CHRISTINE HILLESHEIM, Employee/Petitioner, v. WOODDALE NURSING HOME, INC., and SFM MUT. INS. CO., Employer-Insurer.
WORKERS’ COMPENSATION COURT OF APPEALS
APRIL 14, 2009
VACATION OF AWARD - FRAUD; VACATION OF AWARD - MISTAKE; VACATION OF AWARD - SUBSTANTIAL CHANGE IN CONDITION. The employee failed to establish good cause for vacation of an award on stipulation based on the grounds of fraud, mutual mistake of fact, or a substantial change in medical condition.
VACATION OF AWARD - VOID OR VOIDABLE AWARD. Where the employee presented persuasive evidence, in the form of an answer to a question within the stipulation for settlement indicating that she did not understand or appreciate the nature and effect of a settlement, the award is voidable, and is vacated.
Petition to vacate award on stipulation granted.
Determined by: Johnson, C.J., Wilson, J., and Pederson, J.
Attorneys: Candice E. Hektner, Peterson & Hektner, Minneapolis, MN, for the Petitioner. John M. Hollick, Lynn, Scharfenberg & Assocs., Minneapolis, MN, for the Respondents.
THOMAS L. JOHNSON, Judge
The employee petitions to vacate an Award on Stipulation, served and filed on May 13, 1998, on the grounds of fraud, mistake, substantial change in medical condition, and that the award is voidable. Concluding the employee has establish sufficient grounds to justify vacation of a voidable award, we grant the petition.
Christine Hillesheim, the employee, sustained an injury to her low back on January 23, 1997, while working for Wooddale Nursing Home, Inc., the employer, then insured by State Fund Mutual Insurance Company. The employer and insurer admitted liability for the employee’s personal injury and paid approximately three days of temporary total disability benefits to the employee.
The employee called the office of Dr. Ann C. Vogel on January 24, 1997, and reported she had developed low back pain after lifting a resident at the Wooddale Nursing Home. The employee was instructed not to work for two days. On January 27, the employee again called Dr. Vogel’s office complaining of low back pain and she was instructed to come into the office on January 28, 1997. Dr. Vogel noted the employee was then six months pregnant and diagnosed an acute low back strain caused by the lifting incident at work. The doctor took the employee off work from January 23 to January 28, 1997, but released her to light duty work at the employer on January 29, 1997.
On March 3, 1997, Dr. Vogel diagnosed a deep venous thrombosis of the left leg and admitted the employee to the hospital. In the admission history, Dr. Vogel noted the employee’s back strain that occurred at work and also reported the employee had fallen on ice on February 7, 1997, while carrying her 14-month old son. The doctor took the employee off work from March 10 until her delivery and prescribed Heparin to treat the thrombosis. The employee gave birth on May 10, 1997. She returned to see Dr. Vogel on May 29, 1997, complaining of an altered sensation in both thighs after sitting. Dr. Vogel stated the employee’s prior low back strain may have returned.
At some point, the employee retained counsel who filed a claim petition in March 1997 seeking a limited period of wage loss benefits and rehabilitation benefits. In July 1997, Dr. Gary Wyard examined the employee on behalf of the employer and insurer. The employee then complained of low back pain with occasional numbness in both legs and feet. Following his examination, Dr. Wyard diagnosed a myofascial sprain/strain resulting from the employee’s January 23, 1997, work injury. The doctor opined this condition had healed without permanent disability. Dr. Wyard stated the employee’s thrombophlebitis was unrelated to her work injury but was caused by her fall on the ice in February 1997. Dr. Wyard concluded the employee needed no further medical treatment for her work injury.
In June 1997, the employee began treating with M. Clark Phillips, D.C. In an examination on August 13, 1997, the employee complained of neck and lower back pain with numbness and tingling into both arms and legs. She attributed these symptoms to her work injury when she was lifting a patient out of a wheelchair and felt a pull in her lower back. On examination, Dr. Phillips noted a decreased range of motion, positive straight leg raising, and paraspinal muscle spasm in the lower spine. The doctor noted the employee was then being treated twice a week.
Ultimately, the employee and her attorney, Steven Rondestvedt, agreed to a settlement with the employer and insurer. A stipulation for settlement was drafted by John M. Hollick, counsel for the employer and insurer, and forwarded to Mr. Rondestvedt in October 1997. Apparently, nothing further occurred, and in January 1998, Mr. Hollick sent to Mr. Rondestvedt another original stipulation for settlement. On February 20, 1998, Mr. Hollick wrote to Mr. Rondestvedt inquiring as to the status of the proposed settlement. Thereafter, a signed stipulation for settlement was sent to Mr. Hollick. By letter dated March 17, 1998, Mr. Hollick returned the original signed stipulation for settlement to Mr. Rondestvedt, and stated:
In reviewing the Stipulation for Settlement, I note that your client answered “no” to question 2 on page 7. She is indicating that this Stipulation has either not been explained to her or that she does not understand it. I would ask that you have her review the Stipulation for Settlement again, answer “yes” to question 2, initial the changes, and do that to the original and all copies.
