1) The document provides an overview of common obstacles to settlement and techniques for overcoming them. It discusses evaluating cases early, managing client expectations, dealing with third party interests like liens, insurance issues, obtaining settlement authority, preparing for mediation, and negotiation techniques. 2) Specific obstacles covered include fear of improper case evaluation, unmet client expectations, third party interests, insurance coverage and excess issues, getting settlement authority from insurance, mediator problems, and dealing with difficult opposing counsel. 3) The document provides tips for overcoming these obstacles through thorough case evaluation, educating clients, understanding lien rights, structuring settlements, preparing clients and documents for mediation, and using strategies like anchoring, written demands,

1. CEB – Overcoming Settlement
Obstacles
June 5, 2009
Presented by:
Brenda K. Radmacher
Teddy Snyder
Gary Bennett

2. Determine the People in the Room
Before any settlement discussions can
start, you need to know who is there….and
so do we!
Introductions…..

3. Obstacles to Settlement
What we will cover today:
– Fear of Improper Case Evaluation
– Unmet/Unreasonable Client Expectations
– Third Party Interests
– Insurance Issues
– Getting Authority
– Mediator Problems/Preparing for Mediation
– Nifty Negotiation Techniques

4. Evaluate Early and Often
Truthiness vs. Data

5. 1. How to Evaluate Your Case?
Case valuation should be performed upon
receipt of the matter
Avoid “thinking from the gut”
“Case Value” vs. “Settlement Value”
Interests vs. Issues
Damages Assessment
Liability Analysis

6. Truthiness: a word
popularized by television
comedian Stephen Colbert to
describe things that a person
claims to know intuitively or
"from the gut" without regard
to evidence, logic, intellectual
examination or facts.

7. FORMULAS

8. Data:
Databases
LEXIS-NEXIS
WESTLAW
VERDICT
REPORTS
GENERAL CIRCULATION
NEWS REPORTS

9. Present Value Calculation
Present value is the value (price) today of a
future payment or series of future payments
such as medical expenses or replacement
income, discounted to reflect the time value
of money and other factors such as
investment risk.

11. With other knowledgeable
professionals:
Attorneys
Claims professionals
Electronic forums- avoid identifying
details
Talk it out

12. With your friends and neighbors
Your own mock- jury

13. Use a Mock jury
Summary mock jury trial
Mock Jury trial
If case economics justify:

14. Develop a range
Consider best/ worst
case scenarios

15. Plaintiff v. Defendant
Legal Expenses to date $100,000
Projected Legal Expenses to trial: $300,000
50% Liability
$500,000
100% Liability
$1,000,000
50% Liability
$300,000
100% Liability
$600,000
Defense View of Damages Plaintiff View of Damages
LIABILITY
Decision Tree
Analysis
NO LIABILITY
Case Value: $0

16. Is the value adequate to
solve the case?
--Liens
--Attorney Fees
--Litigation Expenses
What would the settlement statement look
like?

17. Possible settlement statement
Proposed gross settlement $200,000
Attorney fees $ 66,000
Likely costs to date $ 10,000
Medical liens of $100,000
possibly reduced to: $ 62,000
Net to Plaintiff: $ 62,000
Were there other specials, e.g., Loss of Earnings?
Is this adequate to settle the case?
How badly does the defense want to settle?

18. Examples
➢ (Written?) Apology
➢ Change the shape of the money with a structured settlement, e.g.,
provide a retirement fund, lifetime payments for the joint lives of the
Plaintiff and spouse, education fund for the Plaintiff’s children
➢ Reinstatement and resignation in an employment case can provide
access to employee benefits
➢ Special needs trust to preserve public benefits
➢ Reversionary trust for disputed future expenses can assure payment
if funds are needed, revert to the defendant/ carrier if unused
➢ Can the Defendant provide something the Plaintiff wants, e.g., new
product
Consider options to meet the
Plaintiff’s needs

19. 2. Unmet/Unreasonable Client
Expectations
Preparing the client for settlement
discussions
Preparing for mediation
Controlling your client and their emotions
Educating the client
How to set expectations

21. 3. Third Party Interests
Statutory rights – workers’ comp liens
Subrogation rights
Medical liens
Attorney’s fees
Public benefit preservation for claimants
--Medicare Secondary Payer Law after
SCHIP
-- Indigent benefits

22. ➢Common Fund Doctrine
Compensates the party who conferred the benefit on the
lienholder
➢Hospital Lien Act Civil Code 3045.1
Limited to same amount received by claimant
➢Medi-Cal Liens Welfare & Institutions Code 14124.78
Limited to same amount received by claimant
➢Health Care Liens Civil Code 3040
Limited to 1/3 of recovery if plaintiff represented, 1/2 if not
represented; applies to people with health insurance; limits
subrogation right and “balance billing”
➢Workers Comp Liens Labor Code 3860(c)
Codifies the Common Fund Doctrine
LIEN LIMITS

23. MEDICARE SECONDARY
PAYER RULE
AFTER THE MEDICARE, MEDICAID
AND SCHIP EXTENSION ACT OF
2007

24. THE RULE:
MEDICARE IS THE SECONDARY
PAYER.
MEDICARE WON‘T PAY IF THERE IS A
PRIMARY PAYER
MEDICARE MAY MAKE A
“CONDITIONAL PAYMENT”
BUT IT RETAINS A “RIGHT OF
RECOVERY” TO GET IT BACK

