ruling.
    • The employee will not have to undergo the stress and trouble of a workers compensation trial, if there is an open dispute.
    • The employee can move on with the employee's life, including getting what ever medical treatment the employee chooses without the approval of the workers compensation insurance company.
    • The employee can move on with the employee's life, including getting what ever job the employee chooses without a lost wage reduction by the workers compensation insurance company.
    • The employee can choose to receive the tax-free lump sum payment settlement in a structured settlement or annuity which is paid out over a set period of time in a series of periodic payments, thus allowing the employee to earn interest while having a guarantee that the money is available in the future.
    • If the employee's medical condition improves after the settlement, then employee will still keep the settlement money that the workers compensation insurance company paid under the expectation of a less positive future medical prognosis.
    • The employee will receive closure to a likely troubled period in the employee's life.

The cons (or negatives) of a workers compensation settlement include the following:

    • The employee will give up any and all rights to future lost wage (indemnity) benefits, which could last a lifetime.
    • The employee will give up any and all rights to future medical benefits, which could last a lifetime.
    • The employee will receive a much smaller settlement if the employee agrees to a partial settlement that leaves open medical benefits.
    • If the employee's medical condition deteriorates (or gets worse) after the settlement, the employee will NOT be able to go back to the workers compensation insurance company for additional money or medical care.

An injured employee should always hire an experienced Louisiana workers compensation attorney to handle his or her settlement, and this attorney can assist the employee in considering and weighing the pros and cons of a potential workers compensation settlement.

Again, not only will the attorney be able to obtain much more money for the employee even after a 20% attorney's fee, but the attorney will handle everything and provide the employee with peace of mind that everything was handled properly in order to maximize the employee's settlement amount, if in fact the pros outweigh the cons of a potential workers compensation settlement.

Factors to Consider Before a Settlement in Louisiana Workers Compensation

No two workers compensation claims are exactly alike.

So before deciding whether or not to settle a workers compensation claim, an injured employee (with the advice and assistance of the employee's attorney) must thoroughly consider certain factors before agreeing to a settlement, or really before even engaging in settlement negotiations.

However, there is no simple Louisiana workers compensation settlement calculator or formula to determine an accurate settlement amount; instead there are many factors to carefully consider with the advice and assistance of the employee's attorney.

The following are examples of some of the more important considerations affecting the decision whether or not to settle a Louisiana workers compensation claim.

Lost Wage (Indemnity) Factors to Consider Before Settlement

Some of the more important factors - concerning lost wage (indemnity) benefits - that the employee and the employee's attorney need to consider before settling a Louisiana workers compensation claim include the following:

    • What type(s) of lost wage (indemnity) benefits are being paid?
    • Has the average weekly wage of the injured employee been correctly calculated?
    • Have all the overtime, vacation and other taxable wage benefits been correctly included in the injured employee's average weekly wage?
    • Has the workers compensation wage rate for the injured employee been correctly calculated?
    • Are all lost wage (indemnity) benefits that are owed to the injured employee being paid?
    • What date was the last lost wage (indemnity) benefit paid?
    • Is there a limit to the number of weeks for the type of lost wage (indemnity) benefits being paid to the injured employee?
    • Are there any other limits to the type of lost wage (indemnity) benefits being paid to the injured employee?
    • Have all past-due lost wage (indemnity) benefits already been paid?
    • Are any penalties or attorney's fees due on any past-due lost wage (indemnity) benefits?
    • What are the time periods for filing an OWC court claim for unpaid lost wage (indemnity) benefits?
    • Is the injured employee capable of returning to another job, either full-time or part-time, or light-duty?
    • Will the injured employee ever be capable of returning to another job?
    • Has the injured employee's doctor released the employee to return to work?
    • Has the workers compensation insurance company's doctor or an Independent Medical Examiner released the employee to return to work?
    • Does the injured employee expect his or her doctor to release the employee to return to work?
    • Has the injured employee asked his or her doctors their opinions on the employee's present or future work capabilities?
    • Does the injured employee have another job lined up?
    • Does the injured employee's employer have a job lined up for the employee?
    • Will a potential workers compensation settlement affect the injured employee's Social Security Disability benefits, Medicare benefits, or unemployment benefits?
    • What does the injured employee expect to do for income following a potential workers compensation settlement?
    • Will a potential workers compensation settlement provide enough money to give financial security to the injured employee?

