By Robert G. Heywood
July 22, 2014
If you haven’t yet mediated a worker’s compensation case, perhaps it’s because you’re not sure what to expect. This article acquaints the reader with the fundamentals of the mediation process with a view to increasing use of this valuable case resolution tool.
At the outset, it is not uncommon for attorneys to tell me that this is their first worker’s compensation mediation. Though mediation is used in almost all other areas of California law, it remains underutilized in settlement of challenging worker’s compensation cases. While there are different styles and manners of conducting mediations, here I discuss methodology which I consider characteristic of many mediators.
When I pose the questions, “Do you have a case that’s been around for a long time that you just can’t seem to get resolved? One that presents thorny issues or complex legal or evidentiary issues? One where there is a lot of emotion on one or both sides?” And when those questions are followed by, “Would you be willing to spend a day on that case if you had an 80+% chance of resolving it?”, the response should be “yes.”
One of the barriers to mediation is a preconception that the case is “impossible”, and that mediation would be fruitless. Experience proves just the opposite. Every week, litigants and attorneys leave mediations with settled cases that they did not believe could be resolved. For the cases that are not settled at mediation, I use the opportunity to treat the gathering as a Case Management Conference. At a minimum we will conclude the session with a plan for what steps need to be taken; who will be responsible for accomplishing them; and when they will be completed. We will have a clear understanding of how we are going to move the case to conclusion.
Resolution of the case is the goal. The applicant wants his settlement and to move on with his life free from the slings and arrows of the worker’s compensation system; the applicant attorney wants to be paid; and the defense attorney and her client want a closed file.
Having worked as a mediator for more than ten years, and having settled several hundred seemingly impossible cases, I have found that the challenge is not so much getting the parties to settlement. Rather, the greater challenge is simply getting the parties to the table. If we can achieve that, the odds are outstanding that they will leave with a settled case or a concrete and timed plan to move the case to closure. Either way, the time will be well spent and will be well worth the cost of the mediation.
WHAT HAPPENS PRIOR TO THE MEDIATION
Once counsel agree that mediation would be beneficial, they will confer on whom they will utilize as mediator. It is often the case that counsel will agree on the mediator suggested by their opponent since they know that opposing counsel has confidence in that mediator. I strongly recommend using a mediator with formal mediation training that covers the subtleties of negotiation and provides valuable insights into the psychological components of the mediation process.
Typically, I am contacted by counsel to find dates that will work for all concerned. We will decide on either a full or half-day session and will ascertain the best location for the parties. If it is to take place outside my office, there needs to be sufficient conference space so as to accommodate both full group and smaller caucus sessions.
Once a date and location is selected, I send notice to counsel with fee information and a cover letter explaining the importance of all key decision makers being present. While I cannot order the attendance of claims personnel, I make it clear that my very strong preference is that they attend in person. Face-to-face dynamics facilitate settlement negotiations. There is a tendency to depersonalize individuals both on the injured worker side and that of the carrier/employer. Preconceptions can be mitigated when both sides meet and talk to each other in person.
The letter also invites the attorneys to send a brief letter in advance of the mediation giving an overview of the case. They may also want to include medical reports, rating information, an explanation of key issues, calendar status, prior settlement discussions, information on liens, benefits paid, or anything else that would be good for me to know.
My preference is to start in the morning—usually at 9:30 a.m. Half-day mediations that start in the afternoon are slightly less successful in achieving full resolution. I attribute this to fatigue, eagerness to wrap things up and get home, and inability to “step away” from the process for reassessment and consultation which can be accomplished during, for example, a lunch break. Parties with insufficient time may harden their positions or prematurely and erroneously conclude that the case can’t be settled. Since compromise and an open-minded approach are essential, I want to choose a time of day that will aid the process. While a mediator gets paid whether the case settles or not, every mediator strives for resolution. Only those who deliver settlements maintain successful mediation practices.
Prior to the mediation, I may also call the attorneys if I have questions or to simply get acquainted before we start. Since the mediator is not deciding the case, ex parte discussions are perfectly appropriate, and they can and do advance the process.
I will read the materials the attorneys provide, and while preparing for the mediation I will work on developing a strategy for each party, looking for the key that will unlock any barriers to productive negotiations. Sometimes parties say, “It’s not about the money”. Of course, it’s about the money, but people need to be ready to talk about the money. My early challenge is to get them to that point.
