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Quarterly
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
A
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
NEW MEXICO WORKERS’ COMPENSATION ADMINISTRATION OFFICES
Main Office RegiOnal Offices
Farmington: Las Vegas: Santa Fe:
Location:
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
Roswell:
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
WCA HELPLINE - HOTLINE:
(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
hOliday
schedule
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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