Quarterly by ps94506


                                          Bulletin                                   Summer 2009 • Volume 13, No. 3

What’s Inside:               Implications of the Lump Sum
NMWCA Bowls for Big          Settlement Amendment
Brothers Big Sisters   3
                             By Victor S. Lopez                                             A third, hybrid form of lump sum, which
Events & Holiday                                                                      evolved in WCA practice over the years came to

Calendar         Back Page             mendment of Section 52-5-12 in Senate          be known as the “disputed claim” lump sum settle-
                                       Bill 76 brings long-needed change to the       ment. This settlement was based on an asserted
                                       Workers’ Compensation Act, and a wel-          fundamental “dispute” going to the heart of the
                             come respite for litigants concerned about entering      claim that, if proven, could entirely undermine the
                             into enduring settlements. When the 1990 Workers’        worker’s case. Rather than face the uncertainties of
                             Compensation Act was enacted, the Legislature            trial, and total loss of the claim, a worker’s attorney
                             authorized only two types of lump sums settle-           might negotiate a total settlement with employer/
                             ments: 1) “debt-based” partial lump sums to pay          insurer, which involved closure of indemnity and
                             debts accumulated during a worker’s disability,          medical benefits. Such cases would be settled
                             Section 52-5-12(C); and 2) “return to work” lump         and approved by a judge – but not always with a
                             sums based on the worker’s impairment rating only        hearing – despite the absence of express statutory
                             (where the worker has returned to work earning           authority. While the worker reduced his or her
                             80 percent of pre-injury wages for six months),          risk of loss, the employer/insurer also curbed their
                             Section 52-5-12 (B).                                     potential exposure by closing the case in some
                                   Neither of these lump sum methods provided         compromised fashion. Many cases were resolved
                             for closure of medical benefits, which can other-        utilizing this alternative procedure. The “disputed
                             wise continue as long as an authorized health care       claim” lump sum variant was working more or less
                             provider opines that medical care is reasonable          “smoothly” over the years until the New Mexico
                             and necessary and related to the work accident.          Supreme Court decided Sommerville v. Southwest
                             The medical benefits thus conferred has often been       Firebird and Builders Trust, 2008-NMSC-034, 144
                             described as a “lifetime” medical benefit. It is more    N.M. 396, 188 P.3d 1147 (2008).
                             accurately the lifetime right to bring before the              Sommerville did not directly address the “dis-
                             Workers’ Compensation Administration (WCA) a             puted claim” lump sum. Rather, it dealt with the
                             claim for such benefits.                                 return to work lump sum provision under Section
                                   Over the years litigants have regularly used       52-5-12(B). In Sommerville, however, the Supreme
                             alternative means of settling workers’ compen-           Court brought into sharp focus the obligation of
                             sation cases that did not satisfy either B or C of       the workers’ compensation judge to hold hearings
                             Section 52-5-12. Some practitioners would simply         in every lump sum proceeding, consistent with the
                             dismiss their cases, if they were pending before the     statute. The Court identified only two, exclusive
                             Administration, and enter into side agreements,          forms of lump sum settlement explicitly authorized
                             including releases of liability. Unfortunately, such     by the Act, i.e., debt-based and return to work lump
                             settlements escape WCA judge oversight to deter-         sums. Sommerville essentially held that lump sum
                             mine the settlement’s fairness and reasonableness        settlement orders not entered into in compliance
                             of attorneys’ fees. Concomitantly, insurers faced        with the terms of the Act, and preceded by a full
                             uncertain risks if unapproved settlements were           hearing to assure a worker understands the terms,
                             later challenged. See Section 52-5-12(G), NMSA           conditions and consequences of a lump sum settle-
                             1978 (Repl.Pamp. 2003) (current subsection, as re-       ment, are unenforceable. The Court placed direct
                             cited with amendment) [insurer cannot pass cost of       responsibility for assuring compliance with the Act
                             benefits (paid to a worker) to employer if benefits      upon the shoulders of the WCA judge.
                             at a later date are due to worker where insurer paid           The Court’s emphasis on the two exclusive
                             unapproved lump sum].                                    forms of lump sum settlements authorized by the
                                                                                         See lump sum settlement on page 2
Implications of Lump Sum Settlement Amendment
Continued from page 1                              nm.us) – no petition for lump sum will be ac-       to disclose in the petition that they have
statute raised questions as to whether the “dis-   cepted for filing unless the worker’s signature     reached an “agreement” (thus, the joint filing)
puted claim” lump sum form of settlement,          has been verified or notarized. Where lump          and that a dispute no longer exists between
which had no direct statutory authority under      sums under Section 52-5-12(D) are involved,         the parties, at least provided and conditioned
Section 52-5-12, would pass muster with            the statute requires that a “joint” petition must   on approval by the judge of the settlement.
the high court. It was the uncertain status of     be filed, and the employer/insurer (or their        Litigants should be prepared to demonstrate
