When is the Best Time to Settle a Louisiana Workers Compensation Claim?

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Settlements in Louisiana Workers Compensation

In Louisiana workers compensation, settlements are completely voluntary for both sides.

In other words, neither the employee can force the workers compensation insurance company to settle, nor can the workers compensation insurance company force the employee to settle.

Nonetheless, settlements do typically occur in most workers compensation claims, because it is generally in the best interest for both parties to settle a claim, or at the very least to strongly consider settlements.

From the perspective of the the workers compensation insurance company, a closed file is generally a good file, because a closed file stops the continued drain on insurance reserves (an amount of money earmarked for a claim) and the need for requiring additional reserving.

From the point of view of the workers compensation insurance company, even though the expenses and costs of administration of a workers compensation claim can be relatively low, a settlement within reasonable limits is generally seen as a win because the insurance company knows that it will no longer need to spend any additional funds on the claim.

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 or procedures 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 effect that vocational rehabilitation can have on the settlement 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.

Of course, there do exist some claims where there is little to no possibility of settlement, but such claims typically involve unrealistic expectations on one or both sides.

But again, in general most Louisiana workers compensation claims will have a settlement value on which both sides might be able to agree, depending upon a variety of issues and facts.

And, there are also claims which may be partially settled, but (due to issues outside of the control of the parties, such as Medicare's interest in a extremely high value medical claim or non-approval of a settlement request subject to approval by the Board of the Second Injury Fund) where a full and final settlement may not be immediately possible.

Timing a Settlement in Louisiana Workers Compensation

The timing of a settlement in Louisiana workers compensation is extremely important, in order to maximize the value of the settlement.

As noted above, it is usually in the best interest of an injured employee to have any recommended surgeries before consideration of settlement.

So there is certainly the concern that the injured employee may settle his or her workers compensation claim too early, which is usually before the full extent of the employee's disability is known.

In fact, the workers company insurance company will frequently offer the employee a settlement before the employee's case is ready to settle, in order to low-ball the employee before the employee has retained an attorney.

But even more importantly, it is extremely important to understand that the value of a workers compensation claim continues to steadily decline, unless additional surgeries or procedures are required.

Thus, 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 effect that vocational rehabilitation can have on the settlement value of a claim.

In fact, the clock is running against the injured employee, even when the employee is engaged in settlement negotiations.

And, if the workers compensation insurance company has presented a settlement offer to the employee before the employee's attorney has presented a settlement offer to the insurance company, then the employee has already waited too long, because the insurance company has already set its settlement parameters and determined its settlement value before even hearing the side of the employee.

So the employee's attorney should always present a settlement offer to the insurance company first.

And, an injured employee has also waited too long if the employee has already recovered, or has already begun vocational rehabilitation, or has already found another job.

Sources of Information for Timing a Settlement

When an injured employee is determining the best time to attempt settlement of the employee's workers compensation claim, the most important source of information is the employee's medical records. 

The employee's medical records - or generally any information obtained from the employee's treating physician or other medical providers - will reveal:

    1. The employee's current medical condition;
    2. The employee's present ability to return to work;
    3. The employee's likely future ability to return to work;
    4. The employee's future medical treatment options; and
    5. The employee's likely future medical expenses.

These factors are the most important factors in determining the settlement value of a workers compensation claim.

Again, the settlement value of a workers compensation claim is primarily based on the employee's future lost wages and the employee's future medical expenses.

Additionally, when an injured employee is determining the best time to attempt settlement of the employee's workers compensation claim, the best source of information is an experienced Louisiana workers compensation attorney.

An experienced Louisiana workers compensation attorney can answer all an employee's questions and concerns, and can maximize the amount that the injured worker will receive 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.

Not only will the attorney be able to obtain much more money for the employee even at 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 recovery.

So, an injured employee should always hire an experienced Louisiana workers compensation attorney to handle his or her settlement, because only a qualified attorney can fully enable an injured employee to make a completely informed decision about whether and when to settle a workers compensation claim.

When is It Too Late to Settle a Workers Compensation Claim? 

Technically, unless the time limits (or prescription periods) run out on an injured employee, it is usually never too late to settle a Louisiana workers compensation claim.

However, in the course of a Louisiana workers compensation claim, it often can become too late to settle a claim for maximum value.

Generally speaking, over time the settlement value of a Louisiana workers compensation claim forms the shape of an arch; after the accident, the settlement value will generally increase over time, gradually hit a peak maximum value, and then gradually decrease until it hits little or nothing.

So again, it often can become too late to settle a claim for maximum value.

Generally speaking, if the workers compensation insurance company has presented a settlement offer to the employee before the employee's attorney has presented a settlement offer to the insurance company, then the employee has already waited too long.

Or, if an injured employee has mostly recovered from his or her disability, then the employee has already waited too long.

Or, if an injured employee has been released to return to work, then the employee has probably already waited too long.

