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In April, 2021 the Washington State legislature passed and Governor Inslee signed into law Senate Bill 5046. The primary effect of this change in law is to remove the prior-existing statutory requirement to structure L&I compromise and release settlement proceeds over a period of months instead of allowing for one lump-sum payment. The “structured” aspect of claim resolution settlement agreements (CRSA) was removed in response to recent Social Security Administration benefit offset policy updates.
So, now that RCW 51.04.063 (and certain closely-related statutes) have been modified by our legislature, this page now answers common questions injured workers may have about CRSA Agreements:
What is a Claim Resolution Settlement Agreement (CRSA)?
This is a type of L&I (workers’ compensation) settlement agreement in which an injured worker over 50 years of age, with an allowed claim that is at least 180 days old, is allowed to settle their workers’ compensation claim for a lump sum of money. However, future medical benefits must remain available to the injured worker via the claim reopening process.
Who is Eligible for a Claim Resolution Settlement Agreement?
Anyone over the age of 50 with an open L&I claim that is at least 180 days old is technically eligible, but the results of focus group studies indicate that virtually all workers receiving a CRSA (formerly CRSSA) settlement believed they were incapable of returning to their job of injury, and most felt unable to perform any job within competitive, full-time employment. Only 17% of those who apply for a CRSA settlement receive one.
Who Actually Gets a Claim Resolution Settlement Agreement?
Data consistently shows that it is usually the most severely injured workers, with the highest claim costs, that will be offered a CRSA (formerly CRSSA) settlement agreement. In recent years, 41 percent have had at least three IME exams; 82% have been assessed as being eligible for vocational retraining; and a majority have had more than two protests or appeals.
What Considerations Increase or Decrease CRSA Settlement Amounts?
Having higher medical claim costs and having a higher wage of injury are the two biggest factors which increase CRSA settlement amounts. Being found eligible to work or eligible for vocational retraining are the factors most likely to decrease the resulting CRSA settlement available. When claim costs appear large, settlement values tend to rise. The converse is true when claim costs appear to be well-controlled.
Does an Injured Worker Need an Attorney to enter a Claim Resolution Settlement Agreement?
Not technically, but a January 2020 study by the W.E. Upjohn Institute for Employment Research found that the Department of Labor & Industries enters into CRSA contracts more quickly with represented workers while employer representatives are generally reluctant to deal with pro se (unrepresented) workers due to the complexity of CRSA negotiations. The percentage of successful negotiations also increases markedly, by a multiplication factor of more than 15, for injured workers who are represented.
What Motivates Injured Workers to Accept CRSA Settlements?
Focus group research indicates that most injured workers who accept CRSA Settlements do so because of their frustrations with the L&I system, including IME exams in particular, and because they believe L&I processes are too often demeaning. They just want to be done with their L&I claim and the system that administers it. Frequently, they do not want to engage in department-funded retraining because they do not believe they will receive adequate skills, get hired, or be able to earn a reasonable wage if they attempt vocational rehabilitation. Many question the feasibility of starting over on a new career path once they are nearing or beyond normal retirement ages. About one-quarter still want to work but feel constrained by the existence of their open claim and the time-consuming burdens it imposes.
How is the CRSA Process Different for Represented Versus Unrepresented Workers?
Unrepresented workers are required to complete an application for settlement, online or hard copy, that includes information about household income and expenditures. This data is kept on record by the Department of Labor & Industries. The Board of Industrial Insurance Appeals must also determine that a settlement is in the “best interest” of an unrepresented injured worker. That determination is left to the injured worker and their attorney if the worker is represented.
Can the Employer Prevent an Injured Worker from Receiving a CRSA Settlement?
Employers can object to CRSA settlements because those agreements affect the employer’s experience rating, commonly for as long as five years (minimum of three). Though technically an employer’s objection shouldn’t prevent CRSA Settlement, in practice they often do. Most sophisticated employers embrace CRSA agreements because, over longer time frames, their hourly premium rates will actually tend to decrease.
Why Might an Employer Object to an Injured Worker’s CRSA Settlement?
Employers most commonly object to CRSA Settlements for one of two reasons: either because they believe their experience rating will be negatively impacted, increasing per hour L&I insurance premiums, or they believe a particular injured worker doesn’t “deserve” to obtain a settlement.
Why Might an Employer Want to Engage in a CRSA Settlement?
L&I data reveals that premium rates average 8.5% less per hour, per full-time equivalent worker for those employers who have previously engaged in CRSA settlements versus those who have not. A CRSA decreases future benefit costs of claims, typically by around 20-25%, so embracing such settlement vehicles decreases premium exposures over time (additional factors beyond actual claim costs must also be factored in premium rates).
