The employee appeals from the compensation judge’s order denying approval of a stipulation for settlement that was filed with the Office of Administrative Hearings on August 9, 2013.  We affirm.

The employee, Sharon Wiehoff, sustained a work-related injury on March 18, 2008, while working for the employer herein, Independent School District No. 15.  The employer and insurer admitted that the employee sustained a temporary cervical strain as a result of the March 18, 2008 injury.  Eventually, Dr. David Kraker recommended that the employee undergo a cervical fusion.  The employer and insurer denied responsibility for the fusion surgery

In the meantime, the parties filed a stipulation for settlement in March 2011.  That stipulation closed all of the employee’s claims, with the exception of ongoing medical benefits, on a full, final, and complete basis.  Compensation Judge Peggy Brenden served and filed an award on stipulation on March 22, 2011, in which she approved the March 2011 stipulation.  The parties then proceeded to a hearing on the denied fusion procedure.  The hearing took place before Compensation Judge Brenden, who issued her findings and order on April 12, 2011 and awarded the fusion procedure to the employee.  The case was appealed to this court, and the compensation judge’s decision was affirmed.  Wiehoff v. Independent Sch. Dist. No. 15, slip op. (W.C.C.A. Sept. 28, 2011).  The employee has not proceeded with the fusion surgery, and in her present appeal brief, the employee indicates that it is “unclear from the record” whether she intends to pursue the fusion surgery.

In August 2012, the employee retained new representation with the Law Offices of Donald Noack.  The employee indicates in her present appeal brief that her primary goal in August 2012 “was to obtain a fair settlement with respect to her ongoing medical claims as she had previously entered into a full, final and complete settlement leaving only future medical benefits open.”  In her present appeal brief, the employee states that “after protracted negotiations with the employer and insurer a settlement was reached between the parties for $110,000.00, which closed out past, present and future medical treatment.”  Accordingly, the parties submitted a stipulation for settlement to the Office of Administrative hearings on August 9, 2013.  The August 2013 stipulation attempted to close out all future medical benefits with respect to the admitted cervical injury of March 18, 2008, in exchange for the payment of $110,000.00 from the employer and its insurer.

On August 15, 2013, Compensation Judge Brenden conducted a telephone conference.  Counsel for the employer and insurer appeared along with a claims representative from the insurer.  The employee appeared as well, along with her attorney.

The compensation judge then issued an “Order Denying Stipulation Approval” and explained that the telephone conference had been held at her request “because I had concerns about the fairness and reasonableness of the Stipulation terms.”  The compensation judge noted that medical benefits were the only benefits left open at the time of the 2011 stipulation.  Based on the 2011 judicial determination that the employee did have a work injury serious enough to warrant a fusion surgery, the compensation judge felt that “the outcome of the 2011 hearing strongly suggests that there is likely to be a need for extensive, expensive medical care in [the employee’s] future.”

The compensation judge further indicated that she considered it highly unlikely that the $110,000 payment the employee would receive from the 2013 stipulation would be used toward medical expenses.  Rather, the compensation judge indicated that “most likely - - and understandably - - the money she would receive would be used for day-to-day living expenses, leaving her without resources to pay for necessary work-related treatment in the future.”  The compensation judge also noted that “the Stipulation, if approved, would unfairly shift work-related medical costs from the liable employer/insurer to a private insurer or government agency.  Under the circumstances of this case, I consider this likely cost-shifting to be unfair and unreasonable.” 

Ultimately, the compensation judge denied the request for approval of the stipulation filed on August 9, 2013.           The employee appeals the compensation judge’s denial.  The employer and insurer have indicated that although they are aware of the pending appeal, they will not take an active role or a substantive position in the appeal.

In reviewing cases on appeal, the Workers’ Compensation Court of Appeals must determine whether “the findings of fact and order [are] clearly erroneous and unsupported by substantial evidence in view of the entire record as submitted.”  Minn. Stat. § 176.421, subd. 1.  Substantial evidence supports the findings if, in the context of the entire record, “they are supported by evidence that a reasonable mind might accept as adequate.”  Hengemuhle v. Long Prairie Jaycees, 358 N.W.2d 54, 59, 37 W.C.D. 235, 239 (Minn. 1984).  Where evidence conflicts or more than one inference may reasonably be drawn from the evidence, the findings are to be affirmed.  Id. at 60, 37 W.C.D. at 240.  Similarly, “[f]actfindings are clearly erroneous only if the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed.”  Northern States Power Co. v. Lyon Foods Prods., Inc., 304 Minn. 196, 201, 229 N.W.2d 521, 524 (1975).  Findings of fact should not be disturbed, even though the reviewing court might disagree with them, “unless they are clearly erroneous in the sense that they are manifestly contrary to the weight of the evidence or not reasonably supported by the evidence as a whole.”  Id.

