By Judge Jim Umsted
(Written after a particularly difficult week reviewing settlement agreements.)
Believe it or not, the judge wants to approve your settlement agreement, and most settlement agreements are approved. However, if you do any of the following, you may succeed in having your settlement rejected by the Court.
Number 1: Ignore the law.
According to Tennessee Code Annotated section 50-6-240 (2014), the judge must make a determination as to whether in the proposed settlement the employee is receiving substantially, the benefits provided by the Tennessee Workers Compensation Law; or in the case of a disputed claim, that the compromise reached is in the best interests of the employee. An easy way to have the proposed settlement rejected is to fail to submit sufficient information for the judge to make that determination. Consider these two questions:
1. How does this settlement give the employee substantially the benefits provided by law?
2. (On a disputed claim) Why is this compromise in the best interests of the employee?
If you cannot answer these questions, the judge might not approve the settlement.
Number 2: Don’t read the Court’s Practice and Procedure rules.
The Court’s Practices and Procedures are posted online. Look specifically at Rule 9 on “Settlement Approvals.” There you can find many possible ways to have your settlement agreement rejected. For example:
1. Refuse to use the Court’s online templates for the settlement agreement (more on this later).
2. Prepare an incomplete or incorrect statistical data form. Hopefully, this may only cause a delay for you to correct the form.
3. Don’t have a final medical report with a rating or showing the employee has reached maximum medical improvement.
4. If you want to close future medical benefits, do not have a statement from the treating physician showing no further medical treatment is anticipated (or documentation of the anticipated cost of future medical treatment). While the rules don’t require this information, if you have it, it will certainly expedite approval.
5. Try closing future medical benefits in a settlement by affidavit, disregarding rule 9.3, prohibiting settlement approvals by affidavit where future medical benefits will be closed.
Any of the above mistakes will greatly increase your chances of having the settlement rejected.
Number 3: Don’t use the Court’s settlement agreement templates.
The Court has supplied online templates for the preparation of settlement agreements (scroll down to the bottom of the page). Use of the templates will greatly increase the chances of approval by the judge. However, if you want to risk having the settlement agreement rejected, consider the following possibilities:
1. Change the template to include broadly-worded release language.
2. Change the template to eliminate statutory rights provided to an employee.
3. Let your secretary prepare the settlement agreement and don’t proofread it before presenting it to the Court.
If nothing else, you may succeed in having the Court require that you retype the agreement using the proper template.
Number 4: Use an incorrect calculation of benefits.
Tennessee Code Annotated section 50-6-207(3)(B) (2014) explains the calculation of additional benefits if at the conclusion of the compensation period the employee did not return to work. The Court’s explanation of how to calculate the additional benefits is contained in the Explanation of Benefits form posted online. Basically, the total award is calculated by multiplying the applicable factors, not by adding them separately. Using an incorrect calculation will result in a settlement rejection until the calculation is corrected.
Number 5: Don’t have your documents completed before presenting them to the Court.
An effective way to slow down the settlement approval process is to leave blank spaces in your documents, such as dates, docket number, state file number, employee’s age and education level. An even better way to risk total rejection of the settlement agreement is to present unsigned documents to the Court and expect the Judge to explain the settlement agreement to the employee who has not read the agreement. In other words, present completed documents to the Court, which the employee has read and understands.
Avoid all of the above mistakes, and you’ll have the best chance to have your settlement agreement approved quickly and painlessly.
From the Bench 