You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Lindekugel v. Fluour Alaska, Inc. (3/28/97), 934 P 2d 1307
<![CDATA[
Notice: This opinion is subject to correction before publication in the Pacific Reporter.
Readers are requested to bring errors to the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0607, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
JOHN LINDEKUGEL, )
) Supreme Court No. S-7360
Appellant, )
) Superior Court No.
v. ) 3AN-94-2802 CI
)
FLUOR ALASKA, INC., ALASKA ) O P I N I O N
PACIFIC ASSURANCE CO., )
and the ALASKA WORKERS' )
COMPENSATION BOARD, )
)
Appellees. ) [No. 4795 - March 28, 1997]
______________________________)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage,
Dana Fabe, Judge.
Appearances: William J. Soule, Law Office of William J. Soule,
Anchorage, for Appellant. Randall J. Weddle, James E. Hutchins,
Faulkner, Banfield, Doogan & Holmes, Anchorage, for Appellees
Fluor Alaska, Inc., and Alaska Pacific Assurance Co.
Before: Compton, Chief Justice, Rabinowitz, Matthews, and
Eastaugh, Justices. [Fabe, Justice, not participating.]
MATTHEWS, Justice.
On August 26, 1976, John Lindekugel suffered a serious
back injury while working for Fluor Alaska. (EN1) Lindekugel and
Fluor entered into a compromise and release on May 21, 1979,
settling Lindekugel's various disability claims for a lump sum
payment of $225,000. The compromise and release explicitly
preserved Fluor's obligation to pay future medical benefits. It
was approved by the Board.
In 1981 Lindekugel went to work for George Easley
Construction Company. On October 8th of that year he reinjured his
back when he slipped while carrying a heavy sheet of plywood. In
March of 1983, he filed an application for adjustment of claim
against Fluor and Easley, seeking medical cost reimbursement from
Fluor and Easley and disability payments from Easley. The claim
referred to both accidents. It came on for hearing on May 12,
1983. At the hearing, but out of the presence of Lindekugel, Gil
Johnson, attorney for Lindekugel, announced his desire to dismiss
the claim against Fluor, stating that a settlement had been reached
with Easley although a compromise and release form putting the
terms of the settlement in writing had not been drafted. The
hearing chairman indicated that the hearing would be continued
until the compromise and release form was submitted for approval.
Randall Weddle, attorney for Fluor, objected to continuing the
hearing, since he had an out-of-state medical witness ready to
testify. Weddle requested an immediate dismissal with prejudice of
the claim against Fluor. After an off-the-record discussion,
Johnson agreed to dismiss the claim against Fluor with prejudice.
After further discussion the chairman stated: "Dismiss [Fluor]
with prejudice. Okay. Thank you." The chairman then stated that
the hearing was continued with respect to the Lindekugel/Easley
claim until the compromise and release "was worked out."
As it turned out, quite a bit of working out was
necessary. The Lindekugel/Easley compromise and release was
finally filed in 1990. It proposed that Easley would pay
Lindekugel $45,000, reciting that Easley had already paid
$21,665.85. The compromise and release provided that Easley would
not be responsible for "current or future medical benefits"for
Lindekugel.
The Board disapproved of the Lindekugel/Easley compromise
and release. In a written opinion dated February 6, 1991, the
Board noted many deficiencies in the compromise and release --
notably it failed to describe at least five surgeries performed on
Lindekugel after January 14, 1983. The Board concluded that the
compromise and release was not in Lindekugel's best interest. In
so concluding the Board stressed the public purpose rather than
private rights aspect of workers' compensation, quoting Professor
Larson's treatise on Workmen's Compensation Law as follows:
[T]he underlying issue is once more the choice
between viewing a compensation claim as a sort
of private tort right and recognizing the
social-protection character of the compensa-
tion system. If one thinks of a compensation
claim as a private, personal, adversary money
claim against the particular employer and his
insurance carrier, one will go [on] to
conclude, as the Kansas court did, that
"workmen are not in any respect under
guardianship or other disability; they and
their employers are free agents; they may
release their employers from liability for
injuries on any agreed terms set forth." What
this overlooks is that the entire compensation
system has been set up and paid for, not by
the parties, but by the public. The public
has ultimately borne the cost of compensation
protection in the price of the product, and it
has done so for the specific purpose of
avoiding having the disabled victims of
industry thrown on private charity or public
relief . . . . To this end, the public has
enacted into law a scale of benefits that will
forestall such destitution. It follows, then,
that the employer and employee had no private
right to thwart this objective by agreeing
between them on a disposition of the claim
that may, by giving the worker less than this
amount, make him a potential public burden.
The public interest is also thwarted when the
employer and employee agree to a settlement
which unnecessarily increases the cost of the
product by giving the worker more than is due.
. . . .