Medical Treatment Factors to Consider Before Settlement

Some of the more important factors - concerning medical treatment benefits - that the employee and the employee's attorney need to consider before settling a Louisiana workers compensation claim include the following:

    • Does the medical evidence support the injured employee's ongoing disability?
    • Has the injured employee's medical condition stabilized?
    • Does the injured employee require a future surgery?
    • Does the injured employee require ongoing future medical care?
    • What are the recommendations of the employee's treating physician for future medical care?
    • How much does the future medical care recommended by the employee's treating physician cost?
    • Does the injured employee require extensive medical care in the future?
    • Does the injured employee require very expensive medical care in the future?
    • What exactly are the employee's anticipated future medical treatment and prescription medication expenses?
    • Are there any medical conditions of the injured employee that are not well documented in the employee's medical records?
    • Are there any medical conditions that the injured employee has not discussed with the employee's doctors?
    • Are all medical benefits that are owed to the injured employee being paid?
    • What date was the last medical benefit paid?
    • Have all past-due medical benefits already been paid?
    • Are any penalties or attorney's fees due on any past-due medical benefits?
    • What are the time periods for filing an OWC court claim for unpaid medical benefits?
    • Are there any outstanding medical liens by the injured employee's medical providers?
    • Have all the injured employee's medical providers been contacted to confirm that there are no outstanding balances due?
    • Will a potential workers compensation settlement affect the injured employee's Medicare benefits?
    • Does Medicare have an interest in any potential workers compensation settlement by the injured employee?
    • Has an accurate Medicare Set Aside (MSA) report been prepared?
    • Has an accurate Medicare Set Aside (MSA) report been submitted to CMS for approval?
    • How does the injured employee expect to pay for medical expenses following a potential workers compensation settlement?
    • Would a potential workers compensation settlement provide enough money to cover all the injured employee's medical expenses in the future?

Vocational Rehabilitation Factors to Consider Before Settlement

Some of the more important factors - concerning vocational rehabilitation benefits - that the employee and the employee's attorney need to consider before settling a Louisiana workers compensation claim include the following:

    • Has the vocational rehabilitation process started?
    • Has a Functional Capacity Evaluation (FCE) been performed on the injured employee?
    • Has a Labor Market Survey been prepared for the injured employee?
    • Has a Labor Market Survey been submitted to the treating physician for the injured employee?
    • Is the Labor Market Survey prepared for the injured employee completely accurate?
    • Do the job positions in the Labor Market Survey prepared for the injured employee actually exist?
    • Is the injured employee actually able to perform the actual job duties for the the job positions in the Labor Market Survey?
    • Do the job positions in the Labor Market Survey actually fall within the physical capabilities of the injured employee, as listed by his or her physician?
    • What are the recommendations of the employee's treating physician for future medical care?
    • Has the workers compensation wage rate for the injured employee been correctly calculated?
    • What is the life expectancy for the injured employee?
    • Has an accurate Medicare Set Aside (MSA) report been prepared?
    • Has an accurate Medicare Set Aside (MSA) report been submitted to CMS for approval?
    • Is the injured employee capable of returning to another job, either full-time or part-time, or light-duty?
    • Will the injured employee ever be capable of returning to another job?
    • Has the injured employee's doctor released the employee to return to work?
    • Has the workers compensation insurance company's doctor or an Independent Medical Examiner released the employee to return to work?
    • Does the injured employee expect his or her doctors to release the employee to return to work?
    • Has the injured employee asked his or her doctors their opinions on the employee's present or future work capabilities?
    • Does the injured employee have another job lined up?
    • Does the injured employee's employer have a job lined up for the employee?

Travel Mileage Factors to Consider Before Settlement

Some of the more important factors - concerning travel mileage benefits - that the employee and the employee's attorney need to consider before settling a Louisiana workers compensation claim include the following:

    • Has the injured employee been properly compensated for travel mileage expenses to and from doctor's appointments?
    • Has the injured employee been properly compensated for travel mileage expenses to and from pharmacy visits?
    • Has the injured employee been properly compensated for travel mileage expenses to and from visits with any other medical providers?
    • Have the travel mileage expenses of the injured employee been correctly calculated?
    • What exactly are the employee's anticipated future travel mileage expenses?
    • What date was the last travel mileage expense paid?
    • Have all past-due travel mileage expenses already been paid?
    • Are any penalties or attorney's fees due on any past-due travel mileage expenses?
    • What are the time periods for filing an OWC court claim for unpaid travel mileage expenses?
    • How does the injured employee expect to pay for travel mileage expenses following a potential workers compensation settlement?
    • Would a potential workers compensation settlement provide enough money to cover all the injured employee's travel mileage expenses in the future?

