Is Trial Always Your Best Option? When to Consider Mediation
Tuesday, April 27, 2010 | 0
By Steven Siemers
Retired workers' compensation judge
You’ve got a post-Jan. 1, 2003 date of injury, a rating that’s somewhere between a high life pension and 100% and a Medicare set-aside estimate in the six figures. What’s your next step?
Typically, a demand letter is sent followed by the filing of a declaration of readiness. Then the attorneys show up to the mandatory settlement conference, exchange proposals that roughly approximate each attorney’s best-case scenario followed by a reflexive, umbrage-tinged rejection. The attorneys fill out the five-pager and set the case for trial. You wait for the trial date, try the case and cross your fingers. The injured worker is asking what’s going to happen, and nobody really knows, not even the judge.
What if you could spend a day or some portion of a day negotiating a structured settlement, with the assistance of your own structure expert, and generate a payout that is in excess of what the applicant would receive with a 100% finding, but that costs the defense less up front than the lower life pension finding? Why wouldn’t you at least want to give the client the opportunity to consider such an option?
Today, in a case of this nature, how do you go about determining the actual range of the evidence? How do you know if a settlement proposal is even within the range of acceptability? Have the Ogilvie numbers been run? Has the present value of the Labor Code §4659(c) cost-of-living adjustment figures been calculated? Has a Medicare set-aside been procured? Has a settlement discussion taken place that considers all of these factors and the plethora of possible outcomes that allow both parties to make an educated decision about settlement by comparing the likely risks of litigation?
As these questions suggest, it’s a lot tougher nowadays to engage in meaningful and productive settlement negotiations. Like seemingly everything else in California workers’ compensation these days, anything that any party wants to accomplish takes more work and more time. These questions also explain why many more stakeholders in workers’ compensation are concluding that mediation is the approach that will most likely lead to productive negotiations, and thus to a resolution that will be more beneficial to both parties than a findings & award.
Before proceeding to trial, every party deserves to be provided with a settlement option. Counsel, whether representing an injured worker, an insurance company, a self-insured employer or a lien claimant, should strive to solicit a settlement proposal in order to provide the client with an alternative to trial. Depending of course on the desirability of the option, every client should have the opportunity to carefully compare the risks of trial to a settlement proposal on the table.
A settlement option provides the opportunity to make a choice. While the client may choose to go to trial, the opportunity to consider settlement options may be the most important benefit that an attorney can provide.
In most workers’ compensation cases in California, case value is not great and generating settlement proposals is relatively straightforward. However, in cases of significant injury and disability, especially in light of the development of the law since 2004, while potential exposure may be great, predicting litigation outcomes is a challenge to say the least. As a result, in high exposure, complex cases where the risks are high, the formulation of serious settlement proposals in these cases is very difficult, but extremely important. As a result, settlement negotiations that have any chance of success will require more attention than will generally result from a telephone conversation or some back and forth banter at the Board.
Attorneys in every other legal specialty use mediation regularly to carefully explore settlement prior to trial, and with overwhelming success. The reasons are as follows:
- All counsel and their clients are in one place at one time, properly prepared to negotiate in good faith.
- The confidentiality of the proceeding allows the parties to negotiate more openly than may otherwise be appropriate.
- The parties prefer to formulate their own compromise resolution rather than turning the dispute over to a judge or jury to resolve without their input or control.
Mediation concludes in settlement the vast majority of the time.
Now in California workers’ compensation cases, attorneys are beginning to use the mediation process to accomplish the same results.
Workers’ compensation attorneys agree to mediation for the following reasons:
- You can’t get a demand or offer from your opponent. One party or both has client control or attorney control problems.
- The potential magnitude of the recovery overwhelms and ultimately paralyzes one or both parties or attorneys.
- The value of the case is difficult to figure out because of MSA issues, COLA calculation issues, apportionment, Benson issues, Ogilvie issues, etc.
- The case is so complex that you can’t settle it over the telephone or by yelling at the opposition at the board.
The following steps are very important in making sure that the mediation day is what the parties expect it to be.
1. Decision Makers: Arrange for ALL decision makers to be present at the mediation. It is especially important for the defense, unless there is virtual symbiosis between defense counsel and the individual for the defendant with adequate settlement authority. During the course of virtually every mediation the participants develop a deeper appreciation for the complexity and risks in the case as the mediation progresses. Those not participating will almost never develop that appreciation. Thus, where defense counsel is on the phone begging for authority, things often go badly.
2. Homework: Do your homework in advance of the mediation, including: Where necessary prepare a Medicare set-aside.
Where appropriate do your COLA calculations. Where appropriate run Ogilvie numbers. Carefully and credibly analyze the potential maximum and minimum exposures in the case.
3. Make a demand ahead of time: Applicant’s counsel should either make a demand or at minimum advise defense counsel as to how the applicant sees the defense’s maximum exposure several weeks before the mediation. This way, when the defense prepares for the mediation they will know in advance how the applicant sees the case and can have an educated discussion regarding what authority will be necessary in order to settle the case. Without this, the defense is left to calculate their maximum exposure themselves, and the defense calculations are almost always far less than the applicant will compute. Clarifying this ahead of time saves time during the mediation.
4. Educate the mediator in advance: Counsel should inform the mediator as to what is believed to be the sticking points standing in the way of settlement. This can be accomplished by writing a confidential mediation brief or by making a telephone call.
5. Prepare Your Client: It is very helpful if the clients understand the purpose of mediation and that compromise will be required during the course of the negotiation if settlement is to be achieved. When the clients are fully educated about the strengths and, especially, the weaknesses of their respective cases, progress is more easily achieved during mediation.
Trial may turn out to be your best option, or your only option, in a given case. However, in high-exposure, complex cases where the outcome is uncertain (currently most all high exposure cases in California workers’ compensation), parties have a clear interest, and I would contend an obligation, to exercise due diligence in soliciting a settlement option, and mediation is often the most productive way to do so.
<i>Steven Siemers is a mediator, arbitrator and special master in workers’ compensation cases throughout California. Siemers practiced workers compensation law as an applicant’s attorney for 14 years in both Northern and Southern California and was a workers’ compensation judge in San Francisco and Oakland for five years.</i>
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