Choate: How Adjusters Can Settle By way of C&R and Scale back X-Mods| Staff Compensation Information

By Gregory L. Choate

Monday, June 7, 2021 | 1

While the goal of any expert is to resolve a case with a compromise and release, an initially overlooked comparison strategy for experts is to offer only a set reward for settling the case.

Gregory L. Choate

The amount paid for a C&R is a factor used to determine the employer’s change in experience. Every employer wants a low X-Mod, and a reviewer negotiating a lower C&R is of great help in cutting costs for the employer.

The applicants’ lawyers seek to negotiate a compromise and release that will earn them the highest legal fees and avoid ongoing processing of the case. One of their negotiating tactics for a compromise and release is to claim that the applicant will continue treatment and the case will become more expensive, especially if surgery is required. They know all possible future medical supplies and their costs. Your first C&R demand is usually very high.

However, they are really trying to avoid a set award as the applicant’s attorney loses a lot of time and manpower through the use reviews, independent medical reports, and coordination with the applicant and medical treatment without getting any more money. The applicant’s attorney will never want to work for free, month after month and year after year, if the case is settled at a set price.

For example, suppose an employee compensation case with a 30% permanent incapacity ($ 37,990) and future medical coverage would have a reasonable C&R of $ 70,000. In this hypothesis, the attorney’s fee of 15% for an agreed price is $ 5,699.85 ($ 37,990 x 0.15% = $ 5,699.85) and the fee for a C&R is ($ 70,000 x 0.15% = 10,500 USD). The applicant’s lawyer will always negotiate the higher fee.

Here are two hypothetical settlement negotiations.

In our first example, let’s assume that the appraiser and lawyer are only discussing one C&R. In this scenario, it is foreseeable that the attorney will typically charge $ 90,000 for a C&R with an appraisal counter of $ 50,000. After some discussion, it will be resolved at $ 70,000 for a C&R and the attorney will receive the higher $ 10,500.00 fee and not have to do any further work on the file.

For our second example, let’s assume that the appraiser uses the negotiation strategy of only offering a fixed premium and not offering a C&R in the first offer. Call the law firm and tell them the case is worth 30% permanent disability and you can send the prescribed price to resolve the case. The office will continue to hold out $ 90,000 for C&R to double the fee that the agreed award would give.

The appraiser should decline the $ 90,000 and re-offer the agreed price, saying that the carrier will consider a C&R if the attorney wants to lower the claim but the demand is too high. The attorney will change negotiating tactics to avoid the clause’s lower fee (only $ 5,699.85) and ongoing work for free, month after month and year after year.

The applicant’s attorney should make a new offer of $ 80,000 to avoid the free labor, and now the case should be closed with the initial offer of $ 50,000 at $ 65,000.

That may not seem like much for compensation, but the goal of the appraisers and lawyers is to cut costs. A $ 5,000 savings over 100 cases means less than $ 500,000 less in claims, and these savings help the employer’s X-Mod significantly.

In conclusion, it is important not to be afraid of only offering a set award at first in hopes of achieving the ultimate goal of a lower C&R crowd. After all, we know that the applicant’s lawyer never wants to work for free.

Gregory L. Choate is an associate attorney in the law firm of Bradford & Barthel’s San Diego office. This entry from the Bradford & Barthel blog is published with permission.