HAZEL M. PATTERSON, Employee/Petitioner, v. RELIANT EMPLOYMENT GROUP and AMERICAN COMPENSATION INS. CO./RTW, INC., Employer-Insurer.

 

WORKERS= COMPENSATION COURT OF APPEALS

FEBRUARY 4, 2002

 

HEADNOTES

 

VACATION OF AWARD.  The employee failed to present evidence sufficient to vacate the Award on Stipulation on the grounds of a mutual mistake of fact, newly discovered evidence or a substantial change in medical condition.  The employee=s petition to set aside the award on the basis of the alleged fraudulent behavior of her former attorney must be denied where there is no evidence of fraud on the part of any party (the employer or insurer) to the Stipulation for Settlement.

 

Petition to vacate denied.

 

Determined by: Johnson, J., Wilson, J., and Pederson, J.

 

 

OPINION

 

THOMAS L. JOHNSON, Judge

 

BACKGROUND

 

Hazel M. Patterson, the employee, injured her right knee on or about July 13, 1999, while working for Reliant Employment Group, insured by American Compensation Insurance Company/RTW, Inc.  The employer and insurer admitted liability for the employee=s injury and paid medical benefits, temporary total and temporary partial disability benefits and permanent partial disability benefits.

 

On July 30, 1999, the employee saw Dr. Donald E. Johnson at the Brooklyn Park Medical Center complaining of right knee pain.  The employee gave a history of striking her right knee on a concrete floor while at work.  On examination, the doctor noted tenderness in the peripatellar area of the employee=s right knee with full range of motion and no sign of meniscus injury.  An x-ray of the right knee showed mild medial joint space narrowing and tiny osteophytes in the intercondylar eminence with no acute fracture.  Dr. Johnson diagnosed a contusion of the right knee and chondromalacia secondary to the contusion.  The doctor prescribed anti-inflammatory medication and instructed the employee to limit her kneeling and squatting.  The employee returned to see Dr. Johnson on August 18, 1999.  The doctor=s examination was normal and he felt the contusion of the employee=s right knee had improved.  On October 15, 1999, Dr. Johnson noted the employee was making progress but referred her for a second opinion with an orthopedic surgeon.

 

The employee saw Dr. Gary R. Sager on October 21, 1999.  The doctor diagnosed an osteoarthritic right knee with what appeared to be a medial meniscal tear.  An MRI scan of the right knee on November 29, 1999, showed the menisci were intact, but revealed chondromalacia of the patella and the medial femoral condyle which Dr. Sager believed was arthritic rather than traumatic.  He opined, however, the employee=s fall may have caused a flare-up of the arthritis.

 

The employee returned to see Dr. Sager on March 2, 2000, with continued complaints of tenderness, especially in the hyperflexed position.  The doctor injected the employee=s knee with Depo-Medrol and Marcaine.  She returned to Dr. Sager on March 23 with continuing problems.  On April 14, 2000, the doctor performed a chondroplasty debridement and repaired the medial and lateral menisci.  The post-operative diagnosis was chondromalacia, stage III, of the medial femoral condylar surface, degenerative lateral meniscal fraying and a degenerative anterior horn tear of the medial meniscus.  Following the surgery, the doctor prescribed physical therapy.  The employee was totally disabled from April 14, 2000 through May 12, 2000.  The doctor released the employee to return to work on May 18, 2000, with a restriction of sitting work only.  In a June 15, 2000 work ability report, Dr. Sager stated he would re-check the employee in six weeks and noted Apossible future surgery.@  On July 27, 2000, Dr. Sager noted the employee had ongoing pain and prescribed a second steroid injection.  On October 26, 2000, Dr. Sager ordered a series of injections to try to relieve the employee=s arthritic pain symptoms.  The doctor noted the employee=s arthritis and chondromalacia were of an ongoing degenerative nature.  By report dated October 21, 2000, Dr. Sager opined the employee had reached maximum medical improvement (MMI) and rated a one percent permanent partial disability.^[1]  The insurer voluntarily paid this benefit to the employee.

 

Askew Rehabilitation Services, a firm of qualified rehabilitation consultants, began working with the employee following her injury.  Initially, their efforts consisted of medical and vocational management.  Following her surgery, the employee returned to work for the employer at a modified job and the insurer commenced payment of temporary partial disability benefits.  In July 2000, the employee left her job with the employer and took a job at Wal-Mart.  In September 2000, the employee=s hours at Wal-Mart were reduced.  In a progress report to the insurer dated September 13, 2000, Mr. Askew stated: AOn 9/5/00 I received a call from the insurer asking if I had heard anything from Ms. Patterson yet.  I said I had not and that I tried to call today and her phone is still temporarily disconnected.  Insurer told me that when speaking with her employer, Ms. Patterson had told the employer that she was going to have a total knee replacement.  Insurer has sent for medical records and will be contacting me regarding this.@  (Resp. Ex. F.)  On December 19, 2000, the employee=s rehabilitation services were terminated due to the settlement.  Apparently, the employee continued to work part-time for Wal-Mart after the settlement.

