KENNETH M. LYDON, Employee/Petitioner, v. D.A.F. TRANSIT, UNINSURED, Employer, and SPECIAL COMPENSATION FUND.
WORKERS= COMPENSATION COURT OF APPEALS
AUGUST 27, 2004
VACATION OF AWARD - VOIDABLE AWARD. Where there was insufficient evidence that the chemically dependent employee was intoxicated at the time of his mediation or that he otherwise lacked competence to understand the settlement to which he agreed, and in light of clear evidence to the contrary, the court could not conclude that the mediation agreement at issue was voidable on grounds of the employee=s incompetence; and without evidence that the agreement was voidable on that basis, and without any alternative showing of good cause based on a substantial change in condition, newly discovered evidence, a mutual mistake of fact, or fraud, the court declined to vacate the Mediation Resolution/Award at issue.
Petition to vacate denied.
Determined by: Pederson, J., Johnson, C.J., and Stofferahn, J.
Attorneys: Thomas R. Longfellow, Longfellow Law Firm, St. Paul, MN, for the Petitioner. Thaddeus V. Jude, St. Paul, MN, for the Special Compensation Fund.
WILLIAM R. PEDERSON, Judge
The employee petitions this court to vacate a Mediation Resolution/Award served and filed May 12, 1997. Concluding that the employee has not shown good cause to vacate the award at issue, we deny the employee=s petition.
On April 12, 1991, while employed as an over-the-road truck driver for both D. A. F. Transit and TLC, Inc., Kenneth Lydon was involved in a motor vehicle accident that resulted in symptoms in his head, neck, low back, and lower extremities. On the date of the accident, Mr. Lydon [the employee] was fifty years old and was earning a weekly wage of $580.40. Subsequent to the accident, on June 26, 1991, the employee underwent an MRI scan of his lumbar back, which was read to reveal an annular tear at L5-S1, an annular bulging at L4-5, and degenerative changes of the facet joints at both of those levels. About a year later, in early June of 1992, the employee underwent a laminectomy and discectomy at L5-S1, and TLC, Inc., and D. A. F. Transit [jointly, the employer] and its insurer admitted liability for the injury. On August 17 and 18, 1992, the employee underwent a functional capacities evaluation, pursuant to which he was found to be restricted to light to medium work, and on September 14, 1992, he was released to return to work within those restrictions. The employer=s insurer apparently went into bankruptcy subsequent to assuming liability for the work injury, and the Special Compensation Fund [the Fund] ultimately assumed responsibility for payment of benefits.
In October of 1992 the employee retained his current attorney, Thomas Longfellow, to represent him in his claim. On November 25, 1992, the employee apparently filed a claim petition, alleging underpayment of temporary total disability benefits from April 12, 1991, to September 14, 1992, and requesting continuation of temporary total disability benefits from October 8, 1992. Also in November of 1992, Dr. George Young, upon review of the employee=s lumbar CT and MRI scans, rendered an opinion that the employee was subject to a significant degenerative condition that pre-existed his work injury of April 1991 and that was not causally related to that injury. On December 2, 1992, the employee=s surgeon, Dr. Richard Freeman, rated the employee=s low back permanent partial disability at 11% of the whole body. Four months later, on April 4, 1993, the employee underwent an independent medical examination by orthopedist Dr. Robert Fielden, who rated his whole body impairment at 9% and restricted him only from awkward and heavy lifting and from long periods of sitting or standing without a break. On May 17, 1993, the employee underwent an employability assessment, conducted by psychologist Dr. Richard Ugland, who found the employee=s likelihood of employment to be minimal, in light of his Aadvanced age, lack of transferable skills, and chronic disability.@ Several months later, on January 20 and 21, 1994, the employee underwent a functional capacity evaluation, pursuant to which he was restricted from doing more than occasional bending, stooping, squatting, crawling, crouching, kneeling, climbing to twenty feet, pushing over thirty pounds, or pulling over forty pounds. The employee was also restricted to frequent lifting of no more than thirty pounds and to only minimal lifting of over sixty-five pounds, and he was found to be capable of working full time with regular breaks and was concluded to be physically able to return to work as an auto mechanic.
The employee has a substantial history of chemical dependency, and on May 11, 1994, he was served with a Notice of Intent to Discontinue Benefits, based on his failure to cooperate with rehabilitation efforts due importantly to that dependency. On August 2, 1994, Mr. Longfellow terminated his representation of the employee due to the employee=s continuing alcoholism and consequent failure to cooperate in pursuing his claims, and he informed the Fund=s claims representative, Jeffrey Lane, that he was doing so for those reasons.
