PETER J. SCHIEL,		)
				)
Employee,			)	DECISION AND ORDER
Applicant,			)	AWCB Case No. 8531798
v.				)	AWCB Decision No. 90-0061
				)
NORTHERN OILFIELD SERVICES,	)	Filed with AWCB Anchorage
				)	April 4, 1990
Employer,			)
				)
and				)
INDUSTRIAL INDEMNITY,		)
				)
Insurer,			)
Defendants.			)
				)

This claim was heard at Anchorage, Alaska, on March 22, 1990. Employee telephonically attended the hearing and was represented by attorney Chancy Croft. Defendants were represented by attorney Susan Daniels. The record closed at the end of the hearing.

Based on the evidence of record and assuming Employee's offer of proof were true, has Employee proved that the agreed settlement which we approved November 13, 1986, should be set aside?

We are hearing Employee's request to set aside an approved compromise and release (C&R) in a bifurcated proceeding. At this hearing Employee submitted an offer of proof in support of his request to set aside the C&R. We are to assume that the facts alleged in the offer are true and are the best evidence Employee could possibly produce in support of his request. Based on the evidence available and the law, we are to decide whether there is justification for setting aside the C&R. If we ruled in Employee's favor, this case would proceed to a hearing where Employee would have to prove the facts stated in the offer of proof, Defendants would be given an opportunity to present contradictory evidence, and then we would actually determine whether the C&R should be set aside. This bifurcated procedure was established in an effort to reduce all parties, expenses and to expedite the case, and we find it was a very appropriate way to handle this particular case.

Having considered the law and the evidence, we find that even if Employee could prove all the facts alleged, he has not justified setting aside the C&R. Therefore, this will be a final decision, appealable to Superior Court, and no other hearings will be held by us unless the court directs us to do so.

Employee alleged he was injured in the course and scope of his employment on November 6, 1985, after breathing battery acid fumes and vehicle exhaust. At that time Employee was 54 years old. He claimed the exposure to fumes and exhaust caused or aggravated his chronic obstructive lung disease. Employee was released to return to work on November 27, 1985. He returned to work but stopped working in December 1985. Defendants did not pay Employee any benefits. Instead, they controverted his claim on February 10, 1986, and again on May 15, 1986. Employee retained an attorney to assist him with his claim. (C&R at 1).

In October 1986, Employee entered into the C&R. In addition to reciting the facts stated above, the C&R also stated in part:

(Id. at 2)

In order to resolve their disputes, Defendants agreed to pay Employee $25,000 in return for a release of his claims. The C&R stated:

(Id. at 4).

Employee signed this agreement on October 17, 1986, and we approved it on November 13, 1986. (Id. at 4 - 5).

At the time Employee agreed to settle his claim, he had been treated by several doctors, among them were Robert Cash, M.D., and Scott Pace, M.D. Dr. Cash had completed a report on February 11, 1986, in which he indicated Employee's condition was diagnosed as "chronic bronchitis, emphysema, possible some early cor pulmonale."

In his letter to Croft dated May 5, 1986, Dr. Pace had stated:

. . . .

Dr. Cash was deposed in September 1986. He testified that Employee had signs of chronic obstructive lung disease, which consists of chronic bronchitis or emphysema or both, and some patients may have an asthma component. (Cash dep. at 6). Dr. Cash also testified Employee had asthmatic bronchitis. (Id. at 7). Dr. Cash indicated Employee could do some type of desk job in a clean environment, but he could not perform physical activity or be around noxious or irritant particles. (Id. at 12). Dr. Cash also testified that Employee's industrial exposures could have exacerbated his condition, as well as aggravated and accelerated an acute event, but could not say whether the work continued to be a significant factor in the chronic condition. (Id. at 18 - 19).

Defendants deposed Employee on January 22, 1990. He testified that he had understood the C&R when he signed it, his attorney fully advised him of his rights, and that he had selected his treating physicians. (Schiel dep. at 10, 15, 17). Employee testified he thought Dr. Cash told him that taking medication would make him better, but he also testified that Dr. Cash had told him he would never be able to work in Alaska in the oil fields. (Id. 18 - 19). In fact no doctor had ever told him he could go back to work in the oil fields. (Id. at 27).

Employee also testified that by taking medication, he "would get along all right," and that he could "beat this illness." (Id. at 22; 24). However, he was not over it at the time he settled his case. (Id. at 25). In fact, Employee applied for benefits from the Social Security Administration (SSA) on April 14, 1986, before he settled his claim. In applying, he stated that he had severe lung disease which disabled him and he was unable to work as a result of this condition. (Id. at 31 - 32).

