Opinion
Docket No. 25558.
Decided June 6, 1977. Rehearing granted July 15, 1977.
Appeal from Wayne, John D. O'Hair, J. Submitted December 13, 1976, at Detroit. (Docket No. 25558.) Decided June 6, 1977. Rehearing granted July 15, 1977.
Claim by Josephine Solo against Chrysler Corporation for workmen's compensation benefits. The claim was dismissed because the employer liability had been previously redeemed and a redemption order had been previously entered by the workmen's compensation bureau. Plaintiff then brought an action in circuit court to set aside the redemption agreement. Summary judgment for defendant. Plaintiff appeals. Reversed and remanded.
James D. Jackson, for plaintiff.
Dickinson, Wright, McKean, Cudlip Moon (by Thomas G. Kienbaum), for defendant.
Before: T.M. BURNS, P.J., and M.J. KELLY and D.F. WALSH, JJ.
On February 18, 1969, while in the course of her employment with the defendant, plaintiff fell on a concrete floor after slipping in a pool of oil. On June 9, 1970, the parties to this action entered into an "Agreement to Redeem Liability" under which, in exchange for $10,500, plaintiff waived any right to medical benefits and weekly payments under the Workmen's Compensation Act arising from the accident. A hearing was held before a workmen's compensation referee on June 15, 1970, and a redemption order was entered.
On November 1, 1971, plaintiff filed a claim for benefits in the workmen's compensation bureau seeking benefits for the February 18, 1969, accident. The referee dismissed the claim with prejudice, finding that defendant's liability had been redeemed. The appeal board affirmed.
On August 31, 1973, plaintiff filed this action to set aside the redemption order. Plaintiff alleged that the February 18, 1969, fall resulted in severe pain in the back, shoulders and buttocks. She was examined by several doctors at defendant's direction. All the doctors diagnosed plaintiff's medical problems as minimal, so plaintiff attempted to return to work but found the pain unbearable. Plaintiff was again examined and her symptoms were said to be due to either a sprain, bursitis or a psychosis. Believing that she had no real physical illness, plaintiff settled with defendant for $10,500. After she signed the redemption agreement plaintiff discovered that she had a herniated disc and a fractured coccyx. Plaintiff's pain was not "in her head" but in fact was caused by bone spurs compressing nerve roots in the spine.
Plaintiff alleged that there was a mutual mistake regarding the nature of her injuries due to the erroneous diagnoses of the physicians to which she was sent. Plaintiff thus sought to have the redemption agreement nullified as being unfair and based upon a good faith mistake on the part of both parties.
Defendant moved for and was granted summary judgment. The trial court ruled that a redemption order issued by the workmen's compensation bureau is a final determination that cannot be vacated by a court exercising equity jurisdiction unless the order is shown to have been fraudulently procured. Plaintiff appeals.
In granting summary judgment for the defendant, the trial court relied upon the rule set out in Johnston's Administrator v United Airlines, 23 Mich. App. 279, 285; 178 N.W.2d 536 (1970):
"A redemption order is a final determination and an award made and accepted cannot be disturbed except upon a showing that it was procured by fraud. Panozzo v Ford Motor Co. (1931), 255 Mich. 149 [ 237 N.W. 369]; Catina v Hudson Motor Car Co. (1935), 272 Mich. 377 [ 262 N.W. 266]."
We find that this rule describes too narrowly the available judicial relief from a final redemption order.
An approved redemption agreement, unlike an approved lump sum settlement agreement, is not subject to reopening by the workmen's compensation bureau upon a showing of change in the claimant's physical condition. Norbut v I Stephenson Co, 217 Mich. 345, 347; 186 N.W. 716 (1922). Relief from a redemption agreement is available, however, in equity. Panozzo v Ford Motor Co, 255 Mich. 149; 237 N.W. 369 (1931). In Panozzo the claimant sought to have a compensation settlement order set aside, claiming that it was procured by fraud. The Court followed the rule that a court of equity may grant such relief from a final settlement receipt which was procured by fraud. The Court did not say that such relief was available only when fraud is shown. Nor do the cases cited in Panozzo limit relief from settlement or redemption orders to actions in which fraud was alleged and proven. In Smith v Port Huron Gas Electric Co, 217 Mich. 519; 187 N.W. 292 (1922), and American Life Insurance Co v Balmer, 238 Mich. 580; 214 N.W. 208 (1927), the Court compared workmen's compensation awards to awards of arbitrators, stating that they were res judicata and could be attacked only in equity where the applicable claim of fraud, accident or mistake could be made. See Palmer v Patron's Mutual Fire Insurance Co of Michigan, 217 Mich. 292; 186 N.W. 511 (1922). In cases decided since Panozzo the Supreme Court has recognized the possibility of impeaching in a court of equity a compensation agreement entered into by mistake. Righi v Robert Gage Coal Co, 269 Mich. 46; 256 N.W. 617 (1934), Hughson v Kalamazoo, 271 Mich. 36; 260 N.W. 111 (1935), Baughman v Grand Trunk W R Co, 277 Mich. 70; 268 N.W. 815 (1936). In Avery v Eddy Paper Corp, 295 Mich. 277; 294 N.W. 679 (1940), for example, the Supreme Court affirmed a circuit court order setting aside a final settlement receipt where a doctor made misstatements (not necessarily fraudulent) to the claimant concerning the extent of his injury.
