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It’s Hotter than a Summer Day in California: Igniting Your Workers’ Compensation Subrogation Settlements

By June 26, 2024July 3rd, 2024No Comments

Best Practices to Maximize Recovery at Mediation

The Importance of Teamwork in Settlements

Effective worker’s compensation settlements are a product of cohesive teamwork. The typical team includes:

  • Third-Party Administrator Workers’ Compensation Subrogation Specialist
  • Civil Subrogation
  • Workers’ Compensation Adjuster
  • Workers’ Compensation Defense Attorney
  • Workers’ Compensation Carrier
  • Workers’ Compensation Carrier’s Subrogation Specialist
  • AOE/COE Investigator

Consistent communication among team members is crucial. Key players such as the Subrogation Attorney and the Worker’s Compensation Defense Attorney must keep others informed about developments in the civil action and proceedings before the Worker’s Compensation Appeals Board (WCAB). Regular roundtables before key events help in coordinating and planning strategies.

Tailoring the Settlement Plan

Every case is unique, and the optional settlement plan depends on various factors known to different team members. For example:

  • Claims representatives might not know the limitations of closing the worker’s compensation claim before the civil subrogation case is settled.
  • Subrogation representatives may be unaware of significant claims issued that could influence an early settlement decision.
  • Subrogation attorneys might not recognize the long-standing relationship between the employer and carrier.

These diverse perspectives need to be integrated into the settlement strategy. Team members should proactively share critical information, including deposition transcripts, PQME reports, investigative reports, and witness statements.

Early Settlement Goal Formulation

Identify the possibility of a Third-Party Compromise & Release early. If not feasible, determine the best timing for a Compromise & Release. Assess whether a lien is sufficient or if active participation is warranted. For large cases, suggest that Plaintiff’s civil counsel make policy limits demand to open the civil third-party insurance policy, which can increase the potential recovery for both Plaintiff and WCAB credits.

Counter-Intuitive Subrogation Mediation

Subrogation in the civil arena can sometimes benefit from unconventional approaches. Rather than aiming for the highest possible direct monetary recovery, a settlement that stipulates credit or a third-party compromise and release might be more advantageous. This approach can close high-exposure claims, providing long-term benefits over immediate cash.

Effective Mediation Briefs

Primary Briefs should not educate the opponent on weaknesses but should coordinate with Plaintiff’s counsel to strengthen the Plaintiff’s case. Early filing allows the mediator and opponents to prepare adequately. A back-up brief should anticipate and counter the opponent’s best arguments assertively.

Addressing Common Issues in Mediation

Employer Fault

Gather comparable reported cases for fault apportionment determinations. Use a WC Calculator to run scenarios of proportional fault and establish an “employer fault threshold” that must be exceeded for employer reimbursement.

Privette Doctrine

Remember, the Privette Doctrine may only bar claims against the general contractor, not the subcontractor primarily responsible for the injury. Collect evidence supporting the general contractor’s causation of injury through targeted discovery.

Mediation: Subro Waiver and Common Fund Issues

Ensure all conditions subsequent are performed and obtain all relevant insurance documents. Be prepared to show evidence of active participation and highlight key entries in subrogation attorney fees that are pertinent to the subrogation claim.

Calculating Litigation Costs

Get specific litigation costs from the Plaintiff’s attorney, at least a best estimate, for proportional Common Fund litigation cost calculation. Clarify that requesting this information does not admit that the Common Fund applies.

Civil Rules Changes and Mediator’s Role

Recent changes in civil rules have redefined the legal meanings of “writing” and “signing” (Cal. Ev. Code 250, Cal. State Bar Rule 1.0.1). The mediator’s role includes facilitating settlements while ensuring that the agreements are legally binding and enforceable.

Critical Settlement Information

Prepare alternative drafts of settlement documents like Release, Third-Party Compromise & Release, Compromise & Release, Stipulation & Award, and Finding & Award. Specify the principal terms, payees, timing of payment, and order of events.

Mediation Privilege and Waiver

Mediation remains a confidential process under Evidence Code Section 1119. Attorneys must provide clients with a printed disclosure of these confidentiality restrictions and obtain a signed acknowledgement (Evidence Code Section 1129).


Successful worker’s compensation subrogation settlements require a well-coordinated team effort, early goal formation, and a strategic approach to mediation. Keeping record of legal changes and ensuring clear communication and documentation can significantly enhance recovery and outcomes.