DALE A. CRANDALL, Employee, v. B & D PUMP, INC., and AMERICAN INTERSTATE INS. CO., Employer-Insurer/Appellants, and UNITED STATES STEEL CORP., SELF-INSURED, Employer, and ST. LUKE’S CLINIC, UNITED HEALTHCARE SERVS., ST. LUKE’S HOSP. & REG’L TRAUMA CTR., and ST. MARY’S DULUTH CLINIC HEALTH SYS., Intervenors.
WORKERS’ COMPENSATION COURT OF APPEALS
SEPTEMBER 28, 2010
SETTLEMENTS - INTERPRETATION; SETTLEMENTS - HOLD HARMLESS CLAUSE. The compensation judge properly interpreted a hold harmless clause in the parties’ stipulation for settlement to place liability for permanent partial disability associated with the employee's chronic dysphagia on the appellant employer and insurer.
Determined by: Stofferahn, J., Wilson, J., and Pederson, J.
Compensation Judge: Jerome G. Arnold
Attorneys: Robert C. Falsani, Falsani, Balmer, Peterson, Quinn & Beyer, Duluth, MN, for the Respondent Employee. Michael D. Miller and Jeffrey R. Homuth, McCollum, Crowley, Moschet & Miller, Minneapolis, MN, for the Appellants. James P. Paciotti, Duluth, MN, for the Respondent Employer.
DAVID A. STOFFERAHN, Judge
Employer B & D Pump and its insurer appeal from the compensation judge’s determination that, pursuant to a hold harmless clause in a 2004 settlement between the parties, the appellants are liable for payment of permanent partial disability awarded to the employee. We affirm.
The employee, Dale Crandall, sustained injuries to his cervical spine on August 31 and October 18, 1979, while driving a production truck for United States Steel Corporation. The employee was treated for a C5-6 disc herniation by discectomy and fusion on October 24, 1979. On December 11, 1985, he underwent a second surgery consisting of a C4-5 level fusion.
Sometime thereafter, the employee began working for B & D Pump performing pipe fitting and concrete finishing. On July 7, 2000, he sustained a low back injury in this employment while digging a trench and lifting chunks of concrete. The employee subsequently underwent low back surgery on February 20, 2001, consisting of a right L2 hemilaminectomy and a facetectomy, discectomy and foraminotomy at L2-3. In January 2002, the employee underwent further low back surgery in the form of bilateral laminectomy at L1, L2 and L3, with L2-3 bilateral medial facetectomies, an L2-3 discectomy, foraminotomy at L1 through L4, and a posterior fusion at L2-3 with fixation using pedicle screws.
About three months after the second low back surgery, the employee began to have increased pain in his neck and left arm extending to his hand, as well as some right hand numbness. An MRI of the cervical spine performed on July 11, 2002, showed that the employee's prior fusions from C4 to C6 were solid, but revealed further herniated discs with spinal cord impingement at the C3-4 and C6-7 levels.
Dr. Mark C. Engasser, who saw the employee for an independent medical examination on June 2, 2003, for U.S. Steel, offered the opinion that the employee had sustained a Gillette injury to his cervical spine concurrently with the 2000 low back injury at B & D Pump. He attributed all of the employee’s medical treatment for the cervical spine after that date to this Gillette injury. Dr. Engasser further apportioned the employee’s disability from his cervical condition 25 percent to the 1979 injuries and 75 percent to the 2000 Gillette injury. He recommended conservative treatment before consideration of additional surgery for the cervical spine surgery which he considered would be risky.
B & D Pump petitioned for a temporary order which was issued October 16, 2003. It allowed for the payment by B & D Pump of permanent total disability benefits to the employee from January 20, 2003, and continuing. In September 2004, the employee, U.S. Steel, B & D Pump, and others entered into a stipulation for settlement of outstanding issues.
In the stipulation, the employee claimed that he was permanently totally disabled as the result of the 1979 injuries and the 2000 injury. He also claimed 31 percent permanent partial disability from the 2000 injury. B & D Pump denied the extent of the employee’s permanent partial disability from the 2000 injury, disputed the employee’s claimed wage, and asserted a right to reimbursement from U.S. Steel and Smokey’s Towing for wage loss benefits paid or payable in the future.
In the stipulation, the parties agreed that the employee was permanently and totally disabled as of January 13, 2003. The employee also waived additional permanency claims to the cervical spine, claims for underpayment of benefits on or before January 17, 2003, certain medical claims in the future, and all future claims against U.S. Steel except for future medical care related to the 1979 injuries. The parties also stipulated that the employee had a 31 percent permanency rating from the 2000 injury as of the date of settlement.
The stipulation for settlement also allocated and settled responsibility for payment of benefits among the employers and insurers. In return for a lump sum payment by U.S. Steel of $40,000, B & D Pump agreed to a full, final, and complete settlement of its claims for reimbursement and/or contribution against U.S. Steel and agreed to hold U.S. Steel harmless as to any future claims by the employee arising out of the 1979 injuries with U.S. Steel. The parties further agreed that the intervenors’ claims for medical care and treatment expenses to the cervical spine would be paid by U.S. Steel, while treatment expense claims for the low back would be paid by B & D Pump. Smokey’s Towing paid $4,000 to B & D Pump in return for a settlement of contribution and reimbursement claims. B & D Pump also agreed to hold Smokey’s Towing harmless for any claims of the employee.
On January 11, 2007, the employee underwent an anterior C3-4 and C6-7 decompression and fusion. U.S. Steel admitted the surgery was related to the 1979 injuries and paid for the associated medical expenses.