the third type of lump sum settlement after        representative) also must sign the petition.        that any dispute that might have existed has
Sommerville that Senate Bill 76 is intended              A hearing must be held in all lump sum        been resolved in the proposed settlement.
to address.                                        proceedings under amended Section 52-5-12,               Settlements under Section 52-5-12(D),
     During the 2009 Legislative Session,          consistent with the mandate of Sommerville.         then, represent amicable settlements which
interested parties uniformly supported a           Because the lump sum petition will assist           have been agreed to by the parties, not
change in Section 52-5-12 to help address          the judge in considering “all the material          begrudging settlements of disputed claims.
issues surrounding the “disputed claim” lump       circumstances surrounding the settlement            Nevertheless, an explanation of the origins
sum. Both workers’ and employer/insurers’          agreement,” the parties may wish to explain         of the dispute may be helpful to the judge in
representatives supported the amendment.           in the petition the nature of the case and how      understanding why it makes sense to approve
The Advisory Council on Workers’ Compen-           the parties intend to resolve the claim (partial    the settlement. For instance, understanding
sation and Occupational Disease Disablement        v. total lump sum; closure of medicals v. open      that a strong notice or causation defense
approved the changes, as did the WCA. The          or limited medical benefits; full indemnity         exists in the case might help the judge to
Legislature passed Senate Bill 76 and Gov.         closure v. partial, etc.). The parties should       understand the risks that the parties are at-
Bill Richardson signed the bill on April 7,        also include other relevant information, in-        tempting to eliminate in pursuing the Section
2009 (codified as Section 52-5-12(D)). The         cluding any related agreements or releases,         52-5-12(D) settlement. Also, introducing
law became effective on July 1, 2009. The          to assist the judge in determining whether          and explaining the medical records show-
amended provision is expected to increase          the proposed settlement is fair and equitable,      ing, for instance, that a worker is unlikely to
lump sum filings before the agency.                and whether it provides substantial justice to      need surgery in the foreseeable future may
     The practice is likely to change now that     the parties. Approval of lump sums is not pro       highlight the reasonableness of closing or
the Section 52-5-12 amendment has gone             forma; the Supreme Court stressed in Som-           limiting the medical portion of the claim in
into effect. Litigants may now pursue lump         merville that WCA judges are duty-bound to          a proposed settlement.
sum settlement petitions at any time, either       assure that the worker understands the lump              In the case of a Section 52-5-12(C)
before or after filing of the main complaint.      sum settlement and its consequences, and the        partial lump sum petition, attaching the
According to the WCA Lump Sum Settlement           judge must determine whether approval is in         worker’s recent debt evidence to the filing,
form – which is available on the New Mexico        the worker’s best interest.                         as is current practice, together with eliciting
WCA Web site (www.workerscomp.state.                     The parties may consider attaching to the     supporting testimony, will help to develop
                                                   petition, and introducing into evidence at the      the record and assist the judge in confirming
                                                   hearing, copies of relevant medical records,        the appropriateness of the partial lump sum
                                                   wage records, debt expenses, the agreement,         advance to pay debts. Similarly, attaching
  NM Workers’ Comp.                                release, and other evidentiary materials to         relevant wage and medical records showing
  Quarterly Bulletin                               help substantiate the record and support the        the wage history and impairment rating under
  Glenn R. Smith, Director                         settlement. This evidence will assist the judge     a Section 52-5-12(B) petition, will assist the
  Mark Llewellyn, Managing Editor
                                                   in assessing the proposed settlement; it will       judge in documenting the worker’s six-month
  Diana Sandoval, Editor/Designer
                                                   allow the parties to question the worker ap-        return-to-work wage history and impairment
  the Bulletin is published in January,            propriately; and it will establish a record of      in support of the request.
  April, July and October by the economic          the appropriateness of the settlement approval           Regarding what role the WCA media-
  Research Bureau of the new mexico Work-          in case of appeal or subsequent challenge.          tors should play in this process, mediators
  ers’ Compensation Administration. the                  In the case of Section 52-5-12(D) “joint”     will continue to bring the parties together
  Bulletin is available free of charge. send       petitions, the parties should also be prepared      and help them find common ground for a
  changes of address and requests to receive
  the Bulletin to the economic Research
  Bureau, new mexico Workers’ Compen-
  sation Administration, pO Box 27198,                                                        nOtICe
  Albuquerque, nm 87125-7198; or by e-mail           the Advisory Council on Workers’ Compensation and Occupational Disease Disablement
  at research@state.nm.us. suggestions for           is a task force created by statute, comprised of six members, three representing workers
  articles are welcome; call Diana sandoval          and three representing employers. the primary role of the Council is to advise the gov-
  at (505) 841-6052.
                                                     ernor and legislature on the status of the workers’ compensation system in new mexico.
  Recent issues of the Quarterly Bulletin can
  be viewed on the Internet at http://worker-        the Advisory Council meets several times a year on an irregular schedule. scheduled
  scomp.state.nm.us/research/index.php.              meetings of the Council are announced on a special telephone number, (505) 841-6011,
                                                     and on the WCA Web site, http://workerscomp.state.nm.us/council/index.php.

