Many factors go into determining the settlement value of a Florida workers' compensation case. Although the opposing parties are seeking different outcomes - the Claimant wants to recover as much as possible, while the Employer/Carrier wishes to settle for as little as possible - each side benefits from performing a fair and honest evaluation; neither party gains an advantage from being deluded about a case's true value.
This is not to say that the parties, after performing their assessments, will always arrive at similar conclusions. Law is more art than science. Judgment calls based on a countless number of variables often result in significantly different conclusions. The goal of successful negotiating is to narrow the differences to an acceptable agreement.
Before considering the factors that influence case value, it should be noted that no party to a workers' compensation case can be forced to settle. Not even a judge of workers' compensation claims can force a settlement on the parties. Moreover, there is no jury system in workers' compensation where a verdict is reached awarding a lump sum of money. Most workers' compensation cases are mediated, but the settlement can only come through an agreement of the parties.
It should also be noted that compensation for non-economic damages (sometimes referred to as, Pain & Suffering) is not awardable in workers' compensation cases. (See these blogs: personal injury; wrongful death.)
This blog will discuss some of the factors that should be considered in determining the settlement value of a Florida workers' compensation case:
- Facts of Case: Do the facts make sense? Do they present a strong or weak case? Can they withstand strong scrutiny? A frank and honest assessment of the facts must be conducted. Failing to do so will result in an unsatisfactory outcome.
- Date of Accident: In workers' compensation cases, especially, the accident date often has significant impact on case value. This is because the workers' compensation laws are in a constant state of change. Sadly, the the rights of claimants have suffered as the power of state Republican legislators has strengthened. Two of the main areas of change concern the permanent total disability standard and the employer/carrier's responsibility for paying the claimant's attorney's fees where it wrongfully denies benefits. The present state of the law with regard to both is more difficult for injured workers than it ever was in the past. The constitutionality of the attorney's fee provision will be challenged to the Florida Supreme Court.
- Age of Claimant: Especially significant with regard to qualifying for permanent total disability benefits, a major workers' compensation benefit. Although never an easy benefit to secure, at any age, an elderly person is more likely to be permanently and totally disabled from an injury than a much younger person with the same injury. Age also factors into the need for medical care, a cost element in every workers' compensation case. In some instances, especially involving catastrophic injuries, the value of a younger person's claim can be more than that of an older person. The reason why is because the younger person will be eligible for benefits for a longer period of time, hence costing the E/C more money.
- Severity of Injury: Generally speaking, the more serious the injury, the more valuable the case. This is not as true in workers' compensation cases as it can be in personal injury cases, but it is still an important factor. The degree of injury determines entitlement to indemnity (lost wage) and medical benefits, both of which are the primary cost elements in workers' compensation cases.
- Value of Past Benefits in Dispute: Workers' compensation claims are filed for past and future benefits. Claims for past benefits include those for lost wages (indemnity benefits), and the payment of medical benefits (e.g., hospital and doctor charges). The cost to the employer/carrier of paying these benefits, plus penalties and interest, must be calculated as part of the overall equation of settlement value.
- Present Value of Future Benefits: The investment cost today to pay future benefits over a periodic basis is much lower than the sum of those benefits paid over time. The investment cost is the present value. Because of the rising cost of medical benefits, present value is a bigger factor with regard to lost wage benefits than it is with medical benefits. There are good softwares available online to make the present value calculations.
- Workers' Compensation Judge Assigned to Case: Not all judges are alike. Some are more conservative than others, i.e., less Claimant friendly. This factor should be considered in determining the chances of success at the trial level. The lower the Claimant's chances, the less valuable the case.
- Case Expenses Incurred by the E/C: This element plays an important and interesting role, both good and bad. I find that e/c's tend to place greater settlement value on a case in which they have already paid a significant sum of money, even if the paper evaluation does not justify it. Some sort of psychological influence. The downside to that example, is that an e/c can look at the figures and decide that the lion's share of money has already been paid and little more will have to be paid out. It's a fine balance, but I tend to prefer situations where the e/c has already incurred significant costs. I always try to obtain a copy of the printout of workers' compensation benefits paid prior to making my final evaluation.