 

The employer and insurer filed a Notice of Intent to Discontinue Benefits (NOID) on September 29, 2000, seeking to discontinue the employee=s temporary partial disability benefits.  They contended the employer had made acceptable job offers to the employee within her restrictions and contended the employee=s reduced hours at Wal-Mart were voluntary.  Gary Meyer, Esq., the employee=s attorney, requested an administrative conference which was scheduled for October 30, 2000.  This conference was apparently continued at Mr. Meyer=s request and rescheduled for November 29, 2000.  Prior thereto, the parties apparently settled the case and the conference was cancelled.  The parties entered into a Stipulation for Settlement which resolved the employee=s claims on a full, final and complete basis with certain medical expenses left open^[2] in exchange for a lump sum payment of $6,500.00.  An Award on Stipulation was filed on January 10, 2001.

 

When the employee initially retained Mr. Meyer, he was associated with the firm of Milavetz, Gallop & Milavetz, P.A.  Sometime thereafter, Mr. Meyer left the Milavetz firm to join Meyer, Puklich, Merriam & Johnson.  On December 20, 2000, Ms. Patterson signed a letter directed to the Milavetz firm advising them she was discharging their firm and retaining the Meyer firm to represent her.  On February 23, 2001, the employee signed a substitution of attorney in which she discharged Mr. Meyer and again retained the Milavetz firm to represent her.

 

On March 15, 2001, the employee returned to see Dr. Sager complaining of continued right knee pain.  The doctor noted the employee=s work injury was Amore of a meniscal tear and then she has the baseline arthritis, which is what by her symptoms what are residual for her.@  (Resp. Ex. C.)  Dr. Sager reinjected the employee=s right knee with Depo-Medrol and Marcaine.  On April 23, 2001, the employee saw Dr. Douglas A. Becker, an orthopedic surgeon, on referral by Dr. Sager.  On examination, the doctor noted the employee=s gait was slow with intense medial joint line tenderness and swelling.  An x-ray showed mild medial compartment degenerative changes.  Dr. Becker diagnosed early degenerative joint disease.  The doctor recommended the employee continue with her exercises and work subject to restrictions.  On May 7, 2001, the doctor noted the employee was limping severely and stated her degenerative changes were quite advanced.  Dr. Becker restricted the employee to working four hours a day.  He recommended total knee replacement surgery and stated that anything short of a knee replacement would be less likely to provide optimal results.  By report dated July 16, 2001, Dr. Becker diagnosed pre-existing degenerative joint disease aggravated by the July 12, 1999 injury.  The doctor stated the arthroscopic surgery was not adequate to relieve her symptoms and recommended a right total knee arthroplasty.  The doctor restricted the employee from any prolonged standing, walking, squatting, kneeling or stair climbing.

 

On August 29, 2001, the employee filed a Petition to Vacate the Award on Stipulation of January 10, 2001, based on mistake of fact, newly discovered evidence, fraud and substantial change in medical condition.  The employer and insurer object to the requested vacation.

 

DECISION

 

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).  "Good cause" to vacate an award is limited to:

 

(1)    a mutual mistake of fact;

(2)    newly discovered evidence;

(3)    fraud; or

(4)    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.  The employee contends each of the statutory bases to vacate an award exists in this case.

 

1.  Mutual Mistake of Fact

 

In a mutual mistake case, Athe inquiry focuses on what the situation was and what was known about it at the time of the settlement.@  Franke v. Fabcon, Inc., 509 N.W.2d 373, 377, 49 W.C.D. 520, 525 (Minn. 1993).  A mutual mistake of fact occurs when both parties to a stipulation misapprehend some material fact relating to the settlement.  Shelton v. Schwan=s Sales Enters., 53 W.C.D. 110 (W.C.C.A. 1995).  The employee asserts neither she nor the employer and insurer were aware of the seriousness of her injury at the time of the settlement.  She further contends neither party knew at the time of the settlement the employee would eventually require a total knee replacement.  Thus, the employee argues, there was a mutual mistake of fact justifying a vacation of the stipulation. 

 

The Stipulation for Settlement recites the employee=s contention she was entitled to ongoing temporary partial disability benefits, rehabilitation or retraining benefits and future medical treatment which Amay include additional surgical intervention.@  The employer and insurer contended the employee was capable of working without physical restriction and denied entitlement to any further benefits.  The parties acknowledge, however, the employee had sustained a one percent whole body disability secondary to her personal injury which the employer voluntarily paid.  Thus, at the time of the settlement, the parties agreed the employee had sustained a permanent injury and that future surgery was possible.  The employee has failed to establish a mutual mistake of fact. 