Other Factors to Consider Before Settlement

Some other important factors that the employee and the employee's attorney need to consider before settling a Louisiana workers compensation claim include the following:

    • Has a Disputed Claim for Compensation (Form 1008) been filed on any workers compensation benefit?
    • If a Disputed Claim for Compensation (Form 1008) has been filed, who is the judge presiding over the case? 
    • If a Disputed Claim for Compensation (Form 1008) has been filed, what are the defenses of the workers compensation insurance company?
    • If a Disputed Claim for Compensation (Form 1008) has been filed, what is the likelihood of success for that disputed claim?
    • If a Disputed Claim for Compensation (Form 1008) has been filed, and if the employee were to succeed on that disputed claim, what would the employee receive?
    • If a Disputed Claim for Compensation (Form 1008) has been filed, what effect does it have on the settlement value of the employee's claim?
    • Does the injured employee expect his or her medical condition to improve over the short-term?
    • Does the injured employee expect his or her medical condition to improve over the long-term?
    • Does the injured employee expect his or her medical condition to deteriorate (or get worse) over the short-term?
    • Does the injured employee expect his or her medical condition to deteriorate (or get worse) over the long-term?
    • Does the injured employee desire to settle both the indemnity and the medical portion of a claim at the same time?
    • Is a partial settlement possible for the injured employee?
    • Does the injured employee desire a settlement with structured payments?
    • Has the injured employee received social security disability or retirement benefits?
    • Will the potential settlement documents include social security disability spread language about life expectancy?
    • What impact will the potential settlement have on social security disability benefits being received by the employee?
    • What is the life expectancy for the injured employee?
    • Has an accurate Medicare Set Aside (MSA) report been prepared?
    • Has an accurate Medicare Set Aside (MSA) report been submitted to CMS for approval?
    • Has the injured employee already applied for social security disability benefits?
    • Does the injured employee have any outstanding liens or subrogation interests, including Medicaid, Medicare, child support, attorney fees or costs?
    • Does the injured employee have any self-funded private disability insurance?
    • What impact will the potential settlement have on social security disability benefits, Medicare benefits, private disability insurance benefits, or unemployment benefits being received by the employee?
    • What is the value of any other claims against the employer - such as tort claims, employment discrimination claims, unpaid wage claims, wrongful termination claims?
    • What is the value and likelihood of success of any other third party claims against any other third party?
    • Should the injured employee settle the workers compensation claim and the third party claims at the same time? 
    • In the event of the death of an employee, have the funeral expenses been paid in full?
    • In the event of the death of an employee, are there any life insurance proceeds available?

The above are just examples of some factors which should be considered if they apply to a particular claim; however, since each case is unique, other factors may come into play.

Pitfalls to Avoid Before a Settlement in Louisiana Workers Compensation

The injured employee (with the advice and assistance of the employee's attorney) must beware of certain pitfalls before agreeing to a settlement, or really even before engaging in settlement negotiations.

A brief list of key settlement pitfalls to avoid includes:

