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This presentation discusses settlements of workers\' compensation cases in Florida. The discussion includes federal law affecting personal injury cases, MSA\'s and CMS participation. General contract principles are also explored.

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  1. 1. Settlements By: BRIAN B. BOLTON Florida Bar Board Certified Workers’ Compensation Law Preeminent Lawyer, Lexis Nexis Bar Register Florida Super Lawyer, 2007-2009
  2. 2. Settlements Are Common Most lawyers are aware that the majority of lawsuits settle at mediation. Interestingly, in Florida, the Workers’ Compensation Judge of Compensation Claims (JCC) may consider only workers’ compensation cases that have been mediated.Consequently, a large number of workers’ compensation matters settle rather than proceeding to trial.
  3. 3. Ripeness Claims that have not gone through the mediation process are not ripe for adjudication. Farnam v. U.S. Sugar Corp . , 34 Fla. L. Weekly D509, D510 (Fla. 1st DCA 2009).
  4. 4. Formalizing The Settlement Upon reaching an agreement in a workers’ compensation matter, as in other areas of the law, it is common for a preliminary summary of settlement terms to be approved by the parties. It is tempting to consider the mediation a success at this point. However, a successful mediation and settlement agreement is one which ends all disputes. It comes as no surprise that once a case has “settled” at mediation or through other informal negotiations, disputes arise as the parties attempt to formalize and finalize their preliminary agreement with documents containing lengthier and much more specific terminology.
  5. 5. Problems Arise Disputes include instances wherein an injured worker attempts to withdraw from a settlement because the parties cannot reach agreement as to specific terms, the injured worker develop “buyer’s remorse,” and for a myriad of other reasons. See Bolton, “Enforcement Of Workers’ Compensation Settlements”, Fla. Bar Journal (April, 2009).
  6. 6. Issues Threatening Settlement The psychological issues involved in obtaining a successful workers’ compensation settlement can be quite complex . These issues include anger directed against a former employer, disputes over the handling of claims by the workers’ compensation insurance carrier, the lack of an ongoing relationship between the injured worker and the other parties, and fear upon reconsideration by the claimant of the extent of the injuries, just to name a few.
  7. 7. Scope of Settlements Florida provides for settlements of all future indemnity benefits, medical benefits or both.
  8. 8. Settlements By Un-represented Claimants – Denied Claim <ul><li>Terms Under F.S. 440.20 (11)(a) </li></ul><ul><li>When a claimant is not represented by counsel… </li></ul><ul><li>Upon joint petition of all interested parties… </li></ul><ul><li>A lump-sum payment in exchange for the employer's or carrier's release from liability for future medical expenses, as well as future payments of compensation expenses and any other benefits provided under this chapter, shall be allowed… </li></ul><ul><li>At any time in any case in which the employer or carrier has filed a written notice of denial within 120 days after the employer receives notice of the injury… </li></ul><ul><li>The JCC must give consideration to the interests of all interested parties and the JCC may or may not enter a compensation order… </li></ul>
  9. 9. Settlements By Un-represented Claimants – Accepted Claim <ul><li>Terms Under F.S. 440.20 (11)(b) </li></ul><ul><li>When a claimant is not represented by counsel… </li></ul><ul><li>Upon joint petition of all interested parties… </li></ul><ul><li>A lump-sum payment in exchange for the employer's or carrier's release from liability for future medical expenses, as well as future payments of compensation expenses and any other benefits provided under this chapter, shall be allowed… </li></ul><ul><li>At any time after the claimant has reached MMI. </li></ul><ul><li>The JCC must determine if settlement w ill definitely aid the rehabilitation of the injured worker or otherwise is clearly for the best interests of the person entitled to compensation…and may or may not enter an order approving the settlement. </li></ul>
  10. 10. Enforcement Of Settlements By Unrepresented Claimants The JCC cannot enforce a settlement agreement into which the unrepresented claimant entered under 440.20(11)(c), the section concerning represented claimant’s. Vallecillo v. Bachiller Ironworks , 2008 Fla. App. LEXIS 6300 (Fla. 1 st DCA, April 28, 2008). In Vallecillo , the Court reversed and remanded a summary final order dismissing the claimant’s PFB based on his settling his claim while unrepresented and under 440.20(11)(c).
  11. 11. Enforcement Of Settlements By Unrepresented Claimants - Vallecillo v. Bachiller Ironworks The Court explained that a settlement is invalid if not approved by the JCC.