- Employer: Not all employers are alike. Some take a harder line than others with regard to workers' compensation cases, oftentimes leading to lower settlement offers. In evaluating how much one can expect to recover by way of settlement, this factor must be considered. When the employer is self-insured, i.e., pays out of pocket instead of through insurance, this difficulty increases.
- Insurance Carrier: Similar considerations as to Employers. Some are more conservative than others. Unfortunately, there are a small number of carriers who are just as difficult as the worst employers. Typically, however, I prefer dealing with insurance companies over employers on claims.
- Adjusters: Same considerations as regards employers and carriers. However, adjusters usually answer to superiors, so an adjuster can be overridden by superiors. This can be good and bad. Therefore, it helps to know all the players.
- Defense Counsel: Same considerations as regards employers, carriers, and adjusters. Added considerations include the competence of the lawyer and the degree to which the employer and carrier rely and respect his/her opinions/advice. A strong defense lawyer can work in favor of increasing the value of a solid claimant's case. The lawyer will have the ability to influence the final decision makers who may not be seeing things as clearly. These same considerations can work to decrease the value of a case if the defense lawyer feels that the claimant's case is weak. A competent defense attorney makes a formidable trial opponent, also a factor to be considered in assessing settlement value.
- Cost to the Employer/Carrier of Handling/Defending a Workers' Compensation Case: Even workers' compensation cases where the claimant has not hired an attorney and all benefits are being provided timely, it cost the employer/carrier money to maintain the file. An adjuster must be paid, and other incidental office costs are incurred, including, in some instances, the involvement of a nurse case manager. The costs rise much higher in litigated cases. More in-house labor is required to adjust the case and outside legal counsel is typically hired, at the rate of $100 to $200 per hour. It is not unusual for a defense attorney to bill 40-50 hours in a normal case, much more in a hotly contested case.
- Employer/Carrier-paid Attorney's Fees: This factor is controlled by Florida Statute 440.34. Prior to July, 2009, when the claimant's attorney successfully prosecuted a claim against the employer/carrier for wrongfully denying benefits, the employer/carrier had to pay claimant's attorney's fees based time spent or a percentage of benefits secured. Where the value of the benefits secured were small, which is often the case in workers' compensation cases, the % formula does not fairly compensate the claimant's attorney. In those circumstances, the attorney opted for hourly attorney's fees. This provision bothered employers/carriers. At their urging, in May 2009 the Republican-controlled legislature eliminated the hourly fees provision. The change has made it harder for claimants to enforce their rights. The 2009 law will be challenged to the Florida Supreme Court. Either way, so-called carrier-paid attorney's fees are an element that both sides must consider to fully determine the settlement value of a workers' compensation case.
- Witnesses: The credibility of testifying witnesses, including the claimant and experts (e.g., doctors; vocational experts), must be assessed. A strong case on paper can be lost by weak and unreliable witnesses.
- Odds of Success at the Trial Level: This is a big factor. Rarely can either side be 100% certain of an outcome, but conclusions based on knowledge and experience can and must be reached in order to properly evaluate case settlement value. The party with the clearly weaker case will, of course, be more inclined to settling, even if it means compromising to get it done. Factors such as who is the presiding judge, attorney competence, facts of the case, quality of the testifying experts, and the law will be considered.
Jeffrey P. Gale, P.A. is a South Florida based law firm committed to the judicial system and to representing and obtaining justice for individuals - the poor, the injured, the forgotten, the voiceless, the defenseless and the damned, and to protecting the rights of such people from corporate and government oppression. We do not represent government, corporations or large business interests.
Contact us at 866-785-GALE or by email to learn your legal rights.