Recent Alabama Case Highlights Need For Court Approval Of Alabama Workers’ Compensation Settlements
Injured workers often ask, “Why do I have to go to court if my case settled?” It’s a good question. The quick answer is that court approval of Alabama work comp settlements is meant to protect injured workers.
Let me give a little background. Alabama workers compensation benefits are limited. I think they are unfair for injured workers. Too many injured workers suffer needless hurdles and delays obtaining basic medical treatment. On top of that, disability benefits are often limited in both time and amount. The Alabama Legislature capped permanent partial benefits decades ago. Since then, the Legislature has ignored increases in the cost-of-living, leaving Alabama families with an injured breadwinner existing at the poverty level.
Our entire work comp system is unfair to workers. I’ve written multiple articles on this. Because the system is unfair, it’s even more important for seriously injured workers to obtain skilled legal counsel and fight for ALL available benefits. And, it becomes even more important for injured workers (with or without a lawyer) to have a safety system where a court can insure the insurance company is not taking advantage of them.
Court Approval — An Important Safeguard
Maybe you’re asking — What’s involved in going to court over my settlement? That’s a good question. We counsel all our injured clients about this process. What’s involved? You will appear before a local circuit judge. Since you’ve reached a settlement, nobody will be cross-examining you. In other words, it’s not adversarial at that point. You or your lawyer will provide the judge with paperwork discussing your potential settlement. The judge may ask a few questions. The judge may let you or your lawyer explain the basics of your settlement. We are always prepared to explain how we fought to obtain the most benefits for our client.
Think of it this way — What’s stopping the insurance company from delaying medical care and benefits to make you desperate for a tiny settlement? What’s stopping the insurance company from requiring you to close your important medical rights without consideration? What’s stopping the insurance company from outright lying about the benefits available to you? If you have a good attorney, these things are not an issue. But, many people settle their claims without legal advice. At the settlement hearing, the judge is not deciding what benefits are actually owed. But, the judge is deciding whether or not you understood the settlement, agreed to it, and it provides basic benefits. In other words, this process is designed solely to protect you.
Historically, Alabama law required that ALL workers’ compensation settlements be approved by a circuit court judge. Our law contains a special provision requiring court approval (Alabama Code Section 25-5-56).
I’ll give you a recent example from one of my cases to demonstrate the importance of Alabama court approval. I represented a young widow whose husband died in a work-related accident. The worker lived in another state. His main office was in that other state. However, he was killed on-the-job in Tuscaloosa County. After his death, the insurance company approached the widow and paid her a small amount (a fraction of what was available) under the work comp laws of this other state. She had no lawyer. But, his accident occurred while working in Alabama. Under our law, he was entitled to Alabama death benefits. And, all settlements require court approval — something which clearly had not occurred here. So, when the widow later called our office with some questions, we were able to help her. Because her earlier settlement in another state had never been court approved, we were able to file a new claim in Alabama and obtain the additional benefits owed. The court approval process protected this widow from being treated unfairly by the insurance company.
Here’s another example. Last year, I received a call from a seriously disabled worker in Huntsville who tried to settle his claim without a lawyer. In his case, the insurance adjuster put language in the paperwork closing all his medical rights. The insurance company wanted to get out of providing medical treatment. The worker was disabled and on Medicare. He had no idea how much harm he could face by simply closing his medical benefits. He could have ended up with nobody providing medical care. Of course, the adjuster explained none of these issues to him. Fortunately, the circuit judge refused to approve the settlement. I was able to advise this worker and help him obtain a settlement that protected his important medical benefits.
Court approval is an important safety measure for injured workers. It protects injured workers from settlements that do not consider or provide basic benefits.
A Modified Approach That Does NOT Always Protect Workers
I mentioned in the preceding paragraphs that Alabama law requires all work comp settlement to be approved. The statute give our circuit judges the responsibility to review and approve them. Our law does contain a second provision that allows an ombudsman (an employee of the Alabama Department of Labor) also to resolve work comp claims by settlement. (Alabama Code Section 25-5-292). An ombudsman can sign a settlement agreement between the parties. Afterwards, the parties have 60 days to ask the court to set the agreement aside based on fraud, new evidence or other “good cause.” So, this approval has limits.