25. NEW LAW CREATES
REPORTING REQUIREMENTS
WITH POTENTIALLY SERIOUS
RAMIFICATIONS FOR BOTH
CLAIMANT AND PRIMARY PAYER
APPLIES TO SETTLEMENTS
JUDGMENTS, PAYMENTS AND
AWARDS IN CLAIMS BROUGHT BY
MEDICARE BENEFICIARIES

26. Sample language:
“The parties have taken Medicare’s interests into
account and set aside $800 for claim-related
Medicare-eligible expenses”
PARTIES MUST TAKE MEDICARE’S
INTERESTS “INTO ACCOUNT”
Sample language:
“The parties have taken Medicare’s interests into account and set
aside $20,000 as an initial deposit and annual lifetime
payments of $4,325 commencing within one year of settlement
for claim-related Medicare-eligible expenses”

27. LUMP SUM MSA
Lump Sum MSA: $130,618
Cost to fund $130,618
STRUCTURED MSA
Seed MSA: $29,986
Premium: $58,625*
Cost to fund $88,611
*$4,193/yr for life
Expected lifetime payout:
$130,618
IT ALWAYS COSTS LESS TO FUND AN MSA WITH A STRUCTURE
DUE TO THE DISCOUNT FOR PRESENT VALUE

28. PENALTIES FOR NON-COMPLIANCE
INCLUDE
FOR CLAIMANT:
LOSS OF MEDICARE BENEFITS
FOR PRIMARY PAYER:
100% PENALTY FOR SHORTFALL UP TO
TOTAL AMOUNT OF SETTLEMENT

29. THE GOAL:
Stop double-dipping
Shore up Medicare so it will be
around for the rest of us

30. SCENARIOS:
1) NO SET-ASIDE IN AGREEMENT- 100% OF SETTLEMENT
DEEMED AVAILABLE TO PAY FOR CARE
2) SET-ASIDE IN AGREEMENT- INQUIRY AS TO HOW
MONEY WAS SPENT AND HOW MUCH IS LEFT; IF
ANYTHING LEFT, MUST BE USED TO REIMBURSE
MEDICARE, IF NOTHING LEFT, HOW WAS IT SPENT?
IF SPENT ON EXPENSES OTHER THAN CLAIM-
RELATED MEDICARE-ELIGIBLE EXPENSES, PATIENT
MUST REIMBURSE MEDICARE. SET-ASIDE IS NOT
BINDING ON MEDICARE
BOTH SCENARIOS: MEDICARE CAN SEEK $$ FROM
PRIMARY PAYER

32. PRESERVING PUBLIC BENEFITS FOR THE
INDIGENT CLAIMANT
AND THE CLAIMANT’S FAMILY
➢SUPPLEMENTAL SECURITY INCOME (SSI)
➢MEDI-CAL
➢8a HOUSING

33. ONCE ASSETS EXCEED POVERTY
THRESHHOLD, BENEFITS WILL BE LOST
SOLUTION:
SPECIAL NEEDS TRUST

34. WHEN NO OTHER PUBLIC HEALTH
INSURANCE BENEFITS ARE AVAILABLE:
INVESTIGATE MRMIP
California Major Risk
Medical Insurance Program

35. 4. Insurance Issues
Coverage, uninsured
defendants and
bankruptcy
considerations
Excess insurance
Cumis counsel issues
Self-Insured interests
and issues
How claim
departments work

36. Insurance Considertaions
Cumis: San Diego
Navy Federal Credit
Union v. Cumis
Insurance Society,
Inc., 162 Cal. App.
3rd 358 (1984).
What Type of Policy?
Is it “triggered”?

37. 5. Getting Authority
Why and how
When to evaluate and obtain authority
How to overcome the problems of access
and understanding

38. Getting Authority
Back-up/Paperwork
Proper requests and
time needed for
settlement authority
Understanding
insurance claims
departments

39. 6. Mediator Problems & Preparing
for Mediation
Who to prepare?
Convening issues
Briefs
Pre-mediation activities
Documents
Brain-storming
Goal Setting
Confidential information

40. Common Errors in Mediation
Advocacy
Wrong Client in the room
Wrong lawyer in the room
Wrong mediator
Lack of preparation
Addressing the Wrong Person
Failure to use tools
Timing mistakes
Failure to identify interests
Use of advocacy tone
Reducing offers
Closing too fast
Pushing for too much
Lack of Patience

41. 7. Nifty Negotiation Techniques
Dealing with difficult
opposing counsel

42. Nifty Negotiation Techniques
How to start the
negotiations – WAIT
is a four letter word

43. FIRST MOVER ADVANTAGE
ANCHORING

44. The only demand/offer that
never got accepted is the one
you didn’t make

45. Define your ball park
Make demands/ offers at the extreme edge
of your range once you have adequate
information

46. Nifty Negotiation Techniques
Multiple parties create
a morass of issues
More options for
creative ADR
mechanisms
Considerations

47. Nifty Negotiation Techniques
Use your mediator as a
tool
Which box do you want?

48. Nifty Negotiation Techniques
Written settlement
offers
Effective demand
letters

49. Nifty Negotiation Techniques
Anticipate and
evaluate tax issues in
settlement

50. The End!