Ambiguous MSA clause may spike settlement by $148K
The parties agreed and had approved a comp settlement for "$400,000 in a lump sum plus payment of a Medicare set aside...." but disagreed whether the Medicare set aside was included or represented an additional payment. The Court indicated the parties could have avoided ambiguity created by conflicting clauses by not using "plus" and using the phrase "which includes payment", citing as authority Vladimir Nabokov. Paluch v United Parcel Service, 2014 Il App. (1st) 130621 April 30 2014).
The only issue is whether the award had been paid, and the circuit required an evidentiary hearing for that determination. The circuit court in Cook County originally found that it had been paid, and then after a motion to consider found that it had not been paid, and now the matter is returned for further determination. The court rejected the contention from UPS that the contract unambiguously includes the MSA. Petitioner contends that it is entitled to an additional $181,580.96 because of the word "plus" which was inconsistent with a list of specific items in the agreement which suggested the MSA was included. The court considered the language in the social security rider was not regarded as part of the contract approved by the IWCC but created further ambiguity regarding the intent since it did not segregate any MSA allocation.
The parties at the time of the settlement of the original agreement had submitted the MSA proposal which was waiting CMS approval.
Commission finds dismissal of case undermines medical opinion
The expert relied upon a case which was dismissed as a basis for total disability, providing a basis to deny PTD liability. Sutton v Doe Run Company, 2013 Mo WCLR Lexis 113 (July 3, 2013).
Commission allows stipulation to address Schoemehl contingency
Claimant alleged occupational asthma from mold while working as an assistant bakery manager and obtained an award for total benefits against the second injury fund. The stipulation provided : "In the event that Employee, Peggy Conley, remains eligible for permanent total disability benefits until Employee’s death, Employee’s husband, Michael Conley, would be entitled to receive Employee’s permanent total disability benefits in the event he remains married to Employee until Employee’s death and Employee predeceases him. Michael Conley’s entitlement to permanent total disability benefits shall cease upon his death or remarriage." Conley v Schnucks Markets, DOLIR 3-28-2013.
See also: Seymour v MLS Construction, DOLIR 3-28-13, Soens v Huddle House, 2014 MO WCLR Lexis 1 (both approving similar language).
Employment release requires hearing
A former employee signed a contract for a severance package which included various releases including any claims for discrimination. The employer then sought to enforce the release as an affirmative defense to a pending claim of racial discrimination and retaliation and both parties requested an evidentiary hearing. The employee asserted that she was misinformed regarding the scope of the release. The circuit court dismissed the discrimination lawsuit without an evidentiary hearing.
The court of appeals found reversible error on procedural grounds that the circuit court dismissed the claim without granting an evidentiary hearing requested by both parties or providing notice that it intended to rule on the merits. The court did not reach the merits whether or not the contract was enforceable but indicated it could invoke principles of mutual or unilateral mistake or fraudulent inducement of contract. The court found the lack of notice to the parties "particularly troubling." The court notes that the settlement did not mention specifically the pending lawsuit, contain consideration different than other parties involved in the general reduction in force, and that litigation counsel were not even aware of, and did not appreciate the potential significance of, the agreement for several months after it was executed. Plaintiff asserted that "her claim that a Wells Fargo representative affirmatively represented to her that the Agreement and Release of Claims applied only to claims arising from the termination of her employment in the 2011 reduction in force. Jones’ belief that the Agreement applied only to her layoff, and not to any claims arising during her employment that were the subject of the pending lawsuit."
The decision is important for work comp practitioners as it highlights the difficulty drafting and enforcing general employment releases. Jones v Wells Fargo Auto Finance, WD 74558 (Mo. App. 11-13-12).
See also: Patco Transport Inc. v Estupian, 917 So. 2d 922 (Fla 1st DCA 2005) (clear and unambiguous language in circuit court PI settlement discharged work comp claim that had not been filed, argument that dismissal had not been "approved" by comp was less of an issue because of attorney representation and lower statutory scrutiny).
Party bound by settlement despite death while waiting approval
The court of appeals found a ‘deal was a deal’ and the employer was stuck with a joint proposal to settle a case for $181,434 to close out 24 years of benefits, even though claimant died the day the motion for commutation was submitted for approval. Nance, dec. v Maxon Electric, 395 S.W.3d 527 (Mo. Ct. 2012); 2012 Mo App. Lexis 1401.
