OhioBWC - Basics: (Policy library) - File

Policy and Procedure Name:

Lump Sum Settlement

Policy #:

CP-12-01

Code/Rule Reference:

R.C. 4123.512; R.C.4123.65; R.C. 4123.88; O.A.C. 4123-3-34

Effective Date:

02/03/22

Approved:

Ann M. Shannon, Chief of Claims Policy and Support

Origin:

Claims Policy

Supersedes:

All Injury Management policies, procedures, directives and memos regarding Lump Sum Settlement that predate the effective date of this policy ands procedure.

History:

Previous versions of this policy are available upon request


 

 

I. POLICY PURPOSE

II. APPLICABILITY

III. DEFINITIONS

IV. POLICY

A.          It is the policy of the BWC that lump sum settlement (LSS) may be initiated by an employer or a claimant:

B.          Settlements Initiated Pursuant to R.C. 4123.512

C.         Submission of the Settlement Agreement and Application for Approval of Settlement Agreement (C-240), including settlement pursuant to R.C. 4123.512.

D.         Signatures

E.          BWC Authority

F.          Disapproval of a Settlement Application

G.         Medicare Set-Aside

H.         Execution of an Amended Settlement Agreement and Release (C-241)

I.           Approval of a Settlement Application, 30-Day Waiting Period and Industrial Commission (IC) Review

J.          Death of the Claimant

K.          Disabled Worker’s Relief Fund (DWRF), Family Support, and Fraud

L.          Self-Insured (SI) Settlements

M.         Settlement of a claim does not prevent the BWC from taking corrective action, including recovery of benefits against a physician of record, a vendor, a claimant or an employer.

N.         Court Settlement: The BWC will process a court settlement in compliance with the terms of the agreement and as directed by the court.

V. PROCEDURE

A.          General Claim Note and Documentation Requirements

B.          Task Received by Regional Settlement Supervisor

C.         Reviewing for Pending Court Appeals

D.         Reviewing for Subrogation

E.          Reviewing for Violation of Specific Safety Requirement (VSSR)

F.          Reviewing for Signatures and Obtaining Signatures

G.         Reviewing for Required Language

H.         Reviewing for Authorization to Receive Workers’ Compensation Payment When the Claimant is Represented by an Attorney

I.           Reviewing for Other Open Claims

J.          Issues Affecting Settlement

K.          Overpayments

L.          Lump Sum Advancements

M.         Unpaid Premiums When the Claimant is the IW and the Employer

N.         Insurance Services Office (ISO)

O.         Fraud

P.          Valuating the Settlement

Q.         Probability Factors

R.         Medical Benefits/Costs

S.          Valuating Future Indemnity

T.          Obtaining Authority, Negotiation and Decision

U.         Finalizing and Closing the Settlement

V.          Thirty-Day Waiting Period (also referred to as the “cooling off period”)

W.        Death of the Claimant

X.          Potential Fraud Discovered After Approval

Y.          Withdrawal from Settlement

Z.          IC Approval or Disapproval

AA.       Processing upon Expiration of the 30-day Waiting Period

BB.       Payment Issues

CC.      Injuries Sustained in a Vocational Rehabilitation Program

DD.      Court Settlement Procedure

 

 


 

I. POLICY PURPOSE

 

The purpose of this policy is to ensure that administrative lump sum settlements and court settlements are processed consistently, timely and equitably, in accordance with all applicable rules and law.

 

II. APPLICABILITY

 

This policy applies to BWC staff who process lump sum settlement applications.

 

III. DEFINITIONS

 

Administrative Settlement: A settlement of the medical and/or indemnity portion(s) of a workers’ compensation claim(s) pursuant to R.C. 4123.65.

 

Claimant: For purposes of this policy, one who seeks the lump sum settlement of medical and/or indemnity benefits - typically the injured worker or a dependent receiving death benefits.

 

Court Settlement: A settlement of a BWC claim(s) related lawsuit, which is approved by the court in which the lawsuit is filed.

 

Conditional Payment Letter (CPL): A notification from Medicare indicating the amounts Medicare has paid to the IW for treatment that may relate to the conditions in the claim.

 

Death Benefits: Benefits payable pursuant to R.C. 4123.59 and R.C. 4123.60 to a dependent of an injured worker who has died as a result of an injury or occupational disease received in the course of, and arising out of, the injured worker’s employment.

 

Disabled Workers’ Relief Fund (DWRF): A special fund that supplements the benefits received by permanently and totally disabled injured workers whose benefits fall below a threshold amount determined annually, based on the cost of living index.

Indemnity-only Settlement: A settlement that includes only the compensation portion of a claim (e.g., temporary total disability, permanent total disability).

 

Lump Sum Settlement: A written agreement that results in closure of a claim(s), or part of a claim(s), as defined by the terms of the settlement agreement. A lump sum settlement agreement may be entered into at the administrative or court level.

 

Net Present Value (NPV): The present value of a monetary award, as opposed to what the award would be worth if spread out over a period of time (i.e., the time value of money).

Partial Settlement: Settlement of only part of a claim or claims, leaving certain conditions, compensation and/or benefits, or combinations of conditions, compensation and/or benefits open for future use.

 

Parties to a claim: The injured worker (IW) or IW’s dependent, the employer and BWC.

 

IV. POLICY

 

A.     It is the policy of the BWC that lump sum settlement (LSS) may be initiated by an employer or a claimant:

1.     At any time during the life of the claim; or

2.     Pursuant to R.C. 4123.512, with the filing of a notice of intent to settle.

 

B.     Settlements Initiated Pursuant to R.C. 4123.512

1.     It is the policy of the BWC, that notices of intent to settle pursuant to R.C. 4123.512 must be filed on a Notice of Intent to Settle (C-512) form.

a.     The C-512 must be faxed to BWC Legal at (614) 621-3395 or mailed to the address provided on the form.

b.     If the notice of intent to settle is not submitted on the C-512 form, BWC staff may contact the filing party and request that a C-512 be completed and submitted within the statutory timeframes of R.C. 4123.512.

2.     It is the policy of BWC that BWC Legal will handle all settlement negotiations and obtain all necessary forms or documents for settlements initiated pursuant to this provision.

a.     If a tentative agreement is reached, the terms of the settlement shall be set forth on an Agreement and Application for Approval of Settlement Agreement (C-240).

b.     The party who filed the notice of intent to settle shall have 14 days from the date the tentative agreement was reached to submit the C-240 with the appropriate signatures.

3.     It is the policy of the BWC that settlements initiated pursuant to R.C. 4123.512 must be completed and paid (if applicable) prior to expiration of the extended statutory timeframe provided by R.C. 4123.512 for appeal.

 

C.    Submission of the Settlement Agreement and Application for Approval of Settlement Agreement (C-240), including settlement pursuant to R.C. 4123.512.

1.     It is the policy of BWC, to avoid delays in processing or the possibility of disapproval, a C-240 (whether filed to initiate the settlement or following the filing of a C-512):

a.     Must be submitted to BWC on the most recent version;

b.     Must be completed in its entirety including a statement indicating why the proposed settlement is deemed desirable; and

c.      Include supplemental forms and/or documentation as indicated on the C-240.

2.     BWC will notify the claimant or the claimant’s attorney if there is any required information and/or documentation missing. BWC will disapprove a settlement request if the required information or documentation is not received within fourteen (14) days after notification by BWC.

3.     An employer is prohibited from denying or withdrawing consent to a settlement application if:

a.     The claim is no longer within the employer’s experience for impacting its future premiums, and;

b.     The employee is no longer employed by the employer.

4.     It is the policy of BWC, in order to maintain proper confidentiality, that a C-240 shall only contain the name and related claims of one employer. If the settlement agreement is seeking to settle claims involving different employers, a separate C-240 must be submitted for each employer.

 

D.    Signatures

1.     The claimant or the claimant’s attorney must sign the C-240.

a.     If the claimant’s attorney signs the C-240 on behalf of the claimant, the claimant must sign and file an Amended Settlement Agreement and Release (C-241). The claimant’s signature must be on either the C-240 or a C-241.

b.     If the claimant has assigned power of attorney (POA) to another, or has an appointed guardian, legally sufficient documentation must be submitted verifying the POA or guardianship. (See Custody, Guardianship and Power of Attorney policy).

c.      A custodial parent will be presumed to be the legal guardian and no further documentation will be required unless BWC receives evidence suggesting the presumption is erroneous.

2.     The employer or the employer’s attorney must sign the C-240 unless one of the following exceptions apply, pursuant to R.C. 4123.65(A):

a.     The employer is no longer doing business in Ohio;

b.     The claim is no longer in the employer's industrial accident or occupational disease experience as provided in R.C. 4123.34(B) and the claimant is no longer employed by that employer; or 

c.      The employer has failed to comply with R.C. 4123.35.

3.     If the employer’s signature is required, but missing, BWC will send the employer notification of the filing of the C-240 and provide the employer the opportunity to respond within 14 days. If the employer does not respond, BWC will disapprove the settlement application.

