Claims Management versus Settlement: Cost Containment Strategies for the End of the Claim (Part 10 of 10)

This final segment in this “Cost Containment Strategies” Blog series addresses strategies for the end of the worker’s compensation claim.   The considerations at this point in the claim are typically whether to keep the claim open and manage it accordingly or whether to settle out the claim- either on a “clincher agreement” or to pay the permanent partial disability rating (“PPD”) on a form agreement, such as a Form 26A.

In North Carolina workers’ compensation claims, full and final settlement of the entire claim is permitted, and the settlement agreement is referred to as a “clincher.”  Clincher agreements are executed by the parties and sent to the Industrial Commission for review and approval.

The main advantages to clincher settlements are as follows:

(1)  Defined exposure;

(2)  Control over the outcome; and

(3)  Closed files.

The main disadvantage is timing, such that if a claim is “clinchered” too early, defendants may pay more money for potential exposure than what they would pay if the claimant’s condition stabilized.

This leads to the alternative strategy of keeping the claim open and managing it accordingly.  The main advantage to this strategy is that defendants will likely not pay more money for potential exposure, as defendants are paying actual costs as they are incurred.

The main disadvantage to this strategy involves the risk that the claim will not get more economically manageable over time.  Rather, the claimant’s condition may deteriorate, which can increase both medical and indemnity exposure.

Just like at the beginning of the workers’ compensation claim, timing is vital when evaluating the right cost containment strategy for the end of the claim.

Questions?  Please contact Jennifer directly at (919) 863-8846 or jjones@cshlaw.com.