An Attempt to Broaden Arizona’s Full & Final Settlement to Denied Claims Fails

Medicare Set-Asides, MSP News, State Regulations on February 22, 2018
Posted by Jennifer J. Mislanovich, JD

As we noted last year, in our post “Settling a Case in Arizona? What You Need to Know About Full & Final Settlements,” Arizona enacted Senate Bill 1332 (SB 1332), allowing permanent closure of all medical benefits in accepted claims. Last month we were excited to learn of the prospect that denied claims would follow suit when Senator Karen Fann first introduced Senate Bill 1100 (SB 1100), proposing amended legislation to allow for full and final settlements regardless of whether a claim is denied or accepted.

On Monday, Senator Fann presented a Floor Amendment of the bill, which in part, clarified that clarified that only accepted claims would be eligible for a full and final settlement.  The amended bill also continues to support elimination of the requirement that injured workers be represented by an attorney when entering a settlement. If a claimant is unrepresented, then an Administrative Law Judge of the Industrial Commission of Arizona (ICA) would be required to determine that the requirements for full and final settlement have been satisfied.

While the ICA would still be required to approve any full and final settlements, this is a notable change from the current standard, which is for the ICA to consider whether the settlement is in the best interest of the employee.  Of note, whenever entitlement to future medical benefits is terminated via Full and Final Settlement, Medicare Secondary Payer (MSP) obligations could be triggered; therefore, the possibility should always be evaluated with the closure of a workers’ compensation claim.

We continue to recommend the following best practice tips for Arizona workers’ compensation claims settling after October 31, 2017:

  • Evaluate claimant’s current medical status before contemplating settlement. An employee’s injuries should be stabilized, which generally means after an employee has reached maximum medical improvement;
  • Obtain a reasonable and defensible Medicare Set-Aside allocation, supported by solid medical and legal evidence. Each agreement must accurately portray a claimant’s future medical needs, in consideration of the legal position of the case;
  • Conduct a conditional payment inquiry to ensure that all conditional payments have been resolved and satisfied prior to settlement. It is important to note that conditional payment demands can happen post settlement; so this is certainly a step parties do not want to miss; and
  • Consider obtaining a structured settlement quote, prior to settlement to determine any additional cost savings. Often structuring a settlement can result in faster settlements and greater savings, while preserving a Claimant’s assets.

To answer any questions or concerns you have related to Medicare Secondary Payer compliance solutions, please feel free to reach out to our team at