Assigned to COMPS FOR
COMMITTEE
Assigned to COMPS FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
workers' compensation; claim settlement
Purpose
Modifies requirements for the settlement of a workers' compensation claim in which the employee waives future entitlement to benefits on the claim. Allows the settlement of a workers' compensation claim in which the employee waives future entitlement to benefits for known conditions described in the settlement.
Background
Laws 2017, Chapter 297 § 3 allows an employee to receive a full and final settlement in a workers' compensation claim upon approval of settlement terms by the Industrial Commission of Arizona (ICA). By waiving all future entitlement to benefits on a claim, an employee may agree to a full and final settlement and receive a lump sum benefit payment from an insurance carrier, self-insured employer or the ICA Special Fund. When considering approval of a full and final settlement, the ICA must determine that it is in the best interest of the employee based on the permanency of the employee's injuries and whether the employee's injuries have stabilized. If the employee does not retain a lawyer, an Administrative Law Judge (ALJ) must deem the settlement fair and reasonable to the employee before it is considered by the ICA.
Laws 2011, Chapter 139 allowed an employee to receive a final settlement for supportive medical maintenance benefits in a workers' compensation claim. Unlike a full and final settlement that requires employee waiver of all future entitlement to a claim, a final settlement required employee waiver of future entitlement for known conditions described in the agreement. Laws 2017, Chapter 297 § 2 repealed statute allowing an employee to receive a final settlement for supportive medical maintenance benefits. S.B. 1100 reinserts the section of law originally added to statute by Laws 2011, Chapter 139.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Full and Final Settlements
1. Repeals the requirement that the ICA determine, based on the status and permanency of the employee's injuries, that a full and final settlement (full settlement) is in the best interest of the employee.
2. Requires the ICA to determine that a full settlement is fair and reasonable to an employee that is represented by counsel.
3. Transfers, from an ALJ to the ICA, the responsibility to determine that a full settlement is fair and reasonable to the employee, if the employee is not represented by counsel.
4. Requires the ICA to consider how a full settlement was computed to determine if the settlement is fair and reasonable.
5. Requires the carrier, special fund or self-insured employer to provide an employee receiving a full settlement information disclosing:
a) the amount of the settlement covering future medical, surgical and hospital benefits;
b) the present value and total amount of future indemnity benefits;
c) the discount rate used to calculate present value and total amount of benefits; and
d) the employee's rated age and life expectancy.
6. Requires all employees receiving a full settlement, rather than only employees represented by counsel, to attest to their understanding of rights settled and receipt of anticipated future benefit costs.
7. Requires an employee to attest that coercion, duress, fraud, misrepresentation or undisclosed additional agreements were not used to facilitate the full settlement.
8. Allows interested parties in a denied workers' compensation claim to reach a full settlement.
9. Requires the period of disability to be terminated by the ICA, rather than the carrier or self-insured employer, before negotiating the full settlement of an accepted claim for temporary disability.
10. Permits an authorized representative of a carrier, self-insured employer or special fund to endorse a full settlement.
11. Requires interested parties to search for unpaid medical charges before executing a full settlement.
Supportive Medical Maintenance Benefits
12. Defines a final settlement as a settlement in which the injured worker waives any future entitlement to supportive medical maintenance benefits (medical benefits) for known conditions described in the agreement.
13. Requires ICA approval of a final settlement covering medical benefits before the settlement is valid and enforceable.
14. Allows the ICA to approve a final settlement if:
a) the period of temporary disability is terminated by final notice or award;
b) the carrier, special fund or self-insured employer submits, for review by the employee and filing with the ICA, a summary and projected costs of all reasonably anticipated future medical benefits; and
c) the settlement includes a description of all medical conditions covered by the agreement.
15. Stipulates that a final settlement only applies to medical benefits for the conditions described in the agreement.
16. Requires the carrier, special fund or self-insured employer to notify the attending physician of the ICA's approval of the final settlement.
17. Requires the carrier, special fund or self-insured employer to remain responsible for payment of treatment not covered by the final settlement, unless medical benefits rendered before execution of the final settlement are disputed.
18. Allows agreements that are neither full settlements nor final settlements.
19. Makes technical and conforming changes.
20. Becomes effective on the general effective date.
Prepared by Senate Research
January 18, 2018
GH/lb