Industrial Commission Mediation Update

By John C. Schafer
Mediation Coordinator
N.C. Industrial Commission

As most of you are already aware Frank Laney recently stepped down as the mediation coordinator for the North Carolina Industrial Commission, and is now working with the Federal Appellate Mediation Program, directed by Harry Martin. Frank did an outstanding job of getting the Commission's mediation program started, and I personally appreciate the time and effort he expended to make the transition for me in taking over his former position as smooth as possible. Although I already know many of the attorneys, mediators, carrier representatives and others who are involved in workers comp cases, if you are in the Dobbs Building and have a few minutes to spare, please stop by my office for a quick visit. Also, anyone who has any questions, or needs any information, is more than welcome to call me at your convenience.

Since the Commission's mediation program has thus far been very successful, many of the program's practices and procedures will remain the same. However, as we complete our review of the Institute of Government's evaluation of the Commission's pilot mediation program, monitor the effects of sending all cases to mediation, and respond to other concerns and issues as they arise, some of those practices and procedures may be modified.

Institute of Government's Evaluation of Pilot Program

On behalf of the Institute of Government (IOG), Stevens H. Clarke and Kelly A. McCormick performed an evaluation of the Commission's pilot mediation program. A control group of cases was compared to a mediation group of 349 cases in which requests for hearing were filed during the period from September of 1994 through November 23, 1995. The study evaluated the views of attorneys and mediators toward the mediation program, and the effects of mediation on the mode of disposition of cases and the disposition time. The study did not evaluate the effect of mediation on the costs incurred by the parties, or the effect on the views of the parties who were given an opportunity to participate in mediated settlement conferences.

The data compiled by the IOG supports the effectiveness of the Commission's pilot mediation program. First, the IOG study noted that "[a]ttorneys and certified mediators responding to a survey generally expressed favorable views toward the mediation program." Second, despite the fact that the median time from hearing request to disposition in cases that went to hearings was longer in the mediation group (629 days) than in the control group (557 days), the overall median disposition time was considerably shorter in the mediation group (312 days) than it was in the control group (372 days). Third, "the program reduced the proportion of cases going to a single-commissioner hearing by one-fourth, lowering the hearing rate from 35.4% in the control group to 27.2% in the mediation group." Settlements were reached in 64.4% of the cases that were mediated, and a substantial number of cases continued to be settled outside of mediation. By way of comparison, the IOG's 1995 evaluation of the Superior Court MSC program concluded that the program did not appear to affect the probability of settlement or the trial rate in comparison with the control group in that study.

The IOG's evaluation of the Commission's pilot mediation program concluded that the program "made progress toward its goal of resolving cases more quickly and efficiently for the parties and reducing the Commission's workload." With regard to improving the effectiveness of the program, the study suggested that it may be possible to do so by increasing the volume of cases assigned to mediation, and by granting excuses from mediation orders less often. Copies of the IOG study can be obtained by contacting the IOG Publications Sales Office at (919)-966-2707.

Current Status of Commission's Mediation Program

Since October of 1996, the Commission has entered mediation orders in all cases, including cases involving claims asserted by persons not represented by counsel, and claims against uninsured employers. It should be pointed out that Professor Clarke and Ms. McCormick concluded that increased participation in the Commission's mediation program might improve its overall effectiveness prior to learning that the Commission had already committed itself to entering mediation orders in all cases. Nevertheless, many persons believed that including what were considered to be the difficult-to-mediate groups of cases in the mediation caseload would significantly reduce the rates of settlement achieved in the mediation program. The statistics compiled thus far for the 1996-1997 fiscal year indicate, however, that the mediation settlement rates have continued to be very impressive despite the fact that mediation orders are entered in all cases, and despite the fact that motions to dispense are not routinely granted.

The Commission's 1996-1997 fiscal year began on July 1, 1996 and extends through June 30,1997. The most current statistics indicate that mediated settlement conferences have been completed in a total of 663 cases wherein requests for hearing were filed in the 1996-1997 fiscal year. This includes 138 cases ordered to mediation prior to October of 1996, 307 cases ordered to mediation in or after October of 1996 upon the request of one or both parties, and 218 cases ordered to mediation by automatic referral. The mediation settlement rate in the 218 cases ordered to mediation by automatic referral is 63.8%, only slightly lower than the 70.6% mediation settlement rate in the other cases during this time period.