Employee's offer of proof contains a affidavit from his present treating physician Lee Newman, M.D. Dr. Newman is a pulmonary specialist. Dr. Newman testified that he has conducted tests and is of the opinion that Employee has a severe asthmatic condition which is related to his industrial exposure. Dr. Newman disagrees with Dr. Cash on the effect Employee's 15 pack-year smoking history has in his current condition.

Employee also submitted his own affidavit in which he states that in settling his claim he relied upon Dr. Cash's testimony that he had chronic obstructive pulmonary disease, that had he known the true nature and condition of his disease he would not have settled his claim, and that he never intended to discharge the claim for asthma nor any claim for any condition that was permanent in nature. In his affidavit Employee also states that the idea of the C&R originated with Defendants. It was presented to the board only two months after it was suggested and Dr. Cash deposition was taken, that he was disadvantaged because he had been unable to work since late 1985, that the settlement would have been more if he had known about Dr. Newman's opinion, and he had no chance to testify before the board regarding his understanding of the C&R.

Employee requests that the C&R be set aside because the facts and circumstances are radically different than he perceived them at the time the C&R was approved. He alleges that there is now a different diagnosis, different evidence about the casual relationship of the condition and his work, and his condition is different now than at the time of settlement. He contends he had no intention to release Defendants from liability for the asthmatic condition because he did not know of that condition at the time of settlement. He contends the release was hastily obtained by Defendants, he was at a disadvantage in the negotiations, that he was in a weak bargaining position, and his doctor surprised him by changing his opinion at the deposition.

Defendants contend Employee has not met his burden of proof because he has failed to establish a "subsequently discovered disability" to justify setting aside the C&R; all he has shown, at best, is a different diagnosis. Furthermore, Defendants contend that even if Employee met his burden and proved a "subsequently discovered disability," they have still shown that Employee understood the nature of the release at the time he entered into it and, therefore, setting aside the C&R is not justified.

Recently in Clark v. Municipality of Anchorage, 777 P.2d 1159, 1161 n.3 (Alaska 1989), the court suggested that the standards stated in Witt v. Watkins, 579 P.2d 1065, 1068 (Alaska 1978), for setting aside a release in a tort action might not apply to a release in a workers' compensation claim. The court cited two California cases. Employee seeks relief applying the Witt test, and both parties acknowledged at hearing that the cases cited by the court in Clark did not appear applicable to the facts of the case. Defendants did argue that even if there are different standards stated in the two California cases, Employee still had not meet his burden of proof. We agree.

Because the parties presented their evidence and arguments in terms of the test stated in Witt, we will first make findings with specific reference to that test. In Witt, the court was asked to set aside a release as unenforceable on the basis that it was the result of a mutual mistake as to the nature of the injuries. The court held that:

(Id at 1069).

(Id.).

The court listed several factors useful to determine whether a release was properly obtained. These factors are:

(Id. at 1070).

We begin our analysis by considering the factors useful in determining whether the release was properly obtained. First, although the release was at Defendants' instigation, we find the release was not hastily obtained. Employee was injured in November 1985 and disabled in December 1985. He consulted various doctors. Defendants immediately denied his claim. He obtained legal counsel. Dr. Cash’s deposition was taken on September 10, 1986. Employee contends he was surprised by Dr. Cash's testimony and Dr. Pace's refusal to testify. However, he did not sign the C&R until five weeks later on October 17, 1986, and we did not approve it until November 13, 1986.¹

Employee contends that he had "only" two months from the time of Dr. Cash's deposition to the time the C&R was presented to the Board. Time, of course, is relative. In terms of the time that the universe has existed, two months is not even equivalent to the blinking of an eyelid. However, in terms of the workers' compensation system, we find two months is a long period of time.

Under AS 23.30.012, "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. . . . We find two months is twice as long as the legislature required the parties to wait from the date of injury before they could settle a claim.

Under AS 23.30.155(d) an employer must decide within 21 days after notice of an injury whether to begin paying benefits or controvert a claim. we find two months is two and one-half times as long as the employer is statutory provided to initially investigate a claim before it must begin paying benefits.

Under AS 23.30.110, "[w]ithin 30 days after the hearing record closes, the board shall file its decision." We find Employee had twice as long to consider his settlement as we have to consider a C&R or decide the merits of a claim after a hearing. Accordingly, we conclude the agreement was not hastily secured.

