MICHAEL J. STANTON,		)
Employee,			)
Applicant,			)	DECISION AND ORDER
v.				)	AWCB Case No. 8819211
				)	AWCB Decision No. 90-0082
VECO, INC.,			)
Employer,			)	Filed with AWCB Anchorage
				)	April 24, 1990
and				)
				)
ALASKA NATIONAL INSURANCE CO.,	)
				)
Insurer,			)
Defendants.			)
				)

The parties' request for approval of an agreed settlement was heard on May 11, 1990, at Anchorage, Alaska. Employee was present and represented by attorney William Erwin. Defendants were represented by attorney Trena Heikes. When the record closed at the conclusion of the hearing, we deliberated the request. Thereafter, we orally advised the parties that we found the agreement was not in Employee's best interest. Accordingly, we denied the request for approval of the agreed settlement. Defendants asked us to issue a written decision and order for appeal purposes.

Is the agreed settlement in Employee's best interest?

On September 7, 1988, Employee completed a notice of injury stating that he slipped on the stairs while climbing down the heliport on August 30, 1988. In the notice he stated he fell down and "landed on [his] rear end." At the time of the incident he was carrying his tool box and work gear. (Report of Occupational Injury or Illness).

Apparently after the alleged incident of August 30, 1988, Employee continued to work until September 7, 1988, when he went to the Kenai Medical Center. He reported the slip down the stairs to the doctor. In addition, he also said his back had bothered him a little after the slip down the stairs, but he kept on working. However, when he awoke on the morning of September 7, 1988, his back hurt a lot and his right leg hurt also. The diagnosis was a herniated nucleuses pulposus, and he was referred to an orthopedic surgeon.

Employee saw George Gates, M.D., on September 8, 1988. He again told of slipping on the stairs, and provided more details to Dr. Gates. He said he fell about four feet and landed on his buttocks. Dr. Gates recommended conservative treatment. His impression was that Employee either had a contusion to the right sciatic nerve from the fall, or an acute ruptured disc.

On September 19, 1988, Defendants filed a notice denying Employee payment of temporary total disability (TTD) benefits. The reason given for the denial was that they had no medical reports to document Employee's inability to work. (September 19, 1988 Controversion Notice). On September 23, 1988, Defendants withdrew the controversion of the claim and began paying TTD benefits effective August 31, 1988. (Compensation Report September 23, 1988).

On October 13, 1988, when Employee had not improved with conservative care and several different tests had confirmed the ruptured disc diagnosis, Dr. Gates performed a hemi-laminotomy and discectomy. Defendants continued to pay disability and medical benefits relating to the condition. Defendants deposed Employee in March 1989. At that time he Defendants asked if he had any prior back injuries that required medical evaluation or treatment. Employee responded:

(Stanton Dep. at 46 - 47).

Later in his deposition, Employee testified:

(Id. at 52).

On April 22, 1989, Employee was examined by Edward Voke, M.D., at Defendants' request. Dr. Voke stated in his report for the examination that "the best option would be for this gentleman to retrain in a more sedentary position." Dr. Voke indicated that if retraining was not feasible or realistic, Employee should return to Dr. Gates for possible re-exploration of the L5-S1 area on the right side, because the March 21, 1989, MRI indicated a small herniated disc existed. Dr. Voke said neither physical therapy nor a back conditioning program would be appropriate for his problem.

However, Employee did not return to Dr. Gates for surgery nor has he been retrained. On April 26, 1989, Defendants terminated Employee's TTD benefits and filed a second Controversion Notice. In the April 26, 1989 Controversion Notice, Defendants denied Employee's right to any benefits based on AS 23.30.022. Defendants contend Employee knowingly made false statements about his back condition at the time he was hired.