  12. 12. Settlements By Represented Claimants <ul><li>Terms Under F.S. 440.20 (11)(c) </li></ul><ul><li>When a claimant is represented by counsel … </li></ul><ul><li>The claimant may waive all rights to any and all benefits under this chapter by entering into a settlement agreement releasing the employer and the carrier from liability for workers' compensation benefits in exchange for a lump-sum payment to the claimant. </li></ul><ul><li>The settlement agreement requires approval by the judge of compensation claims only as to the attorney's fees paid to the claimant's attorney by the claimant. </li></ul>
  13. 13. Payment 14 days Time begins from the mailing of order approving attorney’s fees unless otherwise stipulated between the parties. F.S. 440.20(11)(c)
  14. 14. Settlements Are Governed By Contract Law, Are Favored Settlement agreements entered into by parties are governed by contract law. See Robbie v. City of Miami , 469 So. 2d 1384, 1385 (Fla. 1985). Such agreements “are highly favored and will be enforced whenever possible.” Id.
  15. 15. Enforcement Mediation Agreements Are Enforceable In Calderon v. J.B. Nurseries, Inc., 933 So.2d 553 (Fla. 1 st DCA 2006), the claimant refused to execute documents after agreeing to settle at mediation and after accepting a cash advance on the settlement. The trial court enforced the agreement and the District Court, with a dissent, affirmed.
  16. 16. The JCC Has The Authority To Determine Intent The JCC has the authority to determine if the parties intended to enter into a binding agreement and to determine the terms and conditions of same. Calderon at 553.
  17. 17. The JCC Cannot Enforce A Contingent Agreement Quinlan v. Ross Stores , 932 So.2d 428 (Fla. 1 st DCA 2006), if a settlement agreement is contingent upon other actions, the agreement is not enforceable. Here, the agreement was contingent upon both parties agreement upon an MSA amount and resolution of a Medicare lien, contingencies that were not satisfied. Thus, the agreement was not enforceable.
  18. 18. MUNROE V.ACE AMERICAN INSURANCE In MUNROE V.ACE AMERICAN INSURANCE , 33 Fla. L. Weekly D 1664, (1 st DCA, June 27, 2008), the mediation report read: Contingent upon employer/carrier approval, the parties agree to a total settlement of $ 30,000, out of which claimant will pay attorney fees + costs of $ 5000. Claimant will net $ 25,000. E/C has 20 days for the contingency. If e/c does not approve of $ 30,000, claimant has option of accepting $ 25,000 total with $ 5000 to attorney + therefore [$]20,000 to claimant net. Claimant agrees to sign a General Release + Voluntary Resignation. E/C agrees to authorize physical therapy until Judge signs order.
  19. 19. Monroe - JCC Cannot Enforce A Settlement Wherein the E/C Did Not Have Full Settlement Authority The 1 st DCA reversed enforcement of the agreement and explained that because counsel for the E/C attended mediation without full authority to settle, we read the agreement in the case at bar as an offer by Munroe to settle for $ 30,000, to which counsel for the E/C provisionally agreed, pending actual acceptance of the offer by the E/C. Munroe was permitted to revoke the offer before it was accepted.
  20. 20. The JCC Cannot Enforce An Agreement When One Party Has Not Given Unequivocal Authority to Settle Fivecoat v. Publix Super Markets, Inc., 928 So.2d 402 (Fla. 1 st DCA 2006. To be enforceable, the parties must have clear and unequivocal authority from their clients to settle.
  21. 21. JCC May Dismiss Claims Based on A General Release In Another Matter In Brewer v. Laborfinders , 944 So.2d 1102 (Fla. 1st DCA 2006), the claimant settled an unrelated claim against an employer executing a very broad general release. A motion to dismiss the workers’ compensation claims was filed and the JCC dismissed the workers’ compensation matters based on the language of the general release.
  22. 22. Brewer Was Represented The record indicated that at the time Brewer executed this release, he was represented by workers’ compensation counsel, but failed to inform counsel of the release before it was executed. However, the fact that Brewer did not inform his counsel, and counsel did not advise him in regard to the release was irrelevant. “The JCC need inquire no further than to determine whether a claimant was represented by counsel when he entered the settlement agreement, not whether he chose to take advantage of counsel’s representation.” Brewer v. Labor Finders
  23. 23. All Inclusive Language Generally Bars All Claims All inclusive language generally bars all claims which matured prior to execution of the release, even those claims unrelated to the litigation that resulted in the release. See Brewer
  24. 24. Brewer Language Was Broad The language in Brewer was broad enough to cover petitions for workers’ compensation benefits. See Patco Transport, Inc. v. Estupinan , 917 So. 2d 922, 923 (Fla. 1st DCA 2005).