4.     If the employer’s signature is not required, but the employer is still doing business in Ohio, BWC will send the employer notice of the filing of the C-240 and provide the employer 30 days to respond.

a.     If the employer does not respond within 30 days, BWC will process the settlement application without the employer’s signature.

b.     If the employer responds and objects in writing to the settlement application, BWC will contact the employer to determine if the IW is currently working for the employer. If they are, BWC will disapprove the settlement application. If they no longer work for the employer the employer will be advised they cannot object per HB81.

5.     When DWRF benefits are paid as part of the settlement, the employer’s signature is required on a C-240 if the employer’s policy has been combined and the employer is now self-insured. BWC will pay and bill self-insuring employers for any DWRF benefits allocated in a settlement.

6.     All signatures required on the C-240 must be dated no more than 18 months prior to the date of filing.

 

E.     BWC Authority

1.     BWC approval is required before any administrative settlement becomes final.

2.     It is the policy of BWC to independently evaluate and determine a fair settlement value and attempt, as appropriate, to facilitate agreement between the parties.

3.     When a settlement has been initiated with the filing of a C-240 (as opposed to the filing of a notice of intent to settle), and the employer has indicated, by checking “Box A” on the C-240, that it is supportive and agreeable to the settlement up to the amount listed on the C-240, BWC may re-negotiate the agreed settlement amount, considering the following:

a.     Is the agreed upon settlement amount more than BWC’s calculated value of the claim, and are the parties willing to permit BWC to negotiate a lesser amount on their behalf;

b.     Does an “arm’s-length” relationship exist between the parties so the settlement outcome is not unfairly influenced (e.g., the injured worker is not a relative or a partner/proprietor in the company);

c.      Is the employer experience rated and is the claim within the policy year experience period;

d.     Does the settlement exceed the claim’s maximum value as determined by BWC; and

e.     Can the settlement be reasonably justified? 

 

F.     Disapproval of a Settlement Application

1.     It is the policy of the BWC to disapprove a settlement request when:

a.     BWC has determined that the settlement agreement is not equitable or in the best interests of a party and/or BWC;

b.     A party does not agree to settle;

c.      The Special Investigations Unit (SIU) or the Subrogation Department has requested disapproval, and a BWC settlement attorney has agreed to the disapproval; or

d.     BWC has requested information, but a party has not timely submitted the requested information.

 

G.    Medicare Set-Aside

1.     Prior to approving a settlement agreement, BWC will require an IW/claimant to establish a Medicare Set-Aside and provide BWC a signed “Medicare Secondary Payer Act Letter” (MSPA letter) when:

a.     A full and final settlement is valued at $10,000 or greater and the IW/claimant is on Medicare or has a reasonable expectation of receiving Medicare within thirty (30) months because the IW:

i.       Is on Social Security Disability (SSD);

ii.      Is age 62 ½ or older;

iii.     Has applied for SSD;

iv.    Has had an adverse decision regarding SSD but has appealed the denial; or

v.      Suffers from end-stage renal failure.

b.     A full and final settlement is valued at $100,000 or greater, even if the IW/claimant is not on Medicare and does not have a reasonable expectation of receiving Medicare within 30 months.

2.     The MSPA letter must:

a.     Contain the signature of the IW/claimant;

b.     Require the IW/claimant to acknowledge and agree that a Medicare set-aside trust fund will be established for all claim-related benefits; and

c.      Provide the name of the bank or financial institution where the account will be located.

3.     The BWC will disapprove the settlement application if the MSPA letter is not provided within the requested timeframe (typically 14 days from the date of the request).

 

 

 

H.    Execution of an Amended Settlement Agreement and Release (C-241)

1.     It is the policy of the BWC that parties to an administrative settlement must execute an Amended Settlement Agreement and Release (C-241) when any of the following apply:

a.     The C-240 filed was not the most recent version and the BWC did not request a new C-240 to be filed; or

b.     A change is made to the originally requested settlement amount, terms or conditions as submitted on the C-240; or

2.     Claims services staff shall staff any variation or exceptions with the above list with their supervisor and/or the legal department.

 

I.       Approval of a Settlement Application, 30-Day Waiting Period and Industrial Commission (IC) Review

1.     It is the policy of the BWC to send a letter notifying all parties of BWC’s approval of a settlement application.

a.     The day after the approval letter is sent is counted as day one of the 30-day waiting period.

b.     The waiting period cannot be waived by any party for any reason.

c.      On-going compensation and medical benefits are suspended effective the mailing date of the approval letter.

2.     Withdrawal from Settlement

a.     Any party may withdraw from a settlement prior to the expiration of the 30-day waiting period.

b.     The withdrawal must be in writing and sent to all other parties to the settlement.

c.      The BWC must receive the withdrawal request prior to the expiration of the 30-day waiting period, regardless of the date the withdrawal is mailed or sent.

3.     IC Review of Settlements

a.     The BWC must send all administrative settlements to the IC for review.

b.     If the IC finds a “gross miscarriage of justice” or finds the settlement terms “clearly unfair” during the 30-day waiting period, the IC may disapprove the settlement.

c.      If the IC does not disapprove a settlement within the 30-day waiting period, the settlement is approved by operation of law.

 

J.      Death of the Claimant

1.     If the claimant dies prior to BWC approval of the settlement, the BWC will disallow the settlement as abated by death.

2.     If the claimant dies during the 30-day waiting period:

a.     Any party may void the settlement for good cause shown; and

b.     If the BWC determines that good cause does not exist to void the settlement, the settlement will be reinstated and paid to the estate of the deceased claimant upon receipt of necessary documentation. Necessary documentation to complete the settlement includes, but is not limited to:

i.       Probate estate documents from a Probate Court naming an Administrator Executrix or Executor of the claimant’s estate;

ii.      An updated R-2 and C-230 from the claimant’s counsel indicating they represent the estate of the claimant;

iii.     The claimant’s death certificate; and

iv.    Medical records surrounding the time of death.

3.     If the claimant dies after the 30-day waiting period, the settlement becomes final.

a.     If the warrant has been issued but not yet endorsed at the time of the claimant’s death, the BWC will seek to have the warrant returned; and

b.     If the the warrant is returned, the BWC will reissue the warrant payable to the estate of the claimant upon receipt of necessary documentation. Necessary documentation to complete the settlement includes, but is not limited to:

i.       Probate estate documents from a Probate Court naming an Administrator Executrix or Executor of the claimant’s estate;

ii.      An updated R-2 and C-230 from the claimant’s counsel indicating they represent the estate of the claimant;

iii.     The claimant’s death certificate; and

iv.    Medical records surrounding the time of death.

4.     In order for the claimant’s legal representative to receive the LSS warrant, the claimant must:

a.     File an Authorization to Receive Workers’ Compensation Check (C-230) form; or

b.     Provide authorization on the C-240.

 

K.     Disabled Worker’s Relief Fund (DWRF), Family Support, and Fraud

1.     Any LSS amount the BWC pays is a final release that is subject to valid court-ordered family support, even if the family support amount is for the entire amount of the LSS.

2.     The BWC’s subrogation recovery rights are not impaired by an LSS.

3.     A finding of fraud at any time permits the BWC to rescind the LSS agreement, seek and recoup administrative overpayments due to the finding of fraud, and refer the claimant for criminal prosecution, if and when appropriate.

 

L.     Self-Insured (SI) Settlements

1.     Settlements with a self-insuring employer must be filed on the Self-Insured Joint Settlement Agreement and Release (SI-42) form.

2.     The SI employer will process the settlement request for LSS.

3.     The IC will review and approve or disapprove SI settlement agreements.

 

M.    Settlement of a claim does not prevent the BWC from taking corrective action, including recovery of benefits against a physician of record, a vendor, a claimant or an employer.

 

N.    Court Settlement: The BWC will process a court settlement in compliance with the terms of the agreement and as directed by the court.

 

V. PROCEDURE

 

A.     General Claim Note and Documentation Requirements

1.     BWC staff shall refer to the Standard Claim File Documentation and Altered Documents policy and procedure for claim note and documentation requirements; and

2.     Shall follow any other specific instructions for claim notes and documentation included in this procedure.

3.     Claims services staff shall recognize that “claimant” as referenced in this procedure may refer to an injured worker (IW) or if the IW is deceased, to a dependent or an estate. Some steps will only apply if the claimant is the IW; in these circumstances, the term “IW/claimant” is specifically used.

4.     Claims services staff shall utilize and maintain the “Settlement Workbook” as required by Claims Operations management and as instructed in this procedure.

 

B.     Task Received by Regional Settlement Supervisor

1.     When the regional settlement supervisor receives a task in the claims management system, indicating the filing of an Application for Settlement Agreement and Application for Approval of Settlement Agreement (C-240):

a.     The regional settlement supervisor shall:

i.       Review the C-240; and

ii.      Assign the C-240 to the appropriate lump sum settlement (LSS) region as needed (regions are determined by Claims Operations management).

2.     The regional settlement supervisor in receipt of the C-240 shall assign the C-240 to an LSS claims service specialist (CSS).

