Humanitarianism deals with actively working to improve the happiness and welfare of others. The concepts of humanitarianism and advocacy are actually integral to the workers’ compensation industry, as we’re in the unique position to offer solutions that are truly win-win by using needs-based analysis and negotiation methods within the realm of structured settlements.
Showing Empathy Is Key
After being injured on the job, many people suffer from anxiety in addition to their physical wounds and ailments. As we see today during the COVID-19 crisis, anxieties stem from the unknowns surrounding physical health, financial security and the future in general. Serious injuries are catastrophic and emotionally challenging; an injured person’s life has been radically altered due to their injuries, so our compassion and respect are paramount.
Firstly, it’s vital that we as claim professionals recognize that while we deal with these cases daily, the injured person probably has no prior experience to draw upon. They’ve possibly heard claim horror stories from their friends, neighbors, colleagues and television ads. It’s therefore no wonder that injured people fear they’ll lack the money necessary to pay for their medical needs and care for their families. This fear is compounded by difficulties associated with complying to complex laws and regulations, including Medicare.
In order to address these fears, it’s vital that we build a relationship of trust, respect and empathy with the injured person from day one. Communication is the most important tool we have. People have a right to feel anger and fear during this trying time. Saying “you have a right to feel the way you do,” or, “it’s ok to be fearful or apprehensive… I’m here to help you work through this” can foster real connections which make settlement discussions more productive.
Be an advocate for the injured person. Eliminate jargon and speak simply to avoid confusion. Anticipate needs of the injured worker and determine means to solve problems before they start. Advocating for injured persons works best when the employer does too. Remember: empathy is at the center of everything we do.
Motivation to Resolve
Money is not the only thing motivating an injured worker to resolve their claim. We need to focus on their issues and needs: housing, medical care, income, self-esteem and sense of worth. These issues can be better defined as interests.
Interests vs. Positions
Interests – what people want to have satisfied.
Positions – ways parties believe that their interests will be satisfied.
Every interest may have many creative ways of being satisfied. Even when positions are opposed, interests may be aligned. Injured workers have common interests: security, independence, healthcare and sustenance. Money is the means to achieve these interests. The amount of money a person believes they’ll need to achieve these interests is their position. An injured person’s needs can be creatively met by discovering their core interests and satisfying them cost-effectively.
Maslow’s Hierarchy of Needs
In order to better understand the motivations behind our decision-making, we can study Maslow’s Hierarchy of Needs. This model is frequently used in psychology, sociology and anthropology but is pertinent to our work as well.
Maslow’s pyramid features our most fundamental human needs at the bottom of a pyramid, and our more abstract needs at the top. In other words, the theory is that our most basic needs (food, shelter and physical safety) must be met before we can be motivated to achieve higher level needs. As settlement professionals we can first assuage concerns over basic needs, but it’s important that we also ask the right questions and help injured people plan for a future that addresses their desire for acceptance, self-respect and capacity to reach their full potential.
Each case has settlement components specific to the injured person and their injuries. Get all the facts before determining the best course of action.
Questions to ask the injured person to determine needs:
- How can I help you?
- What do you need?
- What are your biggest concerns?
The answers to the above open-ended questions will help you conduct a needs analysis. Claims professionals and structured settlement consultants should explore:
- Indemnity payments
- Future medical needs
- Life care plan assessment
- Rehabilitation needs
- Housing modifications
- Family education needs
- Life insurance needs of care givers
- Medicare set aside
- Special needs trust
We can also successfully navigate state, government, and medical resources, reaching settlements that are fair to both parties while protecting injured workers’ current and future external benefits.
Below are two real examples of the humanitarian settlement approach, which provided injured workers with additional support and resources for post-settlement success.
Antonia is a 31-year-old foreign national. She was involved in a 25-foot fall resulting in serious head injury and brain surgery resulting in diminished everyday function. She spent two years in a rehabilitation facility and has since spent the past four years in a nursing facility. She has permanent neurocognitive deficits requiring lifelong supervision and an independent guardian. Antonia has a half-sister in the United States who was granted limited guardianship.
In meetings with her nurse case manager, Antonia continually expressed her wishes to live with relatives in Mexico. Her immediate family there consists of parents aged 60 and 69, as well as two brothers and one sister all in their 20s and 30s.
A thorough review was completed by a life care planner for her ongoing physical and emotional needs. Needs included:
- Health care, both WC-related and other.
- Housing needs in Mexico since the family home was very small.
A settlement was reached consisting of funds for:
- Housing: home in Mexico $120,000
- Transportation via accessible vehicle: $80,000
- Healthcare and attendant care: $7,143/month
- Lost wages (indemnity): $1,000/month
A guardianship settlement trust was established for the home, plus receipt and distribution of medical and attendant care funds. The trustee will get Antonia on Mexican government-provided health insurance (or private insurance if necessary), and work with a trust benefit advisor in Mexico who will assist the family.
The settlement offer made by the WC insurer was designed to meet Antonia’s specific needs and give her a better quality of life as determined by her explicit wishes. The present value of future WC exposure exceeded $5.0 million, and the case was resolved for just under $3 million. The WC judge and surrogate judge both approved the structured settlement, which is expected to pay approximately $5.3 million to provide for Antonia for the remainder of her life. This case was a win-win scenario that came about through the use of humanitarianism and advocacy.
Harold was involved in a one-vehicle auto accident in 1996 and sustained severe head trauma. His only child was born the same year. After the injury he began living in nursing facilities, and his wife was named the guardian of his person and the estate.
Present value of WC exposure: $6.5 million.
Harold and his wife were divorced, but she remained the guardian of person and estate. At the time of settlement, his brothers became joint guardians and a trust was established for a Medicare Set-Aside Allocation and nursing home costs (negotiated price for life) with a trigger to preserve eligibility for Medicaid if needed.
The total structured settlement and cash totaled $2.7 million, with a total expected lifetime payout of $5.2 million. The terms included immediate cash payment of $370,000, covering:
- Cash to Harold.
- Child support.
- Medicare set-aside seed money.
- First year costs of nursing facility.
- Lifetime income for Harold’s income replacement.
- Professionally administered Medicare set-aside to continue eligibility.
- Annual costs of Harold’s nursing facility care.
As a bonus, Harold’s child was awarded with a scholarship from Kids’ Chance of America, which provided a four-year scholarship to a state university.
Harold’s case was unrepresented, leading to extra scrutiny by the WC court. With the establishment of a settlement based on Harold’s needs, the case was approved and the judge commented: “You are the most humane adjusters I have ever had the pleasure to work with in my years on the bench. Your compassion will be returned to you.”
Again, this was a win-win settlement reached with empathy. Harold and his loved ones were extremely grateful to the claim professionals for their handling of the case to benefit the entire family.
Benefits of Structured Settlements
- Structured settlements provide security and a planned, dependable cash flow with income guaranteed, for as long as a lifetime.
- Structured settlements receive tax-free treatment. When properly handled, all structured settlement payments are not subject to income taxes.
- They are flexible in payment design and payment amounts and timing are able to meet a myriad of future needs.
- Structured settlements provide spendthrift protection and injured persons benefit from income independent of potentially bad decisions made by themselves or those around them.
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