Tools for Dispute Resolution
Settlement Agreements are an accepted method of resolving disputes in the workers’ compensation system. This article will address the intended purpose of settlement agreements, the approval process and various considerations when entering into these agreements.
Form 15 Settlement Agreement (Full and Final)
The most common form of settlement agreement is the Form 15. This form agreement is used to document the settlement terms of a full and final agreement of one or more disputed issues in a workers’ compensation claim. Workers’ compensation rules provide specific guidelines addressing the use and approval process for a Form 15 settlement agreement. The specific Rule language is provided.
Rule 17.600: Form 15 - Settlement Agreement:
Form 15 – Settlement Agreement (Full and Final). This form may be used to settle a genuine dispute over the compensability of a claim and/or the extent of benefits due. Once executed by the parties and approved by the commissioner, this form shall relieve the employer of all further liability for compensation benefits related to the injury. This form must be accompanied by a letter identifying the disputed issue(s), detailing the parties' respective positions (supported by adequate medical documentation if necessary), and fully explaining the terms of the proposed settlement. The agreement shall not be approved unless the commissioner is convinced that the best interests of the claimant are served thereby, and under no circumstances should a claimant be promised that this will occur.
Form 14 Settlement Agreement (Medical Benefits Open)
The Form 14 agreement is used to document the settlement terms of agreement over of one or more disputed issues in a workers’ compensation claim, except, the agreement leaves open Medical Benefits. This means that the parties may reach agreement over a disputed claim or disputed benefits, however, the carrier/employer remains responsible for the injured worker’s medical benefits that are reasonable and necessary and related to their work injury. The relevant Rule is 17.5000 and the guidelines for request and approval are the same as for a Form 15.
Form 14 and Form 15 settlement agreements are used to settle disputes between the parties as to compensability of a claim or entitlement to benefits. They may be used to settle a dispute over any type of benefit(s): 1) Medical; 2) Lost wage (temporary total disability); 3) Permanency; 4) Vocational Rehabilitation; and 5) Death benefits. A Form 14 or 15 agreement should not be used to document agreement only concerning resolution of two different permanency ratings. The Form 22 is used instead to document permanency agreement. A Form 14 or 15 may cover a permanency dispute, however, if it resolves issues of entitlement to permanency benefits or if a permanency dispute is coupled with another disputed matter.
The Form Settlement Agreement
Both the Form 15 and the Form 14 are available on the workers’ compensation website at http://www.state.vt.us/labind/wcomp/wcforms.htm. The department form is not required but its use is encouraged. One party may instead prepare a settlement agreement, however, such agreement must clearly identify the claim, the terms of the settlement and must otherwise include language that addresses the considerations listed in the Department’s Form 14 or Form 15. Every settlement agreement must contain identifying information; settlement terms; and must provide for party and Commissioner signatures.
The Proposed Settlement Agreement
The parties entering into the agreement are usually the injured worker and the insurance carrier as agent for the employer. Occasionally, a dispute involves multiple carriers. Each party to the dispute (or their representative) must sign the agreement. One or more parties must submit a settlement letter or memo identifying the disputed issues(s), the parties’ respective positions and indicate what benefits the settlement provides. Either party may submit additional information which they feel supports the settlement agreement.
Addendums are Common
Addendums are documents that identify additional terms or provisions to the agreement. Addendums are commonly used to address side or supplemental issues, such as a re-payment of liens, provisions for attorney fees and pro-ration of benefits over the workers’ lifetime out of the settlement proceeds.
Departmental Review and Approval
The standard for review is addressed in the statute, 21 V.S.A. §662(a). The commissioner may approve of a settlement (compromise) agreement when s/he is “clearly of the opinion that the best interests of such employee or such dependents will be served thereby.” Departmental review includes review of the proposed settlement agreement and supporting documents as well as review of the file. The agreement will likely be approved if both parties have signed the agreement and the settlement is in the injured worker’s best interests.
Injured Worker’s Best Interests
The commissioner may approve an agreement if s/he is convinced that the best interests of the claimant are served by the agreement. This means that the settlement must provide the injured worker with the benefits they are entitled to, or if disputed, the benefit amount which appropriately approximates what the worker is entitled to, given the evidence supporting each parties’ position.
Once the parties agree upon settlement, they are often anxious for approval and payment. The department will act expediently if the following are provided:
- Accurate identifying information is indicated on the settlement agreement
- All parties original signatures are on the settlement agreement
- A settlement letter is provided, addressing Rule 17 considerations
- A worker who is not represented by an attorney should provide a letter indicating why they feel the settlement is in their best interests
- A party with prior (different) attorney representation should make certain that the prior attorney’s withdrawal is on record
- Any liens in the claim are addressed in the settlement agreement
Approved Agreement is Enforceable
Once the parties have signed the agreement and it has been approved by the Commissioner (or designee), it is enforceable. The carrier is required to pay the monetary settlement agreed to. The injured worker is likewise bound by the terms of the agreement and if it is a full and final settlement, the injured worker is not entitled to benefits beyond the terms of the settlement.
Settlement agreements can be valuable tools for documenting compromise and resolution of disputed matters. Each agreement must be reviewed individually. The Department requires careful attention to the settlement documents and terms to ensure that such agreements are in the injured workers’ best interests.