About three years later, on April 23, 1997, without representation by an attorney, the employee participated in a telephone mediation session with Mr. Lane, conducted by Department of Labor and Industry Workers= Compensation Division mediator Carol Hanson. This was apparently the fourth mediated settlement in which the employee had participated since the commencement of his claim, the earlier three under representation by an attorney--two having occurred on April 16, 1993, regarding temporary total and rehabilitation benefits and the employers= joint liability, and a third having occurred on October 11, 1993, regarding the employee=s average weekly wage.
About a week after the April 23, 1997, mediation session, on May 2, 1997, the employee signed an Agreement to Mediate Workers= Compensation Claim, which had been signed by Mr. Lane for the Fund on April 25, 1997, was subsequently signed by Mike Schoff for the Department of Human Services on May 5, 1997, and was signed without date by Mediator Hanson. Also on that same date, May 2, 1997, the employee signed and made separate, hand-initialed affirmations of each of the following on a AChecklist of Employee=s Understanding of Mediated Settlement@: (1) that he had read the entire mediation resolution; (2) that the resolution had been explained to him by the mediator; (3) that he understood all of its terms; (4) that he understood that, by signing it, he was bound by its terms; (5) that he understood that it affected his legal rights and that he should consult an attorney if he had any doubts about signing it; (6) that he understood that the physical problems that he had as a result of his work injury might become worse in the future; (7) that he understood that bills for medical treatment would be paid only if the treatment was deemed necessary and reasonably priced; (8) that he understood that, if he was unable to earn wages in the future, he would not be entitled to any further wage-loss benefits; (9) that he understood that, if his earnings should decrease or become less than his pre-injury wage, he would not be entitled to any further partial wage benefits; (10) that he understood that, if he was unemployed, underemployed, or unable to work in his line of employment, he would not be entitled to any assistance in finding another job or to any retraining; (11) that he understood that, by executing this settlement, he was waiving his right to sue the insurance company in order to establish its liability for his work injury; and (12) that he understood that he would not be entitled to any further permanent partial disability benefits. Also on that Checklist, the employee indicated by his initials that he had not made any agreement with an attorney to represent him in his claim.
On May 12, 1997, Compensation Judge Jerome Arnold issued a Workers= Compensation Mediation Resolution/Award that had been signed by Mr. Lane for the Fund on April 25, 1997, by the employee on May 2, 1997, and by Mike Schoff for the Department of Human Services on May 5, 1997. Pursuant to this award, the Fund paid a lump sum of $20,500.00 in full, final, and complete settlement of all of the employee=s workers= compensation claims against the employerB$574.49 to the Department of Human Services for moneys paid to the employee through the General Assistance Program from February through April 1997 and $19,925.51 directly to the employee.
In 1999, the employee was charged and convicted and jailed for diving while intoxicated. Subsequent to his release from jail, the employee sought chemical dependency treatment and has apparently been sober ever since. He apparently lived in Illinois with his sister for several years following his treatment, returning to Minnesota in 2003 to support and care for his sixteen-year-old daughter as well as he could on his social security income.
On March 5, 2003, the employee saw Dr. Freeman again, who diagnosed mild lumbar stenosis and chronic low back pain and sciatica and prescribed new medications to relieve the employee=s back and knee pain. On July 9, 2003, the employee underwent x-rays that were read to reveal complete loss of disc space at L5-S1 and mild loss of disc height at L1-2, rendering a diagnosis of caudal lumbar spondylosis. By late 2003, the employee=s chemical dependency issues had apparently been resolved for several years, and on December 1, 2003, Mr. Longfellow resumed representation of him in this matter. On December 10, 2003, Mr. Longfellow wrote to Mr. Lane, informing the latter that it had been the employee=s understanding that the lump sum paid to him under the 1997 settlement agreement had been for past due amounts only, requesting copies of all outstanding medical records, and asking Mr. Lane if he would agree to reinstate rehabilitation benefits Abefore there is a vacation of the Mediated Award.@
The request for reinstatement of rehabilitation benefits was apparently denied, and on April 28, 2004, the employee filed a petition to vacate the May 12, 1997, Mediation Resolution/Award. As of the date of the petition, the Fund had evidently paid 156.2 weeks of temporary total disability benefits at varying rates from April 12, 1991, through May 3, 1994, together with some $45,000.00 in medical, rehabilitation, and miscellaneous expenses.