Shortly after the surgery, the employee began to experience gagging, and he has had continuing problems with swallowing, eating, and talking. The employee also had frequent vomiting. His treating physicians, Dr. Mark Rhodes, diagnosed severe dysphagia and hyperreflexia, and concluded that these conditions were due to neurologic damage during the 2007 surgery and were therefore related to his 1979 cervical work injuries. Dr. Rhodes rated the condition with 15 percent permanent partial disability.
In January 2009, the employee filed a claim petition seeking 15 percent permanent partial disability in accordance with Dr. Rhodes’ opinion. A hearing was held before Compensation Judge Jerome Arnold on February 17, 2010. Issues included causation and the extent of permanency associated with the dysphagia condition, and whether the hold harmless agreement between the employers in the 2004 stipulation applied to the employee’s claim for permanent partial disability benefits. Following the hearing, the judge found that the employee’s dysphagia was causally related to neurologic damage during his 2007 surgery which was itself directly related to the employee’s 1979 work injuries. The compensation judge also determined the employee had sustained an additional 15 percent permanent partial disability. These findings are not appealed. The compensation judge further concluded that the hold harmless agreement applied and that B & D Pump was liable for the payment of the permanency awarded for the dysphagia condition. B & D Pump and its insurer appeal from this portion of the Findings and Order.
The hold harmless clause that is the issue in this matter is found in paragraph XVI. A., of the stipulation and reads as follows:
That U.S. Steel Corporation has agreed to pay, and B & D Pump and its insurer agree to accept the sum of $40,000.00 in exchange for a full, final and complete settlement of any and all claims for contribution and/or reimbursement, past, present and future arising out of the alleged injuries of August 31, 1979 and October 18, 1979. Only future medical care and services as it relates to the cervical injuries of August 31, 1979, and/or October 18, 1979, shall remain open and available to the Employee subject to all available defenses including, but not limited to, reasonableness, necessity, and causation. That B & D Pump and its insurer agree to hold U.S. Steel Corporation, self-insured, harmless as to any other claims that may be filed by the Employee arising out of said injury dates.
The compensation judge concluded that under this clause any liability which U.S. Steel might have in the future, resulting from the two 1979 work injuries, had been assumed by B & D Pump and that, as a result, the employee’s permanent partial disability arising out of the 2007 surgery was the responsibility of B & D Pump. We conclude the compensation judge’s interpretation of the clause is reasonable.
The appellants argue that the compensation judge erred as a matter of law in reaching his conclusions. They contend his decision is contrary to the decision of the Minnesota Supreme Court in Sweep v. Hanson Silo, 391 N.W.2d 817, 39 W.C.D. 51 (Minn. 1986) and must be reversed. We are not persuaded.
In Sweep, the parties submitted a stipulation that purported to close out all future claims, not only claims related to the specific injuries in dispute but also claims for any other injuries which the employee might have sustained in his employment. The Workers’ Compensation Court of Appeals concluded the settlement was impermissibly broad and disapproved the agreement. The Minnesota Supreme Court affirmed. Since Sweep, this court has held on numerous occasions that a settlement which seeks to close out an employee’s future claims for injuries which were unknown or not in dispute at the time of the agreement is improper. Stipulations that close out claims for unknown injuries do not, in fact, bar such claims. Munklewitz v. Bladholm Bros., slip op. (W.C.C.A. July 28, 1993); Larson v. St. Louis Co., 62 W.C.D. 545 (W.C.C.A. 2002); Gates v. Costco Wholesale, No. WC04-201 (W.C.C.A. Jan. 14, 2005).
We fail to see, however, how the hold harmless clause at issue in the present case could be considered to be an impermissible close out of future unknown claims. Nothing in the clause can be read as attempting to limit the employee’s future claims for consequential injuries related to the 1979 injuries at U.S. Steel. We read the paragraph in the stipulation and the clause at issue here as simply an agreement between U.S. Steel and B & D Pump as to which employer would be responsible for future claims arising out of the 1979 injuries. We see no reason why an allocation of responsibility for consequential injury claims should be barred by the language of Sweep. The question here is one of interpretation of contract language.
The plain language of the clause is that B & D Pump accepted liability for all claims the employee might bring relating to the 1979 injuries except for medical expenses. The claims brought by the employee for permanent partial disability related to dysphagia are well within the scope of the hold harmless clause. Pursuant to the agreement it entered into with U.S. Steel, B & D Pump is responsible for the permanent partial disability benefits awarded by the compensation judge. It is not the role of the compensation judge or of this court to determine if, with the benefit of hindsight, the agreement was wise or unwise for B & D Pump.
The appellants also argue that the results reached by the compensation judge were unfair in that the results were not contemplated by the parties at the time of the settlement. We note, however, that in the stipulation, the employee was recognized as being permanently and totally disabled and, as a result, he would not have future wage loss claims related to the 1979 injuries. The permanent total disability designation also resolved future claims for rehabilitation services. The employee waived future claims for permanent partial disability of the cervical spine and U.S. Steel remained responsible for medical bills connected to the 1979 injuries. Yet, U.S. Steel and B & D Pump agreed that B & D Pump would hold U.S. Steel harmless for “any other claims that may be filed by the employee arising out of said injury dates.” There is no reason, then, to assume that the present issue could not have been reasonably anticipated by the parties at the time of the settlement. In any event, the appellants point to no language in the stipulation which would in some way limit the plain language of the hold harmless clause.
The compensation judge’s decision is affirmed.
 See Gillette v. Harold, Inc., 257 Minn. 313, 101 N.W.2d 200, 21 W.C.D. 105 (1960).
 The other parties included Smoky’s Towing and its insurer, and intervenors Blue Cross/Blue Shield of Minnesota and St. Luke’s. B & D Pump alleged that the employee sustained a Gillette injury of an unspecified nature on January 17, 2003, while working for Smoky’s Towing.