ALASKA WORKERS' COMPENSATION BOARD
P.O. Box 25512 Juneau, Alaska 99802-5512
JOHN ROSENDAHL, ) ) Employee, ) DECISION AND ORDER Applicant, ) ) AWCB Case No. 8522463 v. ) ) AWCB Decision No. 90-0018 CHANDLER PLUMBING & HEATING, INC) ) Filed with AWCB Fairbanks Employer, ) February 2, 1990 ) and ) ) INDUSTRIAL INDEMNITY COMPANY ) OF ALASKA, ) ) Insurer, ) Defendants. ) )
We heard this request for approval of a proposed Compromise and Release on January 30, 1990 in Fairbanks, Alaska. The employee appeared and represented himself. Attorney Michael Budzinski represented the employer and insurer. We kept the record open following the hearing to receive additional evidence concerning the employee's medical condition and insurance coverage. We closed the record when we met in a special session on February 2, 1990.
ISSUE
Should we approve the proposed Compromise and Release under AS 23.30.012?
SUMMARY OF THE EVIDENCE
The employee tore the medial meniscus in his right knee when, he slipped on a pipe on April 25, 1983 while working as an expeditor for the employer, and reinjured the knee at home on August 25, 1985. He underwent several surgical procedures and was rated with a 15 percent impairment to the right leg by John Joosse, M.D., on September 12, 1989.
While incarcerated at the state prison in Palmer, Alaska in the fall and early winter of 1989, the employee suffered a heart attack unrelated to his work injury. He underwent quadruple by-pass heart surgery on September 29, 1989. The medical expenses for this surgery and care were paid by the Alaska Department of Corrections. Because the employee's rib cage failed to knit properly following this procedure, he had to undergo additional chest surgery on Friday, January 26, 1989, four days before the hearing. The employee testified that his surgeon rated him as disabled for purposes of federal Social Security supplementary benefits and state Adult Public Assistance, which triggered the employee's entitlement to state Medicaid coverage for his second chest surgery and its follow-up treatment. 42 USC §1396a (10)(A)(ii)(IV).
The employee testified that he has a standing job offer to start work as a parts man for Interior Towing and Salvage when his treating surgeon releases him to return to work following his recuperation from chest surgery. The parties dispute whether his present knee problems are the result of a general degenerative condition or his work injury. They now propose a Compromise and Release agreement to settle the employee's entitlement to all benefits, except for medical benefits, for a lump-sum of $25,000.00.
We continued the hearing under 8 AAC 45.070(a), keeping the record open in order to obtain more evidence concerning the medical prognosis for the employee's heart condition, and concerning his entitlement to Medicaid benefits or entitlement to continued medical coverage by the Department of Correction. On February 2, 1990 the employer submitted a letter dated January 31, 1990 from the employee's cardiac surgeon, R. Leighton Fisk, M.D., in which Dr. Fisk briefly discussed the heart and chest surgeries and suggested that, barring intervening complications, the employee should soon return to employable status. In a cover letter the employer indicated that the Department of Corrections had refused further coverage for the employee's heart condition.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
AS 23.30.012 provides:
At any time after death, or after 30 days subsequent to the date of the injury, the employer and the employee . . . have the right to reach an agreement in regard to a claim for injury or death under this chapter in accordance with the applicable schedule in this chapter, but a memorandum of the agreement in a form prescribed by the board shall be filed with the board. Otherwise, the agreement is void for any purpose. If approved by the board, the agreement is enforceable the same as an order of award of the board and discharges the liability of the employer for the compensation notwithstanding the provisions of AS 23.30.130, 23.30,160, and 23.30.245. The agreement shall be approved by the board only when the terms conform to the provisions of this chapter and, if it involves or is likely to involve permanent disability, the board may require an impartial medical examination and hearing in order to determine whether or not to approve the agreement. The board may approve lump-sum settlements when it appears to be in the best interest of the employee or beneficiary or beneficiaries.
8 AAC 45.160(a), (d), and (e) provide:
(a) The board will review settlement agreements which provide for the payment of compensation due or to become due and which undertake to release the employer form any or all future liability. Settlement agreements will be approved by the board only where a dispute exists concerning the rights of the parties or where clear and convincing evidence demonstrates that approval would be for the best interests of the employee or his beneficiaries.
