Present Value and Settlement Value
Present value is the amount of money that needs to be
invested today to generate sufficient funds to pay the expected future benefits.
The WCRA expects a long-term return on its investment of 6.5%. Because the
present value of a claim represents the maximum cost if the claimant remains
eligible for benefits, settling for less than present value seems prudent.
Although the individual characteristics in each claim have to be considered, it
is our experience that most claims settle at 50-75% of the present value. If
significant savings cannot be realized, the WCRA generally prefers to pay out
the claim over time.
Contact the WCRA
Members are required to notify the Association prior
to entering into claim settlements that may involve present or future WCRA
reimbursement. Contacting our claims services staff allows us to work with
members to make certain that proposed settlements involving WCRA funds are
accurate and that they adequately protect the WCRA's interests.
If a settlement involving WCRA funds is executed
without advance notice to the Association's claims services staff, but we have
no substantial disagreement with the terms of the settlement, we will simply
reimburse the member for the full settlement amount. If, however, the terms of a
settlement entered into by a member are based either on errors in applying the
provisions of Minn. Stat. Ch. 176 or because the settlement is clearly excessive
and materially affects the WCRA's financial interests, we may reduce the
reimbursement to the member. The undisputed settlement amount will be
reimbursed to the member, who may request a review of the denial of the
reimbursement as provided in the WCRA Plan of Operation.
The WCRA does not attend or participate in settlement
conferences or pretrial conferences, nor should the WCRA be included as a
signatory on a stipulation for settlement.