The Court of appeals reversed the Commission, which had agreed with the employer that it had no authority under §287.390 or §287.530 to approve the proposed settlement to commute a PTD award.
Section 287.390 relates to compromise settlements. The Court found the statutory phrase “any dispute or claim” did not limit its applications to settlement of the original claim and that the terms for approval applied in this case. Section 287.390 was modified for 2005 amendments which limit the discretion of the Commission to reject settlements. The court found that amendment was procedural and applied retroactively, and the Commission had limited authority to reject a proposed settlement in this pre-reform case. “The Commission shall approve a settlement agreement as valid and enforceable as long as (1) the settlement is not the result of undue influence or fraud, (2) the employee fully understands his or her rights and benefits, and (3) the employee voluntarily agrees to accept the terms of the agreement.” The court finds “we interpret the post-2005 version of section 287.390 to mean that the Commission does not have discretion to reject the parties' settlement agreement if it meets the three above requirements, unless it finds that the agreement was the result of undue influence or fraud or that the employee did not understand his or her rights and benefits or did not voluntarily agree to accept the terms of the agreement." No such findings were made in this case.
Section 287.530 grants the authority of the Commission to commute future PTD payments into a lump sum, even if the application comes after the award is final. The employer argues §287.530 require the commission must consider the commutable value whether to approve or disapprove a settlement and the commutable value is zero after claimant’s death. The court found that 287.390 procedures governed approval in this case, and even §287.530 contemplated wide discretion to determine “value” and that a dependent's interests could be considered whether to proceed with commutation. The court suggests either party may have considered the "value" of any potential Schoemehl issues that could have been asserted by the spouse, although the issue was never raised.
The court found that §287.470 allowed authority to modify an award based on a change of condition but concluded claimant’s diagnosis of end-stage cancer did not trigger this application because the change did not flow from the accident. The award for PTD was based on scleroderma and Reynaud's arising from claimant's work as a grinder. The employer offered to settle the case in May 2011, and claimant was diagnosed with end-state cancer in June. The employer stipulated it was aware of the diagnosis before submitting the joint motion in August 2011 and resubmitting the motion in October 2011. The employer’s offer had actually exceeded the projected life expectancy even without consideration of the cancer diagnosis.
The employer had paid benefits for 18 years since the 1993 award and had tried unsuccessfully after the award to close the case as a commutable settlement. The original request in 1994 was not considered in the best interest of the parties. The request in August 2011 had been rejected procedurally for trying to modify the award rather than commute it.
Settlement shuts down second claim
Claimant cannot pursue a second claim alleging new injuries caused by physical therapy because the Division lacks jurisdiction after claimant settled the first accident which caused the need for treatment. Meinczinger v Harrah's Casino, 367 S.W.3d 666 (Mo. Ct. App. 2012).
Claimant in 2002 hurt her left knee and about 6 years later in October 2008 she settled the case for 50% of the knee. This appeal involves a fight over a second claim filed in July 2008, months before settling the case, alleging she sustained further injuries to the hip and opposite knee during physical therapy for the primary injury. The Division opened a second file which resulted in a hearing and appeals addressing the issue of jurisdiction. This case involved the narrow issue of new injuries sustained during authorized treatment. The court of appeals affirmed a decision of the commission that the Division lost jurisdiction by settlement in these circumstances when the injuries identified in the second claim were a natural and probable consequence of the first accident. The settlement documents indicated claimant was forever closing out the 2002 case but the contract did not expressly reference the second claim.
Judge Romines in a dissent argued that the majority misapplied the law because there was no clear statutory authority to support a lack of jurisdiction and noted that the employer was aware of the second pending case at the time it settled the first case.
Hon. Crane (Div. 2)
Atty: Leeds, Hecht
PPD Settlement did not "prove" prior disability
Claimant had a prior back surgery and settlement and a few years later sustained another work injury resulting in back injury and surgeries at L4-5 and L4-S1 and the issue was whether claimant was PTD as a result of the last accident alone or in combination with the pre-existing condition. The ALJ found Fund liability noting the prior settlement and expert opinons which supported Fund liability.