Compare, Denton v Utley, 350 Mich. 332; 86 N.W.2d 537 (1957): mistake on part of plaintiff as to extent of his injuries may justify setting aside release of tortfeasor. See Hall v Strom Construction Co, 368 Mich. 253; 118 N.W.2d 281 (1962).
It has been recognized in other jurisdictions that relief from a compensation settlement is available where shown to have been procured by or based upon a mutual mistake of a material fact. Maryland Casualty Co v McWilliams, 175 F.2d 475 (CA 5, 1949), Hansen's Case, 350 Mass. 178; 213 N.E.2d 869 (1966), Morgan v Duncan, 361 Mo 683; 236 S.W.2d 281 (1951), Herrera v C R Paving Co, 73 N.M. 237; 387 P.2d 339 (1963), Clark v Gastonia Ice Cream Co, 261 N.C. 234; 134 S.E.2d 354 (1964).
But see, Lambert v Remington Rand, Inc, 334 Ill. App. 176; 78 N.E.2d 852 (1948), Griffin v Coal Operators Casualty Co, 84 So 2d 481 (La App, 1955).
Little justification can be found for limiting the power of a court to set aside a redemption order to cases of fraud. The injustice such a rule can permit, on the other hand, is demonstrated in the case at bar. Although the plaintiff has alleged that the redemption agreement was based on completely erroneous diagnoses and that she is suffering from a much more serious disability then previously believed, she has had no opportunity to prove her allegations in any manner. To require proof of fraud in the procurement of the redemption agreement before any relief will be granted is improper. The argument is well-stated in 3 Larson, Workmen's Compensation Law, § 81.52:
"In view of the practical protective function of workmen's compensation, the desirability of preserving a right to reopen for genuine mistake seems too self-evident for argument. In the nature of things, there are bound to be many occasions when even the most thorough and skillful diagnosis misses some hidden compensable condition. Should the claimant then be penalized because of an erroneous disposition, either by award or settlement, when the only fault lies in the imperfections of medical science?"
We hold that a court exercising equity jurisdiction may set aside a workmen's compensation redemption order where the claimant has a meritorious claim for greater compensation than he has received and where in entering into the redemption agreement the claimant relied upon false representations (even though made in good faith) concerning his medical condition made by the employer's doctor. See Alvarez v Employer's Fire Insurance Co, 531 S.W.2d 218 (Tex Civ App, 1976).
The order of the trial court granting summary judgment for the defendant is reversed. This cause is remanded to the trial court for further proceedings.
D.F. WALSH, J., concurred.
After the parties to this action entered into the "Agreement to Redeem Liability" on June 9, 1970, a hearing was held on June 15, 1970, before a referee at which testimony was taken on a record. The agreement was subject to the approval of the referee, MCLA 418.835; MSA 17.237(835), and once approved, the order of the referee became final since no review was ordered or requested within 15 days, MCLA 418.837; MSA 17.237(837). On November 1, 1971, plaintiff filed a claim for benefits in the workmen's compensation bureau presumably after discovering the true extent of her injuries. The referee dismissed the claim on the ground that the injuries alleged in plaintiff's petition were redeemed by the prior agreement. The appeal board affirmed. It held that the 15-day appeal period had run, that the order approving the agreement had become final and that payment had been made according to the agreement. The appeal board concluded:
"If plaintiff was the victim of fraud as alleged then her remedy lies in a Court of equity vested with judicial power to grant the relief she seeks. The referee properly dismissed the application filed with the Bureau of Workmen's Compensation for want of jurisdiction."
It seems to me that plaintiff's complaint in essence charges negligence on the part of the examining and treating physicians. Plaintiff's own attorney had expressed some reservation about the medical management and had arranged for plaintiff to be seen and examined by expert medical specialists of good reputation and of his own choosing. If the medical information was incomplete or inaccurate it must be considered to be a hazard of the redemption proceeding. There is absolutely no doubt from a reading of the record, the plaintiff's complaint and the briefs of the parties that no allegation of fraud is made or inferable. I would hold that the trial court correctly relied on Johnston's Administrator v United Airlines, 23 Mich. App. 279, 285; 178 N.W.2d 536 (1970), and properly granted defendant summary judgment.
I would prefer that the law in this area were otherwise. Redemption settlements are very often a gamble and if the odds are tipped against the parties by false medical information there ought to be a remedy. It is my belief that a remedy should be fashioned in the workmen's compensation bureau and not in the courts. The administrative law judges and the appeal board are better suited to work out conflicting claims as to whether a worker's disability has worsened, a hazard which is assumed in a redemption settlement, or, if the parties were led astray by inaccurate, incomplete, misleading or even false medical information. Minnesota appears to provide statutory machinery for setting aside a redemption agreement for cause. See Mattson v Abate, 279 Minn. 287; 156 N.W.2d 738 (1968). I would recommend that the Legislature consider granting the bureau statutory authority to set aside a redemption agreement for cause under circumstances such as those framed by plaintiff's complaint.
I would affirm.