INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY WORKERS COMPENSATION LITIGATION MANAGEMENT POLICIES AND PROCEDURES

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1 INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY WORKERS COMPENSATION LITIGATION MANAGEMENT POLICIES AND PROCEDURES In order to strengthen partnerships with claims defense counsel, ICRMA has adopted Workers Compensation Litigation Management Policies and Procedures which represent a reasonable and effective path for the management of litigated matters. These guidelines ensure consistency in claim litigation management and define the expectations of claims defense counsel to achieve the best result in an efficient and cost-conscience manner consistent with ethical obligations. It is the intent of the ICRMA to allow Members to select their own defense counsel, while at the same time recognizing that it is in the best interests of all Members to ensure the professional, competent, and cost-effective handling of litigation. 1. DEFENSE COUNSEL 1.1 Approved Panel Counsel. Attorney firms requesting to be added to the panel of approved attorney firms must meet and/or agree to the following provisions: The firm must be nominated, in writing, by one of the current ICRMA Members, their TPA, or by the ICRMA. The ICRMA Claims Committee shall have the responsibility of approving the panel of defense attorneys and the authority to add or delete individual counsel or firms from time to time pursuant to recommendations from the General Manager Regardless of the selection process, the Member shall bear the financial responsibility of the defense expenses, including fees, until its retained limit is exhausted Upon application to the ICRMA, the firm shall provide a resume setting forth the experience of the individual attorneys that will handle ICRMA cases and their areas of expertise including experience in handling workers compensation defense for public entities The firm must agree that the hourly rate charged shall not exceed the current approved rates for partners and associates, unless the Member agrees to pay any difference 1

2 between the maximum allowed rate and the actual rate charged. The ICRMA must be notified in writing if the Member agrees to exceed the maximum allowed rate The firm must annually submit proof of professional liability insurance appropriate to the legal profession, and in an amount not less than $1,000,000 per claim. 1.2 Selection. Defense counsel for each reportable claim shall be selected by the Member and may be selected in conjunction with the Member s TPA. The applicable parties shall be notified of the selection of counsel within 48 hours of retention of that counsel. The selection shall be based on the nature and complexity of the case, the experience and ability of the attorney, as well as other relevant factors. Nothing in this document shall be construed to limit the right of a Member to retain its own defense counsel to represent the Member in any litigation in accordance with the Memorandum of Coverage. If, however, a Member retains its own counsel who is not one of the pre-approved defense panel firms, the firm must still comply with the policies and procedures herein. Regardless of the amount paid to defense counsel, whether it is the ICRMA s maximum hourly rate, or such additional amount as the Member may agree to pay, for purposes of computing the Member s self-insured retention, the ICRMA s approved hourly rate shall be utilized. 2. POLICIES REGARDING LEGAL SERVICES All ICRMA approved panel counsel agrees to the following: 2.1 Engagement Letter. All legal services performed on reportable claims as defined in the Memorandum of Coverage (and as set forth in Section 4.1 below) will be initiated by an engagement letter sent by the Member and copied to ICRMA. Except in extraordinary circumstances or upon written approval by ICRMA, no work shall be performed and billed unless such work has been undertaken pursuant to such an engagement letter. If no engagement letter has been signed, counsel must sign an engagement letter with the ICRMA before exhaustion of the Member s self-retained limits. 2.2 Retained Defense Counsel. The selected attorney firm shall designate one attorney to have primary responsibility for each case on which services are requested. The case should be staffed economically and effectively. Roles and responsibilities of staff 2

