Guest Column: Streamlining settlement approval for worker’s compensation claims

The permanent adoption of Rule 47 allows parties to move settlement agreements to closure much faster, saving on legal expenses

For more than 100 years employers and employees have dealt with work-related injuries in Alabama. For the most part, the Alabama Workers’ Compensation Act has remained the same since it was last amended in 1975, meaning the last updates to the act predate the World Wide Web by 16 years. Many task forces have been formed in the past decade and proposed changes, but nothing has made it past the cutting room floor. While the ways in which claims are handled, employees compensated and medical issues evaluated remain the same, the pandemic’s impact on the legal system’s tech-reliance has at least resulted in a new rule in Alabama to streamline the approval of settlement agreements when employers and employees get on the same page regarding resolution of their claims.  

The end result: reduced time and costs for employers and insurers handling workers’ compensation claims.

Workers’ compensation settlements pre-pandemic

Under the Alabama Workers’ Compensation Act, any settlement agreement must be approved by either a circuit court judge via a “best interest” hearing or approved by an ombudsman with the Alabama Department of Labor, with the ombudsman route increasing the likelihood of a more efficient resolution. Alabama Code §25-5-290 has always allowed for a workers’ compensation claim to be resolved via a benefit review conference overseen by an ombudsman. The section never precluded litigated cases from having a settlement agreement approved before an ombudsman. Despite this fact, the unspoken rule was that it was poor form to go around the assigned judge, lest one intended to commit professional suicide.

And thus, for nearly two decades, litigated matters were walked through in front of the circuit court judges instead of ombudsmen. In some cases, this formality could delay the approval of a settlement agreement, depending on the court’s docket and the judge’s schedule. Further, a circuit court judge could potentially, and in some cases did, refuse to approve a settlement agreement even when both parties were represented by counsel. While the hearing requirement was designed to protect the parties and to make a determination that the agreement was in the employee’s best interest, the process itself could be cumbersome or cause delays.

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And then COVID-19 shut the world down overnight. Courthouses, law firms, employers, schools, nail salons — nearly all industries were affected in some capacity during the initial weeks and months of the pandemic. As a result, local and state governments had to endeavor to find a way to move forward despite the obvious constraints of a global pandemic. On March 18, 2020, the Alabama Supreme Court entered the first of many administrative orders regarding the prosecution of workers’ compensation cases during the suspension of in-person proceedings.

As a portion of this Administrative Order, workers’ compensation hearings could be held telephonically or by videoconferencing. Further, for the first time it was clearly stated that any workers’ compensation settlement could be approved by an ombudsman, and that such settlement would result in the dismissal of the claim pending in circuit court. Chief Justice Tom Parker’s first administrative order ran through April 16, 2020, but subsequent orders have been entered time and again, continuing to sanction this settlement approval process through the end of 2021.

For employers and businesses, these administrative orders were tremendously helpful. Despite the world’s closure, insurance carriers and employers still had the availability to resolve claims and get them off the books without delay. In fact, the ability to have settlement agreements approved telephonically or via zoom suddenly streamlined the process. There was no more waiting to get on the judge’s already busy and backed up docket. 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. What used to take an entire day or weeks to coordinate could suddenly be handled in mere minutes.

Certainly, employers and insurance carriers also appreciated lower costs associated with these administrative orders as well. No more did a defense attorney from Birmingham have to travel 3.5 hours to Mobile, stay overnight in a hotel and attend a brief conference, only to then have to travel 3.5 hours back to Birmingham on the client’s dime. Now that same attorney could have the settlement agreement approved in a half-hour. The decreased cost associated with having settlement agreements approved benefits employees and their attorneys, as well as employers and insurance carriers.

The circuit court judges polled statewide vocalized that the process allowed their dockets to clear more quickly and efficiently as well. All in all, the process seems to have been a game changer in the workers’ compensation arena.

Making the Changes Permanent

The Alabama Supreme Court took notice, and in September 2021, Chief Justice Tom Parker contacted the officers of the Alabama State Bar Workers’ Compensation section and requested a task force be formed to draft a rule to permanently memorialize this process that had been so well received. Thus, a group comprised of four defense attorneys, four plaintiff attorneys, four judges and one appellate expert, taken from all over the state, formed to draft and publish the rule in a permanent format. As the act already allowed for such a settlement approval, there was no need to rewrite legislation.

After much debate and discussion, the rule was finalized and adopted on Dec. 30, 2021, as Alabama Rule of Judicial Administration 47, which specifically states as follows: “A pending Workers’ Compensation case in which a settlement agreement has been reached between the parties and approved by an ombudsman of the Alabama Department of Labor pursuant to Section 25-5-292, Ala. Code 1975, shall be dismissed upon filing by the parties of the settlement agreement, including a copy of the settlement documents approved by the ombudsman, and a joint motion for stipulation of dismissal, pursuant to Alabama Rule of Civil Procedure 41(a)(1)(ii), with the court.”

There is no room in the rule for a circuit court judge to overrule the settlement or otherwise affect it.

The permanent publication and adoption of Rule 47 will allow parties to move settlement agreements to closure much faster and will save employers and their carriers on legal expenses previously incurred during the travel to and from such proceedings. Knowing this rule will live on permanently allows everyone to breathe a sigh of relief, and we no longer must rush to push a settlement agreement through before the expiration of the latest administrative order’s deadline. 

Amanda Cutshall Goozée, partner with Swift, Currie, McGhee, & Hiers, represents businesses and insurers in a diverse range of litigation matters, including workers’ compensation, insurance coverage, labor & employment, transportation and premises liability. She may be reached at [email protected].

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