Diamonds Are Forever, Settlements May Be too

Friday, April 17, 2015 | 0

A couple of settlement cases across the country provided some insight last month, and WorkCompCentral reported on both of them. In the first, review of a settlement was denied, and the settlement is permanent. In the second, an injured worker sought recovery from a former attorney and was denied.

On March 27, WCC reported that the U.S. Supreme Court had declined to review a pro-se injured worker's challenge to a settlement. The case originated in California where the injured worker entered into some stipulations. When she tried to set-aside those agreements, an administrative law judge concluded that she had not proven that would be appropriate.

There followed a series of reviews by the workers' compensation appeals board, the California appellate court and the California Supreme Court, concluding with the U.S. Supreme Court declining to review the case.

On March 31, WCC reported that a Pennsylvania injured worker's malpractice claim against his attorney could not proceed. There, the worker injured his back in 2005, and settled his case in 2008 while represented by an attorney. The worker later complained that he did not understand that this settlement would bar his receipt of future medical care.

In the Pennsylvania case, the worker sued his attorney, alleging that had he known the settlement would bar future medical care, he would not have entered into the agreement. The Pennsylvania court dismissed the case, holding the injured worker could not win unless he proved that "he was fraudulently induced to settle." The court concluded that the evidence did not show that the injured worker's agreement was not voluntary. There was evidence as to what he was told, and that he was afforded the chance to ask questions.

These two reports come from across the continent. A California case in which appeal after appeal sought to negate a worker's compensation settlement. A Pennsylvania case in which an injured worker was unable to hold an attorney responsible regarding a settlement. The suggestion that comes from these cases is that settlements may be forever, just like diamonds.

Settlement is an important consideration in any dispute. It affords the opportunity to both sides to cease hostilities and conflict. Mediators like to tell people that their process offers the chance to formulate their own resolution to their issues or their case. That is true enough.

These news stories suggest though that the time to ask questions about resolution is before the agreement is made. Ben Franklin said, "An ounce of prevention is worth a pound of cure." This was in the context of his idea that preventing fire "was preferable to rebuilding a burned city."

Litigation can be exhausting. Those who advocate alternative dispute resolution note as an advantage that agreements can be quicker than proceeding to trial. In that context, the purpose of entering a settlement may be to end the litigation and put the dispute to rest.

In both of these stories, however, the litigation did not end when agreements were entered. Certainly, it appears that the litigation ultimately concluded. But the California case apparently continued in litigation for at least a year after the settlement was signed. Documents were required from both sides at a hearing before an administrative law judge, then at the workers' compensation appeals board, the California appellate court, the California Supreme Court and the U.S. Supreme Court.

In the Pennsylvania case, there is more data available. That settlement was entered in 2008. In 2011, the worker filed a malpractice suit. In May 2013, the trial court dismissed the lawsuit. In March 2015, the appeals court affirmed that dismissal. That might be the end, or the appeals could continue as they did in the California case. But so far, the malpractice litigation has been ongoing for about four years, and the settlement of the workers' compensation case was seven years ago.

Neither of these resolutions resolved much immediately. Regardless of the ultimate outcome in these stories, a point worth considering is that years have been spent in rebuilding Ben Franklin's proverbial city in these cases – time and expense on all sides that might have been prevented or minimized with his "ounce of prevention."

Lawyers.com cautions us that contracts are all around us, that "we make them everyday." Its advice is "most contracts include information or clauses that should be read and understood before you sign." This is a critical point; before making the agreement, know what the details are, what the words and phrases mean, what you are giving up and what you are getting in return.

Since 2001, the Florida workers' compensation judges do not review details of settlements involving injured workers who have attorneys. Unrepresented settlements receive more scrutiny, and in my experience, judges of compensation claims ask some pointed questions about them. But in the represented settlement, the analysis is limited to attorney's fees and child support. It is critical that all sides read and understand the agreement before signing it.

David Langham is deputy chief judge of the Florida Office of Judges of Workers' Compensation Claims. This column was reprinted with his permission from his Florida Workers' Comp Adjudication blog.