The Commission reversed an award against the Fund and found no prior disability noting claimant had resumed heavy labor and testified to no ongoing symptoms until his 2000 accident which produced severe functional restrictions following a single level discectomy by Dr. Brophy and a subsequent 2-level fusion by Dr. Gornet. Claimant's expert testified that claimant's prior medical condition made a re-injury potentially more severe but the Comission noted to fully explain how the prior condition was "disabling". The employer's expert concluded claimant could perform light duty work but attributed 30% new disability and supported future medical to wean claimant from narcotics. Ward v Walmart, 2012 Mo WCLR Lexis 158.
Atty Rau, Early
Experts: Gornet, Volarich, England, DeGrange
No collateral estoppel against Fund for settlement with employer
Claimant could not assert the second injury fund was bound by the terms of a settlement when it was not a party to the settlement. The fund was not required to introduce any medical evidence to challenge claimant's expert, and the Commission's rejection of the expert was founded in evidence when the expert was impeached regarding his understanding of the nature of claimant's job activities. Seifner v Treasurer of the State of Mo., 362 S.W.3d 69 (Mo. App. 2012)
The Second District rejects summary judgment for the employer in a fight whether a 2002 comp settlement to keep medical open for 1 year to the back included $190,000 in subsequent medical bills for a staph infection at the heart. The case is Gassner v Raynor Manufacturing Co., 948 N.E. 315 (Ill. App. 2011), 2011 Ill. App. LEXIS 399.
The case has important lessons for anyone drafting settlement language addressing the scope of future medical care. The claimant treated for a back fusion and developed a staph infection and settled the primary case with the provision to keep medical open for 1 year "for treatment to the low back." The employer paid $24,000 in medical after the settlement, but disputed the provision required payment of an additional $190,000.
The court concluded summary judgment was improper under a four corners analysis because the phrase "to the low back" was ambiguous and required parol evidence for its interpretation. The release left disputed facts regarding the intent of the parties and if the staph infection for the heart after 2002 was the same infection related to the earlier back surgery. The court notes that the release did not indicate "treatment" for the back was limited to orthopedic care and "should have so stated" if the employer, who knew about a prior staph infection, wanted to exclude care for staph.
Claimant filed for petition to the trial court in 2008, about 6 years after the original settlement. The case lingered for about 4 years after it was originally appealed to the commission for review under 19(h), when the Commission concluded it lacked jurisdiction. The court concluded that the appeal was timely under a 10 year statute of limitations for contract cases.
In Shepard v Yellow Transportation, 2011 MoWCLR Lexis 31, the Commission reversed a SIF award for disability, noting the ALJ's finding of 14% disability for a prior concussion was not supported by the evidence, and modified the award of to 5% based on Dr. Volarich's rating, noting the absence of any records to support any diagnosis of concussion. The Commission decision contains a long discussion that a settlement amount is not controlling whether or not the claimant can pursue a second injury fund claim and the Commission is not bound by such stipulations. The Commission concluded that pre-reform cases required an administrative law judge to approve only cases "in accordance to the law" and allowed an inference that an administrative law judge reviewed the amount of the settlement, consistent with Conley. The commission found the post-reform changes to 287.390 no longer allowed this assumption because the standard for approving contracts changed.
Atty: Martin, Frazier
Experts: Volarich, England
The commission reversed a denial of benefits against the second injury fund, and found claimant to be permanently and totally disabled because he hurt himself again getting up from a couch from home after a back surgery. The case is Edwards v Honeywell, 2011 MoWCLR Lexis 16. The Commission rejected the Fund's defense that claimant had no pre-existing disability because he was performing extremely heavy work leading up to his primary accident when he hurt his back rolling paper. His expert had rated disability to the neck and elbow, including a childhood arm injury. The focus is how disability may combine in the future. The Commission disregards a settlement of 15-16% of the back on the primary case, and disregards comments in the settlement agreement apparently addressing causation of the second accident at home (the award is not published). The Commission finds claimant 40% disabled on the primary case and awards benefits from the Fund for permanent and total disability. Claimant's expert found claimant hurt himself again at home as a consequence of the original accident, and after the second accident he was told he might require more surgery. The administrative law judge agreed that claimant was totally disabled, but found the cause not compensable because claimant hurt himself at home ten months after claimant's back surgery getting up from a couch. In addition, the administrative law judge relied upon a comment in the original settlement agreement apparently addressing causation. The Commission found the couch accident flowed from the original accident, based on unrefuted testimony from claimant's expert. The Commission considered a 'stray' comment in a settlement document not as important as the opinion of claimant's expert (unrefuted as the fund offered no experts whatsoever).