Page 2                                                                           New Mexico Workers’ Compensation Bulletin, Summer 2009
Implications of Lump Sum Settlement Amendment
settlement in the course of the mediation            should be set for hearing at the earliest time     access to future medical care, or consideration
process. The mediator can be instrumental            practical. Although telephonic and video-          of other factors that may be relevant to the
in memorializing agreements that reflect the         conference hearings are permissible, and have      judge’s decision on the matter.
collaboration of the parties involved. Any           gained popularity of late due to their ease             Finally, if the settlement contemplates
recommended resolution the mediator issues           and convenience, the parties should consider       affecting the worker’s future medical benefit,
during the 60-day period that outlines the           which evidentiary vehicle for testimony (of-       the parties should be prepared to consider and
general terms of the proposed settlement will        fering live, telephonic or video testimony of      explain to the WCA judge how the medicare
have to acknowledge the conditional nature           the worker) would most effectively assist          set-aside issue, third party reimbursement,
of the resolution and recognize the need for         the WCA judge in considering the proposed          or other related issues have been addressed.
the parties to file a joint petition and to hold a   settlement.                                        This article is not intended to explain the
hearing and obtain approval of a WCA judge,                After the hearing, it will be important to   notice, filing, payment, reimbursement or
pursuant to Section 52-5-12.                         develop an appropriate order that addresses        other requirements of federal entitlement
     Whether a joint petition is filed in the        the scope of the hearing and the terms of the      law or third party actions that may impact
midst of the 60-day mediation window, or             settlement, consistent with the applicable         workers’ compensation settlements that in-
after acceptance or rejection of the recom-          statutory provision and case law. Whether it       clude closure or limitation of future medical
mended resolution, as a matter of legal              is the judge or counsel who prepares the lump      benefits. However, practitioners on both sides
practicality and form, the mediation process         sum order, the drafter would be well advised       of the aisle who ignore the potential impact
(including acceptance or rejection of the            to avoid using standard form orders that           of federal or other state laws on workers’
resolution) should be concluded before the           simply include general boiler-plate language,      compensation settlements will do so at their
time the lump sum order is actually entered.         state a dollar figure for the settlement, and      own peril, including their own potential li-
This will avoid the possibility of a rejection       little more. The order represents the judge’s      ability. (See, e.g., Federal Center for Medi-
of the recommended resolution after the lump         decision and reasoning in approving the lump       care Services, and Workers’ Compensation
sum settlement order has been entered by the         sum, and so the order should fully reflect that    Agency Services: http://www.cms.hhs.gov/
judge, which could create unnecessary delay          reasoning. To be enforceable and withstand         WorkersCompAgencyServices.)
in the ensuing conflict between the statutory        appellate review or a re-opening hearing, it            Any order and record created under this
operation of Sections 52-5-5 (mediations) and        is important for the order to be case-specific     approach should facilitate enforcement of the
52-5-12 (lump sum).                                  and reflect the terms of the settlement, and       settlement and avoid successful challenge on
     After the petition for lump sum has been        the factors the judge relied upon in approv-       appeal or in a re-opening proceeding.
filed, and appropriate notices of hearing and        ing the settlement. The judge should make
self-addressed and stamped envelopes have            factual findings, including a consideration        Victor S. Lopez is a New Mexico Workers’
been provided by the litigants to the Clerk’s        of the monetary or legal risks inherent in the     Compensation Judge.
Office, the petition for lump sum ideally            case, the likelihood of the worker’s need or