The overall participation in the Commission's mediation program has been increased significantly since the pilot program was commenced in 1994. The mediation group in the IOG's study constituted only 5.8% of the total number of cases in which hearing requests were filed during 1994. In addition, motions to dispense with mediation were allowed in 28.4% of the cases in the mediation group, and mediation conferences were actually held in only 163 cases, or 47.6% of the cases in the mediation group. In contrast, although the statistics concerning the 1996-1997 fiscal year are obviously not yet final, motions to dispense have been allowed in only 16% of the cases ordered to mediation, including 21.5% of the cases automatically referred to mediation, and in only 8.8% of the remaining cases. Mediation conferences have already been held in 34.75% of the cases, and 49.25% of the cases are still pending.

The effect of the mediation program on appeals from the Commission to the N.C. Court of Appeals, and the resulting effect on the disposition time of such cases, was not considered to be statistically significant for purposes of the IOG's study of the 1994 pilot program. However, it is interesting to note that the number of cases heard on appeal from the Commission to the N.C. Court of Appeals was reduced from 153 in 1995 to 107 in 1996. While we have not yet attempted to determine what portion of this reduction in appeals can be attributed to the mediation program, one obvious effect of the disposition of a case in mediation, as opposed to the disposition of a case pursuant to a Deputy Commissioner's opinion and award, is that a mediated settlement eliminates the need for any further proceedings on appeal.

Modifications to Appointment/Dispense Orders

All mediators and attorneys in workers comp and state tort cases need to remember that the $100 administration fee and the $100 per hour mediation fee set forth in the rules are the default rates for the mediators appointed by the Commission when the parties are unable to agree upon the selection of a mediator within the applicable time periods. It is obviously important for the mediator and the parties to have a clear understanding and agreement with regard to the fees and costs to be charged by the mediator, and if the fees and costs to be charged are in any way different from the default rates, the agreement concerning such fees and costs should be finalized in writing as soon as possible after the mediator has been appointed. For example, some mediators may want to charge a mediation and/or administration fee in excess of $100, or charge a cancellation fee for mediation conferences that are canceled or rescheduled, or charge for travel time or other related costs. On the other hand, some mediators do not charge any administration fee if the case is not actually mediated. In the absence of a contrary agreement between the mediator and the parties, all mediators appointed by the Commission are bound by the above default rates.

The Commission's orders concerning the appointment of mediators and orders dispensing with mediation have been modified to clarify that the above default rates will apply "unless the parties and the mediator otherwise agree with regard to the payment or the amount." In addition, the appointment orders have also been modified to provide that the settlement of a case prior to mediation will eliminate the parties' responsibility for the administration fee only if the mediator is given at least seven (7) days notice prior to the scheduled date of the mediation conference.

Motions to dispense with mediation typically will be denied unless the non-moving party does not object, or if the moving party is a pro se plaintiff. If the motion is not timely submitted (within the 21 or 55 day period specified in the mediation order, or after the appointment of a mediator if one party has waived the right to select the mediator),but is nevertheless allowed, the $100 administration fee will usually be allocated as follows. If the moving party is a pro se plaintiff, or the non-moving party consents to the motion, or agrees that mediation would not be appropriate, the fee will be charged to both parties. Otherwise, the administration fee will be charged to the moving party. Since a substitute mediator will almost never be appointed without the consent of both parties, the original mediator's administration fee will be charged to both parties.

Expediting the Mediation Process

There are several ways to expedite the mediation process so that cases can be resolved as quickly as possible. If your case is referred to mediation and you know that the parties will not be able to agree on the selection of a mediator, call my office and let me know that you waive the right to select a mediator by consent so that I can go ahead and appoint a mediator for your case. Likewise, if you intend to seek an extension of time for the selection of a mediator or the completion of a mediated settlement conference, or if you intend to file a motion to dispense with mediation, you should attempt to contact the opposing party's attorney and advise me of that party's position.

Extensions of time are liberally granted if requested by the mediator or if requested by both parties. If a mediation conference is scheduled on a date after the completion date, I will extend the completion date to that date or a few days thereafter. Requests for extensions of time for the selection of a mediator can be made by telephone but, in order to avoid unnecessary delays, in the absence of the opposing party's consent such extensions will typically not exceed seven (7) days. Unless the other party consents, motions to dispense with mediation made by any party other than a pro se plaintiff must be in writing and will be held for ten (10) days plus three (3) days for mailing, or until a response is actually received, whichever occurs first.

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