Synopsis: The Biggest Claims Mistake Adjusters Make.
Editor’s comment: We see it over and over and over again. When it happens, we try to smile and provide simple logic and common sense. We are not sure how it started but however this concept began, we recommend putting it on the garbage pile of bad ideas that won’t work out.
What is the big mistake? Well, I want my readers to know we are constantly asked by claims handlers on WC, GL and EPLI claims to “ask the other side for a settlement demand.” We are certain the idea comes from the claims concept of “doing something” to keep things in the claim moving forward. We understand the concept of getting a claim moving but don’t make it move like this!!
Never Ask the Other Side for a Settlement Demand
To best understand, consider a common transaction that is always happening, all around us. Home sales—if you want to sell a home, you can go to any number or real estate brokers and look at what they have for sale. You can also go online to Zillow.com, Redfin.com or Trulia.com and look for yourself.
There is no real estate broker or real estate web sales site that lists homes for sale for “whatever you want to pay.” Every real estate owner, sales person and broker does their homework, carefully examines the property to be sold, compares it other properties for sale in the area and looks at “comps” or comparable sales of homes like that one. The real estate websites do literally hundreds of comps online to constantly update values in your village/town/city and give you accurate information designed to best advise you on what to ask/pay when selling your home or buying one. The equivalent of “comps” in our industry should be your reserves—reserves should be set based upon other similar claims with like-kind injuries and recoveries.
The important aspect that I am trying to teach claims handlers at every level is starting any effective negotiation requires both “bracketing” and homework! I understand your bosses sometimes overload you with too many claims and too much to do on each claim. That said, I don’t feel you can aggressively and ethically handle settlement negotiations to give up the most important aspect by letting the other side do your homework and start the bracketing for settlement. Trust me, if you ask Plaintiff attorneys to demand “whatever they want,” in my experience, they will start wildly high and you then need to spend hours and hours bringing them back to reality.
I vote start the bracket yourself. Make a reasonable and fair offer. If Claimant’s counsel doesn’t want reasonable, get the matter into a pretrial with one of IL WC Arbitrators/Commissioners presiding. Let the hearing officer know what you offered and why. We assure you they are fair, honest and wonderfully professional. If they can bring the parties together, they will make every effort to do so. Please remember the vast majority of our IL WC claims settle, year in and year out. A lot of the best settlements come via hard work by our hearing officers.
What is “Bracketing?”
Well the first party in a claims or real estate or any sales transaction that says what they are willing to pay or accept has an enormous advantage. That is why all home sales have a price already defined and listed—to let new buyers know what they may need to purchase the property and close the deal. They can look at the homework and research you provide. After taking a look, they can counter lower at the risk of losing what may be a great deal for a house. If the house doesn’t bring offers, the real estate sales person and owner may have to get together and re-evaluate the asking price.
In short, my strongest recommendation in settling any claim is to first know the file backwards and forwards. You have to do your homework and understand the strengths and weakness of the claim. Once you are confident about your research/homework, it is imperative is to always, always make the first offer and thereby start the bracketing.
What is problematic about letting the other side start the bracketing? Learn, as I did, from the venerable Bernie Goldstein! Attorney Goldstein practiced law in this state for over 60 years. I remember he knew the advantage of starting the bracketing in negotiations and if he had a file that was worth $20,000, Bernie would always ask for $118,000. When you told him that was outrageous and there was no way you could get that much from your client, he would then drop the demand to $78,000. I remember arguing with him and telling him it was still exponentially more than my client would pay and he would always answer he dropped the demand $40,000 so I would have to come up $40,000!
What I always remember from such discussions was to beat Bernie to the punch and always start the bracketing—if the claim was worth $20,000, I would contact the client and offer $10,000 at my earliest opportunity. If Bernie then countered at $78,000, I was a lot easier to hammer him down to the $20,000 range.
Always Send the Paperwork!!
As a final note, my new approach to all settlements in my IL WC, GL or EPLI practice is to create the needed settlement documents, have the client approve them and then forward to the other side as my opening offer. Many times, if the value is reasonable, the other side will grab it, sign and get approval. If they counter with a reasonable value within my authority, we can quickly modify the settlement documents and, with client approval, re-sign and resend to OC.
If you don’t send the paperwork, it leaves the negotiations somewhat nebulous and open. I have had great results to insure my team and my clients understand the value in not just talking about settlement but actually putting the paperwork together, getting client approval and hammering out a final deal with the other side.
We appreciate your thoughts and comments. Please post them on our award-winning website.
Synopsis: Can IL Workers’ Comp Add “Small Claims” Handling?
Editor’s comment: Of the approximately 40,000 new IL WC claims filed every year, there are major, moderate and minor/tiny claims. As you read this, I estimate at least 25-30% of litigated IL WC claims have a value under $10,000. This creates challenges for self-insured employers, insurance carriers and the defense industry in general as it is increasingly difficult to manage and defend such claims in a cost-effective fashion.
Many of our clients will consider over-paying small and minor claims to rapidly close rather than allow them to pend and pend. Reserves remain blocked from use by employers/insureds. As defense counsel, we are asked repeatedly to close/settle/resolve minor files to be told by our opponents
- They are looking for medical bills;
- They don’t have a complete medical chart;
- Their clients have pie-in-the-sky view of PPD values and
- Their clients are AWOL—they don’t know how to reach them.
We also see claimant lawyers set minor cases for hearing over and over again. They will then routinely seek continuances of the trial settings. In my view, this unseemly tactic is dramatically irritating to clients from other states where the clients are used to a “trial setting” meaning the claim is going to be tried, defaulted or dismissed. The IL WC system rarely does so, leaving defense clients confused and typically upset. Please also note my feeling some Claimant attorneys set cases for hearing over and over again in a fashion that seems to be extortive—they want our clients to have high defense costs to justify taking dubious claims from low nuisance value to higher nuisance values to avoid repetitive trial settings and continuances.
I also feel some Claimant attorneys want to maintain a “posse” of pending claimants/claims so they have implicit salespeople out there, looking for other folks to get injured and file minor claims with that attorney. The issue our clients have with that concept is the system then moves away from seeking fair compensation for injured workers to actually create a system that encourages questionable injuries and claims. We also point out the IL Supreme Court and the ARDC sanction other attorneys across our State for slow handling of valid claims. It appears the only place a claim can sit for years, even decades, with no one truly questioning it would be at our IWCC. Get ‘em moving, folks!
One method used in the Circuit Courts to address these sorts of issues is the “Judge Judy” handling of small and minor claims. The case is not generally assigned to any judge—they select a small claims jurist who adroitly deals with and tries/settles the smaller claims. The cases are put on a relative “fast track” and have a much more aggressive call with a focus on trying to move the little ones to a fair and speedy outcome. I am a strong proponent of the idea that “justice delayed is justice denied.” If Claimant suffers
- a minor but accepted injury
- is back to regular work,
- lost time/bills are paid or will be paid and
- the matter is ready for disposition
Why let it sit and sit? Common sense indicates all sides of the WC matrix should get such minor cases to settlement, hearing or dismissal. We suggest Chairperson Fratianni, her Chief Legal Eagle Ron Rascia, the IL WC Advisory Board, the IL State Chamber and other business groups consider informally or formally creating a small claims handling process where either side of a litigated claim can file motions confirming acceptance, payment of interim benefits and request expedited resolution via settlement or nature and extent hearing.
We appreciate your thoughts and comments. Please post them on our award-winning blog.