      Workers’ Compensation Bowls for
      Big Brothers Big Sisters
         The Workers’ Compensation Administration participated in the 2009 Big
    Brothers Big Sisters fund raising event, held at the Santa Ana Star Casino on
    April 26. The WCA team was led by Trudy Sisneros (pictured), who works in
    the office of the Clerk of the Court. The WCA team raised $500 to benefit Big
    Brothers Big Sisters.
         According to its Web site, Big Brothers Big Sisters is the oldest, largest and
    most effective youth mentoring organization in the United States. Big Brothers
    Big Sisters mentors children, ages 6 through 18, in communities across the coun-
    try. The Big Brothers Big Sisters Mission is to help children reach their potential
    through professionally supported, one-to-one relationships with mentors that have
    a measurable impact on youth.

New Mexico Workers’ Compensation Bulletin, Summer 2009                                                                                         Page 3
 Main Office                                RegiOnal Offices
                                            Farmington:                     Las Vegas:                  Santa Fe:
                                            3535 East 30th St., 2nd Floor   32 NM 65                    810 West San Mateo,
 2410 Centre Ave. SE
                                            Farmington, NM 87402            Las Vegas, NM 87701         Ste. A2
 Albuquerque, NM 87106-4190
                                            Phone: (505) 599-9746           Phone: (505) 454-9251       Santa Fe, NM 87505
                                            In state toll-free phone:       In state toll-free phone:   Phone: (505) 476-7381
 Mailing Address:
                                            1-800-568-7310                  1-800-281-7889              Fax: (505) 476-7390
 PO Box 27198
 Albuquerque, NM 87125-7198                 Fax: (505) 599-9753             Fax: (505) 454-9248
                                            Las Cruces:                     Lovington:                  Penn Plaza Building
 Phone Numbers:
                                            1120 Commerce Dr., Ste. B-1     100 West Central, Ste. A    400 N. Pennsylvania
 Phone: (505) 841-6000
                                            Las Cruces, NM 88011            Lovington, NM 88260         Ave., Ste. 425
 In state toll-free phone: 1-800-255-7965
                                            Phone: (575) 524-6246           Phone: (575) 396-3437       Roswell, NM 88201
 Fax Clerk of the Court: (505) 841-6060
 Fax Director: (505) 841-6009               In state toll-free phone:       In state toll-free phone:   Phone: (575) 623-3781
                                            1-800-870-6826                  1-800-934-2450              Fax: (575) 623-0078
                                            Fax: (575) 524-6249             Fax: (575) 396-6044

                      (toll free in New Mexico)                                   WCA Web site:
   1-866-WORKOMP                         1-866-967-5667                        www.workerscomp.state.nm.us

New Mexico Workers’ Compensation Administration
2410 Centre Ave. SE, 87106-4190
PO Box 27198
Albuquerque, NM 87125-7198

 The Workers’ Compensation
 Offices in Albuquerque and all Field
 Offices will be closed on the follow-
 ing national holidays:

 Labor Day: Monday, Sept. 7

 Columbus Day: Monday, Oct. 12

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