3 members should be clearly defined and appropriate to each individual s qualifications and level of experience. Counsel shall designate work to subordinates wherever possible to achieve efficiency and cost-effectiveness without compromising quality. Retention of consultants or experts requires the prior approval by the ICRMA on reportable claims. 2.3 Evaluation of Attorneys and Firms. The performance of each preapproved attorney and/or defense panel firm will be evaluated on an as needed basis by the ICRMA Claims Committee. The ICRMA Claims Committee has the right to remove any firm or any attorney from the panel. 2.4 Monitoring Counsel. The ICRMA has the right to retain monitoring counsel, whose fees will be paid by the ICRMA. The fees and costs for this shall not be applied against the Member s self-insured retention as long as counsel acts only as monitoring counsel. Defense counsel shall fully cooperate with monitoring counsel. Should defense counsel fail to cooperate with monitoring counsel, the Member has the option of either allowing the ICRMA to assume the defense of the lawsuit; or of waiving any rights to defense and indemnity coverage it has from the ICRMA. 2.5 In-House Counsel. A Member has the right to utilize its own in-house counsel, be it an employee or a contract attorney, to represent the Member in any civil litigation matter related to a workers compensation claim. However, the in-house counsel shall satisfy and comply with these Procedures. 2.6 Reinstatement. Any defense counsel or law firm removed from the Approved Panel Counsel list shall not be permitted to apply for reinstatement until three years from the conclusion of the legal action that gave rise to the conflict. 3. CASE ANALYSIS AND STRATEGY Unless otherwise requested, reporting is required for four events: acknowledgement, initial evaluation and analysis, significant developments, and closing report. Reports should be provided to the Member, their TPA, and the ICRMA on ICRMA reportable cases. At no time shall a gap in reporting exceed 180 days. 3.1 Acknowledgement. Upon receipt of a new case, counsel should send an acknowledgment letter regarding receipt of the file and designating the attorney assigned to the case. Any matters of immediate concern or information that may result in early resolution of the case should be 3

4 addressed in the acknowledgment letter. 3.2 Initial Evaluation and Analysis. On a date mutually agreed upon by the Member, the assigned counsel, and the ICRMA if reportable, but no later than 30 days from receipt of the assignment, counsel should send an initial report with the following information: A summary of the alleged injury, the factual basis for the litigation, a summary of the information developed during the preliminary investigation, and a preliminary evaluation of liability and exposure A strategic litigation plan providing the following: Identify facts or elements which must be proved or disproved and the discovery necessary to establish these; Identify each significant activity counsel proposes to initiate (e.g., investigation, discovery, legal research, etc.); Identify discovery that have been or are likely to be initiated by other parties; Identify any potential third party negligence; Identify any potential co-defendants to the case; Discuss the anticipated course of action to be taken and the prospect for success; Discuss the potential for early disposition of the case by settlement, and provide recommendations with respect to direct settlement negotiations; and Provide an estimate of a resolution date Defense counsel shall identify any additional information or documentation that is needed to disprove the claim or to establish an appropriate defense. Whenever possible, this investigation and information-gathering shall be done by the Member s TPA or the adjuster assigned to the case. 3.3 Significant Developments. Defense counsel should communicate and apprise of significant developments as soon as practical. This will include reports from medical professionals and investigators as well as legal reports such as depositions which indicate significant findings that may drive the case and increase legal exposure. Significant development reports should address: An updated evaluation of the Member s or the ICRMA s liability An updated strategic litigation plan. 4

5 3.3.3 Settlement evaluation and options A revised estimated case resolution date Trial Report - If it is anticipated the case will proceed to trial, a date mutually agreed upon by counsel and the Member or the ICRMA, but no later than 45 days prior to the scheduled trial date, a detailed report should be submitted detailing the issues and an analysis of same and any other information pertinent to the case. At the conclusion of all trials, a brief summary trial report should be directed to the Member, the Member s TPA, and the ICRMA, if reportable, outlining the trial results with further legal recommendations. 3.4 Final Report. At the conclusion of the case, a short summary report shall be prepared and directed to the Member, the Member s TPA, and the ICRMA if the case is ICRMA reportable. 4. LITIGATION BUDGET 4.1 Reported Claims. All case budgets must be approved by the ICRMA. Reported claims include claims where the total incurred has met or exceeded the Member s retained limit, or any occurrence involving: One or more fatalities; Loss of limb or amputation; Loss of use of any sensory organ; Spinal cord injuries (quadriplegia or paraplegia); Third degree burns involving 10% or more of the body; Serious cosmetic disfigurement; Paralysis; Brain or neurological injuries. 4.2 Approved Revisions to Case Budget. Changes can occur in any case that will affect the defense litigation plan and consequently alter estimated defense costs. Accordingly, a case budget, in appropriate instances, may require revisions to take into account the changed circumstances. Approval is required from the ICRMA to change the case budget on any reportable case. 5. COMMUNICATION Defense counsel should consult with the Member, the Member s TPA, and the ICRMA, when the case meets reporting criteria, on the appropriate 5