Once that has been done, please send it back to me and I will file it with the Office of Administrative Hearings.
By letter dated April 28, 1998, Mr. Rondestvedt forwarded to Mr. Hollick the “fully executed and properly completed Stipulation for Settlement.” The stipulation was signed by the employee and question no. 2 at paragraph X. was answered “Yes.” The parties agree, however, in the answer to question 2 the change was not initialed by the employee. Mr. Hollick then filed the stipulation for settlement with the Office of Administrative Hearings. An Award on Stipulation was served and filed on May 13, 1998.
The stipulation for settlement as approved by the Office of Administrative Hearings stated there was a dispute as to the employee’s wage on the date of her admitted personal injury. In the stipulation, the employee contended she was entitled to an underpayment of temporary total disability benefits, ongoing temporary total disability benefits from February 1997, a short period of temporary partial disability benefits, statutory rehabilitation services and outstanding chiropractic expenses. The employer and insurer contended the employee sustained a superceding, intervening injury when she fell at home in February 1997, that she failed to conduct a reasonably diligent job search, and that the employee had no restrictions or permanent disability. The parties agreed to settle the claim on a full, final, and complete basis for $1,950.00 with the sole exception of reasonable and necessary, causally-related non-chiropractic and non-psychological medical treatment.
In March 2008, the employee filed a petition to set aside the Award on Stipulation filed on May 13, 1998. By affidavit, the employee stated that Mr. Rondestvedt sent to her the original stipulation for settlement which she signed, but she stated she answered “No” to question 2 at paragraph X. Ms. Hillesheim asserted that the answer to question 2 was later changed from “No” to “Yes.” Apparently, the word “No” was whited out and “Yes” was written in. Ms. Hillesheim stated she did not make the change. She assumed Mr. Rondestvedt, without her permission, changed the answer to question 2. Further, Ms. Hillesheim contends that she did not understand the terms of the Stipulation for Settlement and did not understand that the settlement was final with the exception of medical expenses. Ms. Hillesheim states that had she understood that the settlement was a close-out of all benefits, she would not have agreed to the settlement.
The employee seeks to vacate the May 1998 Award on Stipulation on the basis of fraud, mistake and 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 (Supp. 1993) and 176.521, subd. 3 (1992), govern this court's authority over petitions to vacate. An employee must show good cause for this court to vacate an award. Stewart v. Rahr Malting Co., 435 N.W.2d 538, 539, 41 W.C.D. 648, 649 (Minn. 1989).
The employee first contends she was defrauded by the employer and insurer as well as her attorney in that they jointly submitted to the court an obviously altered document. The employee argues counsel for the insurer knew the stipulation would not be approved unless the employee answered “Yes” to question 2 at paragraph X. While the employee states she cannot prove who made the change, she contends that it is obvious to even a casual observer that the document was altered and the change was not initialed by the employee. The employee contends the employer and insurer had an obligation to inquire when a clearly altered and uninitialed document was presented to them. Since they did not do so, the employee contends the employer and insurer were complicit in the fraud and the stipulation should be set aside. In response, Mr. Hollick stated by affidavit that he did not alter the Stipulation for Settlement and stated he believed that the employee had made the requested change to question 2.
We conclude the employee has not established fraud. In Strande v. Women’s Club of Minneapolis, 50 W.C.D. 527 (W.C.C.A. 1994), affirmed 518 N.W.2d 555, 50 W.C.D. 532 (Minn. 1994), the court stated that fraud under Minn. Stat. § 176.461 generally refers to fraud by one party against another party. In Patterson v. Reliant Employment Group, slip op. (W.C.C.A. Feb. 4, 2002) and Tomaszewski v. World Arrowspace Corp., slip op. (W.C.C.A. Oct. 30, 2002) this court decided similar cases in which the employee contended he or she was induced to enter into an improvident settlement based upon the fraud, misrepresentation, concealment and deceit of counsel. In both cases, this court declined to vacate the stipulation absent evidence the employer and insurer were aware of, or parties to the fraud.