In the last couple years with Covid, the Alabama Supreme Court has entered Orders broadening the scope of settlement approvals outside a normal in-person hearing. In a March 2020 Order, the Alabama Supreme Court allowed circuit courts to have settlement hearings by teleconference (like zoom). That Order also stated that cases settled by an ombudsman would be dismissed.
Now, I think the use of teleconference technology is a good thing. Many injured workers live far away from the courthouse. For example, I settled a case in Cullman County last week involving an injured and disabled truck driver who now lives in California. A zoom hearing is a great way for a remote party to settle his case. Zoom hearings allow disabled, remote, or ill, parties to appear and conclude their cases. I have no criticisms of court approvals conducted over live teleconference.
I do have concerns with settlements in front of an ombudsman. Where the injured person has skilled legal counsel, his rights are usually protected. But, too many insurance companies make a low offer and then have an ombudsman appear to approve it. The ombudsman is not a court officer. In some of these situations, a court might express concerns with the details.
Is an ombudsman too quick to approve questionable settlements? Is an ombudsman as concerned with protecting the legal rights of an injured worker to get proper benefits? Or, is an ombudsman more concerned with closing the file? The words of a well-known insurance company lawyer are insightful. According to that insurance company defense lawyer, “an attorney could sit at his desk and suddenly have five settlement agreements approved back-to-back-to-back over the phone with one ombudsman.” Does that sound just to you? To me, it does not. Don’t get me wrong — Lawyers spend too much time dealing with coordinating schedules. But, approving five different and unique settlements in “mere minutes” is not good for protecting worker rights. That’s my concern with an approach that is so streamlined, it becomes a cookie-cutter assembly line with a goal on moving claims rather than protecting hurt workers. We should do better than creating a system that allows insurance companies to herd injured workers through a “mere minutes” process to settle claims over essential benefits.
A Recent Supreme Court Decision Highlights The Lack Of Protection For The Injured Worker
A recent decision by the Alabama Supreme Court highlights my concern with work comp settlements that are not approved through court. The case is Ex part American Cast Iron Pipe Company. In that case, the worker suffered a very serious head injury. He later settled his claim with an ombudsman. Several years afterwards, the worker was declared incompetent due to this traumatic brain injury (TBI) in the work-related accident. It appears his incompetency began at the time of the accident. According to witnesses, the worker had trouble following simple instructions after suffering the work-related TBI. His injury was so severe — he could not even recall his wife or children in the months after the work-related accident. According to this evidence, it was clear the worker would not have understood the workers’ compensation settlement agreement or its terms. Based on this, the Alabama Supreme Court concluded the agreement could be void due to the worker’s incompetency.
This new case highlights my main concern with cases settled through an ombudsman rather than a judge in court. The ombudsman is really not concerned with competency, due process or justice. The ombudsman is concerned with closing files. Our courts have a very different concern. Our courts are charged with protecting your legal rights. A circuit judge would likely inquire about the worker’s competence and ability to enter into an agreement. A circuit judge would ask questions and inquire about the injuries to make sure the worker, at least, understood the basic settlement terms. I don’t think a judge would approve an agreement where the worker was clearly incompetent due to a serious traumatic brain injury (TBI). This is an important safeguard for disabled workers.
The court approval process for Alabama workers’ compensation settlements serves a very valuable purpose. The process is designed to protect workers. Many of these workers are vulnerable due to financial pressures, pain, or impairments from their injuries. These workers need the full protection of our law.
We are accident and injury lawyers helping people across Alabama. From our office in downtown Huntsville, we have prepared cases for courtrooms statewide. If you have questions about a personal injury or workplace accident, let us know. We are happy to discuss your questions or concerns. Our consultations are always confidential and free.