Opinion
NO. 2015-CA-001168-WC
06-03-2016
LANDY MILLS APPELLANT v. NALLY AND HAMILTON ENTERPRISES; HONORABLE J. GREGORY ALLEN, ADMINISTRATIVE LAW JUDGE; AND WORKERS' COMPENSATION BOARD APPELLEES
BRIEF FOR APPELLANT: McKinnley Morgan London, Kentucky BRIEF FOR APPELLEE: W. Barry Lewis Hazard, Kentucky
NOT TO BE PUBLISHED PETITION FOR REVIEW OF A DECISION OF THE WORKERS' COMPENSATION BOARD
ACTION NO. WC-13-00153 OPINION
AFFIRMING
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BEFORE: ACREE, CHIEF JUDGE; J. LAMBERT AND MAZE, JUDGES. LAMBERT, J., JUDGE: Landy Mills appeals from the Workers' Compensation Board (the Board)'s July 2, 2015, opinion affirming the opinion of the Administrative Law Judge (ALJ) below. After careful review, we affirm.
Mills injured his back, right leg, and right foot in October 2012 while working for Nally and Hamilton Enterprises (Nally) and initiated a claim for workers' compensation benefits. A formal hearing was held on June 26, 2013. At the hearing, Mills and Nally agreed on a settlement, under which Mills would receive a lump sum of $40,000.00, which included interest, attorney's fees, vocational rehabilitation, temporary total disability, permanent total disability, permanent partial disability, a waiver of the right to reopen and a waiver of medical expenses. The settlement agreement operated as a complete and total dismissal with prejudice. In pertinent part, it stated:
In consideration of the lump sum payment set forth above, the Plaintiff and the Defendant hereby agree that the Plaintiff completely releases and forever discharges the Defendant from any and all liability for further reopening for income benefits pursuant to KRS 342.125 based on an increase in occupational disability, statutory disability, or any other theory of recovery which the Plaintiff now has, or which may hereafter accrue or otherwise be acquired, on account of, or which may in any way grow out of the alleged work-related injury and that the Plaintiff's claim for benefits shall be dismissed with prejudice. Plaintiff shall have no right to reopen for increased occupational disability benefits in consideration of the amounts paid pursuant to this agreement. $8,000.00 of the lump sum settlement to the Plaintiff constitutes consideration for the waiver of the right to reopen. $8,000.00 of the lump sum constitutes consideration for the waiver of all past, present and future medical expenses. No past or future medical bills will be paid by the Defendant-Employer. $500.00 of the lump sum is specifically paid as consideration for the waiver of all claims for vocational rehabilitation. The remainder of the settlement proceeds constitutes consideration for the waiver of all claims for income benefits including temporary total disability; permanent
partial disability; permanent total disability; interest and attorney fees.After the hearing, the ALJ issued a hearing order approving the above settlement agreement. On August 27, 2013, the Chief Administrative Law Judge (CALJ) approved the settlement agreement. Meanwhile, on July 25, 2013, Mills had an MRI of his lumbar spine. Based on the results of the MRI, Mills was referred to Dr. Bean, and the referral was generated on August 26, 2013, the day before the CALJ approved the settlement agreement.
...
[Mills] acknowledges the effects of the settlement for a dismissal with prejudice. [Mills] has been advised that a dismissal with prejudice means that he shall have no right to further payment of any benefits whatsoever as a result of the work accident referenced herein. [Mills] understands that he shall receive no further income benefits; medical expenses, vocational rehabilitation; or TTD benefits at anytime in the future. [Mills] has been warned of the effects of this settlement agreement; [Mills] desires to go forward with the settlement agreement for a dismissal with prejudice due to the risk of loss and costs of further litigation.
On September 6, 2013, Mills filed a motion styled "Motion to Set Aside Proposed Settlement" and raised the fact that he was going to have to have surgery as grounds for setting aside the settlement agreement. Nally responded to Mills' motion on September 23, 2013, objecting to the reopening of the claim and also to Mills' characterization of the agreement as a proposed agreement. Nally argued that the settlement agreement had been formalized in a Form 110 and had been approved by the CALJ. The CALJ granted Mills' motion on September 26, 2013. The record reflects that the CALJ did not consider or receive Nally's response to Mills' motion to reopen, as the order stated, "there have been no objections or other responses to the motion to set aside the settlement agreement." Nally filed a notice of appeal to the Board.
In its November 26, 2013, Opinion and Order Dismissing, the Board determined that the CALJ had treated the motion to set aside the settlement as a motion to reopen Mills' claim. The Board reasoned that under Kentucky Revised Statutes (KRS) 342.125, an order granting the reopening of the claim is not appealable. The Board noted that under Kentucky Rules of Civil Procedure (CR) 54.02(1) and (2), an order is only appealable if it terminates the action itself, acts to decide all matters litigated by the parties, determines all the rights of the parties, and divests the ALJ of his or her authority, citing Tube Turns Division v. Logsdon, 677 S.W.2d 897 (Ky. App. 1984). With regard to Mills' claim, the CALJ's order was not final and appealable because it only determined that Mills had made a prima facie showing that he might prevail under the evidence put forth upon reopening. The order did not establish whether Mills suffered a change of disability or worsening of condition caused by the injury, and there was no final award.