Second, we find Employee was not at a disadvantage because of his injuries or symptoms at the time of the release. There is no evidence that Employee's injuries or medication for his injuries affected his ability to think or reason. He admits he was alert and coherent. He contends he was disadvantaged in providing information regarding the investigation because he was living in Colorado and his attorney was in Alaska. We note Employee lived in Ft. Morgan, Colorado at the time of the release. We find he did not live in an isolated, remote area without access to a telephone which is a common means of communication even when an employee and his attorney are in the same town. There is no evidence that he was housebound, or lacked assistance in the event he could not leave home. He and his attorney could have transmitted documents to each other by regular mail. In times of need for quick action, express mail or overnight courier services are available. We conclude Employee was not at a disadvantage because of his injuries.

We find Employee was represented by counsel. We particularly find Employee is represented by counsel who is very knowledgeable in workers' compensation matters. Not only do we note that his attorney served in the legislature and participated in enacting some parts of our present Act, his attorney handles a large percentage of the injured workers' cases that are settled or scheduled for hearing before us. We find he had more than adequate, if not exceptional, representation.

We find Employee did not rely on Defendants' representations or representations of a physician retained by Defendants. Employee had his choice of physician; when his insurer told him to get a second opinion, he chose that doctor as well. We find nothing in the record indicating that Employee relied upon anyone other than his attorney and his choice of doctors.

The next factor of Witt is whether liability was seriously in dispute. We find it was because Defendants had not accepted Employee's claim, and there was a difference in medical opinions regarding the causal relationship between the work injury and his condition.

The final factor of Witt is the relative bargaining positions of the parties and the amount to be paid. We find nothing in the record indicating any disparity in the bargaining positions. Employee was represented by a knowledgeable attorney who had worked his claim for several months. Employee had been examined by his choice of physicians; Defendants had not even had Employee examined by their choice of physicians. Although Employee had been out of work for several months at the time of the settlement, and argues he was in financial distress at that time, he presents no evidence to support this position. Employee's affidavit states that he is currently in financial distress, but he does not state what his situation was at the time he entered the agreement.

Employee also contends that he was left in a weak bargaining position after his treating physician refused to testify. We find there was adequate time for Employee to either discuss this with Dr. Pace and to secure his testimony before the settlement was reached, or he could have sought another's physician's medical opinion. He offered no evidence that he was inhibited from securing medical evidence to contradict Dr. Cash's opinion.

Concerning the amount of the settlement, we find that it was within the range of reasonableness, was adequate, and was realistic at the time he settled. Given the evidence and the serious nature of the dispute at the time of settlement, it is clearly more than a nuisance value settlement. We do agree with Employee, however, that if his claim were compensable, the amount would be inadequate. However, that determination had not been made, and there was substantial evidence to the contrary at the time of the settlement.

In addition to considering the above factors, we also consider the special factors alleged by Employee. He contends that if he had known the true nature of his condition at the time of the settlement he would not have settled for the amount which he accepted. Under Witt the test is whether the releasor intended to discharge the disability subsequently discovered. Under Witt a subsequently discovered disability" can occur based on three types of mistake as to the fact of an injury. Witt at 1069. First, there may be a mistake as to the fact of an injury. That type of mistake has not occurred in this case.

The second type of mistake involves the character of the injury, which was the case in Witt. He initially thought he had only fractured ribs, but later discovered that he had fractured vertebrae. This is an obvious different type of disability.

In this case, we find Employee knew at the time of the release he suffered a lung condition, and it is still a lung condition which is causing his disability. We find there is no difference in the character of the injury. It is true that the C&R refers on several occasions to "chronic obstructive lung disease" as the condition alleged to have resulted from the work exposure, and now Dr. Newman states that Employee has occupational asthma. However, the condition was a lung condition at the time the C&R was signed, and it is still a lung condition. There were other diagnoses given before Dr. Cash settled on chronic obstructive lung disease, and if Employee was not aware of them, his attorney certainly was. Employee specifically agreed at page 4 of the C&R that the "extent of said injuries and resulting disability may not be fully known..... [but] the employee acknowledges his intent to release the employer . . . from any and all liability arising out of or in any way connection with the work-related accident referred to above." There is no showing that the difference in diagnosis has any impact on the extent of disability, the type of medication, or Employee's life expectancy. All that has changed is Dr. Newman's giving the condition a different name. Because Employee still suffers from a lung disease, just as he did at the time of the release, we find the change in diagnosis does not justify disregarding the C&R.