6 means of communication whether by , fax or regular mail to avoid duplication. Defense counsel should comply with all reasonable requests for information and documents; however, any documents or information that are privileged shall not be disclosed, absent consent from the Member or the ICRMA if applicable. 5.1 Correspondence. Copies of all agreed-upon correspondence shall be promptly provided by defense counsel to the Member, the Member s claims adjustor, and the ICRMA, when the case meets reporting criteria. Defense counsel will promptly respond to all letters or phone calls and will keep the Member, the Member s claims adjustor and the ICRMA (when the case meets reporting criteria) fully advised of the progress in each case. 5.2 Depositions, Trials, Arbitrations and Hearings. Immediately upon receipt, defense counsel shall send notice of all depositions, trials, arbitrations, mediations and hearings to the Member, the Member s claims adjuster, and the ICRMA when the case meets reporting requirements. 5.3 Evaluations. Upon request and at such other times as deemed necessary, defense counsel shall provide written or oral evaluations of the litigation. These evaluations shall disclose any weaknesses or strengths that have been discovered, any changes in applicable statutes or case law, any increase or decrease in anticipated costs, and (if possible) the potential liability and settlement value of the case. These evaluations should be as straight-forward and as objective as possible to allow the Member, the Member s claims adjustor, and the ICRMA to meaningfully analyze the case and to determine the course of action to be taken. 6. SETTLEMENT AUTHORITY Defense counsel shall not settle any case or make a settlement offer in any amount without prior written authorization from the ICRMA when the case meets reporting requirements and the settlement requires contribution from the ICRMA. If the case is not reportable to the ICRMA, defense counsel shall not settle or make an offer to settle a case without first obtaining authority in writing from the Member. 7. POLICIES REGARDING EXPENSES AND REIMBURSEMENTS 7.1 Attorney Hourly Rate. Counsel shall submit a rate schedule upon its initial engagement. Unless another basis for setting fees is agreed upon in advance in writing, charges for professional services for 6

7 attorney work shall not exceed $ per hour. Charges for paralegal or non-attorney professional work shall not exceed $ per hour. Charges for legal assistant work shall not exceed $80.00 per hour. Changes in rates occurring after such date shall be approved in writing. Ranges for hourly rates are not acceptable. Hourly rates for each attorney working on the file must be provided. Legal counsel and the ICRMA shall have the right to renegotiate rates after the Member exhausts its self-retained limits. 7.2 Attorney Billable Activities. Generally, no more than one attorney s time should be billed for depositions, hearings, motions, case meetings, etc. It is expected that counsel will appropriately apportion court time (including travel costs) to each case in which counsel is appearing in court if one or more matter is handled. Legal research for a particular issue that is over three hours requires pre-approval. When billing for legal research, the entry must reflect a description of the topic researched and its relevance to the defense effort. A copy of the research memo shall be sent to the Member, the Member s claims adjuster, and the ICRMA if applicable. 7.3 Reimbursable Expenses/Disbursements. Reasonable and customary expenses incurred in the case are reimbursable. Defense counsel shall include all individual items of expense and disbursement of $250 or less in the regular billings. Reasonable and customary expenses include travel costs, filing fees, court reporter fees, witness fees, photocopying costs (not to exceed $.10 per page without prior approval), long distance telephone charges, and air courier costs. Facsimile transmission charges will be reimbursed at a per page rate not to exceed $0.10/page, without prior approval. 7.4 Travel Costs. All reasonable and necessary travel costs are reimbursable expenses. Travel costs could include airfare, lodging, meals and other transportation. Travel costs should be incurred in a cost-conscious manner. Accordingly, air travel is reimbursed at coach fare. Where travel is for multiple cases, it is expected that counsel will appropriately apportion travel costs among the various cases. Meal expenses shall not exceed $50 per diem. 7.5 Non-Reimbursable Expenses. We do not pay for expenses such as staff overtime, word processing, special publications, or attendance at continuing legal education seminars. In addition, the following expenses are consider unreasonable or unnecessary and will not be reimbursed: Preparation of invoices or responses to billing inquiries; 7

