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Calculating the Cost of Future
Medical Treatment
by Marjory Harris, Esq. |
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Figuring out the cost of future
medical treatment [FMT] is more art than science and needs
to take into consideration a number of factors:
1. Is it beneficial to the injured worker to
settle out future medical?
Attorneys have a fiduciary duty to their clients
to put the client’s economic interest first. We
need to find out what our client wants and get that in
writing (see “Informed
Consent”).
We need to explain the pros and cons of keeping medical open
vs. closing it out. In our current system of medical
provider networks and utilization
review , not to mention the MTUS,
which our client has already experienced by the time we are
evaluating FMT, the client frequently wants out of the system.
But we need to explain why being on their own may leave them
without any treatment or worse treatment than available under
workers’ compensation. We need to control our desire
to get paid and be relieved of further work on the case and
be objective when discussing this.
While we may think it best to leave medical open in certain
cases, our clients may insist on a lump sum settlement. In
that case, we have quite a bit of work to do to come up with
a reasonable “bottom line” figure.
If the defendant refuses to settle medical, we are off the
hook, but if the defendant makes an offer and we believe
it to be inadequate, we should advise our client by a formal
letter that we do not believe they should settle out medical
but will assist them with the paperwork, provided they sign
a release. We must remember that if we do not want to help
them settle that benefit, some other attorney is likely to
take over the case.
In order to present an objective explanation of the future
medical benefit and buying it out, we need first to examine
the available data and make calculations. This is the most
difficult part of the process, and one that we are ill-equipped
to do.
Traditionally, in the bulk of cases, the analysis relates
more to “what the market will bear” than any
real experience with the costs of treatment. A workers’ compensation
judge may say, “I’ll approve $X for this type
of case,” which is not a basis for agreeing to such
a sum, in the author’s opinion. While the WCJs review
for adequacy, that is not a defense to a malpractice claim
when we have not done what we are required to do – due
diligence.
Another unfortunate practice is settling on the fly, while
at the Mandatory Settlement Conference and learning what
sum is the most the defense will offer. A “take it
or leave it” description of the settlement offer to
the worker may cause resentment towards the attorney, loss
of potential business through foul word of mouth, and, at
worst, a malpractice claim.
The following suggested process will prepare the client to
make a sound decision and document the attorney’s due
diligence.
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| In order to present an objective explanation
of the future medical benefit and buying it out, we need first
to examine the available data and make calculations. This is
the most difficult part of the process. |
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2. What is medically necessary
in the future?
We start with a review of the medical record. What was recommended
by the Primary Treating Physician? Is that different in any
appreciable way from the recommended future medical treatment
set forth by the AME or QME? If so, what is the explanation?
(“Dr. Sawbones always recommends a future knee replacement
whenever there is a contusion of the kneecap” or “Dr.
X examines injured workers at over 100 locations throughout
California and has yet to find a single case where surgery
is necessary for someone injured on the job.”)
If the doctors’ recommendations are vague, we need
to send a letter requesting clarification or take a deposition.
Next we look at what we know from experience or research:
how likely is it the injured worker will actually need or
undergo the treatment recommended? For example, if there
was localized back pain and spasms and no objective evidence
of a spinal disorder, will future treatment amount to much? |
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3. What are reliable
cost estimates?
Reliable costs estimates are just that – estimates.
If obtained from vendors who carry malpractice insurance,
we may rely more on them than a bald-faced assertion from
an opponent, but still, the buck stops on the applicant’s
attorney’s desk, so no matter how reliable the estimate
seems to be, a good informed
consent is necessary.
In big cases, we may need to retain a life
care planner. We can also use the analyses of Medicare
Set Aside specialists, assuming the MSA is approved by CMS.
Remember to add the non-Medicare
covered items.
We need to check resources on line [see sidebar] to get some
idea of the current costs for certain types of treatment.
There are software programs, such as CaseWORTH,
that may help establish the value of future medical treatment
and would be worth exploring, considering the reasonable
price.
In the usual case, you can plug the data into the free Settlement
Analyzer and it will do the addition. It is important
to review the benefits
printout to see how much was actually paid out for treatment.
After all, if our client does not go for treatment more than
occasionally, or has not had any treatment for some time,
defendant may not consider FMT to have a high value.
Be vigilant for clients who are treating outside the workers’ compensation
system, and obtain all bills from outside sources. If the
client is planning to treat in another state, be aware the Official
Medical Fee Schedule (OMFS) does not apply. See State
Compensation Insurance Fund v. WCAB (Arroyo) 69 Cal.
App.3rd 884 (1977).
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4. What must also
be included?
In addition to doctor visits, costs of medications, surgeries,
and the like, consider the need for and expense related to
assistive devices and attendant care. If there is an MSA,
include as a separate item the “doughnut hole” costs
of prescription medications. To learn more about how
defendants approach the issue of future medical treatment,
see "The C&R
Dilemma." A regulation
governing self-insured employers gives us some idea what
is required of claims adjusters when reserving for FMT: See
8 CCR 15300. |
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5. What liability does the attorney face?
Attorneys can be sued and have judgments against them for
settling cases by Compromise and Release where the money
allotted for FMT proved insufficient. Because there is
that specter of liability does not mean that we should
never agree to do a Compromise and Release, only that we
need to exercise due diligence, which includes explaining
all the options to the client and getting their written
consent.
Informed
Consent
There is no bullet proof informed consent that can fit
in a document of reasonable size and scope. If you have
ever bought or sold a house you may recall reams of boiler
plate designed to exculpate the seller and agents. For
a workers’ compensation case, a document of a few
pages is sufficient to cover all aspects of the Compromise
and Release. I use the following paragraph for buying
out medical in Compromise and Releases. Over the years
I revise it and it gets longer. I welcome suggestions for
improving it:
“I acknowledge that I have closed out my
rights to any further benefits, including compensation
and medical treatment (including surgery) and, upon
approval of this settlement, my case shall be closed
in its entirety for all purposes. My case will be closed
even if the doctors have indicated a probability of
my need for further medical treatment or surgery. My
attorney has advised me that she cannot estimate the
actual cost of future medical treatment and that she
cannot warrant coverage under any medical plan. She
is therefore not recommending that I close out future
medical treatment. I have elected to do this anyway
after full consideration of this issue, with knowledge
of the impossibility of accurately predicting future
medical costs, because I desire to control my own medical
treatment.”
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6. What is the “market value” of the
FMT?
Only by negotiating can we determine “what the market
will bear” or how much defendant is willing to pay
to buy out FMT. The better we are prepared with well-researched
costs, the better we can assess whether to settle the benefit
or to leave medical open. Sometimes we cannot settle all
issues, and an Award for future treatment is the outcome,
either by Stipulations or by Findings and Award. Later,
the claims adjuster may make an offer to buy out medical.
Then we begin the evaluation process again.
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Marjory Harris began practicing law in 1974 as a defense
attorney and later became an applicant's attorney and
a certified specialist. She continues to represent injured
workers at the San Francisco, Oakland, San Jose and San
Bernardino venues and mentors attorneys on big cases.
Reach Marjory at (888) 858-9882 or email to
MHarrisLaw@verizon.net
www.workerscompensationcalifornia.com
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