CAUTION TO CLAIMANTS ON WORKERS’ COMPENSATION SETTLEMENTS
By Attorney Dennis Kurth
Snow, Carpio & Weekley
The Industrial Commission was given jurisdiction to approve settlements of workers’ compensation cases by virtue of a Supreme Court case in 1986 followed by the adoption in 1987 of a set of administrative rules for ALJ’s to follow in approving settlement agreements.
A bona fide dispute and a written settlement agreement signed by the parties with the claimant certifying that they have read and understand the terms of the settlement agreement and were not signing under duress or coercion, are required. (ICA policies and procedures as published in the ICA Manual, however, do not have the force and effect of the Industrial Commission Rules of Procedure or the workers’ compensation statute).
The question of whether a purely verbal agreement to settle a workers’ compensation case is enforceable against an insurance carrier arose in the context of a claimant who died in a car crash while on his way to his attorney’s office to sign a settlement agreement. The claimant’s heirs sought to enforce the verbal agreement but the carrier, of course, claimed that it could not be enforced because the written agreement had not been signed.
The Industrial Commission, in Tabler, refused to enforce the verbal settlement agreement and the claimant’s heirs appealed. The Court of Appeals held that a verbal agreement could be enforceable if the parties intended to be bound by the verbal agreement and set aside the Industrial Commission’s award. The case was remanded to the Industrial Commission to hold hearings to determine the intent of the parties. In an important footnote, however, the Court held that it was not addressing the issue of whether a verbal settlement could be enforced against an injured worker.
The case was then settled between the heirs and the insurance carrier. Since then no changes have been made to the statue or the Industrial Commission rules regarding settlements. Still, except for the Industrial Commission policies and procedures, no written agreement is required.
Recently, in a memo decision, the Court of Appeals held that an oral settlement could be enforced against the claimant who had simply changed her mind about settling her case and refused to sign the written settlement agreement. In the True Value case, the claimant, whose attorney had withdrawn when she changed her mind about the settlement, was unrepresented in the Court of Appeals and did not even file an answering brief, thereby confessing error. In addition, the Court felt that, “on this record”, the verbal agreement should be enforced.
The True Value case, even though not a legal precedent, creates a dilemma for claimants, represented or unrepresented. While the carriers and their attorneys, in euphoria over the ruling, will seek to enforce verbal settlements, claimants and their attorneys must now be extremely cautious in settlement negotiations to anticipate every eventuality that could affect their decision as they may not have the luxury of reconsidering their decision before the settlement documents arrive.
True Value will probably not be the last word in the enforce-ability of verbal settlements against claimants and should not be taken as such. It would be very bad policy for the Industrial Commission to follow for many reasons including that facts can change quickly and injured workers should not be held to verbal agreements under the workers’ compensation law, which is solely designed to help them, until they have read and understood the language of the settlement agreement.
All claimants contemplating settling their cases should seek the advice of experienced counsel first. For claimants’ attorneys, the best policy is to advise the carrier or their attorney that they do not intend to be bound by the settlement until the C & S is fully executed and the claimant certifies that they understand all the terms.
For more information on Workers' Compensation or Social Security Disability, please contact Snow, Carpio & Weekley toll-free at 855-325-4781 or visit our website at www.workinjuryaz.com. We serve the entire State of Arizona and have offices located in Phoenix, Tucson, Yuma and Lake Havasu City.