WHAT HAPPENS AT THE MEDIATION
THE JOINT SESSION
Preliminary Matters and Introductions
When mediation day comes, and all parties, counsel and other principals have arrived, I invite them into a large conference room where everyone has ample space to be comfortable. Usually we have coffee, water and some goodies. I want the atmosphere to be relaxed. While not all mediators use an opening joint session, my experience has been that it is very helpful in advancing the process. [Note: all commentators on mediation emphasize that it is a process. If the process is hurried, failure is the likely result.]
The attorneys may know me, but is important that I gain the applicant’s trust. Likely, everyone else in the room deals with worker’s compensation cases every day, but this is his one and only case. If he is worried that there are a lot of people there from the defense side, I reassure him that this is a good sign, since it means the defendant brought the key people who can put together resolution of his case. If he appears physically uncomfortable, I offer the applicant a different type of chair.
I invite each participant to introduce themselves and explain why they are there. For example, the worker may have no idea why a structured settlement expert is there or what one is. Even if all the applicant does is say his name, it gets him talking. Over the course of the day, I want to engage the applicant and listen to his story. This is sometimes referred to as giving the applicant the equivalent of his “day in court.” Being heard with empathy and sincerity forms the psychological base for trust. Once achieved, it allows us to move on to productive talks about money and other settlement components. Simply jumping into money discussions does not work.
Introductions are important because this may be the first time the carrier has met the applicant. I want the carrier to see the applicant as a real person and not just another “claimant”. I want the carrier to hear how the industrial injury has affected the applicant’s life. Similarly, I want the applicant to see that the examiner is a real person doing her job administering a system that has many limitations imposed by the legislature.
Often the applicant brings a spouse, child, or other trusted friend or advisor. I invite that person to be a part of the process. When the day is finished, and we have a resolution of the case, I want the applicant to be confident in the correctness of the decisions made. Satisfaction with the process and the results are hallmarks of a successful mediation. An applicant who settles a case on excellent terms may be met with second-guessing and even criticism by a non-participating spouse. The spouse who is there for guidance and affirmation of decisions, having participated, will accept and embrace the decision as being the correct one for the applicant and his family.
This is also the time to confirm that the defense has settlement authority. Often we end the mediation with a fully executed C&R or other stipulations. If the defense does not have decision makers present or immediately available, the productiveness of the mediation may be lessened. Since the applicant has full settlement authority, it seems only reasonable that the defense should too.
Explaining my Role
Having never been in a mediation before, the applicant may be unclear about the mediator’s function. That may be true of some counsel too. I advise that I am an attorney who has had a long career in handling worker’s compensation cases; that I am a certified specialist; that all I do is mediations and arbitrations; and that while the defendant is going to pay my fee, I am a completely independent person.
Because many people confuse arbitration and mediation, I explain that an arbitrator is a judge, while a mediator is a facilitator. Thus, while I am keenly interested in the case, I will not be making any substantive decisions. I will use my training and insight to help guide the parties to a mutually agreeable resolution that together we will create. Even though experience shows that we usually can work out a deal that everyone is very happy with, I don’t want to oversell. I emphatically reject the notion that if everyone leaves unhappy it must be a “good settlement.” Experience shows just the opposite. Mediated settlements crafted by the parties themselves meet their interests and needs in a way that works well for each.
I explain that I will not give legal advice. However, if we need legal information [such as what a code section says or dollar value of a rating], I am happy to oblige. My job is also not to answer the question, “What do you think this case is worth?” If answered, this has the risk of giving the mediator the appearance of an advocate, potentially jeopardizing the necessary impartiality of the mediator. This is not to say that near the end of the day I will refuse to offer a mediator’s proposal, but, for the most part, recommendations as to what the parties should do comes from their attorneys.
This is also a good time to remind that parties that with a mediated settlement we have no limits on the creativity that we can bring to the settlement. The judge has very few options. Usually her role is simply deciding what is going to be the permanent disability award. In contrast, we can put together a resolution that can conclude PD, take care of any potential additional TD award, supplemental job displacement voucher issues, integration of future medical with Medicare, integration of indemnity and life pension benefits so as to minimize offsets from Social Security, pension or other long disability benefit source, plus we may able to do this in a way that has tax advantages, and we may be able to guarantee benefits for life and for applicant’s heirs by using a structured settlement.