As a general rule, the settlement of disputed claims without litigation is favored.  Larson v. University of Minn., 64 W.C.D. 112, 114 (W.C.C.A. 2004) (citing Hentshel v. Smith, 278 Minn. 86 153 N.W.2d 199 (1986)).  However, settlement of a workers’ compensation claim may be made only in compliance with the terms and requirements of the workers’ compensation act, and since 1935, the workers’ compensation act has required that settlements compromising an injured employee’s claim be fair and reasonable and in conformity with the workers’ compensation act and laws.    See Alvord v. Hoffman Eng’g Co., 55 W.C.D. 47 n.8 (citing Krebsbach v. Lake Lillian Coop. Creamery Ass’n, 350 N.W.2d 349, 36 W.C.D. 796 (Minn. 1984); Heinz v. Vickerman Constr., 306 N.W.2d 888, 33 W.C.D. 667 (Minn. 1981); Senske v. Fairmont & Waseca Canning Co., 232 Minn. 350, 45 N.W.2d 640, 16 W.C.D. 242 (1951)).

Minn. Stat. § 176.521, subd. 2, provides that a settlement agreement where both the employee and the employer or insurer “are represented by an attorney shall be conclusively presumed to be reasonable, fair, and in conformity with this chapter exceptwhen the settlement purports to be a full, final, and complete settlement of an employee’s right to medical compensation under this chapter or rehabilitation . . .” (emphasis added).  The settlement here purports to close out “medical compensation” on a full, final, and complete basis.  Therefore, the stipulation “must be approved by the commissioner or a compensation judge.”  Id.

“The parties to the agreement of settlement have the burden of proving that the settlement is reasonable, fair, and in conformity with [the workers’ compensation act],” and a compensation judge has “discretion in approving or disapproving a proposed settlement.”  Minn. Stat. § 176.521, subd. 2.  Therefore, if a compensation judge reviews a proposed stipulation and concludes that it is not in conformity with the provisions of Chapter 176, the settlement can be disapproved.  See Paulson v. Holiday Inn, slip op. (W.C.C.A. July 24, 1995).

The employee initially argues that any factual assumptions made by the compensation judge, including the employee’s private insurance coverage, or lack thereof, or the manner in which she might use the proceeds of the settlement for medical expenses or some other daily living expenses, are unsupported by the record and that the compensation judge improperly proceeded without a formal record of the proceedings.  There is, however, no requirement for a formal proceeding in Minn. Stat. § 176.521.  The compensation judge reviewed the stipulation and the circumstances of the case before determining that a complete medical closure was not reasonable at this time.  Appellate courts have reviewed disapprovals of stipulations in the past.  See, e.g., Heinz, 306 N.W.2d at 890, 33 W.C.D. at 671-72 (affirming disapproval by compensation counsel and the W.C.C.A.); Larson v. University of Minn., 64 W.C.D. 112 (W.C.C.A. 2004) (vacating disapproval).

In Heinz, the employee was purportedly willing to close retraining and vocational benefits after an admitted injury, although he had “no real vocational guidance and seems to have no defined and fixed goals with respect either to retraining or to employment.”  306 N.W.2d at 890, 33 W.C.D. at 671.  The parties raised a number of arguments, including that “the employee is an adult with considerable experience, who had entered a prior settlement arising out of his injury, and was represented by counsel.  Furthermore, settlements avoid litigation, with resulting economies in time and expense, and are ordinarily encouraged as in the best interests of the parties.”  Id.  Those arguments are similar to the arguments being raised in this case.  However, the court concluded that the terms of the settlement and the “circumstances disclosed by the record” that was available in the case permitted a determination that the settlement was not in conformity with the workers’ compensation act and affirmed the determination that the stipulation was not fair and reasonable.^[1]  Id.

Here, the parties submitted the August 2013 stipulation attempting to close out all future medical benefits with respect to the admitted cervical injury of March 18, 2008.  The compensation judge, however, did not approve of the stipulation because, based on the outcome of the 2011 hearing, the employee did have a work injury serious enough to warrant a fusion surgery.  Furthermore, the compensation judge indicated that “the outcome of the 2011 hearing strongly suggests that there is likely to be a need for extensive, expensive medical care in [the employee’s] future.”  On review, we conclude that the compensation judge had sufficient information available to support these determinations and her ultimate determination that closure of future medical benefits at this time would not be fair and reasonable and in conformity with the workers’ compensation act.

The employee also argues that the compensation judge improperly considered whether there will be a “cost shifting” between the workers’ compensation insurer and some other entity that is not a party to the litigation, and the employee argues that the compensation judge did not properly analyze and compare the medical benefits foreclosed in the settlement by the employee with the consideration provided by the employer.  However, potential cost-shifting consequences, including those from workers’ compensation insurers to other insurance or government programs, are valid considerations for a compensation judge, especially in the case of medical costs where emergency treatment would not be denied by a hospital.

Ultimately, because the compensation judge is given discretion to approve or disapprove of a stipulation, and because the circumstances disclosed in this matter support the compensation judge’s disapproval of a complete closeout of future medical benefits, we affirm.^[2]