Also, an injured employee has definitely waited too long if:

    1. The employee has begun vocational rehabilitation;
    2. The employee has undergone a Functional Capacity Evaluation (FCE);
    3. A Labor Market Survey has been performed for the employee; or
    4. The workers compensation insurance company has reduced or eliminated the employee's lost wage (indemnity) benefits.

But again, in all of these scenarios, an injured employee can still settle his or her workers compensation claim; however, the employee has waited too long to settle the claim for maximum value.

Maximum Medical Improvement and Settlement Timing in Louisiana Workers Compensation

An excellent time to attempt a workers compensation settlement is after the injured employee has completed medical treatment and the employee's treating physician determines that the employee has reached a condition known as at Maximum Medical Improvement (MMI).

What Is Maximum Medical Improvement?

In Louisiana workers compensation, Maximum Medical Improvement - or “MMI” for short - is generally defined as the point at which the injured employee's medical condition has stabilized and is unlikely to improve any further.

In other words, Maximum Medical Improvement means that the injured worker has reached a state where his or her medical condition cannot be improved any further, or that a treatment plateau in the employee's healing has been reached.

Of course, just because the injured employee worker has reached Maximum Medical Improvement does not mean that he or she is 100% fully healed.

Instead, Maximum Medical Improvement simply means that the injured worker's medical condition is generally "as good as it is going to get."

So in this sense, Maximum Medical Improvement could be a state reached both by an injured employee who is 100% fully healed, and a different injured employee who is not healed at all.

In Louisiana workers compensation, Maximum Medical Improvement in generally determined by the treating physician of the injured worker.

Really, this is because no other individual or party is in a better position to determine whether or not the employee has reached the point at which the injured employee's medical condition has stabilized and is unlikely to improve any further.

Also, a determination of Maximum Medical Improvement can be positive for an injured employee, because it can signal that the employee's workers compensation claim is near an end and that settlement is likely to occur soon, since the employee's medical situation will no longer be changing or improving.

The workers compensation insurance company will likely be eager to pursue settlement negotiations at this point, and ideally the employee's attorney should already have presented a settlement demand in the matter.  

Settlement Timing and Maximum Medical Improvement

Typically, in a Louisiana workers compensation claim, settlement most frequently occurs once a determination of Maximum Medical Improvement has been made by the injured employee's treating physician.

Again, Maximum Medical Improvement means that the injured worker's medical condition is generally "as good as it is going to get" and not going to improve.

And because the employee's medical condition is generally not going to improve, both the employee and the workers compensation insurance company should be able to properly evaluate the settlement value of the employee's claim, since both sides should be able to estimate and predict the employee's future lost wage (indemnity) benefits and future medical expenses.

So, once an injured employee reaches Maximum Medical Improvement, the employee's workers compensation claim is prime (or ripe) for settlement. 

But if either the injured employee or the workers compensation insurance company fails to recognize that the employee has reached Maximum Medical Improvement, then unnecessary costs, expenses and time can be added to a workers compensation claim.

And on the flip side, settling an employee's workers compensation claim too soon is rarely in an injured worker's interest, because the workers compensation insurance company at that point will assume that the employee needs little to no more medical treatment, and thus will undervalue the employee's claim.

So by settling a claim too early (which usually means for too little an amount), the injured worker could be left uncompensated for future medical expenses, which the employee will likely have to pay for out-of-pocket, without any opportunity to reopen his or her claim.

But at the same time, an injured employee should always be proactive regarding settlement negotiations and should never wait for the workers compensation insurance company to make the first move when it comes to settling a workers compensation claim.  

For these reasons, an injured worker should always be represented by an experienced licensed workers compensation attorney, especially prior to any settlement negations.

Nonetheless, a determination of Maximum Medical Improvement remains a very important event in the course of any Louisiana workers compensation claim, and the injured employee and the employee's attorney must recognize this determination as a prime opportunity to reach a full and final settlement with the workers compensation insurance company.

Timing Factors to Consider When Settling a Louisiana Workers Compensation Claim

Before deciding when to attempt settlement of a workers compensation claim, an injured employee (with the advice and assistance of the employee's attorney) must thoroughly consider certain timing factors before timing a settlement, or really before even engaging in settlement negotiations.

The following are examples of some of the more important timing considerations affecting the decision of when to time an attempt at settlement in a Louisiana workers compensation claim.

Timing Factors Regarding Lost Wage (Indemnity) Benefits to Consider Before Settlement

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

    • What type of lost wage (indemnity) benefits is currently being paid?
    • What is the current limit (if any) to the number of weeks on the type of lost wage (indemnity) benefits being paid to the employee?
    • Are there currently any other limits to the type of lost wage (indemnity) benefits being paid to the injured employee?
    • Is the injured employee currently 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?
    • Have all past-due lost wage (indemnity) benefits already been paid?
    • What date was the last lost wage (indemnity) benefit 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?
    • Has the injured employee's doctor 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?
    • Has the workers compensation insurance company's doctor or an Independent Medical Examiner released the employee to return to work?
    • 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?

