How to determine when a settlement makes sense

Settlement is an important claims management tool that is allowed by the Ohio Bureau of Workers’ Compensation (BWC) .

“Employers find a settlement to be advantageous as it removes existing reserves or prevents future costs,” says Jill Havens, settlement coordinator at CompManagement. “There is, however, a deadline each year established by the BWC for filing settlements for the policy year. For private employers it is July 15 and for public employers it is Feb. 15.”

Smart Business spoke with Havens about the settlement process and when to initialize a settlement with an injured worker.

What is a settlement?

The BWC defines a settlement as when the parties to a claim agree to a sum of money to forever resolve all past, present or future claim issues or liabilities. There are two types of settlements: partial and full. A partial settlement is defined as the settling of only certain conditions, compensation and/or benefits. A partial settlement keeps a reserve open on a claim, which is used by the BWC as an estimated value to determine future premium for the employer. A full settlement means settling all allowed conditions, compensation and benefits which ends the reserve. Only the injured worker/injured worker representative, employer/employer representative or the BWC can file for a settlement.

When does a settlement make sense?

Based on our long history of working with employers to help settle their claims, they have found that better settlements tend to occur during the following circumstances:

  • An injured worker is no longer employed with the company.
  • An injured worker is no longer receiving medical treatment or lost time compensation.
  • A large reserve is being assessed for future medical and/or indemnity.
  • Wage loss is being paid or has been requested.
  • A permanent partial application has been filed, but not yet awarded or paid.
  • A permanent total disability application has been filed.
  • Additional conditions have been requested on the claim.
  • A rehabilitation plan has been completed.

What claims may not be beneficial to review for settlement?

We have found that in working with employers, their encounters have shown that it may not be beneficial to settle a claim during the following circumstances:

  • An injured worker is still receiving ongoing temporary total compensation, extensive medical treatment or is pending surgery.
  • The claim has reached maximum value based on compensation, medical and the BWC program.
  • The claim has no reserve or no current activity.
  • The claim is no longer impacting the employer as it is out of the experience period.

How is a settlement approved?

The BWC will review the settlement application for the claim to understand the potential benefits, determine if the claim is ready for settlement and identify a value for settlement. If all parties and the BWC sign the settlement agreement, an approval letter is sent to all parties to the claim as well as the Industrial Commission of Ohio. All parties have 30 days to withdraw their approval of the settlement, otherwise the settlement will be paid to the injured worker or their representative. Once a claim is settled, it cannot be reopened, nor can any medical or indemnity be paid against the claim.

Does a settlement impact a premium discount program?

Yes, a settlement may have an impact on premium discount programs and should always be reviewed prior to initializing an application. Settling a claim can help reduce costs to potentially keep an employer eligible for a program and reduce future liabilities that are charged directly to the employer.

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