Death Before Compromise and Release Approval

Friday, December 20, 2013 | 0

Your humble blogger was at a certain Bay Area board recently, zealously advocating for his client's interests, when he overheard a not unheard-of factual scenario:

Applicant enters into a compromise and release agreement with defendant.  The compromise and release includes funds to cover temporary disability, permanent disability, and future medical treatment.  Applicant drags his feet signing the document, but does sign it eventually.  Applicant's counsel drags his feet getting the documents to the defense, but does forward it eventually‚ just to have applicant pass away without the C&R being filed or approved.

Now, the state of our medical technology is nothing to look down upon‚ we have skilled physicians and effective medicines, wonderful diagnostic technology and borderline-magical surgical equipment.  But even all this cannot provide any treatment to the recently deceased that is reasonable to cure or relieve from the effects of the injury.  Also, once someone passes away, their condition can be described, even by a lay man, as "permanent and stationary‚" or having reached "maximum medical improvement."

So, should the defendant still be held to paying out for temporary disability benefits as well as future medical treatment in this compromise and release?

Traditionally, case-law has held that a C&R is a contractual, binding agreement, although the Supreme Court did affirm the Board's rescission of the agreement based on the intervening death of the injured worker.  (See Chavez v. I.A.C. (1958) 23 Cal.Comp.Cases 38).

Ok, now get ready to mumble things like, "this your first day as a comp attorney?"

Your humble blogger wishes all his wishes for the Workers' Compensation Appeals Board to be staffed with impartial judges.  This is not always the case, because Judges are human and sometimes have their predispositions towards one side or another, but generally speaking WCJs give everyone a fair shake in applying the law.

That being said, the WCJ is not there to rubber-stamp settlements, but to provide an additional check to make sure the settlement terms are adequate.  So, if the WCJ can be bothered to review the settlement terms to make sure they are adequate in compensating the injured worker, why not make sure that the settlement terms do not unfairly prejudice the defense as well?

Or, if we can count on that, how about this: when entering into a compromise and release agreement, include the following, self-executing language (you can stick this into Paragraph 9):

"In the event that the applicant should expire, die, or pass away for any reason prior to the approval of this Compromise and Release by the Workers' Compensation Appeals Board, defendant will have the option of withdrawing from this agreement."

So why bother doing it like this?  Well, think about it, if you are entering into a compromise and release, it's entirely possible that death benefits, if the death is even in part industrially caused, would be greater than the compromise and release amount (especially if you need to factor in an Medicare set-aside).  So, any enterprising (and soul-less) applicants' attorney will be hoping that his or her client dies if a death benefit would be greater than the C&R amount (what's $50,000 for a compromise and release compared to $250,000 in death benefits?)

So, if you enter this language (and the applicant agrees) you might just find yourself protected in the event of an unfortunate death, and get to pay the cheaper of the two benefits (either death benefits or C&R). Then again, if the death is not industrially caused, you might find yourself even better off, by not having to pay either.

But be wary too. An applicants' attorney may want to make you throw in some more money to leave that clause in there.  Practically, though, it is such an unlikely scenario, that it might stick for free.

Gregory Grinberg is a workers' compensation defense attorney in San Francisco. This column was reprinted with his permission from his California Workers' Compensation Defense blog.