3.     Ensure a copy of the C-240 is imaged into each claim.

4.     Upon Assignment of the claim, the LSS CSS shall:

a.     Ensure the C-240 filed is the most recent version.

i.       If the claimant has not filed the most recent version of the C-240 the LSS CSS shall determine if all the information and documentation required has been submitted.

ii.      If any required information or documentation is missing, the LSS CSS shall notify the claimant and request the required documentation/information.

iii.     If the required documentation/information is not received within fourteen (14) days the LSS CSS will review with their supervisor for possible disapproval.

b.     The LSS CSS may request the claimant re-submit the settlement request using the most recent C-240, if doing so is more efficient than requesting the claimant to submit missing information or documentation separately.

5.     Any information additionally requested by the BWC (e.g. court records, medical documents, business licensure, marriage records, etc) or submitted to the BWC and related to the calculation of the claimant’s life expectancy, should be imaged by BWC in a confidential folder.

6.     Notify the disability management coordinator (DMC), if the IW/claimant is participating in a vocational rehabilitation program;

7.     Ensure a separate C-240 is filed for each employer with claims being included in the settlement agreement (a single C-240 shall not include claim number(s) involving another employer or the employer’s name(s);

8.     Review whether the claim is no longer within the employer’s experience for impacting its future premiums and if the employee is no longer employed by the employer.

9.     Review the claims for pending applications.

a.     Other than as provided in section IV.B.4.b below, the status of pending applications shall be changed to “Suspend”.

i.       Suspended applications include, but are not limited to:

a)     Requests for additional conditions;

b)     New requests for compensation;

c)     Requests for scheduled loss compensation, and

d)     Any pending Application for Determination of Percentage of Permanent Partial Disability or Increase of Permanent Partial Disability (C-92).

ii.      If there is a pending C-92, the LSS CSS shall also contact the C-92 team to stop processing the application.

iii.     When an exam is scheduled, the LSS CSS shall also contact the exam scheduling region to suspend the exam, unless it is related to temporary total disability (TT).

b.     Continue to process:

i.       Permanent total disability (PTD);

ii.      TT for extension of benefits only;

iii.     Wage loss (WL) cases for extensions of benefits only;

iv.    Alternative dispute resolutions (ADR);

v.      Requests for medical treatment;

vi.    Actions related to determining maximum medical improvement (MMI); and

vii.   Any other application or issue whose processing, the IMS or settlement attorney determines may impact the advisability or value of the settlement.

c.      If a new application or request is received following the filing of the C-240 the LSS CSS shall create a new case for the application and place it in “Suspend” status;

i.       Create a “Legal” case in all claims included on the C-240 and any subsequent claims included in the settlement:

a)     Identify the issue in the case as either an “administrative” settlement, “512 Intent” settlement or “court” settlement;

b)     Update to the appropriate issue status, including the thirty (30) day hold when appropriate;

c)     Add the appropriate activity to the case and fully update it once the settlement is complete.

 

C.    Reviewing for Pending Court Appeals

1.     The LSS CSS shall research for all claims filed by the IW/claimant to ensure there are no pending court appeals.

a.     Indicators of court appeals are documents titled “AG referral”, “court appeal”, or “court document”.

b.     The LSS CSS may consult with the BWC settlement attorney if the status of an appeal is unclear.

2.     If there appears to be an outstanding court appeal, the LSS CSS shall:

a.     Notify the claimant or the claimant’s attorney; and

b.     Advise the claimant or claimant’s attorney that the claimant may choose to pursue either the administrative settlement or the court case, but not both;

i.       If the claimant chooses to pursue the court case, the LSS CSS shall issue an “LSS Disapproval” letter and include the following language: “The application is denied. All parties do not agree with the settlement terms. This claim is currently pending a court proceeding. You may pursue settlement through the Attorney General’s Office.”

ii.      If the claimant chooses to pursue the administrative settlement, the LSS CSS shall request from the claimant a date-stamped dismissal entry from the court.

iii.     If a dismissal entry is not received within 14 days of a request, the LSS CSS may disapprove the C-240.

 

D.    Reviewing for Subrogation

1.     The LSS CSS shall review all claims to be included in the settlement for any open subrogation case(s).

2.     If there is an open subrogation case, the LSS CSS shall notify the BWC subrogation contact assigned to the service office and ask whether the settlement can proceed.

3.     The subrogation contact shall update the claims management system to reflect whether the settlement may proceed.

a.     If the subrogation contact indicates that the settlement should not proceed, the LSS CSS shall:

i.       Notify the parties that all parties do not agree to the settlement. The claimant or the claimant’s attorney shall be contacted; and

ii.      Disapprove the settlement, indicating that all parties do not agree to the settlement.

b.     If the subrogation contact indicates that the settlement may proceed, the LSS CSS shall keep the subrogation contact informed of the status of the settlement.

4.     The LSS CSS shall reference the Subrogation policy for further information.

 

E.     Reviewing for Violation of Specific Safety Requirement (VSSR)

1.     The LSS CSS shall review all claims to determine if there is a pending VSSR application. If there is a pending VSSR application, the LSS CSS shall follow the procedures in the VSSR procedural section of this document.

 

F.     Reviewing for Signatures and Obtaining Signatures

1.     The LSS CSS shall ensure that the C-240 contains the signature of the claimant or the claimant’s attorney and the signature of the employer or employer’s attorney, unless an exception applies.

a.     Dates of Signature: All signatures required on the C-240 must be dated no more than eighteen (18) months before the settlement application date.

b.     Power of Attorney (POA) and Guardian: If the settlement involves a claimant that assigned power of attorney to another individual or the claimant has a guardian, the LSS CSS shall ensure:

i.       The claim file contains legal documentation, including a copy of the POA, verifying the POA or guardian status of the individual claiming such status, except in the case of a minor child, BWC shall presume the custodial parent is the legal guardian;

ii.      The POA or guardian signs his or her own name on the C-240 and includes “POA” or “guardian” by the signature; and

iii.     There is compliance with any other applicable provision of the Custody, Guardianship, Power of Attorney and Incapacitation policy and procedure.

c.      Multiple Claims and Employers: If there are multiple claims being settled with more than one employer, each employer must sign the C-240 that contains the claims involving that employer (unless an employer signature exception applies).

d.     Rehabilitation Injury Claim: If the IW/claimant was injured while participating in a vocational rehabilitation plan through the BWC, a specified BWC designee shall serve as the employer designee for signing the C-240.

e.     Disabled Workers’ Relief Fund (DWRF): When DWRF benefits are paid as part of the settlement, the employer’s signature is required on a C-240 if the employer’s policy has been combined and the employer is now self-insured (SI).

f.       SI employer in final-cancel status but still in business: If the SI employer’s policy is in final-cancel status, but the employer is still in business, the employer must sign.

g.     Employer’s business sold: If an employer’s business has been sold, the LSS CSS shall contact the BWC Employer Services Division to determine if liability has been transferred to the acquiring employer.

i.       If BWC has transferred liability, the acquiring (combined-risk) employer’s signature on the application is required.

ii.      If BWC has not transferred liability to the acquiring employer, the employer’s signature is not required.

2.     Exceptions to Employer Signature Requirement

a.     Employer no longer doing business in Ohio: The LSS CSS shall not require the employer’s signature if the employer is no longer doing business in Ohio. If it appears the employer is no longer doing business in Ohio, but the employer’s policy is not in final-cancel status, the LSS CSS may consider an employer out of business if all of the following are true:

i.       The employer’s policy been lapsed for more than one year;

ii.      The employer’s mail has been returned to BWC;

iii.      All the identified employer phone numbers are non-working; and

iv.     The Secretary of State’s website indicates the employer is out of business.

b.     An employer’s signature is not required in cases which the employer is prohibited from denying or withdrawing consent to a settlement application. To meet this condition, claims services staff shall verify:

i.       The claim is no longer within the employer’s experience for impacting its future premiums, and;

ii.      The employee is no longer employed by the employer.

c.      Employer doing business In Ohio: The LSS CSS shall not require a signature from an employer still doing business in Ohio when the LSS CSS has mailed the employer an “Employer 30 day letter for Lump Sum Settlement”, did not receive a response within 30 days and one of the following apply:

i.       The IW/claimant is no longer employed by that employer and the claim is outside the employer’s experience.

a)     In general, claims do not go out of a state agency employer’s experience.

b)     A retrospectively rated employer has a ten-year experience period; or

ii.      The employer is not in compliance with R.C. 4121.35 because of one of the following:

a)     A lapsed risk;

b)     A cancelled risk;

c)     No coverage on the date of injury.