8 Time spent reviewing or analyzing the law firm s conflict issues, opening or closing the file or other administrative duties; Clerical work performed by attorneys and/or paralegals; Charges directly related to the departure of a lawyer or paralegal (including start-up work or higher rates for replacement personnel, and including review time for transferred cases to a new or existing attorney.) Case management or litigation software or systems; Continuing education for any personnel; and Overhead expenses required to operate a legal practice. 7.6 Defense Experts. The ICRMA shall be notified prior to engaging the services of any expert in reportable claims. 8. BILLING PROCEDURES 8.1 Billing Statement. Bills may be submitted monthly or quarterly but in no case longer than quarterly, unless the total amount of unbilled legal fees and expenses exceeds $2, or it is the final bill for services on the matter. Bills in excess of $2, at the time the threshold is met and final invoices at the conclusion of services shall be promptly submitted. 8.2 Legal Fees. Legal services should be adequately described. Block billing will not be accepted. Any billing statement not in conformity with these rules will be returned to counsel for revision and then it can be re-submitted for payment. A reasonably descriptive statement should set forth the following: The firm s IRS number; The caption of the case; Name of the injured worker; Claim number; Date the services were rendered; Description of services; Identity of the person(s) rendering the services described; Rate at which the person(s) rendering the services is billed out; Amount of time expended by each person for the services described; Calculated fee for that particular billing entry; and The total amount paid to date. 8.3 Billing Reimbursable Expenses and Disbursements. Reimbursable expenses incurred and disbursements made, with supporting 8

9 documentation for expenses in excess of $25.00, are to be itemized and adequately described. 9. DISPUTES BETWEEN PARTIES 9.1 Arbitration. Any dispute between the defense firm and the Member, between the defense firm and the ICRMA, or between the Member and the ICRMA pertaining to these Procedures shall not be subject to any court action, but shall instead be submitted to binding arbitration. 9.2 Selection of Arbitrator. Arbitration shall be conducted pursuant to the California Code of Civil Procedure. Arbitration shall be conducted by a three-person panel. Each party shall select one arbitrator and the two arbitrators shall then select a third arbitrator upon mutual agreement. No arbitrator shall be employed or affiliated with the ICRMA or any party to the dispute. 9.3 Arbitration Time Limits. The selection of arbitrators shall take place within twenty (20) calendar days from the receipt of the request for arbitration. Unless mutually agreed otherwise, the arbitration hearing shall commence within forty-five (45) calendar days from the date of the selection of the arbitrators. 9.4 Cost of Arbitration. Each party shall pay the cost of its selected arbitrator and one-half the cost of the third selected arbitrator. In addition, each party shall be responsible for its own costs, expenses and legal fees of arbitration. 9.5 Arbitration Procedure. Except for notification of appointment and as provided in the California Code of Civil Procedure, there shall be no communication between the parties and the arbitrator(s) relating to the subject of the arbitration other than at oral hearings. The procedures set forth in California Code of Civil Procedure Section relating to depositions and discovery shall apply to any arbitration pursuant to this Section. Except as provided otherwise above, arbitration shall be conducted as provided in Title 9 of the Code of Civil Procedure (commencing with Section 1280). The decision of the arbitrators shall be final and binding, and shall not be subject to appeal. 9

10 AGREEMENT TO COMPLY WITH PROCEDURES I AGREE TO ABIDE BY THE ICRMA S LITIGATION MANAGEMENT POLICIES AND PROCEDURES. I UNDERSTAND THE MEMBER AND THE ICRMA HAVE THE RIGHT TO ENFORCE THE TERMS OF THIS AGREEMENT AS TO THE UNDERSIGNED LAW FIRM. Dated: By: By: [Attorney s Law Firm] [Individual Attorney] 10

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