The third situation is where there is a mistake as to the extent of the injuries. This seems to be the heart of Employee's contentions in this case.

However, contrary to Employee's assertions, we find that the facts demonstrate Employee clearly contended that he was permanently and totally disabled at the time he settled the claim. The C&R states at the top of page two, [i]t is the employee's position that he is permanently and totally disabled as a result of his lung disease and he does not expect to return to work. "The C&R clearly states at page 3 that "[i]n order to resolve all disputes between the parties with respect to. . . all compensation benefits regardless of whether the same be. . . permanent total . . . ." In addition, Employee had applied to the SSA for disability benefits before he entered the C&R and had represented to the SSA that he was unable to work at that time. Furthermore, his doctors had told him he would not return to work in the oil fields.

We are sympathetic with Employee's situation; he had hoped to get better but that did not happen. However, under Witt it does not provide a basis for setting aside the C&R. "A party may very well enter into an agreement contemplating the possibility that his condition may substantially worsen in the future, but hoping that it will not. The occurrence of the worsening condition under those circumstances is not a basis for disregarding the release." Witt at 1069. Employee testified:

(Schiel Dep. at 24).

Unfortunately, Employee did not beat the illness, and he got worse.

Because the court indicated Witt might not apply, we attempt to find standards in the case cited by the court in Clark, 77 P.2d 1161, and use that legal framework to analyze this case. In Johnson v. Workmen's Compensation Appeals Board, 471 P. 2d 1002, 1007 (California 1970), the California Supreme Court stated:

Employee did stress that he had no hearing before the Board before we approved the C&R. He fails to mention what difference this would make. Under AS 23-30-012, we "may" hold a hearing when an agreed settlement involves the release of permanent disability benefits. Under our regulation 8 AAC 45.160, we set a hearing only in our discretion. Given the nature of the dispute, the evidence available at the time the C&R was submitted, Employee's representation by a knowledgeable attorney, and the fact that even to this day Employee still acknowledges he understood the C&R, what purpose would the hearing have served? If Employee and his attorney submitted the same C&R today, and assuming Dr. Cash's opinion still stood, we would still approve the agreement because liability is so seriously disputed and that dispute is substantiated by the evidence available.

As we stated before, Employee presented no evidence of economic pressure at the time the C&R was signed, and he did not lack competent advice at that time either. We find there was no reason to conduct a hearing before approving the C&R based on the circumstances that existed at the time it was submitted.

Defendants acknowledge that if the Johnson standard were applied and the C&R is considered a judgment, then Employee's remedy would be under Alaska Rule of Civil Procedure 60(b). However, under ARCP 60(b) requests for relief from judgment must be made within one year after the date of notice of the judgment. Accordingly, Employee's request would be time barred.

We also turn to Professor Larson's treatise on workers' compensation to determine if there are other factors we should consider in this case. At 3 A. Larson, Workmen's Compensation Law Section 81.40, page 15-1104 to 1114 (1989), Professor Larson states:

Our Act appears to be one that does not allow reopening agreements on the same basis that awards are reopened. AS 23.30.012 provides in part:

Furthermore, even if we could review a C&R under AS 23.30.130, we have lost jurisdiction under section 130 because it has been more than one year since the judgement was entered.

Professor Larson goes on to state:

. . . .

(Id). at 81.51(b), pp. 15-1129 to 1134.

We cannot find any additional factors in the above discussions that we should consider. Although we too are unhappy that Employee did not recover as he hoped, we find we lack justification to set the C&R aside. Accordingly, Employee's claim is denied and dismissed.

Employee's claim is denied and dismissed.

DATED at Anchorage, Alaska this 4th day of April, 1990.

ALASKA WORKERS' COMPENSATION BOARD

/s/ Rebecca Ostrom
Rebecca Ostrom, Designated Chairman

/s Mary A. Pierce
Mary A. Pierce, Member

/s/ Darrell F. Smith
Darrell F. Smith, Member

RJO:rjo

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 an interlocutory order staying payment is obtained in Superior Court.

APPEAL PROCEDURES

A compensation order may be appealed through proceedings in 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 Peter J. Schiel, employee/applicant; v. Northern Oilfield Services, employer; and Industrial Indemnity, insurer/defendants; Case No. 8531798; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 4th day of April, 1990.

Clerk