Wc intercompany arbitration

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Wc intercompany arbitration

  1. 1. WORKERS’ COMPENSATION INTERCOMPANY ARBITRATION Cohen, Placitella & Roth, P.C.
  2. 2. Jurisdiction of Arbitration Forums <ul><li>Arbitration Forums (“AF”) permits workers’ compensation subrogation claims to be submitted to intercompany arbitration through the Special Arbitration program. Article First of the Special Rules and Regulations states: </li></ul><ul><li>Upon settlement of a claim or suit, signatory companies must submit any unresolved disputes to Arbitration Forums, Incorporated (hereinafter referred to as AF) where: </li></ul><ul><li>(c) a workers’ compensation carrier or a self-insured seeks to recover reimbursement of workers’ compensation benefits from an alleged tortfeasor. </li></ul>
  3. 3. Selected Special Arbitration Rules and Regulations <ul><li>Parties The involved carriers must be signatories to the Special Arbitration Rules and Regulations. Membership can be ascertained by searching the Member Directory found on AF’s website ( www.arbfile.org ). </li></ul><ul><li>Condition Precedent Before submitting a dispute to AF, the parties should attempt to settle the issue. If arbitration is filed, the filing company at a minimum must list the adverse party’s current representative’s name and address, the insured’s name and the claim number. Failure to list current and correct information may cause the decision to be voided. </li></ul><ul><li>Jurisdictional Amount Compulsory arbitration is applicable up to a maximum of $250,000 contribution sought per claim. Claims for separate parties arising out of the same accident, occurrence or event are considered separate claims. </li></ul>
  4. 4. Time Limitation <ul><li>The filing carrier should commence an arbitration proceeding within 180 days of finalizing the workers’ compensation claim. Failure to file within 180-day period is an affirmative defense only if the delay is raised as an affirmative defense and can be shown to have prejudiced the party raising the defense. </li></ul>
  5. 5. <ul><li>A Special Arbitration proceeding may be commenced even if the workers’ compensation claim has not been finalized under two circumstances. </li></ul><ul><ul><li>(1) The statute of limitations is about to expire . A claim that has not been finalized may be filed in ICA with a request for a one year deferment. If the claim is not finalized within the deferment period, an additional deferment may be requested. Under this scenario, the arbitrators will not consider the application until the lien is finalized. </li></ul></ul><ul><ul><li>(2) Unexpected Medical Payments . If an ICA application was filed and decided and then there were unexpected medical payments, the carrier may file a request for subsequent payment. A new hearing would be held to consider whether the subsequent payments were causally related to the initial injury. </li></ul></ul>
  6. 6. Initiating the Arbitration Proceeding <ul><li>The carrier initiates the filing process by completing the S-Form and contention sheet and submitting one copy to AF with a copy to the representative of each opposing company. The filing party must submit all other documents (damage supports, public sector reports, witness statements, expert reports, etc.) to AF by the close of business ten days prior to the hearing date. Documents not sent within this time period are not forwarded to the arbitrators. </li></ul><ul><li>NOTE: The filing company is not required to provide copies of its evidence to the opposing party. Generally, it is more effective to not provide any expert reports to the opposing party. </li></ul>
  7. 7. <ul><li>Responses to S-Form and Contentions Sheet The responding company must file its response by the close of business ten days prior to the hearing date. Personal representation is not permitted if an answer has not been filed. </li></ul><ul><li>No Default Judgments The arbitration panel will hear the case even if the responding company does not answer the Contentions. There are no default judgments. </li></ul><ul><li>Damages The party seeking damages must include a damage amount on the S-Form and support the amount in the Contentions and/or Itemization of Damages section of the Contentions Sheet. The damages section should include a calculation of the total amount. </li></ul><ul><ul><li>Arbitration Forums cannot arbitrate any matter involving an injured worker’s claim for damages. </li></ul></ul>
  8. 8. <ul><li>Products Liability Claims Reasonable accommodations should be made for the inspection of an alleged defective product. Failure to permit inspection of the product could result in withdrawal of the case if the failure is raised as critical to the defense. </li></ul><ul><li>Arbitration Panel If the case involves a claim for less than $15,000, one arbitrator will be assigned. If the claim is between $15,000 to under $100,000, one arbitrator will be assigned unless a panel of three arbitrators is requested If the claim is $100,000 and above, three arbitrators are assigned unless the parties agree to a panel of one. </li></ul>
  9. 9. Hearings <ul><li>Formal rules of evidence do not apply during intercompany arbitration hearings. A party may present witnesses (including experts) or attend a hearing by indicating so on the S-Form. Neither insureds nor witnesses may appear without the presence of a company representative. </li></ul>
  10. 10. Decisions and Awards <ul><li>Decisions are posted on AF’s website ( www.arbfile.org ) within seven days of the hearing. Decisions are also mailed to the interested parties. The parties are to honor all awards within 30 days of the decision publication date. </li></ul>
  11. 11. Appeals <ul><li>Decisions are final and binding, however, a party may appeal a decision where the total settlement amount is $100,000 or more. The appeal must be filed within 30 days from the date the decision was published. The appealing party must complete the Special Arbitration Decision Appeal Form and set forth a specific objection to the decision and the basis for the objection. The appeal must be sent by certified mail to AF’s Service Quality Department. The adverse party then has 30 days to submit its response to the appeal. If the response is not timely received, the party waives its right to respond. AF will then forward the original file, decision and appeal positions to a new three-person panel. No new evidence, witnesses or personal representation are permitted. If there is a clerical or jurisdictional error, a company must provide written notice of the error to AF within 30 days after the decision’s publication date. A jurisdictional error occurs when the arbitration panel improperly proceeds with a hearing without resolving a pled potential jurisdictional impediment or dismisses a case where a party has not raised an objection to jurisdiction. </li></ul>
  12. 12. Laws of the Applicable Jurisdiction <ul><li>It cannot be overstated that the laws of the applicable jurisdiction must be carefully examined before submitting a claim to intercompany arbitration. </li></ul><ul><ul><li>Carrier’s Independent Right of Recovery A claim cannot be considered for intercompany arbitration unless the applicable jurisdiction recognizes a carrier’s independent right of recovery. Claims arising in a jurisdiction where the carrier must piggyback its subrogation claim to the injured workers’ claim cannot be arbitrated by AF. </li></ul></ul>
  13. 13. Jurisdictions Recognizing a Carrier’s Independent Right of Recovery <ul><li>California </li></ul><ul><li>Pennsylvania </li></ul><ul><li>Maryland </li></ul><ul><li>Florida </li></ul><ul><li>Illinois </li></ul><ul><li>Massachusetts </li></ul><ul><li>Virginia </li></ul><ul><li>Alabama </li></ul><ul><li>Kentucky </li></ul><ul><li>New Jersey </li></ul>
  14. 14. Advantages of Intercompany Arbitration <ul><li>Less expensive than traditional litigation </li></ul><ul><li>Cases typically decided in less than one year </li></ul><ul><li>Finality of decision – even if a decision is appealed, no extensive time or money is spent on the appellate process </li></ul>

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