Workers' Compensation

New Study on Why Workers Settle Their Workers’ Comp Claims

By Robin E. Kobayashi, J.D., LexisNexis Legal & Professional Operations, and Thomas P. Kieselbach, Esq., Cousineau McGuire Chartered, Minneapolis, MN

The Minnesota Department of Labor & Industry’s (DLI) newly released survey on “Workers’ Perspectives on Settlements and Hearings” (February 2013) finds that a large percentage of workers with settlements were concerned about the fairness and outcome of the settlement process, and felt pressured by primarily their attorneys, followed by insurers and employers, to settle their workers’ comp claims. Interestingly, about half of the workers surveyed were not employed, and of those that were employed, approximately half of them reported a decrease in wages compared to their pre-injury wage. Additionally, many workers reported that their medical condition had become worse.

Survey Group

DLI based its survey on surveys mailed to 1,061 workers with settlements (the “settlement group”) and 536 workers with hearings (the “hearing group”) during specified time periods.  Completed surveys were received from 323 workers with a settlement (35% response rate) and 204 workers with a hearing (43% response rate).

Survey Questions

DLI surveyed workers on:

  • whether workers consider their settlements to be voluntary
  • whether workers feel pressured to settle their claims
  • the extent to which workers consider themselves informed about their claims, their disputes, and their settlements
  • the workers’ experiences after their settlements
  • whether the experiences of workers with settlements are similar to those of workers with disputes resolved through a hearing

See survey form for workers with settlements. See survey form for workers with hearings.

Key Findings

Voluntary choice of settlement or hearing:  The survey results were mixed as to whether workers voluntarily chose to settle their workers’ comp claims, with a large percentage feeling pressured to settle after speaking to their attorneys about their chances of winning at a hearing. Workers in the settlement group (45%) were twice more likely than the workers in the hearing group (20%) to feel pressured to settle primarily from their attorneys, followed by insurers and employers.

Understanding benefits and arguments: Almost half of both the settlement group and hearing group said they understood the benefits involved in the dispute “some” or “not at all”. About two-thirds of the settlement group said they understood their settlement terms “very well” or “mostly”, with one third of the settlement group having little or no understanding of their agreement.

Expectations and reconsiderations:  The majorities of both the settlement and hearing groups reported talking to their attorneys about their chances of receiving a favorable ruling at a hearing. But when asked if they could have a “do-over”, only 29% of the settlement group would settle their claim again, whereas 38% said they would opt for a hearing. In comparison, 33% of the hearing group would go to a hearing again, whereas only 13% would settle.

Employment and medical condition: Only about half of the workers in both groups were employed at the time of the survey. Of those employed at the time of the survey, 56% of the settlement group and 48% of the hearing group reported wages lower than their pre-injury wage. Many workers reported a worsening of their medical condition (41% of settlement group; 45% of hearing group).

Fairness: 21% of the settlement group considered their agreement a fair compromise, whereas 50% of the hearing group considered the judge’s ruling fair.

Dispute resolution and fairness comments: Most of the survey respondees expressed dissatisfaction with the dispute resolution process, specifically the length of the process and the workers’ need for more information. Other concerns were financial pressure, denial of medical and rehabilitation treatment, and pressure from insurers creating what the workers deemed an unfair system.

DLI Recommendations to Improve Workers’ Experiences and Outcomes in Processing and Resolving Their Claim Disputes

  • Provide injured workers with timely, accurate, impartial and accessible information about dispute-resolution procedures and outcomes, once a claim petition is filed, to help injured workers make decisions, have realistic expectations, and feel involved in the dispute-resolution process
  • Change the attorney fee structure to ensure worker attorney incentives are properly aligned with the interests of their clients, with particular attention being made to whether the current fee structure unduly rewards attorneys to settle claims
  • Make administrative changes to ensure all disputes receive timely action, including a fast-track system for primary liability hearings, which are currently used for discontinuance conferences, so that payments to injured workers can be decided promptly and the healing process for the injured worker can begin
  • Re-evaluate approval of settlements that close out vocational rehabilitation and future medical benefits and whether this will address workers’ concerns about job status, future medical treatment, and worsening of their medical condition post-settlement