3.     Obtaining Signatures

a.     If the claimant’s (or claimant’s attorney’s) signature is missing, the LSS CSS shall contact the claimant or the claimant’s attorney, by phone or letter (using the “LSS-IW Signature Letter”), and set a task for 14 days from the date of the telephone call or letter to determine if the required signature has been provided.

i.       If the required signature is provided, the LSS CSS shall continue to process the settlement application.

ii.      If the claimant does not submit the required signature, the LSS CSS will review with their supervisor for possible disapproval and use the “LSS Disapproval” letter.

b.     If the employer (or the employer’s attorney’s) signature is missing:

i.       The LSS CSS shall send the “Employer Signature Letter for C-240” to the employer, requesting that the signature be provided within 14 days of the mailing date.

ii.      The LSS CSS shall set a 14-day task from the date of the letter to follow up.

iii.     If the employer does not submit the required signature, the LSS CSS shall disapprove the settlement using the “LSS Disapproval Letter”.

c.      If one of the employer signature exceptions applies and the employer signature has not been provided, but the employer is still doing business in Ohio, the LSS CSS shall send the employer the “Employer 30 Day Letter for Lump Sum Settlement”.

d.     If the employer does not respond within 30 days of the date of the letter, the LSS CSS shall process the settlement application without the employer’s signature.

 

G.    Reviewing for Required Language

1.     The LSS CSS shall ensure that the C-240 includes a statement or a separately provided written statement, which provides a description of the circumstances of the settlement and why the proposed settlement is deemed desirable.

a.     The LSS CSS shall ensure the statement provided does not waive claimant liability for fraud, overpayment or subrogation, or otherwise change the terms of the settlement agreement.

b.     If the sufficiency of the required language is unclear, the LSS CSS shall staff the issue with the BWC settlement attorney.

2.     If the LSS IMS or Settlement Attorney determines that the statement is not acceptable, the LSS CSS shall advise the claimant to submit a new C-240.

a.     The LSS CSS shall set a diary/task for 14 days from the date of the request to determine if the new C-240 has been received.

b.     If the claimant returns an adequate, new C-240, the LSS CSS shall process the settlement.

c.      If the claimant does not return the new C-240, the LSS CSS shall disapprove the settlement application.

 

H.    Reviewing for Authorization to Receive Workers’ Compensation Payment When the Claimant is Represented by an Attorney

1.     If the LSS CSS is aware that an attorney represents the claimant, the LSS CSS shall ensure that the claimant properly signed the authorization on the C-240 or that the claim contains a valid Authorization to Receive Workers’ Compensation Payment (C-230).

2.     If the claimant has not signed the authorization, (the attorney is not authorized to sign on the claimant’s behalf) and there is not a valid C-230 on file, the LSS CSS shall contact the claimant or the claimant’s attorney to determine the claimant’s intention regarding distribution of any potential payment.

 

I.       Reviewing for Other Open Claims

1.     The LSS CSS shall identify all open claims filed by the IW/claimant.

2.     The LSS CSS shall encourage, but cannot require, the claimant to include all claims in the settlement.

3.     BWC may deny the settlement application or reduce the settlement amount when:

a.     It is not in BWC’s interest to exclude claims from the settlement, or

b.     The LSS CSS finds that the costs for the claim being settled could shift to another claim not included in the settlement.

4.     The LSS CSS shall document in the Settlement Workbook the reason the LSS CSS excluded any claims from the settlement.

 

J.      Issues Affecting Settlement

1.     Incarceration

a.     If there is evidence in the claim indicating the claimant may be incarcerated, the LSS CSS shall investigate further to verify the claimant’s status.The LSS CSS shall disapprove the settlement application if:

i.       The date of injury is on or after August 22 1986; and

ii.      The claimant is incarcerated in a state or federal correctional institution, or in any county jail in lieu of incarceration in a state or federal correctional institution (in this or any other state), for the conviction of a state or federal crime.

b.     If the date of injury is before August 22, 1986, the LSS CSS shall consult with a BWC settlement attorney to determine if the settlement is in the best interest of BWC.

 

K.     Overpayments

1.     The LSS CSS shall review the claim to determine if there is an outstanding overpayment in any of the IW/claimant’s claims.

2.     If there is an overpayment, declared or in dispute, the LSS CSS shall recoup one-hundred percent (100%) of the overpayment from the settlement amount, unless a BWC settlement attorney approves an adjustment or waiver in writing.

3.     The LSS CSS shall ensure that the C-240 or C-241 and the “Approval of Settlement Agreement” letter (hereinafter “approval letter”), as applicable, address all overpayments, specifically including the amount of the overpayment.

4.     The LSS CSS shall only recoup DWRF overpayments from DWRF awards. Any DWRF overpayments shall be identified on the C-240 or C-241. DWRF Overpayments can be moved to a regular overpayment in the system if the settlement is an AG settlement or DWRF was allowed, paid and later overturned and denied.

5.     The LSS CSS may declare a claimant overpaid if the overpayment is the result of continued payments after the effective settlement date.

a.     The LSS CSS shall issue an “Overpayment Created after Settlement” letter to declare the overpayment.

b.     A BWC order shall not be issued for an overpayment in these circumstances.

6.     Waiver of Overpayment

a.     If there is a waiver of an overpayment in writing from the Legal Department or AG Order, and the source claim of the overpayment is settled, then the LSS CSS shall request Customer Service Support remove the overpayment from the system.

b.     If the source claim of the overpayment is not settled, BWC may either recoup the overpayment from the settlement amount or allow the overpayment to remain. The LSS CSS shall leave the overpayment on the claims management system for recoupment at a later date, unless otherwise instructed.

 

L.     Lump Sum Advancements

1.     The LSS CSS shall offset any settlement award by previous lump sum advancements that are outstanding at the time of settlement. See the Lump Sum Advancement policy and procedure for instructions on calculating a lump sum advancement.

2.     The LSS CSS may staff these issues with their supervisor or the Legal Department.

 

M.    Unpaid Premiums When the Claimant is the IW and the Employer

1.     The LSS CSS shall identify if the IW/claimant is also the employer of record (EOR). If so, the LSS CSS shall staff with Employer Services to determine if the IW/claimant/EOR owes premiums and the amount.

2.     If unpaid premiums are identified, the LSS CSS shall contact the IW/claimant/EOR before or while processing the settlement to determine if the parties can reach agreement on deducting the entire unpaid premium amount from the proposed settlement amount.

3.     If the IW/claimant/EOR does not agree, the LSS CSS shall disapprove the settlement as not in the best interest of the parties.

4.     If the IW/claimant/EOR agrees, the C-241 shall reflect the agreement and the LSS CSS shall continue to process the settlement application.

 

N.    Insurance Services Office (ISO)

1.     The LSS CSS may request an ISO report whenever the LSS CSS determines it may be useful in valuing and negotiating the settlement agreement.

2.     The LSS CSS shall make the BWC settlement attorney aware of any “hits” when an ISO report has been obtained.

 

O.    Fraud

1.     If the LSS CSS suspects fraud in a claim at any point in the settlement process, the LSS CSS shall notify the Special Investigations Unit (SIU).

2.     SIU will review and ask the LSS CSS to either disapprove the settlement application or proceed with the settlement application with consideration of a potential fraud overpayment.

a.     If SIU determines that the settlement should be disapproved, the LSS CSS shall notify the BWC settlement attorney.

b.     If SIU agrees to the settlement process proceeding, the LSS CSS shall ensure that the BWC settlement attorney and SIU are kept informed of the status of the settlement.

 

P.     Valuating the Settlement

1.     Net Present Value Factors (NPV)

a.     The LSS CSS shall reference the current year’s NPV chart available on COR, to calculate NPV when PTD or death benefits are being considered.

i.       If the PTD value is based on an injury, as opposed to an occupational disease (OD), The “PTD non-OD” category shall be used to determine the NPV factor.

ii.      If the PTD value is based on an OD claim that is not a lung disease, the LSS CSS shall use the “PTD-OD-Non Lung” category.

iii.     If the PTD value is based on an OD claim that is related to a lung disease, the LSS CSS shall use the “PTD-OD Lung” category.

iv.    When evaluating death claims, the LSS CSS shall use the “Survivor” category.

2.     All NPV totals are subject to probability factors.

3.     The LSS CSS shall not reduce medical benefits to net present value, unless after staffing with the supervisor and BWC settlement attorney it is agreed unusual circumstances exist justifying such a reduction.

 

Q.    Probability Factors

1.     The LSS CSS shall use probability factors to:

a.     Assess indemnity or medical costs projected to start sometime in the future, such as the likelihood of a surgery or other major treatment and associated TT or percentage permanent partial (%PP) disability compensation; and/or

b.     In the case of an allowed PTD, death, or pre-PTD claim, to estimate the likelihood of the claimant reaching full life expectancy and, for a pre-PTD claim, the likelihood that PTD will be awarded.

 

R.    Medical Benefits/Costs

1.     The LSS CSS shall consider IW/claimant lifestyle, co-morbidities, prognoses and aging when projecting future treatment types and frequency. A probability factor shall be used to estimate likelihood of the IW/claimant obtaining a particular type of medical service in the future.

2.     The LSS CSS shall ensure that projected medical services and costs are reasonably supported by appropriate documentation indicating that such services are likely to be required in the future.

 

S.     Valuating Future Indemnity

1.     Temporary Total Disability (TT)

a.     The LSS CSS shall ensure that all projected periods of compensation are supported by medical documentation.

b.     TT shall not be factored into the LSS value in claims with a date of injury prior to 11/15/1973 if the IW/claimant has received the maximum amount of TT.

c.      The LSS CSS shall consider the following when determining the amount of expected TT compensation:

i.       The TT the IW/claimant is entitled to, but is not yet paid; and

ii.      The likelihood of TT being awarded in the future.

