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Overcoming settlement obstacles

Teddy Snyder
Teddy Snyder

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,

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CEB Overcoming Settlement Obstacles June 5, 2009 Presented by: Brenda K. Radmacher Teddy Snyder Gary Bennett
Determine the People in the Room Before any settlement discussions can start, you need to know who is there.and so do we! Introductions..
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
Evaluate Early and Often Truthiness vs. Data
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
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.
FORMULAS
Data: Databases LEXIS-NEXIS WESTLAW VERDICT REPORTS GENERAL CIRCULATION NEWS REPORTS
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.
Overcoming settlement obstacles
With other knowledgeable professionals: Attorneys Claims professionals Electronic forums- avoid identifying details Talk it out
With your friends and neighbors Your own mock- jury
Use a Mock jury Summary mock jury trial Mock Jury trial If case economics justify:
Develop a range Consider best/ worst case scenarios
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
Is the value adequate to solve the case? --Liens --Attorney Fees --Litigation Expenses What would the settlement statement look like?
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?
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 Plaintiffs 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 Plaintiffs needs
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
Overcoming settlement obstacles
3. Third Party Interests Statutory rights workers comp liens Subrogation rights Medical liens Attorneys fees Public benefit preservation for claimants --Medicare Secondary Payer Law after SCHIP -- Indigent benefits
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
MEDICARE SECONDARY PAYER RULE AFTER THE MEDICARE, MEDICAID AND SCHIP EXTENSION ACT OF 2007
THE RULE: MEDICARE IS THE SECONDARY PAYER. MEDICARE WONT PAY IF THERE IS A PRIMARY PAYER MEDICARE MAY MAKE A CONDITIONAL PAYMENT BUT IT RETAINS A RIGHT OF RECOVERY TO GET IT BACK
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
Sample language: The parties have taken Medicares interests into account and set aside $800 for claim-related Medicare-eligible expenses PARTIES MUST TAKE MEDICARES INTERESTS INTO ACCOUNT Sample language: The parties have taken Medicares 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
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
PENALTIES FOR NON-COMPLIANCE INCLUDE FOR CLAIMANT: LOSS OF MEDICARE BENEFITS FOR PRIMARY PAYER: 100% PENALTY FOR SHORTFALL UP TO TOTAL AMOUNT OF SETTLEMENT
THE GOAL: Stop double-dipping Shore up Medicare so it will be around for the rest of us
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
Overcoming settlement obstacles
PRESERVING PUBLIC BENEFITS FOR THE INDIGENT CLAIMANT AND THE CLAIMANTS FAMILY SUPPLEMENTAL SECURITY INCOME (SSI) MEDI-CAL 8a HOUSING
ONCE ASSETS EXCEED POVERTY THRESHHOLD, BENEFITS WILL BE LOST SOLUTION: SPECIAL NEEDS TRUST
WHEN NO OTHER PUBLIC HEALTH INSURANCE BENEFITS ARE AVAILABLE: INVESTIGATE MRMIP California Major Risk Medical Insurance Program
4. Insurance Issues Coverage, uninsured defendants and bankruptcy considerations Excess insurance Cumis counsel issues Self-Insured interests and issues How claim departments work
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?
5. Getting Authority Why and how When to evaluate and obtain authority How to overcome the problems of access and understanding
Getting Authority Back-up/Paperwork Proper requests and time needed for settlement authority Understanding insurance claims departments
6. Mediator Problems & Preparing for Mediation Who to prepare? Convening issues Briefs Pre-mediation activities Documents Brain-storming Goal Setting Confidential information
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
7. Nifty Negotiation Techniques Dealing with difficult opposing counsel
Nifty Negotiation Techniques How to start the negotiations WAIT is a four letter word
FIRST MOVER ADVANTAGE ANCHORING
The only demand/offer that never got accepted is the one you didnt make
Define your ball park Make demands/ offers at the extreme edge of your range once you have adequate information
Nifty Negotiation Techniques Multiple parties create a morass of issues More options for creative ADR mechanisms Considerations
Nifty Negotiation Techniques Use your mediator as a tool Which box do you want?
Nifty Negotiation Techniques Written settlement offers Effective demand letters
Nifty Negotiation Techniques Anticipate and evaluate tax issues in settlement
The End!

More Related Content

Overcoming settlement obstacles

  • 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.
  • 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 Plaintiffs 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 Plaintiffs 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 Attorneys 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 WONT 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 Medicares interests into account and set aside $800 for claim-related Medicare-eligible expenses PARTIES MUST TAKE MEDICARES INTERESTS INTO ACCOUNT Sample language: The parties have taken Medicares 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 CLAIMANTS 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
  • 44. The only demand/offer that never got accepted is the one you didnt 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