Here, the employee does not allege the employer or insurer directly perpetrated any fraud, nor does she allege the employer and insurer were aware of or were parties to the alleged fraudulent conduct of Mr. Rondestvedt. Rather, the employee contends the employer and insurer had an obligation to inquire why the change to the settlement document was not initialed. Their failure to do so, the employee contends, renders the respondent complicit in the fraud justifying a vacation of the settlement. We disagree. Clearly, Mr. Hollick was aware the settlement document was altered and the change to question 2 at paragraph X. was not initialed as he had requested. This fact alone, however, is insufficient to prove the employer and insurer were aware of or should have been aware of a false representation by the employee’s attorney. We cannot agree that the failure to initial a single change to the settlement agreement required Mr. Hollick to conduct some further investigation. Accordingly, we conclude the employee has failed to establish fraud and we deny the petition on that basis.
2. Mutual Mistake of Fact
The employee next contends the stipulation should be vacated based on a mutual mistake of fact. The employer and insurer must concede, the employee argues, that they either misapprehended the fact that the employee understood the settlement or that they intended the employee to be bound by a settlement that she did not understand. In either case, the employee contends there has been a mutual mistake of fact. We disagree.
A mutual mistake of fact occurs when opposing parties to the stipulation both misapprehend some fact material to their intended settlement of a claim. Shelton v. Schwan’s Sales Enters., slip op. (W.C.C.A. May 18, 1995). Here, the employee did not intend that the answer to question 2 in paragraph X. be changed without her consent. It may also be, as the employee has asserted, that she did not fully understand the terms of the stipulation because it was not explained to her by her attorney. In either event, however, there is no evidence the employer and insurer were mistaken as to any material term of the stipulation. As we previously noted, there is no evidence the employer and insurer or their counsel were aware that the answer to question 2 was changed without the employee’s consent. We find no basis to conclude the employer and insurer were mistaken as to the employee’s intent in entering into the stipulation. Accordingly, we deny the petition to vacate based on the allegation of mutual mistake.
3. Substantial Change in Condition
The final statutory ground for vacation of the stipulation asserted by the employee is that she has experienced a substantial change in her medical condition since the time of the award that was not clearly anticipated and could not reasonably have been anticipated at the time of the award. She asserts that since the date of the settlement she has had extensive medical and chiropractic care, epidural injections, and physical therapy. She contends she experiences constant low back pain that inhibits her ability to work. The employee states she was working at the time of the settlement, but contends that since then has been periodically unable to work due to back pain. The employee asserts she likely has additional permanent disability and contends the change in her condition is causally related to her work injury. Accordingly, the employee contends there has been a substantial change in her medical condition justifying a vacation of the stipulation.
In August 1998, the employee saw Dr. Francille Knowles complaining of low back pain increasing over the past several months. The employee told the doctor the first time she experienced back pain was following her work injury of January 1997 and she stated she experienced intermittent low back pain since then. Dr. Knowles diagnosed muscular low back pain and prescribed Ibuprofen and physical therapy. The employee returned to see Dr. Knowles in December 2002 complaining of continued low back pain since her personal injury. On examination, straight leg raising was positive on the left. The doctor ordered an MRI scan which was normal and prescribed physical therapy. The employee received physical therapy for her low back pain in January and February 2003. The physical therapist noted the employee had low back pain and radiating left leg pain. The employee saw Dr. Kucourek at the Pipestone Medical Group in February 2003 complaining of continued low back pain with radiation into her left leg and foot with some numbness and tingling. The doctor diagnosed persistent low back pain with radiculopathy and prescribed an epidural injection. The employee then saw Dr. Balt who noted weakness of dorsal flexion of the left foot and gave the employee an epidural injection at L4-5. In March 2003, the employee saw Dr. Corey Welchlin, an orthopedic specialist, complaining of low back and left leg pain. The diagnosis was mechanical low back pain with occasional left leg symptomatology. The doctor doubted the employee had a surgical problem. The employee saw Dr. Christian Morgan in July 2006 complaining of low back pain which she attributed to her January 1997 work injury. Dr. Morgan diagnosed low back pain secondary to a lumbar strain with no evidence of radiculopathy or nerve impingement.
Dr. Wyard reexamined the employee in July 2008 at the request of the employer and insurer. Dr. Wyard concluded the employee’s back examination was normal and opined she had no permanent disability or need for restrictions secondary to the January 23, 1997, personal injury. Further, Dr. Wyard opined the employee’s low back condition had not worsened since the date of his last examination and opined she needed no future medical care or treatment because of her work injury.
In May 2008, Mr. Hollick took the deposition of the employee. Ms. Hillesheim testified that after she left the employ of Wooddale Nursing Home in February 1997, she then worked simultaneously for two gas stations, six months at the first and three months at the second. The employee did not again work until 2001 when she operated a daycare out of her home in Pipestone, Minnesota, through June 2004. The employee then moved to Worthington, Minnesota, where she worked part-time at a drugstore for three months. In 2007, the employee attended Avalon Beauty School and in November 2007 went to work for Great Clips in Worthington, Minnesota. In May 2008, the employee purchased Professional Hair Designers, a salon in Worthington, Minnesota, which she operated at the time of her deposition.
