No Doubt; You Must Have a Dispute

By Judge Dale Tipps, Murfreesboro

Disputed settlements are permitted under section 50-6-240(e), which allows parties to settle a claim without regard to whether the employee is receiving substantially the benefits to which they are entitled. Below, I’ll point out a few potholes along the road to approval of these types of agreements (it’s spring, and we’re regularly dodging them these days).

One requirement of this kind of settlement is that the judge must determine it is in the best interest of the employee. As judges, we take this charge to find best interest seriously.

Best interest isn’t an objective standard. We have to ask questions about why the proposed settlement is in the employee’s best interest. Explanations of the nature and extent of the injury, the defenses to the claim, the timeframe between the injury and proposed settlement, the amount offered, etc., are very important. I must be convinced that the settlement offers enough benefit to outweigh the possibility of an employee receiving less or nothing at trial.

My subjective conclusion isn’t the only concern. The statute has another requirement, and I’ve noticed an increase in the number of proposed settlements that overlook it. Section 240(e) also says that the parties must either dispute whether a claim is compensable or the amount of compensation due.

A typical problem is a claim where medical treatment and/or temporary disability was paid, and the employee has a single impairment rating. Under these facts, obviously the claim was accepted as compensable, and no proof of a dispute over the amount of disability benefits is given. (What the employee or the attorneys think of the rating isn’t relevant, as they’re not qualified to offer medical opinions.) Therefore, section 240(e) is inapplicable.

What about a 0% rating? Cases with a 0% rating from the treating doctor are often approved as disputed settlements because the rating may be evidence of a dispute over the amount of permanent disability.

However, please don’t confuse a 0% rating with no rating at all. I regularly see proposed settlements that state “employee has not been placed at maximum medical improvement and no provider has given any permanent impairment,” or words to that effect. This often occurs when the injury was relatively minor or the employee stopped pursuing treatment, so it’s easy to understand why the settlement is being presented as disputed. However, the statutory requirement cannot be ignored, and it doesn’t allow for disputed settlements just because the employee doesn’t want additional treatment or doesn’t like the treating physician. If you don’t have a rating, you may need to request one before proceeding with a disputed settlement.

The bottom line is this: If you don’t identify a genuine dispute of compensability or extent of disability, the Court may be unable to approve a disputed settlement.

So keep this in mind the next time you present a disputed settlement. Hopefully, the experience will be just like driving on a newly paved road—or where the potholes have been at least sort of repaired.