Opinion
BOARD No. 07444-99
Filed: December 24, 2001.
REVIEWING BOARD DECISION
(Judges Levine, McCarthy and Carroll)
APPEARANCES
Mark J. Nevils, Esq., for the insurer at hearing
Dorothy M. Linsner, Esq., and W. Frederick Uehlein, Esq., for the insurer on appeal
Mark J. Kelly, Esq., for the Trust Fund at hearing
Jessica Coccoli, Esq., and Mary C. Garippo, Esq., for the Trust Fund on appeal
The insurer appeals from a decision in which an administrative judge denied its petition for § 37 reimbursement on the basis that the underlying claim had been settled by a § 48 lump sum agreement prior to the establishment or acceptance of liability. For the reasons that follow, we reverse the decision, and recommit the case for further findings consistent with this opinion. The employee alleged that he experienced a severe heart attack while lifting boxes at work on December 9, 1991. (Dec. 5.) On September 30, 1992, the employee and the insurer settled the employee's claim for workers' compensation benefits by way of a lump sum agreement, without establishment or acceptance of liability. (Dec. 3.) The insurer filed the present petition for § 37 reimbursement based on the amounts paid in the lump sum. The trust fund disputed all elements of the § 37 petition. (Dec. 4.) See n. 1supra. The claim went to an administrative judge, who denied it after hearing. (Dec. 9.) The judge found:
G.L.c. 152, § 37 (St. 1985, c. 572, § 48), applicable to the present petition, provides, in pertinent part:
When an employee who has a known physical impairment which is due to any previous accident, disease or any congenital condition and is, or is likely to be, a hindrance or obstacle to his employment, and who, in the course of and arising out of his employment, receives a personal injury for which compensation is required by this chapter and which results in disability that is substantially greater by reason of the combined effects of such impairment and subsequent personal injury than that disability which would have resulted from the subsequent personal injury alone, the insurer or self-insurer shall pay all compensation provided by this chapter. The insurer or self-insurer shall, however, be reimbursed by the state treasurer from the trust fund created by section sixty-five in an amount equal to seventy-five per cent of all compensation paid subsequent to that paid for the first one hundred and four weeks of disability.
G.L.c. 152, § 48 (St. 1991, c. 398, § 74), provides, in pertinent part:
Under the conditions and limitations specified in this chapter, the insurer and employee may . . . by an agreement pursuant to section nineteen, redeem any liability for compensation, in whole or in part, by the payment by the insurer of a lump sum amount.
When the insurer and the employee reach such agreement subsequent to insurer acceptance of liability or subsequent to a decision of an administrative judge, the reviewing board, or an appeals court of the commonwealth finding insurer liability which decision is in effect at the time such agreement is entered into, said agreement shall not redeem liability for the payment of medical benefits or vocational rehabilitation benefits with respect to such injury.
No lump sum agreement made prior to the establishment of liability for compensation shall prohibit an employee from subsequently filing a claim for medical benefits only, in any instance in which such employee has suffered a substantial deterioration of his medical condition. . . .
In the instant case the critical fact that this employee suffered a personal injury "in the course of and arising out of his employment" has never been established. The insurer twice denied liability concerning the employee's claim citing a host of reasons including, but not limited to, the question of whether Mr. Walsh's myocardial infarction was related to his employment. Although the case was eventually settled between the parties, it was settled without liability. Nor is it certain that liability would ever have been established. The employee's evaluating physician, Dr. Alan Balsam, did offer the opinion that the myocardial infarct was, by history, causally related to Mr. Walsh's activities at work on December 9, 1991. (Insurer Exhibit No. 26.) The insurer's evaluating physician, Dr. Lawrence Baker, would only state, however, "that the exertional efforts expended by Mr. Walsh on 12/9/91 namely bending over and lifting up boxes sequentially, each box weighing approximately 25 pounds and carrying each box a distance of approximately ten feet, that that exertional effort conceivabl[y] superimposed upon the underlying substrate of artherosclerotic disease, could have precipitated the bilateral arm aching, which was a coronary equivalent. The prolonged bou[t] of bilateral shoulder to elbow discomfort with inordinate fatigability conceivably represented the beginnings of an MI. . . ." (Insurer Exhibit No. 31, emphasis added). The statements of Dr. Baker are equivocal and the outcome of any litigation that might have been pursued by the parties is uncertain, in any event, the issue is settled by virtue of the lump sum agreement.
The insurer after denying liability both before and at the time of the lump sum settlement now seeks to establish that a second injury arising out of and in the course of employment did in fact occur. The insurer asserts that although it must prove all of the other elements under § 37, as to this question, "[i]t simply has the burden of offering some evidence that a second injury occurred. . . ." I do not adopt this argument and find that in order for the insurer to prevail in this claim it must prove, among other elements, that this employee suffered a second injury in the course of and arising out of his employment. The insurer settled the disputed litigation without liability. The lump sum agreement was a final determination and the insurer cannot now seek to re-litigate the question.
(Dec. 7-9.) We do not agree with the judge's analysis, and reverse the decision.
The fact that the parties settled the underlying claim by a § 48 lump sum agreement "prior to the establishment of liability" or prior to "insurer acceptance of liability," id., does not bar § 37 reimbursement of appropriate amounts paid in the settlement. The § 37 element of "a personal injury for which compensation is required by" G.L.c. 152 can be satisfied by the redemption of liability for such an injury, without the requirement that it be accepted or established by decision or judicial opinion. As the Supreme Judicial Court stated inHenderson's Case, 349 Mass. 683, 685 (1965), "A lump sum settlement under § 48 is "as near as possible to the present value of all the compensation payments which the employee would be entitled to receive in the future.' Paltsios' Case, 329 Mass. 526, 529. In that sense it is "the compensation provided by' those sections of the Workmen's Compensation Act which establish liability." (Emphasis added.) It is important to understand that a lump sum settlement that does not establish liability also does not establish "no liability"; it merely leaves the question unanswered.'
