“Don’t Settle with Terrorists”
“Don’t negotiate with terrorists.” Easy enough for a politician to say – but have they ever practiced Workers Compensation law? Sometimes, we all feel like we are negotiating with terrorists – at least metaphorically. But even if you cannot avoid negotiating with the litigation terrorists of your practice area, it pays to make sure that you do not commit a cardinal sin: settling with a terrorist – a real one.
i. A Hidden Problem
It is 9 a.m. on Monday morning, a three-thousand-page file arrives on your desk, and you know that you have a problem.
Two years ago, a worker, Mohamed al-Azan, tripped on a piece of re-bar, fell off of a roof, and landed on his back. Initial tests revealed a fractured vertebra and three broken ribs. The treating physicians provided an optimistic prognosis – they expected the worker not only to walk again, but also to return to work full time. But, the doctors were wrong – the worker can now walk with a cane, but will never fully recover.
Your client wants to settle the case. You review the files – conduct a quantum analysis – and begin to prepare an initial settlement offer. Settling the case is going to be expensive, and your client is not going to like the final number. That is always a problem – but at least it is a familiar one.
But there is another problem – potentially a $20 million one – lurking in the paperwork. Midway through the file, sandwiched between the initial set of medical records and the worker’s current prognosis are volumes of seemingly misplaced papers.
This is a Workers Compensation case. Who put in a document from “The Office of Foreign Assets Control”? The injury occurred in Louisiana. Louisiana Workers Compensation applies to the claim. You could easily look past the documents – after all, jurisdiction is not in dispute – but that could be a $20 million mistake, and a PR disaster.
ii. An Expensive Public Relations Nightmare
The Office of Foreign Assets Control is a division of the United States Treasury Department. It maintains a list of “Specially Designated Nationals.” The list, essentially, is a database of people whose assets are blocked because of ties to terrorism and/or international narcotics trafficking.
The Treasury Department and other branches of the federal government necessarily frown upon doing business with known terrorists and international drug rings. Federal law prohibits engaging in any financial transactions with people on the list – which includes sending out settlement checks. If you knowingly transact with someone on the list, “penalties . . . can include fines ranging up to $20 million and imprisonment up to 30 years.” Even inadvertent violations can incur civil penalties “ranging up to $65,000 for each violation.”
Fines and prison sentences aside, do you really want to explain to your client that the settlement check you just sent out helped fund a terrorist network in Yemen or a drug trafficking ring in Sinaloa? Anyone practicing Workers Compensation is familiar with claims made by undocumented workers. Although not politically correct, some names may trigger greater scrutiny to make sure that your client isn’t about to settle with a “Specially Designated National.”
iii. Any Easy Win
If the claimant is on the Specially Designated Nationals list – in addition to saving your client from fines and a federal investigation – you will also win your case. The Treasury regulations specifically provide that, if a workers compensation claimant is a designated on the Specially Designated Nationals list, “that person’s coverage is blocked, and if he or she makes a claim under the policy, the claim cannot be paid.”
Check the list, file a motion with the court, and win your case. It is now 11 a.m. on Monday morning. Two hours ago you knew that your client had one problem – a verified claim for continuing disability with no liability defenses. You didn’t know about another issue – that paying the claim would expose them to civil penalties and a federal investigation. But now, you know that the second problem actually solves the first. A potential disaster turned into an easy win.
No matter what: “Don’t Settle with Terrorists.”
Written by: Robert Dunkelman, Pettiette Armand