  25. 25. Brewer – Parole Evidence Excluded The Brewer Court held that because the release language was unambiguous, the JCC properly excluded parole evidence. See Also Churchville v. GACS, Inc. , 973 So. 2d 1212, 1215 (Fla. 1st DCA 2008)(A court may look beyond the language of a contract only when the document's terms are ambiguous.)
  26. 26. Ambiguous Terms May Be Defined By Extrinsic Evidence When the terms of a written document are ambiguous and susceptible to different interpretations, extrinsic evidence may be considered by the court to ascertain the intent of the parties or to explain or clarify the ambiguous term. Friedman v. Virginia Metal Products Corp., 56 So.2d 515, 517 (Fla.1952); Emerald Pointe Property Owners' Ass'n, Inc. v. Commercial Constr. Industries , 978 So.2d 873 (Fla. 4th DCA 2008); Killearn Homes Ass'n, Inc. v. Visconti Family Ltd. Partnership , --- So.3d ----, 2009 WL 2959663 (Fla. 1 st DCA, 9/17/09).
  27. 27. Mutual Mistake A release may be modified in the event of a mutual mistake. A mistake is mutual when the parties agree to one thing and then, due to either a scrivener's error or inadvertence, express something different in the written instrument. Providence Square Ass'n v. Biancardi , 507 So. 2d 1366, 1372 (Fla. 1987).
  28. 28. JCC Has Jurisdiction To Set Aside Represented Settlement Agreements In Sanders v. City of Orlando , 33 Fla. L. Weekly D707a (Fla. S.Ct., September 26, 2008), Employee, Robert Flamily (deceased at the time of the opinion so his Personal Representative-Sanders, brought the appeal) settled his workers’ compensation case in 1996, the same of which was approved by the JCC at the time and as required by statute in 1996. In 2004, a JCC vacated the 1996 settlement agreement because it contained material misinformation upon which Flamily had relied when he agreed to the settlement. The First DCA reversed. The Florida Supreme Court Affirmed the JCC’s order.
  29. 29. Sanders v. City of Orlando Appellate Courts Holdings The 1 st DCA reversed the JCC’s order holding that the JCC had no jurisdiction to set aside the 1996 settlement as the 2001 statute amendments (440.20(11)(c)(Effective 10/1/01) allowing represented claimant’s to settle without JCC approval) divested the JCC of jurisdiction over represented settlements. The Florida Supreme Court reversed the appellate court and reinstated the JCC’s set aside and held that JCC’s retain jurisdiction over settlements even though, under the 2001 amendments, a JCC no longer must to approve settlements of represented claimant’s. The Florida Supreme Court did not address the issue as to whether the amendments may be applied retroactively.
  30. 30. Sanders v. City of Orlando Facts Robert Flamily was an employee of the City of Orlando and permanently retired from that employment on January 16, 1996, due to a heart condition. Flamily submitted a workers' compensation claim for the heart condition and was represented by Herbert Hill.
  31. 31. Sanders v. City of Orlando Facts Continued Flamily and his attorney, Herb Hill, settled at mediation in November, 1996. The settlement paperwork was then submitted to the City's attorney, on 12/12/96. The JCC approved the settlement on 12/13/96 (See Motion to Set Aside filed 5/28/02). The Florida Supreme Court explained that the settlement documents allegedly contained different terms than the settlement paperwork that Hill and Flamily had signed. For example, the settlement paperwork had previously contained a $3,000 per lifetime limit for future medical expenses, but at the time the settlement was approved, the terms provided a $3,000 per visit limitation. The settlement approved by the JCC also contained language that Flamily waived any future workers' compensation claims that were either known or unknown at the time of the settlement. The Motion to Set Aside was not filed until 5/28/02, the Florida Supreme Court did not address the limitations issue.
  32. 32. Sanders v. City of Orlando Facts Continued A 1978 blood test first disclosed elevated levels of liver enzymes. In approximately 1979, the City began requiring firefighters to use gloves and masks while performing their duties. Blood tests performed in later years, 1988 and 1990, also reflected abnormal liver functions. In approximately February 1996, Hill made two requests to the City to produce documents. In response, Hill received a medical summary, which stated that the blood test results for the years 1978 through 1982…were within a normal range . The City accepted Flamily as permanently totally disabled on September 24, 1996. A 1978 blood test showed elevated levels of liver enzymes.