    1. Whether or not a Medicare Set Aside (MSA) report will be required, the amount of the MSA allocation and whether it will be funded by annuity or by lump sum payment should all be a part of the settlement negotiations. If the injured employee finds out - after agreeing to a settlement - that the employee's net settlement is being greatly reduced by an MSA, and tries to back out prior to signing the settlement paperwork, the workers compensation insurance company can force the employee into the settlement.
    2. Delays while waiting on approval of a Medicare Set Aside (MSA) by the Center for Medicare and Medicaid Services (CMS) and/or seeking approval of the Second Injury Fund for funding of part or all of a settlement, can also serve as obstacles to a settlement. These expected delays and the manner in which the delays will be handled should be explicitly agreed to between the parties.
    3. Not placing a time for performance on tasks that may take more than 30 days is important. The injured employee is entitled to an end date or time certain for performance of the settlement terms, so the opposing attorneys should include in the documents the result they desire and the mechanism for achieving it.
    4. In cases where there are no disputes, the workers compensation insurance company cannot settle for a discount rate greater than 8%. Louisiana workers compensation law allows the injured employee two years to request the additional compensation and an additional sum that will amount to 1.5 times the amount that should have been paid in settlement, if a lump sum settlement is settled for a discount rate greater than 8%. For instance, if an 8% discount would have amounted to a settlement of $100,000 and the employee was paid only $80,000, the employee would be owed $70,000 — $20,000 to reach the $100,000 mark and $50,000 to get him to 1.5 times the $100,000 (the amount owed at 8%).
    5. The employer may wish to have a resignation included in the settlement, and if that is not initially conveyed such a detail may cause problems with the settlement. If appropriate, this should be explicitly agreed to between the parties.
    6. The employee and the workers compensation insurance company should verify that all authorized non-emergency treatment and all appropriate and related emergency treatment has been paid for and/or will be paid. If any such treatment has been paid, or not been paid, or will not be paid, or will be paid, then the nature and extent of these payments should be explicitly incorporated into the settlement.
    7. Medicare conditional payment amounts should be determined. Most workers compensation insurance companies have contracts with organizations that can perform a conditional payment search, and this amount should generally be uncovered prior to negotiating settlement. Although any conditional payments would not be owed until settlement, the workers compensation insurance company may want to know in advance what those conditional payments might be. An injured employee's failure to advise as to Medicaid or Medicare entitlement and/or conditional payments can kill a settlement or adversely affect the employee's recovery and expectations.
    8. Liens and subrogation interests need to be handled as part of the settlement process. Concerning liens and subrogation interests for non-ERISA health care plans, if it is determined that the worker's compensation payor was responsible for payment of medical benefits that have been paid by the health insurer, the obligation of the workers compensation payor for such benefits shall be to reimburse the health insurer one hundred percent of the benefits it paid. If it is determined that the workers compensation payor was responsible for payment of benefits and its denial of responsibility is determined to be arbitrary and capricious, then the health insurer shall also be entitled to recover legal interest on any benefits it paid, calculated from the date such benefits were due.
    9. The workers compensation insurance company has its own subrogation rights against any third party claim filed by the employee. In many cases, this subrogation right can be an excellent vehicle for a favorable full and final settlement. Through a combination of waiver by the workers compensation insurance company plus the credit received for the amount the employee nets, the parties can often come to a full and final settlement.
    10. If the injured employee's private health insurance company paid for treatment arguably related to the accident, then this health insurance company has a lien that should be handled prior to executing the settlement documents. If the plan is an ERISA plan, then this health insurance company may have an absolute right to recover the lien upon settlement with no allowance for state law defenses such as 1208 fraud, failure to request authorization or other statutory defenses. If the plan is an exchange created by the Affordable Care Act, the subrogation rights of this health insurance company are not clearly defined and care should be taken when settling to insure that any lien is settled with the workers compensation claim.
    11. Child support liens need to be investigated and settled. Child support should state in writing the amount that they will require from the settlement and that amount should be included in the settlement documents, and the failure to withhold amounts from child support could amount to enforcement actions against the employer and/or the workers compensation insurance company, especially if a garnishment has been served.
    12. The employee and the workers compensation insurance company should verify that there are no other outstanding liens. However, if there are other outstanding liens, the nature and extent of these other outstanding liens should be explicitly incorporated into the settlement.

In order to avoid these pitfalls, all the details related to these pitfalls should be addressed and provided to the attorneys for the parties.

While some of these issues can be worked around by including conditional provisions in the language of the settlement (with the default to be continuation of benefits as if no settlement occurred), the more complex the settlement the more likely something important may get missed.

And if the parties expect a delay in the settlement process, there is no obstacle under Louisiana law to extending the time for the settlement to be completed and the payment made, just as there is no obstacle to setting a shorter time than allowed by Louisiana law.

However, if there is an unforeseen delay and the reason for delay were within the control of the workers compensation insurance company, then the injured employee may be entitled to penalties and reasonable attorney fees because of that delay.

The Louisiana Statutes for Settlements in Louisiana Workers Compensation

The primary Louisiana statutes regarding workers compensation settlements are La. R.S. 23:1271, La. R.S. 23:1272, and La. R.S. 23:1274, which read as follows:

§1271.  Right of parties to settle or compromise

A.  It is stated policy for the administration of the workers' compensation system of this state that it is in the best interest of the injured worker to receive benefit payments on a periodic basis.  A lump sum payment or compromise settlement in exchange for full and final discharge and release of the employer, his insurer, or both from liability under this Chapter shall be allowed only:

(1)  Upon agreement between the parties, including the insurer's duty to obtain the employer's consent;

(2)  When it can be demonstrated that a lump sum payment is clearly in the best interests of the parties; and

(3)  Upon the expiration of six months after termination of temporary total disability.  However, such expiration may be waived by consent of the parties.

