Arizona state legislature passes new legislation improving the full and final settlement process

The Arizona state legislature recently passed new legislation aimed at dramatically improving the full and final settlement process. Although the initial version of the full and final settlement statute, A.R.S. 23-943.01(B), went into effect in November 2017, very few claims have been settled under the statute. This is due, in part, to the fact that the statute requires the Industrial Commission to determine a proposed settlement is “fair and reasonable” and in the “best interests of the claimant” before approving the agreement, and the Industrial Commission’s interpretation of these concepts made the process of getting a settlement approved very onerous.

On April 12, 2018, Arizona Governor Doug Ducey signed Senate Bill 1100 amending the initial full and final settlement statute. Under the amended statute, which goes into effect August 4, 2018, the Industrial Commission will no longer be responsible for determining if a proposed settlement is in the “best interests of the claimant.” Instead, if the necessary information is provided, the objective requirements are satisfied, and the mandatory attestations are made, the Industrial Commission must approve the proposed settlement.

The amended full and final statute also brings a few other key changes. The original statute required the agreement to be signed by the carrier, special fund, or self-insured employer. The revised statute provides clarity that the signature of an authorized representative (e.g. attorney) is also sufficient. The amendment also now requires the parties to attest not only that they conducted a search for and took reasonable steps to satisfy and identify medical liens, but also any unpaid medical charges. Similar to our traditional compromise and settlement agreements, under the amendment, the parties must attest that no coercion, duress, fraud, misrepresentation or undisclosed additional agreements were used to achieve the full and final settlement. The revision also now expressly requires disclosure of the amount of the settlement addressing future medical benefits.

The passing of the original full and final settlement in November 2017 was a landmark development in Arizona’s workers’ compensation framework. Starting August 4, 2018, the revisions provided under the amended statute are expected to streamline the ICA approval process and allow the parties more flexibility to negotiate the terms of a full and final settlement.