  33. 33. Sanders v. City of Orlando Remand The Florida Supreme Court remanded the case back to the JCC to determine issues including whether the Motion to Set Aside was filed within the limitations period.
  34. 34. Practical Application Of Enforcement Concepts <ul><li>Discussion of Bonagura v. Sedgwick & Home Depot. , 33 Fla. L. Weekly D1820b (1 st DCA, July 21, 2008)(Advancement paid). </li></ul><ul><li>Include language in the mediation agreement or have the claimant and his/her attorney sign a document that the agreement is “binding, enforceable as of this date.” </li></ul><ul><li>Include specific consideration to make it binding </li></ul><ul><li>Include “30 days to pay” language in agreement. </li></ul>
  35. 35. Evidentiary Hearing Required Santana v. American Airlines , 34 Fla. L. Weekly D1376c (Fla. 1 st DCA, July 8, 2009), The parties in a workers' compensation case may reach “a valid, binding oral settlement,” but the record must contain some evidence of the terms of the agreement. See Bonagura v. Home Depot , 991 So.2d 902, 904 (Fla. 1st DCA 2008). Here, the JCC based his orders granting Appellees' motion to enforce settlement entirely upon an unsworn motion filed by the Employer/Carrier. This does not constitute competent substantial evidence. Reversed.
  36. 36. Advancements Advancements up to $2,000 are allowed without formal judicial approval. A letter to the JCC is sufficient. Advancements over $2,000 require formal judicial approval. See F.S. 440.20(12)(c)
  37. 37. Medicare As of 2005, Medicare provided coverage to about 42.5 million people spending about $330 million dollars on benefits. See 2006 Medicare Trustees’ Report republished in “Medicare Reimbursement Problems”, Defense Research Institute Journal, February, 2008, p. 9.
  38. 38. Medicare Set Aside Trusts <ul><li>History </li></ul><ul><li>The Federal Medicare Secondary Payer (MSP) Statute was adopted in 1980. </li></ul><ul><li>The Center for Medicare & Medicaid Services (CMS) began to look at Medicare Set Aside Trusts (MSA) as a way to protect MSP interests beginning in about 1995 and specific policies were adopted in 2001. </li></ul><ul><li>Fanning v. U.S. , 346 F.3d 386, 389 (3d Cir. 2003)(Private insurance is primary, Medicare is only a secondary for covered conditions). </li></ul><ul><li>2003, Congress fortified the MSP Statute, see 42 U.S.C. ss. 1395y, due to concerns for rising costs of medical care paid by Medicare. </li></ul>
  39. 39. 2003 Federal Amendments Prior to 2003, Medicare could only recover from group health insurance and similar plans and only to the extent that payment has been made or can reasonably be expected to be made promptly. See Thompson v. Goetzmann , 337 F.3d 489, 492 (5 th Cir. 2003). The 2003 amendments provide that persons “responsible” for an injury to a Medicare recipient pay for medical care. See “Medicare Reimbursement Problems”, Defense Research Institute Journal, February, 2008, p. 9..
  40. 40. What Are The Practical Effects? <ul><li>The basic premise of the MSP is that Medicare will remain a &quot;secondary payer&quot; if a &quot;primary payer&quot; exists. </li></ul><ul><li>Workers’ Compensation is considered a primary payor of medical benefits. </li></ul><ul><li>CMS may require an MSA to protect its interests under MSP. </li></ul><ul><li>Workers’ compensation Carrier can be and probably will be liable if it does not protect Medicare’s rights. </li></ul>
  41. 41. What Does CMS Require? CMS requires that certain Workers' Compensation settlements, those seeking to limit or close future medical benefits (i.e. those under F.S.440.20(11)) with a qualified claimant , obtain CMS Regional Office approval of the settlement and MSA Allocation within the settlement documents. The settlement documents include special trust language which sets up a trust in favor of Medicare for such future medical payments.
  42. 42. What Is An Allocation? An allocation is simply a projection of future medical costs that would otherwise be paid under workers’ compensation and based upon historic data including payment history, medical records, prescriptions and recommendations for future care such as surgery.