During the joint session I advise all present that under the California Evidence Code, mediation is a special kind of meeting. It is one where everything that is said is protected from later disclosure or use at subsequent hearings. I provide the parties with a stipulation that all participants sign acknowledging this and agreeing to abide by those rules. The stipulation includes the code sections if they want to refer to them. This also provides me with a convenient list of all who attended, since mediators are required to keep track of attendance.
Introduction of Caucus Concept
Following the explanation of confidentiality, I advise that at the conclusion of the joint session we will be meeting in smaller groups. During those sessions, the confidentiality rules will still apply, and further, I assure them that I will not reveal anything that is said in those meetings without their specific authority. I let them know that at the end of the caucus, I will recap what it is they would like me to say and how they would like me to present it.
Other Joint Session Matters
Worker’s compensation practitioners use a sometimes mind-numbing assortment of acronyms. While we understand them, the applicant probably does not. Since this is the applicant’s case, it is essential that the applicant know what we are talking about. I advise that he should not hesitate to jump in and ask, “What do mean by UR?”, for example. This also enhances his perception of being involved, rather than having a bunch of other people talking about him and making decisions about his life.
Even though I emphasize that I am strictly a facilitator, the applicant understands that I am directing the process. If I have him sit next to me, it furthers the goal of him being involved, and that he is a very important player.
Usually the joint session wraps up with me asking various questions. I preface them with the comment that if any are ones they would prefer to discuss in a caucus, that would be fine. Examples are: What is the calendar status of the case? Are there any liens? Is the applicant on Social Security? Are we going to need a Medicare Set Aside trust? Are there any pending medical or vocational evaluations? How much temporary disability has been paid? What is the amount of permanent disability advances? Are there other issues such as self-procured medical expenses, penalty claims or unpaid costs?
These are not questions that usually evoke any controversy, and they help me understand and narrow the issues. They also give the parties the opportunity to talk to each other making them more comfortable with each other, and helps break down wariness about one another.
Finally, I ask the broad question of what they would each like to accomplish i.e. are they looking for a full C&R, a C&R with open medical, a stipulated award, or are they there for something else? Sometimes they say that they are not sure and are willing to consider all options. Other times they prefer to talk about this in caucus, but often both sides will say that they are looking for the same thing. If so, we know we will all being going down the same path with a goal of achieving that result. If they want a C&R, we can all work toward that end. The simpler I can make our focus, the more likely we will achieve our common goal.
This is not the time to make long advocacy speeches, but I do give them the opportunity to say something if they feel it’s necessary to know it before we proceed into the caucus phase. For example, if the applicant has just decided to have surgery or is planning to relocate, that may be something that should come out early in the discussions.
The important thing is that by end of the joint session we should have a good idea of what we would like to work on; everyone should know who is there and their roles; they should be confident that over the course of the day this case will be our sole focus; and that there will be plenty of time for them to say everything they need to without fear of being rushed. If we’ve done the joint session right, we should be well-positioned to move into productive caucuses.
THE CAUCUS PHASE
The first caucus I conduct is with the applicant group. Applicant has the burden of proof and will go first at trial, and starting with the applicant reaffirms his sense of involvement and importance. I don’t want to inadvertently give the impression that somehow I am more interested in what the defense has to say.
In a further effort to build trust, I want to hear and genuinely listen to the applicant’s story. What happened?; how has this changed your life?; what problems has it caused for you and your family?; would you like to get out of the workers’ comp system?; and similar questions. More than once, I’ve been told, “You’re the first person who really listened to me.” Not only does this fulfill the need to have a “day in court”, it is all part of building that psychological framework for moving the discussion toward financial issues.
The goal is that by end of the first caucus with the applicant group, we will be able to present the defense with a demand. I emphasize that an outrageous demand will only result in an unacceptable low response and may even threaten to end the mediation. We will do far better if applicant starts with a proposal that is grounded in reality yet still leaves room for further negotiation.
Assuming I am able to go to the first caucus with the defense with a number, before revealing that number I usually start the session with a similar period of listening. I want to hear what the defense thinks about the case and how they have evaluated it. The defense also needs to feel it’s been heard. I do not want to be viewed as another advocate for the applicant. Since these cases often involve complex issues with applicants who may be perceived as problematic, after listening to the defense position, I sometimes ask what the defense attorney and the examiner believe the applicant’s opening demand is. If it turns out the actual demand is lower than they expect, I emphasize the work that went into getting there and encourage them that they should respond in kind by making a reasonable opening offer. We also need to find out if there are additional conditions that we need to know about such as resignation, confidentiality, 132a resolution etc.
