New Law Governing Closeouts of Future Medicals in Arizona Workers’ Compensation Settlement Agreements


6/16/2017

On May 8, 2017, Arizona Governor Doug Doucey signed an amendment impacting the workers’ compensation law governing settlements that close out future medical treatment on admitted claims. The legislature voted to repeal Section 23-941.01[i] and replace it with an amended version[ii]. The old version allowed release of future supportive medical maintenance benefits, but disallowed closure of active treatment in admitted claims. The new amendment is effective as of October 31, 2017 and allows the closure of all future medical benefits by way of a settlement agreement if specific criteria are met.

The amended version allows interested parties to a claim to settle and release all or any part of a claim. The full and final settlement must conform to the following criteria:

  1. Be in writing.
  2. Be signed by the carrier, special fund, or self-insured employer.
  3. Be signed by the employee or the employee’s authorized representative.
  4. Acknowledge that the employee had the opportunity to seek legal advice and be represented by counsel.
  5. Include a description of the employee’s medical conditions that have been identified and contemplated at the time of the settlement agreement.

If the employee is represented by counsel, then the full and final settlement must also include the following attestations:

  1. The employee understands the rights settled and released by the agreement and was represented by counsel.
  2. The employee has been provided information from the carrier, special fund, or self-insured employer that outlines any reasonable anticipated future medical, surgical, and hospital benefits relating to the claim and the projected cost of those benefits and that provides an explanation of how those projected costs were determined.
  3. The employee understands that monies received for future medical treatment associated with the industrial injury should be set-aside to ensure that the costs of such treatment will be paid.
  4. The parties have considered and taken reasonable steps to protect any interests of Medicare, Medicaid, the Indian Health Service, and the United States Department of Veterans Affairs, including establishing a Medicare savings account if necessary.
  5. The parties have conducted a search for and taken reasonable steps to satisfy any identified medical liens.

If the employee is not represented by counsel, then the employee must appear before an administrative law judge and the judge must make specific factual findings regarding whether the required criteria are satisfied. The judge is precluded from approving the settlement if the criteria are not met or if the settlement is not deemed fair and reasonable to the employee.

The full and final settlement between the parties is not valid and enforceable unless it is approved by the Commission. When determining whether to approve a settlement, the Commission must consider whether the settlement is in the best interest of the employee by considering (1) whether the employee’s injuries are stabilized, and (2) the permanency of the employee’s injuries.

Once the settlement agreement is approved by the Commission, the carrier, special fund, or self-insured employer is obligated to notify the attending physician of the approval of the settlement and that it terminates the employee’s entitlement to medical benefits.

As the industry leader in Medicare and Medicaid Secondary Payer Compliance, ExamWorks Clinical Solutions is already best placed to help you outline any reasonable anticipated future medical, surgical, and hospital benefits relating to the claim, the projected cost of those benefits and provide an explanation of how those projected costs were determined. We stand at the ready with a full line of medical cost projection products, including Medicare Set-Asides that you can easily incorporate into your settlement documents to satisfy the criteria set out in this important amendment that is effective on and after October 31, 2017.


[i] The repealed version of Section 23-941.01 read as follows:

A. Any final settlement agreement involving a workers' compensation claim is not valid and enforceable until the final settlement agreement is approved by the commission.

B. Subject to the following requirements, the parties may enter into a final settlement and release of a claim for undisputed entitlement to supportive medical maintenance benefits after the period of temporary disability is terminated by a final notice of claim status or award of the commission. The carrier or employer shall submit a summary of all reasonably anticipated future supportive medical maintenance benefits and the projected cost of the benefits for review by the employee. The summary shall also be included with the final settlement agreement filed with the commission. All medical conditions subject to the final settlement agreement must be described in the final settlement agreement. The final settlement provisions defined in this subsection shall only apply to future supportive medical maintenance benefits for the described condition.

C. The employer or carrier shall inform the attending physician of the approval of a final settlement agreement if the final settlement agreement terminates the employee's entitlement to supportive medical maintenance benefits. Unless supportive medical maintenance benefits rendered prior to the date of the final settlement are subject to a dispute or payment for the treatment was included in the final settlement agreement, the employer or carrier shall remain responsible for payment for the treatment not covered by the final settlement agreement as provided by this chapter.

D. For the purposes of this section, "final settlement" means a settlement in which the injured worker waives any future entitlement to supportive medical maintenance benefits for known conditions described in the agreement.

[ii]https://legiscan.com/AZ/text/SB1332/2017

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