. . . .
(d) The board will inquire into the adequacy of all agreed settlements and will, in its discretion, set the matter for hearing to determine whether an agreement should be approved or disapproved. Agreed settlements between the employer and the employee or other persons claiming benefits under the Act are not final until approved by the board.
(e) Agreed settlements in which the employee waives medical benefits or benefits during rehabilitation training are presumed unreasonable and will not be approved absent a showing that the waiver is in the employee's best interests. In addition, lump-sum settlements of board-ordered permanent total disability claims are presumed unreasonable and will not be approved absent a showing that the lump sum settlement is in the employee's best interests.
Regarding settlements, Professor Larson recommends:
Apart from variations in the language of the statutes applied in these cases, which undoubtedly account in part for the disparity in results, the underlying issue is once more the choice between viewing a compensation claim as a sort of private tort right and recognizing the social-protection charter of the compensation system. If one thinks of a compensation claim as a private, personal, adversary money claim against the particular employer and his insurance carrier, one will go on to conclude, as the Kansas court did, that "workmen are not in any respect under guardianship or other disability; they and their employers are free agents; they may release their employers from liability for injuries on any agreed terms set forth." What this overlooks is that the entire compensation system has been set up and paid for, not by the parties, but by the public. The public has ultimately borne the cost of compensation protection in the price of the product, and it has done so for the specific purpose of avoiding having the disabled victims of industry thrown on private charity or public relief. To this end, the public has enacted into law a scale of benefits that will forestall such destitution. It follows, then, that the employer and employee had no private right to thwart this objective. . . .
3 A. Larson, Workmen's Compensation Law, Section 82.41, pp. 15-1204 to 15-1205 (1983).
We have two specific concerns over this proposed settlement. First, the employee is not yet medically stable from his heart surgery; second, his Medicare coverage for his heart condition may be adversely affected by his receipt of a lump-sum settlement. Social Security disability benefits and the related Medicaid benefits have a means test for eligibility. The employee would not be eligible for continued Medicaid coverage for his heart condition during any month in which his combined income and assets are greater than $2,000.00. 42 USC 1382 (1) (B). 42 USC 1382e (b)(1).
It appears that the lump-sum settlement would disqualify him from Medicaid coverage until he had consumed the money. Given that he is in the process of recovering from heart surgery, the possibility of astronomical medical expenses remains. We find the terms of settlement in and of themselves to be reasonable, absent the heart condition. Nevertheless, considering his potential medical liability, his lack of medical stability, and his restriction from work, we cannot find that this settlement is in his best interest at this time. We conclude that we must reject it. Pursuant to AS 23.30.130 we will retain jurisdiction for one year to reconsider this decision if the parties should be able to show a relevant change in the employee's condition during that period.
ORDER
The Compromise and Release between the parties proposed under AS 23.30.012 is denied. We retain jurisdiction over the Compromise and Release and over this decision pursuant to AS 23.30.130.
DATED at Fairbanks, Alaska, this 2nd day of February, 1990.
ALASKA WORKERS' COMPENSATION BOARD
/s/ William S.L. Walters
William S.L. Walters, Designated Chairman
/s/ Joe J. Thomas
Joe J. Thomas, Member
/s/ Steve M. Thompson
Steve M. Thompson, Member
WSLW/ml
If compensation is payable under terms of this decision, it is due on the date of issue and penalty of 20 percent will accrue if not paid within 14 days of the due date unless interlocutory order staying payment is obtained in Superior Court.
APPEAL PROCEDURES
A compensation order may be appealed through proceedings in the Superior Court brought by a party in interest against the Board and all other parties to the proceedings before the Board, as provided in the Rules of Appellate Procedure of the State of Alaska,
A compensation order becomes effective when filed in the office of the Board, and unless proceedings to appeal it are instituted, it becomes final on the 31st day after it is filed.
CERTIFICATION
I hereby certify that the foregoing is a full, true and correct copy of the Decision and Order in the matter of John Rosendahl, employee/applicant; v. Chandler Plumbing & Heating, employer; and Industrial Indemnity Company of Alaska, insurer/defendants; Case No. 8522463; dated and filed in the office of the Alaska Workers' Compensation Board at Fairbanks, Alaska this 2nd day of February 1990.
Clerk
SNO