Which Employers Are Most Likely to Agree to CRSA Settlements?
About 40% of board-approved CRSA Settlements are between injured workers and their self-insured employers (SIE), whereas only about 25% of Washington’s workforce is employed by an SIE. Thus, the injured workers of SIEs are far more likely to obtain a CRSA Settlement than those of State Fund employers. The larger and more sophisticated the employer, the more probable it engages in CRSA settlements.
Why do Injured Workers of Self-Insured Employers Get More CRSA Settlements?
CRSA Settlements are more often used by Self-Insured Employers (SIE) because their negotiators are virtually-always attorneys and their client is also liable for all systemic costs. By contrast, the Department of Labor & Industries generally negotiates through laypersons who are far less familiar with litigation risks, court rules, binding case law and more sophisticated risk management strategies, AND the department also doesn’t factor litigation expenses into its valuation models because the Attorney General’s Office (a different state agency) shoulders most of the litigation expenses associated with non-settlement. In short, the outcomes are disparate and better for employees of self-insured employers because the manner and sophistication of the negotiations differ for them versus State Fund employees.
Do Injured Workers of Self-Insured Employers Get Better CRSA Settlements?
According to a January 2020 study by the W.E. Upjohn Institute for Employment Research, the average CRSA (formerly known as CRSSA prior to passage of SB 5046 in April 2021) entered into by the Department of Labor & Industries was less than $100,000. By contrast, Washington Law Center data indicate that average settlements by SIEs, at least during claim closure litigation, are substantially higher. Still, due to the sophistication of most self-insured employers, they engage in more frequent and earlier settlement discussions, resulting in smaller average L&I settlements than the State Fund pays.
What is the Average Claim Resolution Settlement Agreement Settlement Amount?
L&I data taken from 1862 claim files show that for settlement applications first made between 2012 – 2015, the median settlement amount for State Fund CRSA (formerly CRSSA) settlements was $90,000. For applications first made between 2016 – 2018, the median settlement in State Fund claims was $88,000. The highest 25% of settlements between 2016 – 2018 reached $120,000, a number that has dropped by $10,000 since the period of 2012 – 2015.
Are L&I Claims Closed by Claim Resolution Settlement Agreement Ever Reopened?
Rarely. When examining L&I claims closed via CRSA (formerly CRSSA), applications first made between 2012 – 2018, State Fund data reveals that that there were only 35 post final settlement reopening applications made, with only 8 of these (23%) granted. Roughly 44% of those who have completed CRSA settlements report having incurred additional claim-related medical expenses after settlement. Many others simply forgo medical services, though they remain symptomatic.
Do Workers Commonly Return to Employment After a CRSA Settlement?
No. L&I data synthesized in a 2020 analysis by the W.E. Upjohn Institute for Employment Research shows that only about 10% – 15% of individuals who have received a CRSA (formerly CRSSA) settlement will later be employed at time of survey, and most only on a part-time basis. The unemployment rate is around 41.2%, with the remainder abandoning all hope of working. The majority of those successfully reemployed tend to be male, over 60, with some college education.
Who is the Best L&I Attorney for CRSA Settlement Matters?
Every L&I Attorney at Washington Law Center benefits from our reputation as a litigation-ready law firm with decades of workers’ compensation experience. We routinely take cases abandoned by other law firms and turn them into successful cases for our clients. The defense attorneys know we will fight (and in most cases we also front all the litigation expenses [subject to later repayment]). We therefore have the credibility to negotiate a successful resolution in your L&I matter, including if you are eligible and desire to obtain a CRSA Settlement outcome.
What if I have More Questions About L&I and CRSA Settlements?
Please see our L&I Resources page which contains several helpful videos about the timelines involved in CRSSA (now CRSA) settlement negotiating and processing. Our videos are still accurate other than the fact that most settlements will no longer be “structured,” although that option does remain available to those who want it. If you have additional questions, please call us today for a free, confidential consultation.
ABOUT THE AUTHOR:
Spencer Parr is a litigation and trial attorney at Washington Law Center focused primarily in the areas of Labor & Industries claims and injury pension benefits. Before co-founding Washington Law Center, Spencer served in the U.S. Army. He has litigated major issues in the law, represented clients from coast to coast, and dedicated his professional life to assisting the injured and disabled. Click here to learn more about Spencer. View More Labor & Industries and Work Injury Resources.