In my last article, “Defense Base Act & Settlement of Claims” (https://solowaylawfirm.com/defense-base-act-settlement-of-claims/), I discussed how employers and their workers’ compensation insurers calculate the settlement value of your claim. More specifically, I explained that in most cases, the employer’s insurance carrier hires a “vocational expert” to complete a “Labor Market Survey” (LMS). This is a survey of jobs that are claimed to be realistically available to you (and within the physical limitations placed upon you by your doctors), supporting their claim that you have lost very little ability to earn money in the future due to your work injury.
In almost 40 years of handling Federal Workers’ Compensation claims (including not only DBA claims but also claims under the Longshore and Harbor Workers’ Compensation Act and the Non-appropriated Funds Instrumentalities Act), I can safely describe what most of my DBA clients say when they receive the low initial settlement offer made in their case. The words they use have fairly common meanings, indicating how they feel about the carrier’s settlement offer, or what best describes their reaction to it! Words like “ridiculous” or “outrageous” are common. Phrases like “that’s a B.S. offer,” or “how do they expect me to live on that?!” are often uttered in response. I think it’s fair to say that my clients do not agree with the insurance company’s view expressed in terms of dollars. Rather, almost every time, injured claimants are astonished that the insurer really thinks they would ever accept such a low offer to settle their entire case.
The Settlement Offer – What Is Included?
Your initial reaction to a low settlement offer in your DBA case may actually get worse when you find out what is to be covered by the offer. For instance, I recently settled a client’s Defense Base Act claim for an amount near $450,000.00. The reason my client was so happy with his settlement is because every penny of this amount went into his personal bank account. Put another way, part of his settlement agreement required the DBA insurer to pay my attorney’s fee for the many years spent litigating his claims. My client paid not a penny in attorney’s fees out of his settlement. In addition, the settlement also required the insurer to pay all of my client’s costs of the case, including expert witness fees and related expenses paid out over the years. My client paid absolutely nothing in bringing his claim and resolving it favorably via a settlement whereby both his lawyer’s fees and all advanced costs and expenses were paid by the carrier separately, such that he received the entire settlement amount. When my client’s neighbor complained to him about paying 40% of his car accident settlement to his attorney as a fee, my client delighted in telling his neighbor that he “got his lawyer for free” and didn’t even have to pay his own costs and expenses. While his neighbor couldn’t believe it, my client was very proud in telling him that no deductions were made to his $450,000.00 settlement, that he received every penny of it.
Costs and attorney fees are just one area of concern in analyzing an offer of settlement. When DBA insurers make a lump sum settlement offer to you, it is most often intended to cover every single part of your claim, including, but not limited to, the following:
- All past-due wage loss benefits;
- All past medical bills and liens;
- All future wage loss benefits and claims of lost-earning capacity;
- All future injury-related medical expenses for life (including any money needed to fund an MSA – Medicare Set-Aside Agreement – to preserve your right to Medicare in the future);
- All attorney fees (including fees owed for prior attorney representation);
- All costs and expenses.
Thus, when reviewing any settlement offer, remember that not only does the lump sum represent every one of the six items listed above as within your DBA claim, but also that if you or your lawyer do not get an agreement from the carrier to pay certain items separately (such as costs, attorney fees, an MSA, medical liens and so on), you may very well be paying these amounts out of your settlement funds. You may end up receiving less than half of the settlement! Therefore, it is critical that you fully understand exactly what is included and covered by your settlement agreement, lest your happiness over the settlement become a short-lived satisfaction at best.
How to Attack the Lowball Offer
In my opinion, the best method for your attorney to attack the insurance carrier’s lowball settlement offer and support your higher offer of settlement is to undermine the evidence it claims supports its position – the Labor Market Survey and vocational expert testimony. Where the insurer justifies its low calculation of your lost ability to earn money in the future on solely the alleged jobs you can do despite your injuries, by undermining the availability of these jobs to you, you are effectively showing that the carrier’s settlement offer is without support.
Again, let’s look at this method of attack in the real world. The insurer says its low offer Is because your treating physician says you can do full-time light work. But upon further review and conferencing with your treating orthopedic surgeon, he advises that due to good and bad days, with your pain, you will be off work approximately 4 days per month. Your lawyer then retains a vocational expert, who testifies that despite your ability to perform light work, you cannot do the full-time jobs listed on the employer’s Labor Market Survey because these employers will not retain a light duty worker who misses work 4 times per month on unpredictable days you are scheduled to work. Thus, you claim, based upon this medical opinion evidence, that these jobs listed by the employer’s expert are NOT actually “realistically available” to you and therefore, you are presenting a claim of PTD – Permanent Total Disability. In order to avoid the possibility that an Administrative Law Judge will agree that you are PTD and thus entitled to two-thirds of your average wages for the rest of your life, the insurer often responds with a much higher settlement offer!
This is just one example of how to attack the carrier’s evidence that supposedly supports its low settlement offer. Your lawyer will hopefully have an arsenal of “tried and true” methods to further attack the LMS offered by the employer/carrier, which may be used to cross-examine their vocational expert, and support you own job expert’s testimony that you have suffered a greater loss of earning ability in the future because you are capable of only part-time work at a lower salary. Naturally, such evidence goes far in supporting your side’s settlement offer, causing the insurer to reassess its chances of prevailing before the ALJ on its claim value. This is the best way to convince the DBA carrier to increase its settlement offer to you, i.e., that it could do much worse at trial if it doesn’t settle your claim for a sum much closer to your number than its own initial settlement offer.
With hard work, it is certainly possible to settle your claim for an amount that reflects the true value of your lost earning ability due to your work-related injury. While this article touches on the way this can be done, it is important that you allow your legal counsel to attack the evidence that allegedly supports the low settlement offer rather than merely accept the low offer presented to you. The Defense Base Act allows for such a fair and reasonable recovery, and with good legal representation, the likelihood that you will receive a much better settlement offer increases substantially as a result.