In considering whether there has been a substantial change in the employee’s condition, this court has used the analysis set forth in Fodness v. Standard Café, 41 W.C.D. 1054 (W.C.C.A. 1989). The court will consider such factors as a change in diagnosis, a change in the employee’s ability to work, additional permanent partial disability, the necessity of more costly and extensive medical care, whether there exists a causal relationship between the injury covered by the settlement and the current worsened condition, and the contemplation of the parties at the time of the settlement. In applying this analysis, the court considers the record to determine the employee’s condition at the time of the settlement as compared to the condition at time the vacation of the settlement is sought.
At the time of the settlement the employee had an acute low back strain with complaints of radiating pain into her legs. In 2003, Dr. Welchin diagnosed mechanical low back pain with occasional left leg symptomology. Dr. Morgan, in 2006, diagnosed low back pain with no evidence of radiculopathy or nerve impingement. Based upon the record before us, we are unable to determine whether there has been any significant change in the employee’s diagnosis. There is no medical evidence the employee currently has any permanent partial disability or any medical evidence that her condition is now worsened. While the employee contends she has been periodically unable to work since the time of the settlement, there is no medical or vocational testimony that the employee has been disabled due to her work injury. Finally, there is no evidence that the need for the employee’s medical treatment after the settlement was due to the personal injury. Rather, the only medical evidence is that of Dr. Wyard who opined in 1997 and 2008 that the employee needed no further medical treatment for her work injury.
We conclude the employee has failed to meet her burden of establishing an unanticipated change in her medical condition. On that basis, the petition to vacate is denied.
4. Voidable Award
The employee contends the award is voidable and seeks its vacation. The employee argues the compensation judge would not have approved the settlement had the unaltered document been presented to the compensation judge with question 2 answered “No.” This material representation to the compensation judge, the employee asserts, makes the stipulation voidable and the employee asks that it be vacated.
In Sondrol v. Del Hayes & Sons, Inc., 47 W.C.D. 659 ( W.C.C.A. 1992), this court held that an award that was irregularly issued is voidable. “In determining whether a voidable award should be vacated, this court will consider (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 the parties; and (4) the equities involved.” Id. at 666-67.
Minn. Stat. § 176.521, subd. 2, requires a compensation judge to “exercise discretion in approving or disapproving a proposed settlement.” Further, the statute mandates that the “parties to the agreement have the burden of proving that the settlement is reasonable, fair, and in conformity with this chapter.” The unaltered settlement agreement with question 2 answered in the negative would certainly have presented to the compensation judge a serious question and concern whether the settlement was reasonable, fair, and in conformity with the chapter. We acknowledge the employee responded affirmatively to question 1, stating she had read and understood the entire stipulation for settlement. Nonetheless, the very fact that the employee responded “No” to question 2 calls into question the employee’s understanding and appreciation of the nature and effect of the settlement. A settlement agreement is a contract, and, as such, the settlement agreement must reflect the intent of the parties. Poser v. Abel, 510 N.W.2d 224 (Minn. App. 1994). Where, as here, there is persuasive evidence that one party did not understand the terms of the settlement, it would be prejudicial to that party and inequitable not to vacate the settlement. Accordingly, the Award on Stipulation served and filed May 13, 1998, is vacated.
 The Stipulation for Settlement at Paragraph X. at page 7 contains a statement that the employee “freely and without reservation has affirmatively answered the following question in her own handwriting and has initialed each answer.” Following this statement was a list of six questions, the first two of which were:
1. Have you read and do you understand the entire Stipulation for Settlement?
2. Has the Stipulation for Settlement been explained to you by your attorney, and do you understand it?
 The supreme court has enumerated the following elements of fraud: (1) a false representation of facts; (2) the representation must deal with a past or present fact; (3) the fact must be susceptible of knowledge; (4) the representing person must know the fact is false; (5) the representing party must intend that another be induced to act based on the false representation; (6) the other person must in fact act on the false representation; and (7) the misrepresentation must be the proximate cause of actual damages. Weise v. Red Owl Stores, Inc., 286 Minn. 199, 202, 175 N.W.2d 184, 187 (1970).
 The employee did, however, affirmatively answer question 1 at paragraph X. stating that she had read and understood the stipulation for settlement.
 The stipulation agreement was not conclusively presumed to be reasonable, fair, and in conformity with the chapter because the employee’s rights to rehabilitation benefits were closed out.