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Calculating the Cost of Future
Medical Treatment

by Marjory Harris, Esq.
> Calculating FMT
> Defense Perspective on FMT
> Life Care Planner
> The Doughnut Hole
> Age as a Factor
> Feinberg on Almaraz-Guzman II

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.

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.
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?
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).

Some online sources of medical costs:
Medicare Costs Lookup
Common surgery costs
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.

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.”


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.


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