  43. 43. When Does A Settlement Require CMS Approval? <ul><li>Submission of a settlement with an MSA and approval by CMS is required when: </li></ul><ul><li>A claimant is Medicare eligible and the total settlement value is greater than $25,000. (Medicare eligibility occurs 24 months after SSD acceptance.) </li></ul><ul><li>A claimant has a reasonable expectation of Medicare enrollment in 30 months or less and the total settlement value is greater than $250,000. </li></ul>
  44. 44. What If The Settlement Does Not Meet The Criteria? <ul><li>The interests of CMS may still need to be protected with an MSA. </li></ul><ul><li>Failure to protect the interests of CMS which can reasonably be forecasted under the MSP may result in liability to a carrier which settles a workers’ compensation claim as Medicare interests were not adequately protected. If in doubt, look at those claims with high medical payments. </li></ul>
  45. 45. Can You Force Medicare To Participate in Mediation? No The result is that settlement may be delayed and undetermined in terms of amount and timing.
  46. 46. Reimbursements To Medicare - Liens Any claimant who receives a settlement in a workers’ compensation case which includes payments for past treatment covered by Medicare must reimburse Medicare within 60 days. See 42 C.F.R. ss 411.24(h); 42 U.S.C. ss 1395y(b)(2)(A) and, if the claimant does not pay, Medicare can recover from the workers’ compensation carrier . See Medicare MSP Manual, Ch.7,; C.F.R. ss 411.24(e), (g), (i) and 42 U.S.C. ss 1395y(b)(2)(B)(ii).
  47. 47. Some Useful Resources <ul><li>See ABA, Health Care Law: Medicare Set-aside Process in Workers’ Compensation Cases </li></ul><ul><li>Online, January 13, 2009 at </li></ul><ul><li>“ Medicare Reimbursement Problems”, Defense Research Institute Journal, February, 2008, p. 9. </li></ul><ul><li>42 U.S.C. ss. 1395y. </li></ul>
  48. 48. Medicare, Medicaid and SCHIP Extension Act of 2007 “MMSEA” MMSEA goes into effect Effective 7/1/09. It requires carriers to report claimant’s who are receiving workers’ compensation benefits to CMS during the course of the claim, failure to do so can result in a $1,000 fine for each failure to report. 42 U.S.C. ss 1395y.
  49. 49. Reimbursement Contractor After 10/2/06, Medicare awarded the contract for recovery to Chickasaw Nation which will be responsible for issuing demand letters and instituting collection actions.
  50. 50. Recovery Of Unrelated Expenses Medicare will require beneficiaries to protest the inclusion of unrelated expenses as part of the reimbursement demand before it will reduce the demand for reimbursement. See Medicare MSP Manual, Ch.7, 50.5; Overview of MSP Claims Recovery Process; .
  51. 51. Statute Of Limitations On Recoveries-Confusion 6 Years after the right to recover accrues, starts when Medicare knew or should have known of the claim. See 28 U.S.C. ss 2415 (a). Claim filing periods are confusing - It appears that the claimant and carrier have a duty to inform Medicare of its right to reimbursement. Without a claims filing deadline, Medicare has 3 years from the date of service. See 42 U.S.C. ss 1395y(b)(2)(B)(iv). And, with a claims filing deadline, 1 year from the date that Medicare is put on notice of a primary payor. 42 C.F.R. ss 411.24(f)(2).
  52. 52. Penalties Double the Medicare Payment plus interest. See 42 U.S.C. ss 1395y(b)(2)(B)(ii) and (iii).
  53. 53. Reimbursement Ambiguities <ul><li>The ambiguities are enormous and include: </li></ul><ul><li>How to obtain a demand for reimbursement by Medicare timely. </li></ul><ul><li>How to determine the amount of reimbursement with any degree of certainty without a formula by Medicare. </li></ul><ul><li>How to forecast a reimbursement request for settlement purposes. </li></ul>
  54. 54. Who Can Negotiate The Claim? Only the Regional CMS Office can negotiate can negotiate the claim for reimbursement. The contractor cannot negotiate. Medicare has the authority to compromise claims of less than $100,000. 31 U.S.C. ss 3711.
  55. 55. Factors Considered In Negotiating A Claim <ul><li>Claimant’s inability to pay. </li></ul><ul><li>Inability of Medicare to collect timely. </li></ul><ul><li>Cost of debt collection. </li></ul><ul><li>The inability of Medicare to prove its case. </li></ul>
  56. 56. Hypothetical Claimant is represented on a WC injury to his right ankle against Smith Inc., he settles same for $10,000. The release includes an “all accidents, known and unknown…” provision. Unknown to the claimant is a lung injury, silicosis. He later files a WC action against a former employer, Ross Inc., for the silicosis and Ross Inc., files a contribution claim against Smith Inc. Smith Inc., defends on the basis of release. Enforceable as to silicosis?