2.     Permanent Total Disability

a.     Medical History and Disclosure and Medical Records

i.       The LSS CSS shall ensure that a Medical History and Disclosure (C-242), a PTD-Death Settlement Acknowledgement and Waiver Full and Final Settlement (C-243) and the two most recent years of medical records are submitted.

ii.      If the C-242, C-243 and medical records are not submitted with the C-240, the LSS CSS may, after staffing with IMS disallow the C-240.

iii.     The C-242 must be signed by both the IW/claimant and the IW/claimant’s attorney, if the IW/claimant is represented.

iv.    The LSS CSS shall staff any questions regarding the extent of medical records required with the BWC settlement attorney.

b.     Evaluating the Likelihood, the IW/Claimant Will Be Granted PTD (Pre-PTD):

i.       The LSS CSS shall consider the following factors when evaluating the likelihood of the IW/claimant being granted PTD:

a)     Claim history that impacts the IW/claimant’s ability to return to work;

b)     Medical history and current treatment indicating the status of the IW/claimant’s allowed conditions;

c)     Vocational rehabilitation history;

d)     The filed Application for Compensation for Permanent Total Disability (IC-2);

e)     Medical reports submitted in association with the PTD application;

f)       Non-medical PTD factors, including:

i)       Educational level;

ii)      Work history;

iii)    Literacy skills;

iv)    Other factors such as learning disabilities, English as a second language, supervisory skills or special training.

ii.      Any other factors that impact ability and likelihood of the IW/claimant’s returning to work.

c.      Applying Probability Factors and NPV

i.       PTD: The LSS CSS shall review the C-242 and the medical records submitted and on file to identify any co-morbidities or lifestyle factors (e.g., smoking, alcohol or drug abuse). The LSS CSS shall then apply a probability factor that reflects the impact of these conditions on the present value of a PTD settlement. Example of a PTD calculation:

a)     The IW/claimant is 65 years old, with several co-morbidities indicating a 70% likelihood of the IW/claimant living to full life expectancy. The PTD rate is $400.

b)     The NPV factor for a 65 year old is 528.

c)     $400 × 528 × .70 = $147,840. This is the PTD value.

ii.      When PTD Has Not Been Previously Granted (Pre-PTD): The LSS CSS shall apply the appropriate NPV factor relative to the IW/claimant’s co-morbidities, along with the probability that the IW/claimant will obtain PTD. Example of a pre-PTD valuation:

a)     100% net present value of the PTD is $211,200.00 (assuming a PTD rate of $400 x 528 as the NPV factor);

b)     Due to co-morbidities, the LSS CSS estimates the IW/claimant has a 70% chance of living to his life expectancy.

c)     The LSS CSS also finds that the IW/claimant has a 50% chance of receiving PTD.

d)     The calculation is $211,200 ×.70 (life expectancy) × .50 (PTD probability) = $73,920.00 (value of PTD);

d.     Disabled Workers’ Relief Fund (DWRF)

i.       Where potential DWRF is involved in a PTD settlement, the LSS CSS shall complete and attach a DWRF worksheet to the Settlement Workbook.

ii.      Unless otherwise approved by the BWC settlement attorney, the LSS CSS shall adjust the DWRF calculation based on the same probability factors that are used for the overall PTD calculation.

iii.     The LSS CSS shall only deduct DWRF overpayments from the DWRF portion of a settlement.

iv.    The LSS CSS shall identify and detail DWRF overpayments in the “Settlement Justification” section of the Settlement Workbook separately from other compensation overpayments.

e.     VSSR

The LSS CSS may determine if the employer has settled its VSSR liability by reviewing the employer claim information or searching the “Adjsettlement” folder in the Universal Document Server.

i.       Settling VSSR when employer is still in business VSSR has been awarded

a)     If the employer has not separately settled its VSSR liability with BWC:

i)       BWC may settle the underlying claim after the VSSR is settled or disapproved; or

ii)      If the parties request that the VSSR be settled along with the underlying claim:

a.     The LSS CSS shall evaluate the claim without consideration of the VSSR, which will be paid by the employer.

b.     The LSS CSS shall obtain authority and tentatively negotiate the settlement with the understanding that the employer will pay the VSSR portion of the settlement pursuant to separate agreement with the claimant.

c.      Before the LSS CSS issues the BWC LSS approval letter, the claimant and employer must file with and receive approval from the IC of a separate VSSR settlement application.

d.     If the parties do not wish to settle the VSSR along with the underlying claim, the LSS CSS shall disapprove the C-240.

ii.      If the employer’s liability for the VSSR has been settled through BWC’s adjudicating committee, the LSS CSS shall evaluate and negotiate the VSSR component of the settlement as if the employer is out of business.

iii.     The LSS CSS shall document the settlement of employer liability regarding the VSSR as part of the settlement justification.

iv.    Settling VSSR Settling VSSR when employer is still in business and VSSR has not been awarded:

a)     The employer is responsible for the settlement and payment of the VSSR.

b)     The LSS CSS shall disapprove the C-240 pending resolution of the VSSR, unless the parties request that the VSSR be settled along with the underlying claim.

c)     If the parties request that the VSSR be settled along with the underlying claim:

i)       The LSS CSS will evaluate the claim without consideration of the VSSR, which will be paid by the employer.

ii)      The LSS CSS will obtain authority and tentatively negotiate the settlement with the understanding that the employer will pay the VSSR portion of the settlement separately.

iii)    A separate VSSR settlement application will be filed with the IC by the claimant and employer and must be approved by the IC before the approval letter is mailed.

i.       Settling VSSR when the employer is out of business and VSSR has been awarded:

a)     The LSS CSS shall confirm with his or her supervisor that the employer is out of business.  Even if inactive a sole proprietor, i.e. an unincorporated business with a single owner, is always in business for the purpose of VSSR settlement. 

b)     The LSS CSS will use the VSSR Evaluation Worksheet to calculate future VSSR amounts.

i)       BWC may settle the underlying claim along with the VSSR.

ii)      The settlement will be referred to the IC for approval in the standard manner; the IC need not separately approve the VSSR portion of the settlement.

ii.      Settling VSSR when an employer is out of business and VSSR has not yet been awarded:

a)     The LSS CSS shall staff with a BWC VSSR attorney.

b)     Upon the request of the VSSR attorney, the LSS CSS shall provide an evaluation of future indemnity in order to assist in negotiation of the pending VSSR.

c)     The LSS CSS may proceed with settlement of the underlying claim once the VSSR settlement is approved by the IC.

iii.     Employer settles the VSSR, then goes out of business before VSSR is paid:

a)     The LSS CSS shall staff with the BWC VSSR attorney.

b)     BWC may request that the VSSR settlement be vacated and the VSSR application to be reopened by the IC.

iv.    Calculation of VSSR Settlements

a)     The LSS CSS shall calculate each compensation  type separately, excluding DWRF, using the appropriate NPV factor and using maximum rates from the year of the injury. Example with a 1997 Date of Injury:

i)       52 (TT weeks) x $521 (TT max for 1997) = $27,092 x 20% VSSR = $5,418.40 x .9412 NPV = $5,099.80

ii)      52 (26% PP award) x $173.67 (%PP max for 1997) = $9,030.84 x 20% VSSR = $1,806.17 x .9412 NPV = $1,699.97

iii)    Once all the compensation types are calculated, add them together for the total VSSR.

iv)    $5,099.80 + $1,699.97 = $6,799.77

f.       Wage Loss and Living Maintenance Wage Loss

i.       The LSS CSS shall only factor wage loss (WL) and/or living maintenance wage loss (LMWL) into future indemnity if the IW/claimant is likely to be eligible for WL or LMWL in the future and has not already received the maximum number of weeks for WL or LMWL.

a)     The LSS CSS shall reference  the Wage Loss Compensation and/or Living Maintenace Wage Loss procedures and respective tips and tools available on COR to determine if the IW/claimant has received the maximum number of weeks.

b)     The LSS CSS may also email the “BWC Claims Policy Field Techs” email box regarding calculation issues for WL and LMWL.

g.     Percentage of Permanent Partial Disability

i.       LSS CSS shall consider percentage of permanent partial disability (%PP) if the IW/claimant has not yet received a %PP award, or if the LSS CSS determines that an additional %PP award is likely.

ii.      The LSS CSS shall ensure that the combined value of any prior %PP awarded and the %PP being factored into the LSS appears reasonable based on the allowed conditions or conditions likely to be added to the claim.

iii.     The LSS CSS shall consider if there is evidence of on-going or recent medical services indicating a change in the condition(s).

iv.    The LSS CSS shall not update the claims management system to reflect the amount of %PP allocated to a settlement.

v.      If the LSS CSS finds that it is substantially likely that an award of 90% or greater will ultimately be awarded, the LSS CSS may include the extra percentage in the settlement value.

