Unlike liability cases that have to end eventually, a workers' compensation case may continue for as long as the worker lives. After the indemnity value of the case is paid--even if the worker is not treating--if the case has not concluded, the file must remain open for possible additional medical treatment of the industrial injury. Some states do not allow the employer to buy out the future medical benefits. Some workers will not give up access to future treatment for the industrial condition, even if the possibility that such treatment will be needed is remote. Often, however, the parties agree that a payment should be made to the worker in exchange for a release of all claims related to the industrial injury. References to settlement in this commentary mean concluding the case.
For many workers, it makes good sense to end the workers' compensation claim. Minor injuries, when the worker has been able to return to the prior or new employment, are most susceptible to closure. However, workers with serious industrial injuries may also benefit from closing their claim.
Of course, there is the risk of a bad result. A bad result may mean not only the ultimate ruling, but also the precedent. Still, most cases do settle. The few that go to adjudication provide valuable information. An adjudication is a public finding that will be noted in the insurance carrier's files and may also be available in a public database if such results are reported. (The term "insurance carrier," for purposes of this commentary, is intended to encompass self-insured entities as well.)
The insurance carrier has the same risk of a bad result as does the worker. Because most cases do settle, the real concern for the defense is the cost. The longer a case goes on, the more it costs.
Case administration costs money. If cases are allowed to remain pending, adjusters' inventories increase, additional adjusters must be hired to handle the load, and administrative costs generally increase. To the extent allowed by law, employers' premiums increase to cover expenses, and the cost is passed to society in general in the form of higher costs for products and services. While this macro-economic view will not govern the handling of the individual case, it does provide a philosophic underpinning for a company to adopt a general incentive for closing cases early.
Mistakes cost money. The longer administration continues, the more opportunity exists for administrative errors. Statutory fiscal penalties for such errors may be significant.
Litigation costs money. Most carriers have programs to manage legal fees, but as long as a case is being actively litigated, the fees will continue. When cases are allowed to remain pending with no active plan for closure, the attorney's activities may not have a real impact on the settlement value. Under these circumstances, the proactive attorney who can bring a case to closure may cut off the fees on this case but is more likely to receive future defense assignments.
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