We also want to find out if they will be offering a structure. In large cases, both sides may come to the mediation with a structured settlement expert. For each, the focus is the dollar cost of the structure, but comparing actual structure proposals showing monthly benefits with or without lump sums is helpful in assessing various scenarios of what would happen in the case of an award from a WCALJ.
My goal is to leave that first defense group caucus with an offer that will advance the process. If the defense is reasonable, I find it much easier to get decent movement from the applicant group. Before leaving the defense group, I may give them some “homework”. This often involves confirming dates and amounts of temporary disability, permanent disability advances, whether vocational experts have been paid, what are applicant’s annual medical expenses and the like.
Applicants may get homework too, such as getting information on self-procured medical, mileage, home health care claims, collateral benefit integration and similar matters.
The caucuses continue in a shuttle diplomacy style as we move closer together. My job is to understand and convey the messages in way that allows the other side to understand, but not necessarily agree with, their opposition. During these caucuses I will explore the consequences of various settlement models and the range of potential outcomes, including their probability. These models may include rating scenarios with life pension, SAWW/COLA and discount factors, life expectancy, guarantees, Medicare set-aside considerations and anything else that goes into assessing the value of the case. This approach helps the litigants hone in on what they feel they need to get from resolution. We also fully explore the alternatives to a negotiated agreement, i.e. what is likely to happen if we don’t settle.
Bracketing the potentials often assists in sharpening the focus of the discussions. While still maintaining a facilitative style, this may be the time for the mediator to give the parties a “reality check.” Each party is at the table with the stated goal of ending the case. If they truly want that to happen, they must be able to compromise.
Keeping both sides making reasonable progress is the challenge for the mediator. If done skillfully, the mediator may be rewarded with a comment such as, “We’ve made more progress in two hours today than in the past five years of litigation.”
I want everyone to go home confident they made the right decision, and that their interests were met. The process should not feel hurried. If we need a break we will take one. I don’t want the process to be thwarted because people’s blood sugar is low, and they get cranky.
FINALIZING THE SETTLEMENT
Most releases start with a preamble to the effect that the parties wish to settle to avoid the hazards, costs and delays of further litigation and buy their peace. With each caucus session, the goal is narrow the gap till we get to the point where it makes sense for each side to avoid the risks of continuing the litigation. Then we have settlement.
Once we have a meeting of the minds on what will be offered and accepted, the parties will jointly prepare and sign a settlement agreement stating the terms and conditions of the settlement. While the mediator cannot approve a C&R, there is nothing to stop the parties from preparing one at the mediation and deciding who will submit it to the WCAB. Sometimes details such as a Hartman formula or structure specifics can be added later, but the mediation should not conclude without a clear statement of the intent of the parties and specifics on what else, if anything, needs to be done to complete the process.
If we get to the point where settlement cannot be completed and no further progress is possible, we will still lay out precisely what needs to be done, who will take care of getting it done, and when it will be completed. Examples could include obtaining a clarifying report from an AME, or finalizing an MSA proposal, or completing the deposition of a vocational expert on DFEC issues. The key is to have that plan so we can come back in the future and complete resolution of the case.
Because the settlement is one created by the parties themselves rather than one imposed on them by a judicial authority, this explains the high degree of satisfaction with mediated settlements. All parties have the peace of mind of a sure thing rather than the uncertainty of what a judge, or a reconsideration panel, might do in a litigation mode that might last for years. The costs of the mediation are far less than the costs of continued and fruitless litigation.
Now the applicant can get on with his life unencumbered by the challenges and frustrations of the worker’s compensation system. The examiner and employer can turn their attention to other matters and be finished with a case that may have consumed what they consider to be a disproportionate amount of time, money and mental energy. It is as if a great weight has been lifted. Mindful of the Mastercard commercial, this is “priceless.”
Robert G. Heywood is a certified specialist in worker’s compensation and works exclusively as a mediator and arbitrator in worker’s compensation and related matters. He did his mediation training at Harvard Law School. His office is in Oakland, and he handles cases throughout California He can be reached at [email protected]