On May 2, 1989, Defendants filed a petition request that we affirm their controversion of benefits under AS 23.30.022. In support of their petition, Defendants filed an affidavit from Fred Clingman which states in part that:

Defendants also filed a copy of the health questionnaire. The questionnaire states: "Please indicate if you have had or been treated for any of the following conditions." One of the conditions listed was "BACK CONDITION, disc, muscle strain." Employee did not place a check mark in the "yes" column next to this condition. Employee did indicate that he had an eye injury when he was young. At the bottom of the form above Employee's signature is the following:

Employee signed this statement on August 29, 1988.

Defendants submitted similar forms, which Employee had previously completed for Employer. On the January 6, 1988, form Employee had not checked any conditions. In fact, after the listed conditions, the form has a line which states: "If you have not had any of the above, write 'none."' Employee wrote "done." On the June 13, 1988, form Employee listed the eye injury as he did in the August 1988 form.

Defendants also submitted a Confidential Health History dated November 2, 1987. Apparently Employee completed this form for Valley Chiropractic. On the first page of the form, Employee listed his reason for seeking treatment as "pain in back." On the second page, Employee indicated he had previously had, and presently had, low back problem and leg problems. The handwritten chart notes indicated Employee was seen on November 2, November 3 1987, and November 5, 1987. He was also seen on August 11 and 12, 1988. The notes for these two visits indicate he had pain radiating down his right leg.

On January 25, 1990, Defendants filed a third Controversion Notice. In that notice, Defendants denied Employee's right to permanent partial disability (PPD)¹benefits based on AS 23.30.022.

The most recent medical report in the record is from Dr. Gates' January 10, 1990, evaluation. In that report Dr. Gates states:

Dr. Gates rated Employee at 16 percent impaired as compared to the whole man.

Rather than proceed to hearing on Defendants' petition for approval of the termination of benefits, the parties submitted an agreed settlement for our approval as required by AS 23.30.012.

Under the agreed settlement, Employee would be paid $15,000 and his attorney would be paid $1,650.00. In return for this lump sum payment, Employee would waive his right to any future benefits from Defendants, including future medical care. In addition, the agreed settlement would require Employee to give up any right he may have to "set aside this settlement agreement based on any mistake of fact or law or upon any changed condition or circumstances." (Agreed Settlement at 6).

At the hearing on the agreed settlement, Employee indicated he was still having back pain. He has sought work, but has not been hired. Employee testified that he has always worked at jobs which require lifting and are fairly physical work such as a mechanic on an oil rig, laying roofing, and working as a cook.

The parties contend that the agreed settlement is in Employee's best interest because he may receive nothing if he we hear and decide his claim. We disagreed with the parties' contentions, and found the settlement was not in Employee's best interest. Therefore, we denied approval.

AS 23.30.012 provides:

(Emphasis added).

Because there is no "applicable schedule in this chapter for medical care, and because "compensation" and "medical and related benefits" are defined separately under AS 23.30.265, it is questionable whether the legislature intended to give us the authority to approve the release of medical benefits.

However, we have assumed such authority and have adopted 8 AAC 45.160(a), (d), and (e) which provide:

(Emphasis added).

Regarding settlements, Professor Larson recommends:

. . . .

(Emphasis added). 3 A. Larson, Workmen's Compensation Law Section 82.41 - 82.42, pp. 15-564 to 15-567 (1983).

Concerning what should be included in a release Professor Larson states:

Id. at Section 82.59, pp. 15-571 to 15-572.

While settlements are favored in the tort system, that is not the case in the workers' compensation system. However, even though settlements are not favored and should he strictly controlled, we approve a large number of settlements. For example, in fiscal year 1989 we received over 1,000 agreed settlements. In that fiscal year we approved 1,093 agreed settlements. On an initial review of the over 1,000 settlements, only 298 were denied.²Thus the vast majority of these agreed settlements are approved.

One of the problems that has been noted with the workers' compensation system is the concerted efforts by the parties to settle cases. Professor Larson states:

Id. at Section 82.71, pp. 15-595 to 15-596.

Although not directly on point, the court's recent decision in Clark v. Municipality of Anchorage, 777 P.2d 1159, (Alaska 1989), suggests that the court would agree with Professor Larson's view.

