A recent trip to the Appeal Board led me to write this article. While in attendance on a different matter, I learned of a case where the trial judge awarded a penalty for violation of the Special Rules of Administrative Practice and Procedure before Workers’ Compensation Judges, specifically Section 131.59(b) for failure to have requisite settlement authority at the time of a mandatory mediation.

The facts of the case before the Appeal Board were as follows. The parties were litigating a claim petition and a mandatory mediation was scheduled by the assigned trial judge. The claimant proceeded to the mediation with counsel and was prepared to negotiate. Counsel for the employer attended the mandatory mediation. However, the employer’s counsel did not have settlement authority and did not have an adjuster available to discuss settlement or any of the pending issues raised by the claim petition. In addition, counsel for the employer did not advise the trial judge, mediating judge, or the claimant’s counsel that he did not have settlement authority prior to the mediation. Counsel for the employer proceeded to the final hearing, and at the final hearing the claimant’s counsel presented his own affidavit detailing the circumstances behind the mediation and requested a penalty under Section 131.59(b). The judge ultimately found the employer/insurer violated Rule 131.59(b) by attending the mediation without settlement authority and awarded a penalty.

Under Special Rules of Administrative Practice and Procedure before Workers’ Compensation Judges Section 131.59(b), mandatory mediation activities conducted by the mediating judges are confidential except that communications, conduct, or documents are not confidential if relevant to establish a party or counsel failed to do one of the following:

(1) appear for mediation without prior approval of the mediating judge, (2) attend a mediation in person or by teleconference, as required by the mediating judge, and (3) have requisite authority to accept, modify or reject settlement proposals offered at mediation, whether at mediation or within a reasonable period of time after the mediation as established by the mediating judge. Under 131.59(c), the adjudicating judge shall possess authority to impose sanctions for failure of the parties to comply with the mediation provisions.

In the subject case before the Appeal Board, the employer/insurer violated two aspects of Section 131.59(b): the employer/insurer did not have an adjuster available by teleconference and they did not have settlement authority at the time of mediation or within a reasonable period of time thereafter.

What It Means to You

These problems could have been avoided by contacting the adjuster and/or employer well in advance of the mandatory mediation date to discuss settlement and settlement authority and having an adjuster available for the mediation. If settlement authority cannot be extended in time for the mediation, the handling attorney should immediately advise, by way of correspondence, the trial judge, mediating judge, and claimant’s counsel, and request the mandatory mediation be continued or cancelled. Direct communication with the judges and opposing counsel could have avoided the award of a penalty in the subject case before the Appeal Board.

Moreover, if forced to attend a mandatory mediation after a request for a continuance is denied, one could comply with the Special Rules by attending the mediation without settlement authority, but responding with a settlement offer within a reasonable period of time after the mediation. The attorney must establish the time frame in which to respond at the time of the mediation and with the mediating judge. The handling attorney should confirm the time period in writing after the mediation and strictly comply with the date to respond to the settlement demand to avoid an argument regarding violation of the Special Rules of Practice and Procedure and a request for sanction by way of a penalty.

Be mindful of complying with the Special Rules of Practice and Procedure as it relates to mandatory mediations and be wary of the trap for sanctions and penalties for a violation of the same.