Upon dismissal by the Board, the claim was assigned to ALJ Allen. In an order dated January 23, 2015, the ALJ found that the settlement agreement was valid and enforceable under KRS 342.265 and that Mills' motion to set aside the agreement did not comply with the requirements of 803 Kentucky Administrative Regulations (KAR) 25.010§4(6)(a). The ALJ reasoned that Mills had not shown any evidence that the settlement agreement was procured by fraud, mistake, or that there was any newly-discovered evidence which could not have been discovered by the exercise of due diligence, which would justify reopening under KRS 342.125. The ALJ noted that the MRI and the referral to Dr. Bean occurred before the settlement agreement and thus he could not conclude that there had been a change in Mills' disability since the date of the award or order. Finally, the ALJ concluded that the plain language of the settlement agreement waived Mills' rights to reopen and that Mills had acknowledged that the settlement agreement was explained fully to him by his attorney.
Mills then filed a petition for reconsideration, asking the ALJ to identify what evidence was submitted after the CALJ's order and what evidence he relied upon in determining the law of the case and the enforceability of the settlement agreement. In his petition for reconsideration, Mills argued that he had not filed a motion under KRS 342.125, and contended that because he had filed a motion to set aside the agreement, he was not required to submit the documentation required by 803 KAR 25:010 §4 (6)(a).
The ALJ issued an order denying Mills' petition for reconsideration on February 20, 2015. In this order, the ALJ included a list of the evidence and filings that it considered, per Mills' request. The ALJ then reiterated that the Board found that, while it was not styled as such, Mills' motion was in fact a motion to reopen under KRS 342.125. The Board had accordingly directed the ALJ to consider all the issues raised in the claim. The ALJ again held that the settlement agreement was valid and enforceable.
Mills then appealed to the Board again. In that appeal, he argued that the ALJ's holding that the agreement was enforceable was contrary to the CALJ's order indicating that the agreement was set aside. Mills argued that the Board's statement that "there has been no final award, order or decision" resolving the claim amounted to a conclusion that there was no settlement agreement. Mills also argued that the CALJ's order was binding on the parties and that this precluded the ALJ from making a second determination on the issue.
The Board affirmed the ALJ's January 23, 2015, and February 20, 2015, orders in its Opinion rendered on July 2, 2015. The Board concluded that KRS 342.265(4) provides that the only remedy once an agreement has been approved by an ALJ is for a party to move to reopen under KRS 342.125. The Board held that under KRS 342.125, the process involves two steps. First, a claimant files a prima facie motion, in which he provides sufficient information to demonstrate a substantial possibility of success in the event evidence is permitted to be taken. If the claimant succeeds in demonstrating that there are grounds to reopen, then the matter is assigned to an ALJ and additional proof time is set so the merits of reopening can be fully adjudicated. The Board reasoned that in the instant case, the CALJ did not have access to Nally's objection and response filed on September 23, 2013, because Nally's response was not entered until September 27, 2013, the same day the CALJ entered his order. The Board further noted that it appeared from his findings that the CALJ had not reviewed the settlement agreement, which contained a buyout/waiver of future medical benefits and the right to reopen.
In looking at Mills' motion to set aside the settlement agreement, which alleged that the same problem was still there and that he would have to have surgery, the Board acknowledged that this would be grounds to reopen for a worsening of disability, had the settlement agreement not specifically contained a buyout/waiver of the right to reopen, which foreclosed that option. The Board held that the CALJ's order setting aside the agreement did not control, because it would have amounted to the CALJ making a ruling prior to the taking of proof on the questions of fraud, mistake, or newly discovered evidence. In fact, the Board noted, Mills had made no allegations of fraud or the like, and he even stated that he had not filed his motion on those grounds. The Board also focused on the fact that Mills had acknowledged his signature on the agreement and that his testimony was that he knowingly and willingly entered into the settlement agreement. The Board held that, despite Mills' arguments to the contrary, its prior decision did not determine whether the settlement agreement was enforceable, because the only decision before it was whether or not the CALJ's September 26, 2013, order could be appealed. The Board held that the order was not final and could not be appealed, and thus it did not reach the issue of whether the CALJ erred in setting aside the settlement agreement. In its opinion, the Board determined that it could now reach that issue.