The pertinent element of § 37 was exactly the same under the version of the statute in effect at the time of Henderson's Case as it is now: "a personal injury for which compensation is required by this chapter. . . ." Henderson, supra at 684 n. 1.
this is so is further supported by the language in § 13A(8), which states in part as follows:
Whenever an insurer and an employee agree to a settlement under section forty-eight, the attorney's fee shall be paid from the settlement in accordance with the following provisions:
(a) when the insurer and the employee reach such settlement prior to the insurer acceptance of liability or prior to a decision of an administrative judge, the reviewing board, or appeals court of the commonwealth finding insurer liability, such fee shall be no more than fifteen percent of the amount of such settlement. . . .
(Emphasis added.)
Of course, as a practical matter, every benefit under the act is redeemed in a lump sum settlement executed without the acceptance or establishment of liability.
We do not agree with the judge that there is a bright line distinction between accepted liability lump sum agreements, and lump sum agreements executed without liability.
In Diliberto v. New England Elec. Co., 11 Mass. Workers' Comp. Rep. 123 (1997), aff'd sub nom. Aetna Life Cas. Ins. Co. v. Commonwealth, 50 Mass. App. Ct. 373 (2000), we concluded that lump sum settlements may be reviewed under a standard of reasonableness for the purposes of determining whether § 37 reimbursement is due. Id. at 130-131. In that case, the trust fund successfully demonstrated that the insurer's settlement of the underlying "injury" of prolonged sitting was unreasonable, because the alleged sitting injury could not meet the test of compensability for a non-incident-based industrial injury, which test is set out in Zerofski's Case, 385 Mass. 590, 594-595 (1982): "an identifiable condition [of employment] that is not common and necessary to all or a great many occupations." Diliberto, supra at 132-135. InDiliberto, the insurer accepted liability in the lump sum agreement.Diliberto, supra at 125. Had the Diliberto lump sum been a "without liability" agreement, however, that would not change the analysis as to its reasonableness. In other words, the very same inquiry is at play, for § 37 purposes, in "without liability" agreements as in "with liability" agreements: whether the settlement was reasonable in light of the risk exposures inherent in the claim. The two types of agreements are indistinguishable with reference to the reasonableness analysis.
We note that the trust fund can challenge a lump sum agreement on the basis that there was no compensable "personal injury"; i.e., that the settlement was unreasonable because, as a matter of law, the insurer could not be found liable. (Put another way, the trust fund can argue that taking the facts that could be found in the light most favorable to establishing liability, as a matter of law, the insurer could not be liable.) On the other hand, where there is a factual dispute, the resolution of which would determine liability (e.g., that a witness is or is not credible, or that there is a difference of opinion between doctors), the trust fund cannot challenge the reasonableness of the settlement on the basis that the factual dispute should be decided one way or the other.
We recently stated in Cosgrove v. Penacook Place, 15 Mass. Workers' Comp. Rep. 166, 172 (2001): "A compromise of an employee's claim can only be made when these future contingencies are assessed and a corresponding present value of the case is assigned, "discounted by the likelihood of success,'" quoting MacQuarrie v. Secretary of Health Human Services, 639 F. Supp. 1357, 1362 (D. Mass. 1986). To the extent "the likelihood of success" means that the employee might — or might not — be able to prove the subject personal injury in litigation, the settlement "without liability" is merely an attribute of the discount of the claim. Moreover, as the insurer points out, the trust fund is a direct beneficiary of the insurer s loss management in settling a claim "without liability," as all potential future exposure to reimbursement for § 30 medical benefits is foreclosed.
We also agree with the insurer that the § 37 element of a "a personal injury for which compensation is required" is established in the present case by the insurer s threshold showing of medical evidence in the underlying claim that could have supported an administrative judge's finding of liability against the insurer. The high hurdle the judge imposed — that the medical evidence might not support a finding of liability (Dec. 7-8) — is inappropriate for proving the reasonableness of the settlement, and does not conform with our approach in Cosgrove, supra. In that case we concluded that there was no basis for interpreting § 37 as requiring a finding or explicit acceptance of § 34A liability, and payment of benefits thereunder, in order to qualify for reimbursement of settlement amounts reasonably characterized as redeeming § 34A exposure. Applying similar analysis here, we therefore reverse the decision and conclude that the personal injury, for the purposes of § 37, is established as a matter of law, based on the underlying medical evidence described in the decision, (Dec. 7-8), and quoted above at p. 2-3. And see n. 5, supra.
Because the trust fund has disputed all the elements of § 37, (Dec. 4), the case must be recommitted for the judge to make findings on the other prerequisite elements for § 37 reimbursement: "a known physical impairment which is due to any previous accident, disease or any congenital condition and is, or is likely to be, a hindrance or obstacle to his employment" and "disability that is substantially greater by reason of the combined effects of such impairment and subsequent personal injury than that disability which would have resulted from the subsequent personal injury alone." As this case is based on a December 9, 1991 date of injury, the 1985 version of § 37 applies.
Accordingly, we reverse the decision and recommit the case for further findings.
So ordered. _______________________ Frederick E. Levine Administrative Law Judge _______________________ William A. McCarthy Administrative Law Judge _______________________ Martime Carroll Administrative Law Judge
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