Policy 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:	02/27/18
Approved:	Kevin R. Abrams, Chief Operating Officer
Origin:	Claims Policy and Legal Services
Supersedes:	Policy # CP-12-01, effective 07/12/17
History:	New 06/24/13; Rev.11/25/14; 10/07/16; 07/12/17

 

 

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 BWC that a 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 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 Services 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 Services will handle all settlement negotiations 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 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 settlements pursued pursuant to R.C. 4123.512.

1.    It is the policy of BWC that, 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.    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.

4.    Signatures

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

i.      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.

ii.     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).

iii.    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.

b.    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):

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

ii.     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 

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

c.     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.

d.    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.

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

ii.     If the employer responds and objects in writing to the settlement application, BWC will disapprove the settlement application.

e.    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 bill self-insuring employers for any DWRF benefits allocated in a settlement.

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

 

D.   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 renegotiate the agreed settlement amount, considering the following:

a.    Is the agreed settlement amount greater 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 and 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?

 

E.    Disapproval of a Settlement Application

1.    It is the policy of 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.

 

F.    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” (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 62½ 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; and

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:

a.    Must be signed by the IW/claimant;

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

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

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

 

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

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

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

3.    The claimant’s original signature is required.

 

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

1.    It is the policy of 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.     BWC must receive the withdrawal 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.    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.

 

I.      Death of the Claimant

1.    If the claimant dies prior to BWC approval of the settlement, 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 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.

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 BWC will seek to have the warrant returned; and

b.    If the warrant is returned, BWC will reissue the warrant payable to the estate of the claimant upon receipt of necessary documentation.

 

J.     For the claimant’s legal representative to receive the LSS warrant, the claimant must:

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

2.    Provide authorization on the C-240.

 

K.    DWRF, Family Support, Subrogation and Fraud

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

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

3.    A finding of fraud at any time permits BWC to rescind the LSS agreement, seek and recoup administrative overpayments due to the fraud, and refer the claimant for criminal prosecution, if 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 BWC from taking corrective action, including recovery of benefits against a physician of record, a vendor, a claimant or an employer.

 

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

 

BWC staff may refer to the corresponding procedure for this policy entitled “Lump Sum Settlements” for further guidance.