h.     Temporary Partial

i.       The LSS CSS shall only factor in a value for temporary partial (TP) in claims with a date of injury prior to 8/22/86, and only when the IW/claimant has suffered or will suffer impairment in earning capacity.

ii.      The LSS CSS shall not factor TP if the IW/claimant has received the maximum TP award for the date of injury.

iii.     When the IW/claimant is receiving TP, the LSS CSS shall:

a)     Determine what TP has been paid to date and include the total dollars and number of weeks paid;

b)     Determine if the IW/claimant will continue to suffer an impairment in earning capacity; and

c)     Estimate the expected TP indemnity costs that are probable for the claim.

i.       Death Benefits

i.       The LSS CSS shall ensure that a C-242, a C-243, and the two most recent years of medical records are submitted from the surviving spouse and each adult dependent included in the valuation of the claim.

ii.      If the C-242, C-243 and the two most recent years of medical records are not submitted with the C-240, the LSS CSS shall disapprove the C-240.

iii.     The LSS CSS shall consider and apply a probability factor that addresses co-morbidities (e.g., diabetes or cancer) or lifestyle factors, (e.g., smoking).

iv.    The LSS CSS shall consider the surviving spouse’s age, number of children, length of marriage, length of widowhood, and other factors indicating the likelihood of the surviving spouse remarrying.

v.      The LSS CSS shall offset any settlement award by previous lump sum advancements made in the death claim that are outstanding at the time of settlement. See the Lump Sum Advancement procedure for instructions on calculating a lump sum advancement.

vi.    The LSS CSS shall consider the entitlement period for any dependent child to be age 18 unless the LSS CSS finds, based on evidence on file or submitted by the parent/legal guardian, there is a likelihood that:

a)     The child will enroll or continue to be enrolled in an accredited educational program up to the age of 25;

b)     The child is, or is likely to be, physically or mentally incapacitated from earning beyond the age of 18; or

c)     The child has co-morbidities that are likely to reduce the benefit entitlement period.

vii.   The LSS CSS may reference the Death Claims policy and procedures for further explanation of dependency status and benefit periods.

viii. The LSS CSS shall staff all settlement requests involving dependent children with the BWC settlement attorney.

ix.    The LSS CSS shall document all projected death benefits by recipient, including spousal, adult dependent and dependent minor child benefits.

j.       Indemnity Only

i.       The LSS CSS shall ensure documentation addresses medical treatment relevant to the potential indemnity award (i.e., for a pre-PTD, the IW/claimant’s surgical and recent medical history, as well as medical evidence submitted in the PTD process).

ii.      The LSS CSS shall value the indemnity-only settlement following the procedures for a full settlement, and then apply an appropriate indemnity-only discount based on the estimated future medical costs.

k.      Medical Settlement Only

i.       The LSS CSS shall staff any C-240 seeking to settle only the medical portion of a claim(s) with the BWC settlement attorney.

l.       DWRF Only Settlement

i.        The LSS CSS shall staff any C-240 seeking to settle only the DWRF portion of a claim(s) with the BWC settlement attorney.

m.    Claims with Negligible Value

i.       If a settlement agreement includes claims of negligible value, the LSS CSS shall reflect in the settlement agreement the value of those negligible-value claims at $0.

n.     Requesting Additional Medical Documentation

i.       For claims where a C-242 and additional medical is not already required, if the IMS, or BWC settlement attorney determine that additional medical is needed, the LSS CSS shall request that the IW/claimant complete and submit a C-242 and submit the most recent two years of unrelated medical documentation.

ii.      The LSS CSS shall set a diary/task for 30 days from the date of the request for the C-242 and required documentation.

iii.     If the form and required documentation is not provided within 30 days, the LSS CSS shall staff with the IMS/SA for disapproval of the C-240 or determine if reduced probabilities would be appropriate.

 

T.     Obtaining Authority, Negotiation and Decision

1.     The LSS CSS has the authority to, and may approve settlements valued $25,000 or less, subject to the exceptions listed in VII.B. The LSS CSS shall obtain settlement authority for recommended settlement amounts above $25,000 as follows:

Amount                                    Authorizing Individual

     $25,001 to $150,000                IMS or BWC Settlement Attorney

     $150,001 to $250,000              Executive Round Table

     $250,001 and above                Administrator or designee

 

2.     The Executive Roundtable (ERT) is a group of senior BWC Management whose role is to review all settlements exceeding a specific threshold for accuracy, compliance with BWC Law, Rules and Policy and consideration of new/complex issues they wish to review.

a.     The members of the ERT shall be the Chief Operating Officer, the Chief of Claims, and the Chief Legal Officer or their designee.

b.     An ERT meeting may be scheduled on a bi-weekly basis where all members will generally meet as a collective. When circumstances warrant individual reviews may occur. 

c.      All settlements received in the Legal Department within one week of the next ERT meeting will be presented at the next roundtable.

d.     BWC Settlement Attorneys shall present proposed settlements to the members.

e.     The ERT will review each settlement and have one of 3 options: reject, authorize or request clarification/corrections to the proposed settlement. 

f.       The ERT may occur virtually or in person, and the members will indicate their rejection, authorization, clarification or corrections of any proposed settlement within seven (7) days of the workflow being initiated. If the ERT requests clarification or corrections regarding the proposed settlement, it should be provided within a reasonable period of time not to exceed five (5) days.  

g.     Resubmissions for clarifications/corrections or a change in settlement terms may be presented to the ERT with approval by the IMS or SA. Resubmissions should be limited, especially when the sole reason for return is to increase the settlement amount without a mistake in calculations, new justification or evidence.

3.     The LSS CSS shall staff with the BWC Injury Management Supervisor the following:

a.     Settlements that include the following types of claims:

i.       Disallowed or undetermined claims;

ii.      Respiratory occupational disease claims;

iii.     A sole proprietorship, partnership, or any other situation in which an arm’s length position or relationship may not exist;

iv.    Claims with ISO hits;

v.      Claims that arise while an IW/claimant is participating in a vocational rehabilitation program;

vi.    Claims containing overpayments where waiver is requested;

vii.   Death benefits claims;

viii. PTD and Pre-PTD claims;

ix.    VSSR (where BWC is settling);

b.     Indemnity-only settlements (including DWRF only settlements);

c.      Medical only settlements;

d.     Settlements with issues that cannot be resolved by the LSS CSS;

e.     Any settlement where a guardian or an individual with POA is signing on behalf of the claimant; and

f.       Any other settlements with unusual circumstances.

g.     Injury Management Supervisors may also staff any of the above with a BWC settlement attorney.

4.     Deference to a Previously Negotiated Agreement

a.     The LSS CSS shall independently evaluate settlement value based on the merits of the claim and the employer’s risk exposure even when the employer is agreeable to the settlement up to the amount listed in box A on the C-240.

b.     The LSS CSS may defer to the employer’s box A preference when all the following are true:

i.       The agreed settlement amount is greater than the LSS CSS’s calculated value of the claim, and the parties are unwilling to permit the LSS CSS to negotiate a lesser amount on the employer’s behalf;

ii.      An arm’s length relationship exists between the parties (e.g., the IW/claimant is not a relative of the employer or a partner/shareholder in the company);

iii.     The employer is experience-rated and the claim is within the policy year experience period;

iv.    The settlement will not exceed the claim’s maximum value; and

v.      The settlement can be reasonably justified.

5.     Preparing the Settlement Offer

a.     The LSS CSS shall review the settlement demand.

i.       Identification of common ground between the parties, such as projections of benefits or treatment that both parties can agree upon; and

ii.      Determination of an appropriate initial offer based upon the LSS CSS’s professional experience and knowledge.

6.     Presentation of the Settlement Offer

a.     The LSS CSS may consult with the LSS IMS or settlement attorney in advance to determine a baseline settlement negotiation strategy.

b.     The LSS CSS shall present the offer verbally to the claimant or the claimant’s attorney who has settlement authority.

c.      The LSS CSS’s initial offer shall be designed to allow the parties to reach agreement within the authorized settlement amount.

d.     The LSS CSS shall request and obtain a counter offer before increasing the BWC’s settlement offer.

e.     The LSS CSS shall document and track negotiations/offers and counteroffers in the LSS Case Activities Tab.

7.     Discussing the Settlement Terms with the Parties

a.     Regardless of the amount or type of settlement, the LSS CSS shall be the primary point of contact between the parties regarding settlement negotiations.

b.     If for any reason the LSS CSS’s supervisor or the BWC settlement attorney discusses the settlement with the parties, he or she shall promptly inform the CSS and the discussion should be documented in claim notes.

c.      The LSS CSS shall refer the claimant to their attorney regarding questions the claimant may have about the settlement negotiations.

d.     The LSS CSS shall ensure the parties are aware of any family support orders or overpayments that will affect the final settlement amount.

e.     The LSS CSS shall seek direction from his or her supervisor or the BWC settlement attorney any time it becomes apparent that the best interests of any party are not being protected, at which time the settlement process may be stopped.

f.       The LSS CSS shall discuss any changes to the original C-240 with the appropriate parties and document them on the C-241 and approval letter.