The Board then held the CALJ erred when it set aside the settlement agreement because Mills had not provided proof of, or even alleged, fraud, mistake, or newly discovered evidence that could not have been discovered through due diligence. The Board held that because the CALJ's order setting aside the settlement agreement was interlocutory, the ALJ had the authority to correct the error if it so found. The Board then concluded that the ALJ's determination that Mills failed to prove the agreement was procured through fraud, mistake, or newly discovered evidence was supported by the record and that the conclusion that Mills understood the nature of the agreement and entered into it knowingly, giving up his right to reopen for a worsening of his condition or disability was also supported by substantial evidence.
Mills now appeals to this Court from the July 2, 2015, opinion of the Board. On appeal, Mills argues that the ALJ erred in holding that the settlement agreement was enforceable and that the Board erred in affirming that decision. In support of this, Mills argues that the doctrine of res judicata prevented the ALJ and the Board from reevaluating the CALJ's order setting aside the settlement agreement. Nally argues that the Board's decision was proper and that the settlement agreement was enforceable.
In Western Baptist Hosp. v. Kelly, 827 S.W.2d 685 (Ky. 1992), the Kentucky Supreme Court articulated a reviewing court's standard of review of the Board's decision in a Workers' Compensation appeal. On appeal, our role as a Court "is to correct the Board only where the ... Court perceives the Board has overlooked or misconstrued controlling statutes or precedent, or committed an error in assessing the evidence so flagrant as to cause gross injustice." Id. at 687-88.
In support of his argument, Mills contends that res judicata applies in workers' compensation proceedings, citing Whittaker v. Cecil, 69 S.W.3d 69 (Ky. 2002). Mills argues that the CALJ's order setting aside the settlement agreement amounted to a final determination of the parties rights and that the ALJ's determination that the settlement agreement was enforceable was contrary to the CALJ's holding.
Nally argues, just as the Board held in its opinion, that the settlement agreement had the same finality as a final judgment, and that the proper avenue for relief for Mills was to file a motion to reopen under KRS 342.125.
KRS 342.265(4) states, "If the parties have previously filed an agreement which has been approved by the administrative law judge, and compensation has been paid or is due in accordance therewith and the parties thereafter disagree, either party may invoke the provisions of KRS 342.125, which remedy shall be exclusive." (Emphasis added). KRS 432.125 provides:
(1) Upon motion by any party or upon an administrative law judge's own motion, an administrative law judge may reopen and review any award or order on any of the following grounds:
(a) Fraud;
(b) Newly-discovered evidence which could not have been discovered with the exercise of due diligence;
(c) Mistake; and(Emphasis added).
(d) Change of disability as shown by objective medical evidence of worsening or improvement of impairment due to a condition caused by the injury since the date of the award or order.
(2) No claim which has been previously dismissed or denied on the merits shall be reopened except upon the grounds set forth in this section.
Although Mills styled his motion as a motion to set aside the agreement, we agree that filing a motion to reopen under KRS 342.125 was his exclusive remedy from the settlement agreement, which had been approved by the CALJ. See KRS 342.265(4). Therefore, the CALJ's order setting aside the settlement agreement should have stated that it was reopening the claim.
As the Board noted in its opinion, the procedure for reopening a prior workers' compensation claim involves two steps.
As is reflected in KRS 342.125(2)(a), the reopening of a workers' compensation award involves a two-step process. The first step involves the filing of a motion to reopen the award, with the movant being required to make a sufficient prima facie showing of a substantial possibility that he can prove not only the conditions that authorize reopening the award but also that he is entitled to a greater award. Only if those requirements are satisfied will the adversary be put to the expense of relitigation or will the taking of further proof be authorized. Likewise, only then will the ALJ review the RIB award in the light of the evidence that the parties have introduced and consider the merits of the worker's assertion that a greater award is authorized.Big Elk Creek Coal Co. v. Miller, 47 S.W.3d 330, 332 (Ky. 2001). Thus, just as the Board held, the CALJ's order setting aside the agreement amounted to a determination that Mills had established a prima facie case that he would be successful on his motion. While Nally appealed this to the Board, the Board properly determined that the CALJ's order reopening was not final and remanded to ALJ Allen for a determination on the evidence as to whether Mills could establish that the case should ultimately be reopened. The CALJ's order was not binding upon the ALJ, and the doctrine of res judicata does not apply.
Furthermore, the ALJ's conclusion that the settlement agreement was valid was supported by substantial evidence. Admittedly, Mills entered into the agreement knowingly and received money in consideration for giving up his right to reopen his claim for benefits. Absent an allegation of fraud, mistake, or newly discovered evidence, the ALJ had no grounds to reopen the claim. We find no error with the ALJ's ruling or with the Board's opinion affirming.
As there is no error to correct on appeal, we affirm the Board's July 2, 2015 opinion.
ALL CONCUR. BRIEF FOR APPELLANT: McKinnley Morgan
London, Kentucky BRIEF FOR APPELLEE: W. Barry Lewis
Hazard, Kentucky