Experts Cordray, Stuckmeyer
Pending MSA issues render settlement incomplete
The Commission originally affirmed an award of permanent partial disability arising from a 2002 accident with the city of St. Louis, and when the case was remanded the Commission flip-flopped and found the city liable for total disability. The court of appeals rejected the city's argument that the Commission lacked authority to change its original findings on the same set of facts, but the court found the claimant properly preserved the issue of PTD in its appeal and the mandate reversed all of the original findings of permanent partial.
The case has an intriguing procedural history as the claimant originally appealed the case to set aside an ALJ finding of disability of about $56,000, in order to enforce an oral settlement prior to the award of $200,000. The employer successfully appealed the revised $200,000 award on the findings that the parties did not have a meeting of the minds regarding specific terms of the settlement (MSA issue remained pending), only to have the Commission then change the award again from $200,000 to perm total, with back weekly benefits of $566 since 2004, with likely exposure far in excess of $200,000. The case is Roberts v City of St. Louis, 292 S.W.3d 566 (Mo. App. 2009).
Pending social security provisions renders settlement unenforceable
Claimant, 63, accepted a $15,000 offer to settle a second injury fund claim alleging permanent and total disability, but the court refused to enforce the agreement, citing section 287.390.1. Claimant claimed various pre-existing injuries including Charcot's, which he states combined with with his primary injury to the back, that he settled with the employer for 15%.The court of appeals, affirming the Commission, found the agreement was not complete since it was still dependent on preparing social security offset language and the second injury fund failed to show that claimant fully understood his rights. Claimant was represented by counsel on the day of the settlement hearing but refused to sign the documents the next day. The court noted that claimant was never asked if he understood his rights and the consequences of entering into a settlement agreement; nor did Mr. Vincent proffer any statement or affirm he understood his rights and the consequences of entering into a settlement agreement. Similarly, Mr. Vincent did not acknowledge or affirm that he was entering into the settlement agreement without any undue influence. Claimant did not "fully understand his rights", even though claimant's counsel recites as part of the settlement hearing transcript that he spent an hour discussing settlement options before claimant accepted the $15,000. The record suggests claimant had been represented by at least 3 different attorneys following the 2000 accident and states he was told once the case was worth $240,000. The decision reaches an absurd result that a represented party apparently upset with his attorney's advice cannot be assumed to understand the language in the state prepared settlement form and now needs to have it read aloud in court as part of a settlement process.The case is Vincent v Missouri State Treasurer as Custodian of the Second Injury Fund, 287 S.W.3d 715 (Mo. App. 2009).
Intent not to pay certain medical bills must be expressed
In Hagene v Derek Polling Construction, No. 5-07-0225 (5th Dist. IL. App. 2-24-09). the petitioner through counsel accepted a settlement for permanent partial disability, agreed that disputes included past, future and hospital bills, and agreed that he submitted all bills prior to the approval of the settlement. The contract did not itemize any unpaid bills and omitted 3 unpaid charges to a doctor and surgery center representing nearly$20,000 in unpaid charges. The court concluded the employer could never have intended not to pay the bills.
The right to medical bills is the "very heart" of the worker's compensation act, and that because it is an important right at issue an explicit manifestation of intent is required before the right in question can be deemed waived. The employer stated the bills were in dispute but did not expressly state that the causal relationship of the bills were also in dispute. The employer argued the petitioner waived any claim of reimbursement by accepting the settlement. The employer conceded that the bills were reasonable and had represented on the contract it had paid all of the medical bills, even though payment was listed as a disputed item.
The case highlights the importance of careful drafting, which ultimately cost the employer another $20,000 four years after the employer likely thought the settlement was a done deal. Simply putting medical bills in "dispute" does not guarantee in Illinois a waiver of rights without an explicit waiver, and a court may reform a contract years later if there are arguably inconsistent representations. Missouri employers should pay close attention to the willingness of courts to reform contracts.