A WCJ approved Compromise and Release Settlement cannot be negated by a subsequent allegation there was no "meeting of the minds" regarding MSA medical expenses.

Lehigh Specialty Melting, Inc. v. WCAB (Bosco): No. 569 C.D. 2020

Employer’s Petition to Review requested relief and enforcement of the terms of an approved Compromise and Release settlement. Consistent with the terms of a C&R settlement, Employer obtained a Medical Set-Aside (MSA) approved by CMS. Claimant refused to execute the paperwork necessary to secure the MSA (as agreed upon in the C&R) as the MSA did not include expenses for medical marijuana. Lehigh Specialty Melting, Inc. 

WCJ Decision granted Employer's Petition. WCAB Order reversed.    Commonwealth Court reinstated WCJ decision.

September 21, 2021 ordered that the Memorandum Opinion filed on July 13, 2021 shall be designated OPINION and it shall be reported.

The Commonwealth Court ruled that once a C&R has been approved, a claimant cannot ask a workers’ compensation judge to negate it based on the contention that there was no meeting of the minds. After WCJ approval, the only means for a party to negate the C&R is to convince a WCJ that the agreement was entered into as a result of fraud, deception, duress, mutual mistake, or unilateral mistake caused by an opposing party’s fault. As none of these conditions exist in the case sub judice, the WCJ decision was reinstated.

Factual Background 

The parties entered into a Compromise and Release Agreement (C&R), which was approved in a 2014 WCJ decision. An amended 2014 WCJ order specified that Employer was to continue to pay medical expenses associated with Claimant’s work injury until it funded a Workers’ Compensation Medicare Set Aside Arrangement (MSA) approved by the Center for Medicare & Medicaid Services (CMS).

In 2018, Employer filed a Petition to Seek Approval of a C&R, a Petition to Review Medical Treatment and/or Billing and a Petition to Review Compensation Benefits.

The gist the three petitions was that Claimant entered into a C&R wherein he agreed not only to a lump sum settlement but also to the potential establishment and funding of an MSA.  Claimant agreed to timely complete all paperwork necessary for Employer to apply for and secure an MSA or Allocation. Thereafter, when Employer obtained a set-aside approved by CMS, Claimant refused to follow through with executing the paperwork necessary to secure the MSA.

WCJ Decision

The WCJ found Claimant testimony was credible that he knowingly and voluntarily agreed that if Employer obtained approval of an MSA and properly funded it, Claimant’s medical benefits would end.

Summary of the WCJ findings of fact reflect -

Claimant agreed to cooperate with Employer’s efforts to obtain an MSA. Under the C&R, Employer’s only obligation [if it chose to exercise it], was to obtain approval of an MSA and fund the same. There was no provision that Employer needed to pay for anything other than the MSA. Employer’s evidence demonstrated that it submitted an MSA to CMS, the MSA was approved, the paperwork was forwarded to Claimant and Claimant’s refused to sign the paperwork because the MSA did not include all of Claimant’s ongoing work-related medical treatment - including medical marijuana.

Employer resubmitted the MSA proposal to CMS, which again approved it with a “notation that medical marijuana is not covered by Medicare and is thus not considered part of an MSA". WCJ found the Employer’s obligation was solely to obtain an MSA and fund it, “not to obtain an MSA and cover other services not covered by Medicare.”  The evidence clearly shows that Claimant failed to cooperate by signing the documents needed to finalize the MSA. Employer could not obtain final approval of the MSA.

The WCJ noted Claimant’s position -  he wants to be reimbursed for his past usage of medical marijuana and he does not want to agree to the MSA unless there is some provision for the funding of his future use of medical marijuana.

The WCJ concluded that Claimant was attempting to re-write the C&R to include payment for non-Medicare covered services as part of Employer’s obligation. However, Claimant has shown no basis for a re-writing of a contract. The WCJ concluded as a matter of law that (claimant's request) is not part of the legal obligation that the parties contractually agreed to in the C&R.

The WCJ decision stated that, if Employer wished to end its obligation for Claimant’s medical benefit payments, it was to obtain a new MSA structured settlement quote and forward the paperwork to Claimant for signing. 

If Claimant signs the MSA paperwork, Employer and its Insurer are relieved of all future liability of medical expenses related to the work injury.  If Claimant does not sign the MSA paperwork, then Employer may send Claimant a check for the value of the MSA and its obligation to pay for work-related medical expenses shall end.

Claimant Appeal to WCAB

The WCAB agreed with Claimant that the WCJ has no authority to require Claimant to execute the MSA documents. Citing Stroehmann Bakeries v. Workers’ Compensation Appeal Board (Plouse), 768 A.2d 1193 (Pa. Cmwlth. 2001). The Board determined that a C&R is enforceable only where there has been a “meeting of the minds” on all of its terms.

WCAB reasoned - circumstances have changed and medical use of marijuana is now approved in Pennsylvania. Claimant contends that medical marijuana is a reasonable treatment for his work injury. Employer disagrees. Accordingly, there is no meeting of the minds. The C&R provision requiring Claimant execute documents for the approval of the MSA and final settlement of his claim for medical benefits - is not enforceable.

Commonwealth Court Appeal of Employer

The Commonwealth Court analysis began with a review of section 449 regarding approval of a C&R agreement -

The workers’ compensation judge shall not approve any C&R unless he first determines that the claimant understands the full legal significance of the agreement. The agreement must be explicit with regard to the payment, if any, of reasonable, necessary and related medical expenses.