 

2.  Newly Discovered Evidence

 

The employee contends her attorney failed to solicit from Dr. Sager an opinion as to whether or not the work injury aggravated the employee=s pre-existing degenerative knee condition and whether that condition would require a second surgery within a year of reaching maximum medical improvement.  After the settlement, Dr. Becker did so opine.  The employee apparently argues the reports of Dr. Becker constitute newly discovered evidence.  We disagree.

 

To grant relief on the grounds of newly discovered evidence, the evidence must have been in existence at the time of award, but could not have been discovered with the exercise of reasonable and due diligence.  The evidence must have been such as to have had a probable effect upon the outcome of the litigation.  Gruenhagen v. Larson, 310 Minn. 454, 459, 246 N.W.2d 565, 569 (Minn. 1976); Brown v. Bertrand, 254 Minn. 175, 94 N.W.2d 543 (Minn. 1959);  Regents of the University of Minnesota v. Medical Inc., 405 N.W.2d 474, 478 (Minn. App. 1987).

 

Dr. Becker=s reports were clearly not in existence at the time of the award.  Accordingly, they do not constitute newly discovered evidence.

 

3.  Fraud

 

The employee contends she was induced to enter into an improvident settlement based on the fraud, misrepresentations, concealment and deceit of her former counsel.  The employee contends the settlement amount was grossly inadequate and that she relied to her detriment on misrepresentations of counsel.  Accordingly, the employee contends the award on stipulation should be vacated.

 

Fraud under Minn. Stat. ' 176.461 generally refers to fraud by one party against another.  Strande v. Woman=s Club of Minneapolis, 50 W.C.D. 527 (W.C.C.A. 1994), aff=d 518 N.W.2d 555, 50 W.C.D. 532 (Minn. 1994).  In this case, the employee does not allege she was defrauded by the employer or insurer nor does she allege the employer or insurer were aware of, or a party to, the alleged fraudulent conduct of her attorney.  Accordingly, we deny the petition to vacate on the grounds of fraud.

 

4. Substantial Change in Medical Condition

 

The employee contends there has been a substantial change in her medical condition since the date of the settlement.  Again, we are unpersuaded.

 

To justify vacation of an award on the basis of change in medical condition, the employee must provide evidence which establishes a substantial worsening in the employee=s condition or significant additional disability since the time of the settlement.  Davis v. Scott Moeller Co., 524 N.W.2d 464, 466-67, 51 W.C.D. 472, 475 (Minn. 1994); Franke at 376-77, 49 W.C.D. at 525.  A number of factors may be considered in determining whether a substantial change has occurred, including 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 than anticipated, and a causal relationship between the work injury and the worsened condition.  Fodness v. Standard Café, 41 W.C.D. 1054 (W.C.C.A. 1989).

 

These factors must be applied in a manner consistent with Minnesota Statutes section 176.461 which requires the change be "clearly not anticipated and could not be reasonably anticipated at the time of the award."  See also Soeffner v. McGuire's Motor Inn, 40 W.C.D. 21, 22 (W.C.C.A. 1987) (medical proof that condition was unanticipated is necessary to show substantial change in medical condition).

 

Dr. Sager=s diagnosis after the April 14, 2000 surgery was chondromalacia of the medial femoral condylar surface and meniscal tears.  In the surgery, the doctor performed a chondroplasty debridement and repaired the medial and lateral menisci.  After the surgery, Dr. Sager=s diagnosis was arthritis of the knee.  On April 23, 2001, Dr. Becker diagnosed degenerative joint disease of the right knee.  This is essentially the same diagnosis Dr. Sager made before the settlement.  The employee=s diagnosis has not changed since the settlement.

 

The employee was working at Wal-Mart at the time of the settlement and apparently continues to work at Wal-Mart.  She does not contend a substantial change in her medical condition has affected her ability to work.  Rather, the employee asserts she will be off work for a substantial period of time if she undergoes knee replacement surgery.  At best, the employee has proven only a future, temporary change in her ability to work.

 

The employee will have additional permanent partial disability should she undergo knee replacement surgery.  In such an event, more extensive medical care would be required.  However, payment for medical expenses is not foreclosed by the Stipulation for Settlement.  Dr. Becker opined a causal relationship between the employee=s injury and her need for surgery.  The employer and insurer dispute this relationship but present no evidence in support of their contention.

 

Finally, the employee contends the parties did not contemplate or anticipate that she would require surgery within a year of the settlement.  The records of Dr. Sager reflect that as of June 15, 2000, he felt a second surgery was possible.  The records of the QRC indicate the employee told her employer in September 2000 she might need total knee replacement surgery.  The Stipulation for Settlement acknowledges the employee might need additional surgery.  Clearly, that the employee might need surgery sometime in the future was known to the parties at the time of the settlement.  Granted, the timing of that surgery was unknown to the parties but we attach little significance to that fact.  On balance, we conclude the employee has failed to establish good cause to vacate the award on stipulation, and the employee=s petition is accordingly denied.