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Introduction

Introduction. About Gitter & Associates. WORKERS’ COMPENSATION CLAIMS: TO SETTLE OR NOT TO SETTLE?. Why Settle? Approach & Methodology Indemnity Medical Medicare Non-Medical Structured Settlement Case Studies Determining Overall Value. Why Settle?. Resolution of all claim issues

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Introduction

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Presentation Transcript

  1. Introduction About Gitter & Associates

  2. WORKERS’ COMPENSATION CLAIMS: TO SETTLE OR NOT TO SETTLE? • Why Settle? • Approach & Methodology • Indemnity • Medical • Medicare • Non-Medical • Structured Settlement • Case Studies • Determining Overall Value

  3. Why Settle? • Resolution of all claim issues • Indemnity • Medical • Etc. • Extinguish future exposure • Avoid potential (further) escalation

  4. Settlement: Approach & Methodology Indemnity • Valuation • Permanent Partial • Permanent Total Disability • Present Value (PV) calculation • Today’s dollars relative to future dollars • Importance of utilizing PV and Discounting

  5. Settlement: Approach & Methodology Medical • Valuation of Medical • Inflationary Factors • Medicare • Medicare Set Asides (MSA’s)

  6. Settlement: Approach & Methodology Medical: Valuation of Medical • Historical review • 2-3 year history of treatment/expenses • Review of future needs • Treatment modalities • Surgeries • Medications

  7. Settlement: Approach & Methodology Medical: Valuation of Medical • Co-morbidity factors • Hypertension, Obesity, Diabetes, History of Smoking, Congenital Conditions, etc. • Co-morbidity as a Cost Driver • Delayed healing process • Failure to recover from surgery • Inability to regain strength, ROM, etc. • Acceleration of degenerative condition(s)

  8. Settlement: Approach & Methodology Medical: Inflationary Factors • General 2-3% per year (normal goods and services) • Medical 6-8% per year • Medication 10-12% per year • “8 by 8 Rule”

  9. Settlement: Approach & Methodology Medical: Discounting for Present Value • Present Value Calculation of Medical • Determination of Annual • Projection of Future Needs (treatment, surgeries, etc.) • Discounting factor • Variations based upon Life Expectancy • One time and future needs

  10. Settlement: Approach & Methodology Medical: Medicare • Brief history and Medicare Secondary Payer Statute (MSP) • $43B in liability transferred to Medicare in a 7 year span leading up to the change (1995-2001) • “Consideration” of Medicare’s interests • Memoranda issued by the Center for Medicare Services

  11. Settlement: Approach & Methodology Medical: Medicare Set Asides (MSA’s) • Medicare Part A & B • Part “A”: Inpatient Hospital care, skilled nursing facilities, LIMITED home health care (stemming from a hospitalization) • Part “B”: MD visits, diagnostics, physical therapy, supplies, etc.

  12. Settlement: Approach & Methodology Medical: Medicare Set Asides (MSA’s) • Medicare Part “D” • Medications (“labeled” usage only) • Coverage for 2013 • Medicare Pays $1,983.50 of the first $6,733.50 • Catastrophic Coverage above this amount is 95%* *(weighted cost brand vs. generic) • Beneficiary out of pocket exposure INCREASED by 29% ($1,150) from 2006 to 2013

  13. Settlement: Approach & Methodology Medical • What is not covered by Medicare? • Most attendant/Home Care • “Off-label” medications • Chiropractic Care (unless prescribed by a MD) • Acupuncture • 20% Deductible

  14. Settlement: Approach & Methodology Non-Medical • “Other” items to consideration in valuing a case • Home care (housekeeping, lawn services, etc.) • Attendant Care • Retroactive benefits • Misc.

  15. Structured Settlements • Description • Components • Cash • Annuities (creativity is the key) • Internal Rate of Return • Benefits to the Parties • Employer • Applicant

  16. Case Study #1 “Dogs” • 59 Year-old Registered Nurse sustained injuries to her spine, bilateral upper/lower extremities, psyche and internal systems • Permanent Total Disability • Extensive Future Medical Care • Assisted Living Facility • Future value established at $2.1M • Settlement at $1.25M • SAVINGS: $900,000.00

  17. SETTLEMENT PROPOSAL CLAIMANT: ROT W. EILER DOB: JUNE 14, 1940 (AGE 66) NORMAL LIFE EXPECTANCY: 19.5 YEARS PAYMENT DESCRIPTION COST EXPECTED PAYOUT CASH AT SETTLEMENT$460,185 $460,185 MEDICARE SET-ASIDE ALLOCATION MSA “seed” Money $40,282$40,282 MSA Annual Payments ($16,141 $144,058 $225,974 due annually, if living for 14 years) ANNUAL ANNUITY PAYMENTS$605,475$750,000 $75,000/year for 10 years Certain TOTALS: $1,250,000 $1,476,441

  18. Case Study #2 “The Boat” • 58 year-old School Maintenance Worker sustained multiple orthopedic and internal injuries (strokes/heart attacks) • Permanent Total Disability • Medical care at $10k annually • significant co-morbidity issues • Value established at $1.3M • Settlement of $330,000.00 • SAVINGS: $975,000.00

  19. SETTLEMENT PROPOSAL CLAIMANT: BASS MASTER DOB: AUGUST 27, 1948 (AGE 58) NORMAL LIFE EXPECTANCY: 22 YEARS PAYMENT DESCRIPTION COST EXPECTED PAYOUT CASH DUE AT SETTLEMENT$72,500 $72,500 MEDICARE SET-ASIDE ALLOCATION MSA “seed” Money $7,435$7,435 MSA ANNUAL PAYMENTS ($3,485 due annually, if living for 16 years)$26,897$55,760 LIFETIME INCOME PAYMENTS$223,125$528,000 $2,000 monthly, guaranteed to Age 65, and payable monthly thereafter for life. TOTALS: $329,957 $663,695

  20. Case Study #3 • 36 year-old Machine Operator sustained a closed-head trauma after being struck by an ejected board • Permanent Total Disability • Substantial Future Medical needs • Valuation established at $2.4M • Settlement at $750,000.00 • SAVINGS $1.65M

  21. Case Study #4 • A 52 year-old Forklift Operator sustained injuries to his spine, left hip and psyche • Substantial Permanent Partial Disability • Ongoing medical care at $10,000.00/year • Valuation established at $525,000.00 • Settlement of $100,000.00 • SAVINGS $425,000.00

  22. Case Study #5 • 48 year-old Office Supervisor sustained injuries to her neck and bilateral upper extremities • Limited Permanent Partial Disability • Ongoing medical care at $4,300.00/year • Valuation established at $133,000.00 • Settlement of $68,000.00 • SAVINGS $65,000.00

  23. Determining Overall Case Value • Computation & Utilization of PV • Indemnity • Medical/Medicare Set Aside (MSA) • Discount rates used to estimate Future Value • Indemnity • Medical (MSA and non-covered items)

  24. TO SETTLE OR NOT TO SETTLE? • Benefits of Claim Resolution • Future Cost Savings • Mitigation of Expansion of Claim • Reserve Reduction/Removal • CLOSED FILE!

  25. Questions?

  26. Thank you! Gitter & Associates, Inc. 1820 S. Escondido Blvd., suite 201 Escondido, California 92025 PHONE: (877) 448-2772 Fax: (760) 740-0449 www.gitterassoc.com

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