In August, the Minnesota Supreme Court heard on appeal the matter of Virgenia Ryan v. Potlach Corporation and Self-Insured/Comp Cost, Inc. (“Ryan v. Potlach”). Reversing and remanding a decision of the Workers’ Compensation Court of Appeals (“WCCA”), the Supreme Court held that besides pending claims for workers’ compensation benefits for a work-related injury, settlement agreements in these cases can also close out claims for conditions and/or complications arising out of the subject injury if those issues were reasonably anticipated by the parties when they entered into the stipulation for settlement.
Ryan v. Potlach involved an Employee who sustained a low back injury while working for the Employer, Potlach Corporation. Ms. Ryan had been moving heavy paper products in the course of her work and, on examination, was found to have disc protrusions at three levels of her lumbar spine. She underwent back surgery, which improved, but did not end, her pain. She then filed a claim petition, asserting a Gillette-type injury to her low back.
In the course of the litigation, Ms. Ryan settled with the Employer on what purported to be a full, final and complete basis for claims related to her back injury, though it was agreed that future medical benefits for reasonable and necessary treatments would be left open. The parties’ stipulation was approved by a workers’ compensation judge, and an Award on Stipulation was issued.
Subsequently, the Employee brought another claim, asserting a back injury with consequential anxiety and depression and claiming further benefits related to a bariatric surgery. She had undergone two additional back surgeries since the earlier settlement, plus a gastric bypass procedure. While she was hospitalized for the second back surgery, a hospital psychiatrist diagnosed Ms. Ryan with depression due in part to her back issues. The Employee was then found to have major depressive disorder when she was examined in connection with her application for social security disability benefits. She began treating with a therapist and, during the same time period, had further treatments for her back pain.
Before a workers’ compensation judge on a motion by the Employer to dismiss Ms. Ryan’s later claim petition, at which point Potlach Corporation asserted that the Employee had failed to properly move to set aside the original settlement agreement before commencing her subsequent claim, the judge held that the initial stipulation did not bar Ms. Ryan from instituting a claim related to the same incident, if the newly alleged condition was not referenced in the parties’ existing settlement agreement. That is, the judge allowed Ms. Ryan to proceed on her claim for chronic pain and/or consequential psychological injury stemming from her original low back injury without having the original settlement agreement vacated.
The findings of the compensation judge were affirmed by the WCCA in July 2015.
More recently, on appeal before the Minnesota Supreme Court, Potlach Corporation maintained that Ms. Ryan’s later claim was barred under the terms of the original settlement agreement, while the Employee contended that her depression due to her worsening back symptoms was a new, unrelated condition, not reasonably contemplated at the time of that stipulation for settlement, and, thus, that claims for her consequential psychological injury were not foreclosed under the earlier agreement.
The Supreme Court noted that since 1992, Minn. Stat. § 176.461(b) had limited the definition of “for cause” in these kinds of cases involving a request to vacate a settlement agreement to circumstances involving a “mutual mistake of fact; … newly discovered evidence; … fraud; or … a substantial change in medical condition since the time of the award that was clearly not anticipated and could not reasonably have been anticipated at the time of the award.” Id.
The Court found that under Minn. Stat. Sec. 176.461(b)(4), the phrase “a substantial change in medical condition” was construed favorably to injured employees in that the scope of parties’ settlement agreements was deemed to exclude “claims based on a substantial change in medical condition that was clearly not anticipated, and could not reasonably have been anticipated, at the time of the award.” The Court cautioned, however, that “[o]n the other hand, section 176.461 does not allow the WCCA to set aside, for cause, the settlement of a work-related injury based on a medical condition that was either anticipated or could have been reasonably anticipated at the time of the award.”
The Supreme Court concluded that under § 176.461, a settlement agreement or award in a workers’ compensation case “may be set aside only for cause in the event of a substantial change in medical condition that clearly was not anticipated, and that could not have reasonably been anticipated, at the time of the award.” See, Minn. Stat. §§ 176.461(b)(4); 176.521, subd.3) (emphasis added). Therefore, the court held, stipulations for settlement in these matters can fully and finally resolve work-related injuries that are the subject of the agreement along with “conditions and complications that arise from the injury and are within the reasonable contemplation of the parties at the time of the settlement agreement.”
As to Ms. Ryan’s later claim, specifically, the court held that the language of the parties’ original settlement agreement was adequate to establish a full, final and complete settlement of conditions arising out of or as a result of her original work-related injury, and that her claimed consequential psychological injury could have been reasonably contemplated at the time the parties initially settled. Under the facts, the Employee was therefore required to move to vacate the original stipulation for settlement pursuant to Minn. Stat. § 176.461 in advance of proceeding on her consequential psychological claim.
As noted by the court in its decision, for defense practitioners and claimants alike, Ryan v. Potlach stands for the principle that while all conditions or complications potentially related to a work injury need not be specifically (and exhaustedly) enumerated in a settlement agreement, the subject occupational injury of an employee, plus any conditions “reasonably within the contemplation of the parties at the time of the agreement,” should be unambiguously excluded or foreclosed.
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