Is your case really closed? Understanding exposure after injury settlement

Imagine, after more than a year of dealing with messy return-to-work issues and litigation surrounding a disputed worker’s compensation claim, you receive an email from your insurance carrier letting you know the case finally settled. You breathe a sigh of relief knowing that you can finally put that case behind you. Or can you?

WORKER’S COMPENSATION COMPROMISE AGREEMENTS

In Wisconsin, most worker’s compensation cases settle. When there is a dispute about the cause or extent of the injury, cases settle by way of a compromise agreement. When an agreement is resolving any and all worker’s compensation claims, the agreement is known as a
“Complete Compromise Agreement.”

IF YOUR COMPANY FAILS TO FOLLOW OSHA REGULATIONS AND IT CAN BE PROVEN THAT SUCH A FAILURE CAUSED THE EMPLOYEE’S WORK INJURY, YOUR COMPANY MAY BE ORDERED TO PAY AN ADDITIONAL 15% OF COMPENSATION UP TO $15,000.

These agreements are sometimes referred to as a “full and final settlement.” Unless the agreement specifically resolves all worker’s compensation claims, including any claims that must be identified in the agreement by statute, certain claims may remain open. If any claims are left open, the agreement is known as a “Limited Compromise Agreement.” However, even a Complete Compromise or Full and Final Agreement may, in reality, be a Limited Compromise Agreement if certain claims remain open, whether intentionally or by poor drafting.

Once drafted, Compromise Agreements are sent to the Department of Workforce Development Worker’s Compensation Division for review and approval by an administrative law judge (ALJ). The ALJ will review the agreement to confirm that there is a material issue of dispute giving rise to the agreement, and either approve, modify or deny the terms of the agreement. If the ALJ approves or modifies the agreement, the ALJ will issue an “Order Approving Compromise Agreement,” setting forth the obligations of the parties under the agreement and providing the insurance company and/or employer 21 days to make the appropriate payments. Once the payments are issued, the worker’s compensation carrier will inform the employer that the case settled, which is when most employers think they are off the hook.

POTENTIAL REMAINING EXPOSURE

Many Wisconsin employers assume that when their worker’s compensation insurance carrier hires an attorney, the employers’ interests will be protected. Unfortunately, that is not always the case, especially when the attorney is hired to represent the insurance carrier with little or no involvement with the employer. If the worker’s compensation agreement does not specifically resolve certain claims, they are deemed to be left open. This includes the following claims that the employee may assert directly against your company. By statute , these are not insurable claims but are the employers’ responsibility to pay or defend against.

The most common claim that arises following a limited compromise agreement is an “unreasonable refusal to rehire.” To meet their burden of proof, an employee only needs to prove that 1) they were an employee of your company; 2) they had a work injury; and 3) your company did not bring them back to work following the work injury. The burden then shifts to you, the employer, to show that your company had reasonable cause for its discharge decision. If an employee prevails on this claim, your company is responsible to pay the employee up to one year’s lost wages.

If your company fails to follow OSHA regulations or provide a safe workplace, and it can be proven that such a failure caused the employee’s work injury, your company may be ordered to pay an additional 15% of compensation, up to $15,000, as a “safety violation penalty” under Wis. Stat. § 102.57 and Wis. Stat. § 101.11 (“Safe Place Statute”).

If certain actions or inactions by your company result in an “inexcusable delay in payment” of an injured employee’s workers compensation benefits, your company may be liable for a penalty equal to 10% of the delayed compensation. If it is determined that the delay was in “bad faith,” the penalty is equal to 200% of the delayed compensation, up to a maximum of $30,000 for each act of bad faith.

These claims do not just go away. Depending on the type of injury, the employee may have 6 years, 12 years, or an unlimited time to bring one of these claims. So, it is critically important that these claims be included in any final settlement.

HOW TO PROTECT YOUR COMPANY’S BOTTOM LINE

It pays to stay actively involved in your company’s worker’s compensation claims for a number of reasons. Active involvement often leads to better investigations, quicker return-to-work times and reduced litigation costs. It also provides you an opportunity to monitor any settlement negotiations so that you push for the above claims to be included in any settlement agreement. Most employers do not have time to stay actively involved. In that case, you should insist that your worker’s compensation carrier direct your litigated claims to an attorney that you trust.

If you have any questions regarding your company’s exposure to employment claims, contact Bob Sanders at Husch Blackwell, LLP at robert.sanders@huschblackwell.com.