Arizona has taken a step toward fully resolving the medical coverage uncertainties that linger when its workers suffer injuries on the job. While many workers’ compensation (WC) injuries resolve relatively quickly, others take longer to respond to treatment in both the acute and post-acute phases, resulting in an extended recovery period and higher healthcare costs over that term. However, the focus of those entities that cover the costs of care is usually on wrapping up both the healthcare payments and the WC case itself as quickly as possible to keep their costs down. Only by fully resolving both the WC and the medical cases can the insurer or employer close their books on the case with certainty.
In Arizona, however, before Fall 2017, WC insurers or self-paying employers were rarely able to fully close a WC claim because the law allowed injured workers to reopen their claim if they required additional medical care after the closure of the WC case. The rule applied even if there had been an otherwise full resolution to the other issues of the case (cause, liability, etc.). Consequently, many AZ insurers and employers were left on the hook for additional payments for WC medical services for months or years after the rest of the case resolved.
In April of this year, Arizona’s governor signed into law Senate Bill 1100(SB 1100) which (finally) gives some relief to the state’s beleaguered employers and WC insurers. The new law gives parties to an accepted WC case more authority to reach and agree to a final and full settlement of the case by permitting claimants to knowingly waive their rights to future claims and their rights to future changes to their claim. The new law does not apply to WC claims that have been denied.
AZ Senate Bill 1100 Resets Terms for WC Cases
In many ways, the reset of AZs WC laws simply allows the parties to settle all issues more quickly by ensuring that they all have a full understanding of the terms of the settlement and its consequences:
- It empowers claimants to stipulate to terms
- SB 1100 now adds a third action to establish the termination of the temporary disability period, which opens the door to final settlement discussions. Moving forward, that termination can be set by 1. an award of the Industrial Commission of Arizona (ICA), 2. issuance by the insurer of a final notice of the period, or 3. (newly added) by stipulation of the parties. This provision gives workers more authority over the terms of their WC case.
SB 1100 also allows the parties to attest to certain conditions which pertain to full disclosure and due process:
- Claimants must attest:
- That they recognize that they are waiving their opportunity to receive future medical supports for their WC injuries;
- That any settlement money offered to cover future costs should be held in reserve for those expenses, and
- That no coercion, duress or fraud compelled them into agreeing to the settlement.
- The employer, carrier or special fund must attest that they have provided the claimant with specific information including:
- Medically related documentation detailing the possible benefits of any reasonable future healthcare claim (such as medical, surgical and hospital benefits), including the potential cost of those benefits and how that cost was determined. As well, the claimant will receive information about how the value of the current settlement offer represents those future healthcare values.
- The total amount of indemnity benefits including in the settlement and how those were determined based on several factors including the claimant’s age and life expectancy (and how that was established). The documentation must also detail how much of the settlement represents those future indemnity benefits.
The new law also addresses the interests of other interested parties to the case:
- Federal support services
All parties are required to attest to the fact that they made a diligent search to protect the interests of Medicare and Medicaid, as well as the Indian Health Service and the U.S. Department of Veterans Affairs (pursuant to AZ regulations).
- Medical services providers
The parties must attest that they took reasonable steps to identify and compensate any liens or outstanding bills for healthcare services related to the WC injury.
Maintaining Health After the WC Injury
The second aspect of the new law specifically addresses “Supportive Medical Maintenance Benefits,” those supports necessary to maintain health after the claimant achieves “maximum medical improvement” (MMI). This is the section that carriers and employers are most excited about: it allows claimants to waive their right to future maintenance benefits by accepting a current financial award that represents that value. With this agreement in place, Arizona employers and WC carriers can resolve every aspect of the case and close it completely with no threat that it may be opened in the future.
However, the new opportunity also comes with documentary and due process requirements:
- All medical conditions related to the injury must be disclosed to the claimant and included in the final settlement documentation;
- Carriers/employers must provide for the claimant a summary of all reasonably anticipated future supportive medical maintenance expenses including the anticipated costs of those benefits, and
- The future settlement provisions are applicable only to those benefits specifically described as a WC injury-related condition.
SB 1100 also recognizes the presence or absence of legal counsel in some WC cases and offers unrepresented claimants the opportunity to have their case heard by an administrative law judge (ALJ). The ALJ will review the settlement agreement to ensure the facts are accurate and that all parties have properly executed the appropriate attestations. The ALJ will also inquire into the claimant’s understanding of their rights, their obligations under the agreement including using the settlement funds to make future payments for injury-related healthcare costs.
Resolving a workers’ compensation case requires a balancing of the interests of all parties. The new Arizona law gives Arizona WC claimants more control over the decisions made within their case while also respecting the need for employers and insurers to resolve and close cases as quickly and expeditiously as possible.