Timing Factors Regarding Medical Treatment to Consider Before Settlement

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

    • Has the injured employee's medical condition stabilized?
    • Does the medical evidence support the injured employee's ongoing disability?
    • Does the injured employee require a future surgery?
    • Does the injured employee require ongoing future medical care?
    • Does the injured employee require extensive medical care in the future?
    • What are recommendations of the employee's treating physician for future medical care?
    • Does the injured employee require very expensive medical care in the future?
    • How much does the future medical care recommended by the employee's treating physician cost?
    • What exactly are the employee's anticipated future medical treatment and prescription medication expenses?
    • 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?
    • Has an accurate Medicare Set Aside (MSA) report been prepared?
    • Has an accurate Medicare Set Aside (MSA) report been submitted to CMS for approval?
    • Does Medicare have an interest in any potential workers compensation settlement by the injured employee?
    • Will a potential workers compensation settlement affect the injured employee's Medicare benefits?

Timing Factors in Vocational Rehabilitation to Consider Before Settlement

Some of the more important timing factors - concerning vocational rehabilitation benefits - that the employee and the employee's attorney need to consider before timing a settlement in 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 listed 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?
    • 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 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?

Other Timing Factors to Consider Before Settlement

Some other important timing factors that the employee and the employee's attorney need to consider before timing a settlement in 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, what effect does it have on the settlement value of the employee's 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?
    • 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 expect to settle both the indemnity portion and the medical portion of the claim at the same time?
    • Has the injured employee already applied for Social Security Disability (SSDI) benefits?
    • Has the injured employee received Social Security Disability (SSDI) benefits?
    • Has the injured employee received retirement benefits?
    • Will the potential settlement documents include social Social Security Disability (SSDI) spread language about life expectancy?
    • What impact will the potential settlement have on Social Security Disability (SSDI) 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, and 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? 

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.

Mediation Conferences and Settlement Timing in Louisiana Workers Compensation

Another excellent opportunity to attempt a workers compensation settlement is during a mediation conference.

What are Mediation Conferences?

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.

Though the parties can choose a private mediator at their own cost (although it is almost always the insurance company who pays the mediator), most mediations in Louisiana workers compensation occur within the Louisiana Office of Workers Compensation (OWC) since there is no fee or cost in those mediations.

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

The Office of Workers Compensation (OWC) mediators are licensed attorneys who are specifically trained in handling mediations, knowledgable about dispute resolution techniques and experienced in resolving Louisiana workers compensation disputes.

These OWC mediators attempt to resolve the workers compensation disputes between the parties, so that the parties will not have to go to a hearing in front of the workers compensation Judge.  

In other words, 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, before those disputed issues go to trial.

What Happens During an Actual Mediation

Basically, most mediations - including those in Louisiana workers compensation - begin with the parties and the neutral mediator all seated in the same room together, usually around a large conference table.

The mediator will start by explaining to the parties why they are there and how the mediation will work.

Then, the sides will take turns introducing themselves, and explaining what they are seeking or offering, and why they are seeking or offering that.

Next, the two sides will separate by moving to separates rooms, and the mediator will go back and forth and exchange counter-offers or positions between the two parties, in order to eventually come to a settlement or agreement between the parties.

Eventually, the matter will either settle or the mediator will declare that no settlement can be reached.

However, whether the claim settles or not, all statements made at any mediation conference shall be privileged and shall not be admissible in any subsequent status conference, pretrial conference, hearing, or trial.  

This simply means that nothing said at a mediation - including a settlement position - can be used against that party at any other time.

Also, unlike Court proceedings, there is no court reporter or stenographer to record or write down what is said at mediations, and no witnesses are called to testify at mediations. 

Upon completion of a mediation in Louisiana workers compensation, the mediator will draft a mediation report, and the mediator and all the parties will sign the report.

How to Approach a Mediation Conference

Mediation can be a really helpful tool in settling a workers compensation claim, because it emphasizes the common goal of resolution that both sides are seeking, while de-emphasizing the confrontational element that is naturally a part of any dispute.

So it is important to understand that mediation is not the court room where the two sides argue that they are right and the other side is wrong; instead, mediation is a process to find agreement between the injured employee and the workers compensation insurance company.

In other words, when an injured employee walks into mediation, the employee is there to work toward the settlement of the claim for an amount that the employee is willing to take, not to argue facts before the workers compensation Judge.

Mediation is voluntary and works only if both sides are willing to compromise, so the injured employee needs to have a realistic assessment of the value of the employee's claim.

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.

The Cost-Benefit Analysis When Settling a Louisiana Workers Compensation Claim

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.

The Louisiana Statutes for Settlement Options in Louisiana Workers Compensation

The primary Louisiana statutes regarding settlement options 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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