 

U.    Finalizing and Closing the Settlement

1.     Medicare Secondary Payer Act (MSPA)/C-241

a.     The LSS CSS shall send a “Medicare Secondary Payer Act Letter” (MSPA letter) to the claimant or the claimant’s attorney in the following situations:

i.       All full and final settlements over $100,000;

ii.      All full and final settlements over $10,000 when the IW/claimant is on Medicare or has a reasonable expectation of receiving Medicare within thirty (30) months, which may occur when the claimant:

a)     Is on Social Security Disability (SSD);

b)     Is age 62 ½;

c)     Has been diagnosed with end-stage renal disease;

d)     Has applied for SSD; or

e)     Has had an adverse decision regarding SSD and has appealed the denial.

b.     When multiple claims are settled, the LSS CSS shall send an MSPA letter if the aggregate value of all claims included in the settlement is over $10,000.

c.      The LSS CSS shall ensure that the IW/claimant has signed and returned the MSPA letter within 14 days of the request. The letter:

i.       Must be signed by the IW/claimant; not the IW/claimant’s attorney;

ii.      Confirms that the IW/claimant will establish a Medicare set-aside trust;

iii.     States the IW/claimant will not seek treatment under Medicare for any medical services which would have been convered under the workers’ compensation claim being settled, until the settlement funds in the Medicare set-aside trust are exhausted; and

iv.    Indicates the name of the financial institution in which the set-aside funds will be placed.

d.     The LSS CSS shall ensure the complete MSPA letter is imaged in to the claim (not just the signature page).

e.     If the LSS CSS does not receive the MSPA letter within 14 days of the request, the LSS CSS shall contact the IW/claimant or the IW/claimant’s attorney to follow-up. The IW/claimant may be given up to seven (7) additional days to return the C-241.

f.       If the MSPA letter is still not returned, the LSS CSS shall review with their supervisor for possible disapproval of the C-240.

g.     The LSS CSS shall reinstate the settlement if the MSPA letter is received within thirty (30) days of the disapproval.

h.     If the MSPA letter is received later than thirty (30) days of disapproval, the LSS CSS shall staff with their supervisor.

2.     VSSR and Subrogation

a.     The LSS CSS shall ensure any issues related to a VSSR are addressed.

b.     The LSS CSS shall ensure any issues related to Subrogation are addressed.

3.     Amended Settlement Agreement and Release (C-241)

a.     The LSS CSS shall request a C-241 when any of the following applies:

i.       A non-current version of the C-240 was filed and has not been replaced with a current version; or

ii.      A change is made to the originally requested settlement amount, terms, or conditions.

b.     The LSS CSS shall set a task for 14 days from the request. If the C-241 has not been provided, the LSS CSS shall contact the IW/claimant or claimant’s attorney to advise them that the C-240 is going to be disapproved. The LSS CSS shall review the settlement with their supervisor prior to disapproval.

c.      The LSS CSS shall reinstate the settlement if the required C-241 is received within thirty (30) days of the disapproval.

d.     If the required C-241 is received later than thirty (30) days after disapproval, the LSS CSS shall staff the claim with a LSS IMS or BWC settlement attorney.

4.     Disapproving the Settlement

a.     The LSS CSS shall disapprove the settlement, with their supervisors consent, when:

i.       Any party to the settlement does not agree or fails to provide any required information or documentation;

ii.      A member of the SIU or Subrogation department requests disapproval; or

iii.     In the case of the claimant’s death.

b.     The LSS CSS shall notify the parties of the disapproval.

c.      The LSS CSS shall publish an “LSS Disapproval Letter”. After issuing the letter, the LSS CSS shall ensure:

i.       All included claims are updated with a copy of the “LSS Disapproval Letter”;

ii.      The case issue is updated in the claims management system to “Denied by BWC” and the case is closed; and

iii.     All suspended actions are reinstated.

d.     In cases which the LSS CSS reinstates the C-240 following the disapproval without the filing of a new application, the LSS CSS shall record the current date as the new filing date and update the case status.

5.     Approving the Settlement and Building the Plan

a.     To approve the settlement, the LSS CSS shall publish the approval letter, print it locally and mail it the same day.

b.     When the claim has been settled for all indemnity and/or all medical, the LSS CSS shall update the claims management system under “Claims Management” and:

i.       Go to “Claims Dates>Other Claim Dates” and select from the drop-down menu:

a)     Pending Settled/Both;

b)     Pending Settled/Indemnity; or

c)     Pending Settled/Medical.

ii.      Go to “Claim Type” and select from the drop-down menu:

a)     Pending Settled/Both;

b)     Pending Settled/Indemnity; or

c)     Pending Settled/Medical.

c.      When the claim is settled for indemnity and/or medical related to a specific condition only, the LSS CSS shall update the claims management system under “Claim maintenance>ICD status” and select from the drop-down menu:

i.       Pending Settled/Both;

ii.      Pending Settled/Indemnity; or

iii.     Pending Settled/Medical.

d.     In all claims the LSS CSS shall update the claim status by going to “Status”, select the “Change Status Reason” and from the drop-down menu select:

i.       Pending Settled/Both;

ii.      Pending Settled/Indemnity; or

iii.     Pending Settled/Medical.

e.     The LSS CSS shall update the case to “Thirty Day Hold”.

f.       If the employer was previously in the state fund but is now SI, and a DWRF value is placed in the settlement, the LSS CSS shall include language in the approval letter stating that the SI employer is responsible to pay the DWRF portion of the settlement.

g.     If Social Security apportionment language is submitted with a C-240 or C-241, or is requested during negotiations, the LSS CSS shall include the following language on the approval letter:

Social Security apportionment language was submitted as an attachment to the C-240 or C-241 and is incorporated herein. A copy is attached.

h.     When the settlement includes multiple employers, the LSS CSS shall send an approval letter to each employer detailing settlement terms pertinent only to claims in which that employer is a party.

i.       When the settlement involves only one employer and multiple claims:

i.       If only one claim has money allocated to it, the LSS CSS shall send one approval letter for all claims.

ii.      If more than one claim has money allocated to it, the LSS CSS shall send a separate approval letter for each claim.

6.     Sending to IC for Review

a.     Within five (5) days of sending the “Approval of Settlement Agreement“ letter(s), the LSS CSS shall ensure that the following information, as applicable, is referred electronically as the “LSSPAC” to the IC for review:

i.       Settlement Workbook Claim Demographic page(s);

ii.      The approval letter; and

iii.     C-240 and C-241.

b.     The LSS CSS shall set a task for five (5) days to ensure the IC referral has been made.

 

V.     Thirty-Day Waiting Period (also referred to as the “cooling off period”)

1.     For purposes of tracking the thirty-day waiting period, the LSS CSS shall count the day after the approval letter is mailed as day one.

2.     If the 30th day is a weekend or holiday the LSS CSS shall consider the next business day as the 30th day of the waiting period and payment of the settlement shall be made the following business day.

3.     For purposes of determining overpaid compensation and payment of medical services, field staff shall consider the day the approval letter is mailed as the effective date of the LSS.

4.     The day the approval letter is mailed the LSS CSS shall update the claim to a “settled-pending” status.

5.     The claims management system shall automatically generate notice to the managed care organization (MCO).

6.     The LSS CSS shall not accept waivers of the 30-day waiting period.

7.     LSS CSS shall staff any request for action regarding the settlement after the expiration of the 30-day waiting period with the BWC settlement attorney.

 

W.   Death of the Claimant

1.     If the claimant dies prior to the LSS CSS issuing the approval letter, the claim abates. The LSS CSS shall issue a “LSS Disapproval Letter” due to claim abatement.

2.     If the claimant dies within the 30-day waiting period, any party may void the settlement for good cause shown.

3.     When the LSS CSS receives notice of the death of a claimant, the LSS CSS shall:

a.     Verify the death by obtaining a copy of the death certificate and related medical records around the time of death (3 months) to confirm the cause of death and whether BWC has good cause to withdraw from the settlement;

b.     Ensure any substituted claimant has filed a Claimant Authorized Representative (R-2) form and a new authorization to receive payment, indicating the claimant’s former representative, or new representative, represents the estate and

c.      Obtain legal documentation from the probate court naming an administrator, executor, or executrix of the estate.

4.     If the LSS CSS discovers the death prior to the expiration of the 30-day waiting period the LSS CSS shall:

a.     Staff the settlement with the BWC settlement attorney; and

b.     If the decision is made to withdraw from the settlement agreement, issue an “LSS Withdrawn Notice”.

5.     If the LSS CSS discovers the death of the claimant following the expiration of the 30-day waiting period, but before issuance of the warrant, the LSS CSS shall:

a.     Staff the settlement with the BWC settlement attorney; and

b.     As recommended by the BWC settlement attorney, either void the settlement for good cause or issue the warrant payable to the estate of the deceased claimant.