Furthermore, we have previously concluded that AS 23.30.012 precludes us from applying AS 23.30.130 or Alaska Rule of Civil Procedure 60(b) to set aside an approved agreed settlement. Pratt v. Sheep Creek Lodge, AWCB Decision No. Unassigned, AWCB Case No. 8725410 (April 13, 1990). Because of this interpretation, we believe it is important that an injured worker retain the right to set aside an approved agreed settlement if a mistake is made, assuming the mistake is the type which justifies setting aside an agreed settlement. See 3 A. Larson, Workmen's Compensation Law Section 81.51(b), pp. 15-1129 to 1134 (1989).

Given this framework, we conclude that we must have clear and convincing evidence at the time we consider a proposed agreed settlement to overcome the presumption that waiver of all benefits, especially future medical care, does not appear to be in the employee's best interest. Judging the adequacy and the employee's best interest when an agreed settlement provides for the release of future medical benefits is difficult because of the numerous unknowns associated with future medical care.

In this case, we have uncontradicted medical evidence that Employee needs to be retrained or have surgery in order to return to work. We believe just the fact that Employee has not fully recovered and needs more surgery justifies denying approval of the agreed settlement. See Anchorage Drywall v. Nielsen, 3 AN 89-239 (Alaska Super. Ct., April 5, 1990).

We acknowledge that given the present state of the evidence and AS 23.30.022³Employee could have a problem in prevailing when his claim is heard. Furthermore, depending upon the evidence presented when the claim is heard, AS 23.30.250⁴could apply under these circumstances. If it does, Employee could face criminal sanctions as well.

We find there is evidence that Employee did not disclose his previous back problems on the health questionnaire. However, at this time we have no evidence regarding the causal relationship between the representation and the injury. In the agreed settlement Defendants argue either that the causal connection is the fact that "the employee would not have been present on the oil rig on which he fell but for his employment."⁵ Alternately, Defendants argue because he continued to work until September 7, 1988, and had been doing heavy lifting, crawling, bending and stooping immediately before the onset of disability, the work is the cause of the disability. Defendants contend this would establish the causal connection between the failure to disclose the back condition and the time of hire and the subsequent disability. (Agreed Settlement at 4).

Part of the problem in this case lies in the fact that we have not determined which incident, if any, brought about Employee's disability. At this time, there is no medical evidence on this point. Because Employee timely filed his claim, under AS 23.30.120, he enjoys the benefit of the presumption that the claim is compensable. Without more evidence on the causation issue, we cannot determine that AS 23.30.022 will bar Employees claim and, therefore, this settlement is in his best interest.

Instead, because Employee continues to need substantial medical care or perhaps retraining in order to return to work, we conclude the "half a loaf" philosophy espoused by the parties is not the appropriate "best interest" test. Instead, if Employee's claim is compensable, he should be fully compensated. Therefore, we must do our job and hear his claim. Accordingly, under AS 23.30.012, we find the agreed settlement is not in Employee's best interest and should not be approved.

Approval of the agreed settlement is denied.

DATED at Anchorage, Alaska this 24th day of April, 1990.

ALASKA WORKERS’ COMPENSATION BOARD

/s/ Rebecca Ostrom
Rebecca Ostrom, Designated Chairman

/s/ HM Lawlor
Harriet M. Lawlor, Member

/s/ Richard Whitbeck
Richard Whitbeck, Member

RJO:rjo

If compensation is payable under the terms of this decision, it is due on the date of issue and penalty of 25 percent will accrue if not paid within 14 days of the due date unless an interlocutory injunction staying payment is obtained in Superior Court.

APPEAL PROCEDURES

A compensation order may be appealed through proceedings in Superior Court brought by a part 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 Michael Stanton, employee/applicant, v. VECO, Inc., employer, and Alaska National Insurance Company, insurer/defendants; Case No. 8819211 and 8828264; dated and filed in the office of the Alaska Workers' Compensation Board in Anchorage, Alaska, this 24th day of April, 1990.

Clerk