This court's authority to vacate a compensation judge=s award is found in Minn. Stat. '' 176.461 and, with regard to settlements, 176.521, subd. 3. An award may be set aside if the petitioning party makes a showing of good cause to do so. Good cause has long been held to exist if "(a) the award was based on fraud; (b) the award was based on mistake; (c) there is newly discovered evidence; or (d) there is a substantial change in the employee's condition." Stewart v. Rahr Malting Co., 435 N.W.2d 538, 539, 41 W.C.D. 648, 649 (Minn. 1989). These bases were codified in slightly different language in a 1992 amendment of Minn. Stat. ' 176.461. The petitioner has asserted that there is also case law authority for this court--under certain conditions--to vacate a mediated award on grounds that the award is voidable due to the petitioner=s having been incompetent to understand the significance of his agreement, the present petitioner=s attorney arguing in his affidavit that A[a]n award of $20,500 is grossly inadequate for an injury that entitled the employee to unlimited temporary partial disability benefits, and would not have been agreed to if the employee had been sober and/or represented by counsel.@ The employee cites Bernard v. Marvin Lumber, 41 W.C.D. 512 (Minn. 1988), for the principle that an agreement entered into by a party who lacks competence to understand the significance of his agreement is null and void under the law, and he cites Sondrol v. Del Hayes & Sons, Inc., 47 W.C.D. 659 (1992), for the principle that a workers= compensation award based on such an agreement is in turn voidable and so subject to vacation by the Workers= Compensation Court of Appeals on that basis, provided that certain conditions are met. We conclude that we need not address those conditions, unpersuaded as we are that the petitioner in this case lacked competence to understand the significance of his agreement.
The employee has asserted in his affidavit that he was chemically dependent on the date of the mediation here at issue, and he has asserted that he did not understand that the stipulated agreement was a close-out of all future benefits. He has not, however, asserted that he was in any way intoxicated at the mediation session or that his chemical dependency in any other way rendered him incompetent to understand the agreement that he signed. Indeed, in addition to his full signatures on May 2, 1997, on the Agreement to Mediate Workers= Compensation Claim, on the Mediation Resolution/Award itself, and on the AChecklist of Employee=s Understanding of Mediated Settlement@ relating to that agreement, he made twelve separate hand-initialed affirmations of his understanding of all of the future implications of that agreement that are here material. Moreover, in his responsive affidavit, Mr. Lane has sworn that A[a]t no time [has he] ever participated knowingly in a mediated settlement where the petitioner has not had the orientation or capacity to freely and knowledgeably enter into a mediated settlement,@ that A[a]t no time was the employee obviously intoxicated nor did he slur his speech in his negotiating or mediating the award at issue,@ and that A[a]t no time was there any indication that the Employee lacked competency to enter into the Mediated Agreement.@ By the time of the 1997 mediation here at issue, the employee had participated in numerous litigation proceedings regarding his workers= compensation benefits and apparently some nonworkers= compensation proceedings over related issues, and he was therefore reasonably well aware of matters at issue on that basis. Nor has the employee=s attorney presented any dispositive evidence that the employee was intoxicated or otherwise incompetent at the time he agreed to the settlement here at issue.
Lacking a persuasive showing that the employee lacked competence to understand the settlement to which he so affirmatively agreed, and in light of clear evidence to the contrary, we cannot conclude that the mediation agreement here at issue is voidable on grounds of the employee=s incompetence. Without evidence that the agreement is voidable on that basis, and without any alternative showing of good cause based on a substantial change in condition, newly discovered evidence, a mutual mistake of fact, or fraud, we will not vacate the 1997 award here at issue.
 As asserted in the employee=s memorandum of law in support of his petition. The claim petition is not evident in the judgement roll and is not available electronically from the Department of Labor and Industry.
 In the amendment, the mistake basis was materially defined as Aa mutual mistake of fact,@ and the substantial change in condition basis was materially defined as "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." Minn. Stat. ' 176.461 (1992) (emphases added).
 The court in Sondrol identified the following four factors for consideration: (1) whether the stipulation was reasonable, fair, and in conformity with the Workers= Compensation Act at the time it was entered into; (2) whether the stipulation appears to fairly reflect the intent of the parties; (3) whether there is any prejudice to any party; and (4) the equities involved. Sondrol, 47 W.C.D. at 666-67.