B.  As used in this Part, "parties" means the employee or his dependent and the employer or his insurer.  Nothing in this Section shall require the office of risk management to obtain approval of settlements from the employing state agency, department, council, board, or political subdivision.

Amended by Acts 1954, No. 724, §1; Acts 1966, No. 181, §1.  Acts 1983, 1st Ex. Sess., No. 1, §1, eff. July 1, 1983; Acts 1991, No. 892, §1; Acts 1997, No. 60, §1, eff. June 11, 1997.

§1272.  Approval of lump sum or compromise settlements by the workers' compensation judge

A.  A lump sum or compromise settlement entered into by the parties under R.S. 23:1271 shall be presented to the workers' compensation judge for approval through a petition signed by all parties and verified by the employee or his dependent, or by recitation of the terms of the settlement and acknowledgment by the parties in open court which is capable of being transcribed from the record of the proceeding.

B.  When the employee or his dependent is represented by counsel, and if attached to the petition presented to the workers' compensation judge are affidavits of the employee or his dependent and of his counsel certifying each one of the following items: (1)  the attorney has explained the rights of the employee or dependent and the consequences of the settlement to him; and (2)  that such employee or dependent understands his rights and the consequences of entering into the settlement, then the workers' compensation judge shall approve the settlement by order, and the order shall not thereafter be set aside or modified except for fraud or misrepresentation made by any party.

C.  When the employee or his dependent is not represented by counsel, the workers' compensation judge shall determine whether the employee or his dependent understands the terms and conditions of the proposed settlement, and shall approve it by order, unless he finds that it does not provide substantial justice to all parties, and the order shall not thereafter be set aside or modified except for fraud or misrepresentation made by any party.

D.  If a suit has been filed against a third party pursuant to the provisions of R.S. 23:1101, the district court hearing the third-party suit shall, in addition to a workers' compensation judge, have the authority to approve a lump sum or compromise settlement of the workers' compensation claim under the same conditions and terms set forth in this Section for approval of such settlements by a workers' compensation judge, and such authority shall include approval and establishment of the credit due the employer.  The fees of the attorney representing the employee in the workers' compensation matter shall be approved by the district court judge.

E.  All compensable medical expenses incurred prior to the date of the settlement shall be paid by the payor unless the terms of the settlement specifically provide otherwise.

Acts 1992, No. 769, §1; Acts 1995, No. 1137, §1, eff. June 29, 1995; Acts 1997, No. 88, §1, eff. June 11, 1997; Acts 1999, No. 776, §1; Acts 2001, No. 1014, §1, eff. June 27, 2001; Acts 2005, No. 257, §1.

§1274. Lump sum settlements; necessity for approval

A. The amounts payable as compensation may be commuted to a lump sum settlement by agreement if approved by the workers' compensation judge as provided in this Part. In a lump sum settlement, the payments due the employee or his dependents shall not be discounted at a greater rate than eight percent per annum.

B. If the lump sum settlement is made without the approval of the workers' compensation judge, or at a discount greater than eight percent per annum, even if approved by the assistant secretary or the workers' compensation judge, the employer shall be liable for compensation at one and one-half times the rate fixed by this Chapter. At any time within two years after date of the payment of the lump sum settlement and notwithstanding any other provision of this Chapter, the claimant shall be entitled to demand and receive in a lump sum from the employer such additional payment as together with the amount already paid, will aggregate one and one-half times the compensation which would have been due but for such lump sum settlement.

C. Upon payment of a lump sum settlement commuted on a term agreed upon by the parties, approved by the workers' compensation judge, and discounted at not more than eight percent per annum, the liability of the employer or his insurer making the payment shall be fully satisfied.

D. For the settlement of compensation claims as provided in R.S. 23:1231 through 1236 the following procedure shall be followed. The claimant must present to the employer an affidavit of death of the employee, proper proof of the claimant's relationship to the deceased and his legal right to the compensation benefits. Such documentation shall be affixed to the joint petition and submitted to the workers' compensation judge for approval as hereinabove provided.

Acts 1977, No. 40, §1; Acts 1982, No. 611, §1; Acts 1983, 1st Ex. Sess., No. 1, §1, eff. July 1, 1983; Acts 1988, No. 938, §1, eff. July 1, 1989; Acts 1989, No. 23, §1, eff. June 15, 1989; Acts 1989, No. 260, §1, eff. Jan. 1, 1990; Acts 1997, No. 88, §1, eff. June 11, 1997.

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