Settlement Procedure

Settlement procedure does not follow any set pattern in Virginia. The circuit courts seem reluctant to assist in the negotiation of a settlement. Therefore the parties are well advised to enter discussions about alternative dispute resolution early in the litigation. The two most popular forms of alternative dispute resolution are binding arbitration and mediation. The mediator and arbitrator will charge by the hour and the parties usually split the costs 50/50. Whether mediation or binding arbitration, the parties should prepare as if the hearing was a trial. The witnesses should be prepped and the exhibits and evidence should be available as if it were a trial.

1. Binding Arbitration

Binding arbitration will conclude the claim and the parties will be bound by the award, subject to any "high-low" agreement. To start binding arbitration the parties must agree on an arbitrator. Also, the form of alternative dispute resolution is usually accompanied by an agreement on the "high" and "low", meaning the ceiling and floor of the award. The high will (almost) always be within the limits of insurance coverage. The agreement to use binding arbitration should recite whether witnesses can be called live, whether the arbitrator will have the power to enforce subpoenas, whether hearsay is admissible, including the medical records, whether depositions will be used in lieu of live witnesses and when the award will be paid.

2. Mediation

Mediation differs from binding arbitration in that the mediator does not make an award. Instead, the mediator attempts to get the parties to reach a settlement by listening to witnesses, reviewing evidence and conferring with the lawyers. There are no hard and fast rules for mediation. The mediator usually requests a submission of the parties' claims and defenses prior to the hearing. The mediator cannot force the parties to accept a settlement and instead uses his power of persuasion to convince the parties that a sure thing is better than a roll of the dice with a jury. The parties should be clear about who is attending the mediation, as most plaintiffs want an adjuster with sufficient authority to be present, not just available by telephone. The parties to mediation should clarify before the mediation whether sufficient authority has been put on the case by the defense so that many hours of expensive mediation are not wasted in a futile effort to settle. The parties should also clarify before the mediation whether any terms need to be confidential, whether the release document will contain any provisions beyond the standard release terms, and how long it will take to put the settlement check in the hands of the plaintiff.

3. Negotiation with the Claims Adjuster or Defense Counsel

A settlement demand package should be prepared when the full extent of the treatment, damages and injuries are able to be quantified or predicted by the treating physicians and other experts. Where possible, prepare your settlement demand package well before the two (2) year statute of limitations will expire. Otherwise, suit must be filed. If suit is filed, service of process can be delayed for up to a year to allow more time to settle the claim. If the claim has not settled and a year post filing is about to expire, due diligence must be used to serve the suit papers on the defendant or the claim may be dismissed with prejudice. Va. Supreme Court Rule 3:5(e). If you miss the service deadline, your only option will be to take a voluntary nonsuit.

A settlement demand letter which contains little more than a tally of the medical bills and wage loss, and then demands a large sum of money, is likely to be ineffective. This type of demand letter will usually tip the adjuster to fact you may not have read and digested the entire medical file, and it will leave you with little ammunition if the claims adjuster takes quotes and findings out of context in an effort to diminish the claim.

The settlement demand package should include a list of all the medical bills and other specials damages. The wage loss should be computed and supported by a letter from the employer and disability slips from the treating physician. The medical records should be summarized. Where future medical expenses are expected, the treating physician should prepare a report which describes the ongoing need for medical care and estimates the future medical costs. The same letter should comment on how the ongoing injuries will affect the plaintiff's employment. The demand letter should summarize the medical care and highlight the significant findings, such as muscle spasm or trigger points (considered "objective" findings) and positive films or scans or diagnostic tests like EMGs. Remember that the claims adjuster will likely send the medical records and bills to his insurance carrier's own medical experts prior to making any settlement offer. The more you know about your client's treatment and medical needs, the better position you are in to negotiate a fair and favorable settlement.

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