6.     If the LSS CSS discovers the death following the expiration of the 30-day waiting period and issuance of the warrant, but before the warrant is cashed, the LSS CSS shall:

a.     Request return of the warrant from the claimant or claimant’s attorney;

b.     Staff the settlement with the BWC settlement attorney; and

c.      As recommended by the BWC settlement attorney, either void the settlement for good cause or issue the warrant payable to the estate of the deceased claimant.

7.     If the LSS CSS discovers the death following the expiration of the 30-day waiting period and after issuance of the warrant, and the warrant has been cashed, the LSS CSS shall staff with the BWC settlement attorney.

 

 

X.     Potential Fraud Discovered After Approval

1.     If potential fraud is identified after the approval letter is issued, but before the expiration of the 30-day waiting period, the LSS CSS shall immediately:

a.     Notify the BWC settlement attorney; and

b.     Issue a “LSS Disapproval” letter to all parties, using general language without reference to potential fraud.

 

Y.     Withdrawal from Settlement

1.      If a party to the settlement submits a request in writing to withdraw from the settlement prior to the settlement becoming final, the LSS CSS shall confirm that the request was sent to all parties to the settlement.

2.     If all parties were notified of the withdrawal, the LSS CSS shall:

a.     Issue a “LSS Withdrawn Notice”; and

b.     On the “LSS Withdrawn Notice”, list the reason for the withdrawal (e.g., written notice from one of the parties; parties no longer in agreement).

 

Z.      IC Approval or Disapproval

1.     If the IC does not disapprove the settlement within the 30-day waiting period, the settlement is approved by operation of law, as long as the IC was given the opportunity to review the settlement.

2.     If the 30-day waiting period expires without the issuance of an IC approval or disapproval, the LSS CSS shall:

a.     Check to make sure the IC referral was made;

b.     Wait one additional business day to make sure that a disapproval was not timely issued by the IC, but failed to attach to the claim; and

c.      Proceed with the settlement, if the referral was properly made and there is no IC disapproval.

3.     When the LSS CSS becomes aware during the 30-day waiting period that the IC has disapproved a settlement as being a gross miscarriage of justice or clearly unfair, the LSS CSS shall immediately notify the LSS IMS or BWC settlement attorney.

 

AA. Processing upon Expiration of the 30-day Waiting Period

1.     Update the claim status to the appropriate settled status (“settled/both”, “settled/indemnity”, “settled/medical”);

2.     Update any cases that are still open or in a suspended status to the appropriate closed status, including updating the issue and closing the case;

3.     Release payment.

BB.Payment Issues

1.     Family Support: If there is a family support order in the claim, the LSS CSS shall follow the procedures set forth in the Family Support Orders and Attorney Fees Paid Pursuant to Deductions of Child Support from Lump Sum Payments procedure.

2.     DWRF Payment: The LSS CSS shall issue payment for the DWRF portion of a settlement by a separate warrant, and charge that portion to the DWRF fund using the DWRF Lump Sum Settlement benefit plan in the claims management system.

3.     When the claimant has died, the LSS CSS shall staff with the BWC settlement attorney to determine how payment is made and what documentation is required.

 

CC.                    Injuries Sustained in a Vocational Rehabilitation Program

1.     The LSS CSS shall issue settlement approval letters for SI rehabilitation claims offline from the claims management system.

2.     Payment for SI rehabilitation claims shall be issued in the claims management system “Miscellaneous Payment” window at the end of the thirty (30) day waiting period.

3.     The LSS CSS shall ensure that the rehabilitation injury claim is assigned to the correct policy number.

4.     The employer’s type of coverage at the time of the original injury, whether the employer paid into the Surplus Fund or not, will indicate if the employer or the Surplus Fund will be charged for the injury in rehabilitation plan claim costs.

5.     Employers who paid into the Surplus Fund at the time of the original allowed claim have coverage for vocational rehabilitation costs, including claim costs for injuries in rehabilitation plans

6.     Employers who did not pay into the Surplus Fund at the time of the original allowed claim are responsible for their own vocational rehabilitation costs. This includes rehabilitation costs associated with injuries sustained during that claim’s original rehabilitation plan

7.     The employer’s Surplus Fund status at the time of the original allowed claim date. dictates the policy number to which the rehabilitation injury costs are charged:

                  Employer Type                        Surplus Fund  Policy Number

                  State Fund                              Yes                  9999-0

                  Self-Insured (opted in)            Yes                  20000999-0

                  Self-Insured (opted out)          No                   Regular policy numbers used               

                  PEC*                                       Yes                  30099901-0

                  PES**                                      No                   Most use own policy number

 

*Public Employer County/city: Includes the county auditor and every taxing district in the county (such as townships, villages, cities, public school districts, libraries, some hospitals, cemeteries and fire departments).

**Public Employer State Agency: Does not pay into the Surplus Fund. PES employer charges rehabilitation injury claims to their regular policy number and do not use surplus fund dollars.

DD.                    Court Settlement Procedure

1.     The following BWC staff may authorize a court settlement, up to the amounts indicated:

      Amount                                                Authorizing Individual

up to $75,000                                BWC Field Attorneys

$75,001 to $150,000                     BWC Settlement Attorneys

$150,001 and above                     Executive Round Table, with Administrator sign off

2.     The assigned lost time service office will process court ordered settlements for medical only claims, as well as lost time claims. This includes court ordered settlements for a single medical only claim or a medical only reference claim with a lost time claim.

3.     Processing the Settlement

a.     The Legal Division will be notified via email by the Attorney General's Office (AG) of a court settlement agreement being reached. 

b.     The Legal Division will forward the email it received from the AG with the subject line “Court Settlement Notification” to the BWC Claims Services AG LSS email box for processing the settlement.

c.      LSS Support Staff shall do the following upon receipt of the email from the Legal Division:

i.       Check the LSS email box daily for notifications and final paperwork packets.

ii.      Create a coversheet in the Regional AG Settlement Worklist tab on LSS Dashboard and assign based on the AG Notification Tracker rotation list; and

iii.     Add a note in the claim to indicate receipt of the court settlement notification.

4.     LSS Staff shall do the following upon receipt of the email from the Legal Division:

a.     Reassign all the included claims to themselves;

b.     Update the Claim Maintenance tabs with appropriate dates indicated in the claim note (the effective settlement date); 

c.      If exclusions exist, do a claims search by the claimant’s social security number to ensure all claims are identified;

d.     If the claimant has multiple active claims, ensure all claims have a settlement notification note. This will not be done for any claims that are listed in the AG email as excluded from the court settlement;

e.     Set a work item to review for receipt of the signed court documents from the AG's office;

f.       Ensure that ongoing compensation payments (e.g., temporary total disability, permanent total disability) continue until receipt of the AG paperwork and the claim is placed in the appropriate settled status.

g.     Ensure any compensation paid after the effective settlement date is declared an overpayment, including any payment for permanent partial disability unless specifically excluded in the AG email. 

5.     Upon receipt of the AG closing documents in the LSS mailbox; LSS Support staff shall:

a.     Forward the email containing the AG closing documents to the assigned LSS CSS;

b.     Ensure AG closing documents are indexed/imaged into the claim.

6.     Upon receipt of the email containing AG closing documents the LSS staff shall:

a.     Read the settlement agreement for special findings (i.e., confirm claims that are excluded or settlement of indemnity/medical/condition only);

b.     If there are no exclusions, include all State Fund claims in the settlement; 

c.      Ensure that medical-only claims are reassigned, as appropriate;

d.     Complete and mail a "Court Ordered Settlement-BWC Findings of Fact" to all the parties and their representatives to document how BWC is perfecting the court settlement;

e.     Image a copy of the “Court Ordered Settlement-BWC Findings of Fact” notice and the settlement agreement in each of the claimant’s files that is being settled. When there are multiple employers, a copy shall be imaged in each claim included in the settlement;

f.       Update medical and indemnity claim settled dates, as appropriate. Injury status codes shall not be updated to “deny or “disallowed” or the status of the claim changed to “disallowed” if previously allowed;

g.     If the settled claim had been disallowed, charge the settlement payment to the State Fund unless the court ordered settlement agreement states to charge it to Surplus Fund, or other specific terms are described;

h.     If to be charged to Surplus Fund, notify the employer adjustment unit by creating a user-generated work item, include details regarding the court ordered settlement and request the settlement be charged to the Surplus Fund.

i.       Enter the “from and to” dates in the payment plan as the date of settlement on the court order;

j.       Ensure the notes in all claims are updated to reflect the settlement is a court settlement; and

k.      Staff with the BWC attorney any request by the claimant to terminate his or her legal representative, cancel an authorization to receive payment and/or any other request to not send payment to the legal representative.

7.     The LSS CSS shall recoup from the settlement amount any payments of compensation made after the effective date of settlement.

8.     The LSS CSS shall update any pending cases as appropriate.

9.     The LSS CSS shall deny any new requests for compensation in the claims included in the settlement.

10.  The LSS CSS shall follow the procedures in Lump Sum Settlements procedure CP-12-01.PR.1 for overpayments.

11.  If the LSS CSS discovers the death of the claimant prior to the issuance of the warrant, or after the issuance of the warrant but before the warrant is cashed, the LSS CSS shall staff with the BWC settlement attorney.