The Court reviewed the C&R terms - Claimant’s wage loss benefits were settled for a lump sum payment;  the C&R did not resolve Claimant’s medical benefits but, instead, provided Employer with the option of funding an MSA or continuing to pay the medical bills related to Claimant’s work injury.

The C&R specifically stated Employer shall continue to remain liable for payment of all reasonable and necessary medical expenses related to Claimant’s work injury through CMS approval of an MSA and Employer’s funding of the same. Claimant agrees to timely complete all paperwork necessary for Employer and its Insurer/Third-Party Administrator to apply for and secure an MSA or Allocation. (emphasis in original).

The Court emphasizeded the C&R was approved by a WCJ, who confirmed via Claimant’s testimony that Claimant understood its terms. Although the medical aspect of Claimant’s workers’ compensation claim was left open at the time, the language clearly demonstrated that the parties agreed that Employer could submit an MSA for CMS approval at a later date. If the MSA was approved by CMS, and Employer chose to fund it, Employer would be absolved of further responsibility for Claimant’s medical bills. As part of this agreement, Claimant agreed to cooperate by preparing all necessary paperwork for Employer to submit the MSA proposal.

Now, Claimant refuses to cooperate as he had promised in the C&R because the MSA and/or Employer will not pay for his use of medical marijuana, which became legal in Pennsylvania approximately two years after the C&R became effective. Claimant relied upon Stroehmann to suggest there is no meeting of the minds and a new C&R was required to relieve Employer of its responsibility for Claimant’s medical expenses.

The Court rejected Claimant’s assertion that Stroehmann requires the C&R to reflect a “meeting of the minds”, noting - nowhere in Stroehmann is the expression “meeting of the minds” used. The focus of Stroehmann was on bringing final resolution to workers’ compensation claims in a way that had not been available to parties in workers’ compensation litigation prior to 1996.

The Court explained that a WCJ’s evaluation of a C&R is primarily focused upon the claimant’s understanding of the terms of the agreement. The fact that the parties have agreed upon a resolution of the claim seems indicative of a meeting of the minds.

Once a C&R has been approved, a claimant cannot ask a workers’ compensation judge to negate it, based on the contention that there was no such meeting of the minds. After approval, the only means for a party to negate the C&R is to convince the workers’ compensation judge that the agreement was entered into as a result of fraud, deception, duress, mutual mistake, or unilateral mistake caused by an opposing party’s fault.     None of these conditions exist in the matter sub judice.

To the extent any of these reasons could even remotely apply to the present case, only mistake might come at all close. Having said as much, we stress that we do not equate a change in law, after the C&R’s approval, with a "mistake" at the time the C&R was negotiated and approved by the WCJ.

At the time the parties entered into their C&R, and it was approved, there was apparent agreement on its terms. The only notable change is that medical marijuana became available in Pennsylvania.

However, given that (1) medical marijuana was neither contemplated nor legal in Pennsylvania when the C&R was approved, (2) Claimant never appealed approval of the C&R, (3) Claimant accepted $155,000 to resolve the indemnity portion of his claim, (4) Claimant agreed to cooperate in Employer’s efforts to secure an MSA, (5) it was up to Employer’s sole discretion whether to fund the MSA, and (6) CMS will not fund medical marijuana, despite changes in State law -  The Court cannot agree with Claimant that a new C&R is required for Employer to exercise its option to resolve the medical portion of Claimant’s workers’ compensation claim.

The Court referenced the Pennsylvania Superior Court’s opinion in Felix v. Giuseppe Kitchens & Baths, Inc., 848 A.2d 943 (Pa. Super. 2004). regarding a trial court’s enforcement of a settlement agreement. The Felix Court stated that “settlement agreements are enforced according to principles of contract law. Courts will enforce a settlement agreement if all its material terms are agreed upon [sic]. A settlement agreement will not be set aside absent a clear showing of fraud, duress or mutual mistake.” Felix, 848 A.2d at 947 The Superior Court added that “it is well settled that a party assumes the risk of his or her own inability to perform contractual duties.” 

The Commonwealth Court reasoned – that in the instant matter - we are not faced with a party’s inability to perform contractually agreed upon duties. We are presented with something more substantial - an unwillingness to perform.

Thus, as per the Superior Court in Felix and in light of the inability of the WCJ to require Claimant to sign the MSA paperwork, we see no error in the WCJ’s decision to enforce the settlement agreement rather than set it aside. The remedy imposed by the WCJ, i.e., requiring Employer to obtain a new quote for the MSA from CMS and giving Claimant two weeks to review and sign the paperwork, followed by the opportunity for Employer to send Claimant a check for the value of the MSA should Claimant choose not to cooperate, is reasonable.

The Court noted - Employer is correct that the Board’s standard would open a Pandora’s box that could potentially unravel countless C&Rs - based on the contention that there was no “meeting of the minds” at the time the agreements were approved. This, in turn, would defeat the true meaning of Stroehmann - which was to underscore the value of bringing permanent resolution to workers’ compensation claims by encouraging settlements and stressing finality.

PRACTICE POINTERS

1. Negotiate and itemize specific settlement terms regarding wage loss medical expense and all other type of payment due at the time of settlement and at any future point. 
2. Draft specific settlement terms regarding the obligations of each party, particularly regarding future medical expense liability. Consider options and alternatives that are available to each party.
3. Present testimony before the WCJ of the claimant's understanding of: specific settlement terms; payments due; future benefit rights; future obligations.