As against this, it is often argued that to
permit compromise will enable claimants to get
at least something in the many controversial
cases where there is serious doubt whether
fundamental conditions of liability can be
established. But again it must be stressed
that the objective of the legislation is not
to see how much money can be transferred to
workmen as a class; it is to ensure that those
with truly compensable claims get full
compensation. If there is doubt about the
compensability of the claim, the solution is
not to send the claimant away half-
compensated; but to let the Compensation Board
decide the issue. That is the Board's job.
The Board was specifically concerned about the waiver of
future medical benefits, quoting Professor Larson to the effect
that an employee should almost never be permitted to waive them:
A settlement ordinarily stops only the
claimant's rights to weekly income benefits
and does not affect his rights to future
medical benefits . . . . This strictness is
well justified, since it is difficult to
imagine why it should ever be in the best
interests of a claimant to bargain away his
rights to future medical treatment for a lump
sum. After all, how can unknown future
medical costs be subjected to commutation on
an actuarial basis? It is significant that
the Council of State Government's draft
compensation law does not permit even its
strictly controlled application of lump-
summing to be applied to medical benefits.
The Board encouraged Lindekugel to pursue a claim against
Fluor for medical expenses:
[W]e would hope he would pursue claims for
work-related medical costs against either
Fluor (the first employer) or [Easley]. Even
his attorney believes [Lindekugel] has a right
of review against Fluor, but no claim has been
filed against Fluor since the so-called
settlement hearing in 1983. We do not
understand why this has not occurred when the
attorney asserts [Lindekugel] may have a
right. . . .
In addition, assuming [Lindekugel] has a
right of review against Fluor for medical
treatment, we question why Fluor was not
brought into the present action since one
issue settled in the C&R was medical
treatment. Of course, the effect of the
continuance hearing in 1983 has never been
resolved.
Eventually Lindekugel hired a new attorney who on
September 30, 1993, filed a claim against Fluor for medical
expenses. Fluor answered, denying liability based on the oral
dismissal with prejudice of May 12, 1983. The Board held that the
oral order was valid. Lindekugel appealed to the superior court,
which affirmed the Board. Lindekugel now appeals to this court.
Lindekugel makes two arguments. First, he contends that
the stipulation to dismiss Fluor with prejudice was "an agreement
in regard to a claim"within the meaning of former subsection
.210(b) of AS 23.30. Because the agreement was not set forth on a
form prescribed by the Board and because the Board did not find it
to be in the best interest of Lindekugel, he contends that it was,
to use the language of subsection .210(b), "void for any purpose."
Second, and alternatively, Lindekugel argues that the
Board abused its discretion in not setting aside the stipulation
for good cause shown.
In response, Fluor argues first that assuming that the
stipulation was invalid under subsection .210(b), it was merely
voidable rather than void ab initio. As a voidable decision it is
now enforceable since it was not corrected through a timely appeal
or motion for reconsideration. Second, Fluor contends that the
stipulation to dismiss the claim with prejudice was not "an
agreement in regard to a claim"within the meaning of subsection
.210(b). Third, Fluor contends that the stipulation for dismissal
with prejudice was governed by the Board's regulation concerning
stipulations, 8 AAC 45.050(c)(10). Fourth, Fluor argues that
Lindekugel has waived any right he might have had to reassert
claims against Fluor because (1) his counsel agreed to dismiss them
with prejudice, (2) Lindekugel delayed objecting to the effect of
the stipulation for more than ten years, and (3) Lindekugel failed
to bring the case to hearing within two years as required by AS
23.30.110(c). Fifth, Fluor argues that the Board did not abuse its
discretion in failing to set aside the stipulation for dismissal
with prejudice because (1) the Board lacked such discretion as the
stipulation was encompassed in an order of the Board and (2) Linde-
kugel's delay in requesting relief -- and the prejudice to Fluor
associated with that delay -- justified the Board in not reopening
the claim.
The statute which is central to the disposition of this
claim is AS 23.30.210(b). In 1983 it read as follows:
At any time after death, or after 30 days
subsequent to the date of the injury, the
employer and the employee or the beneficiary
or beneficiaries, as the case may be, have the
right to reach an agreement in regard to a
claim for injury or death hereunder in
accordance with the applicable schedule
hereof, but a memorandum of the agreement in a
form prescribed by the board shall be filed
with the board. Otherwise, the agreement is
void for any purpose. If approved by the
board, the agreement is enforceable the same
as an order or award of the board and
discharges the liability of the employer for
the compensation notwithstanding the
provisions of sec. 130, 160, and 245 of this
chapter. The agreement shall be approved by
the board only when the terms conform to the
provisions of this chapter and, if it involves
or is likely to involve permanent disability,
the board may require an impartial medical
examination and a hearing in order to
determine whether or not to approve the
agreement. The board may approve lump-sum
settlements when it appears to be to the best
interest of the employee or beneficiary or
beneficiaries. (EN2)
The regulation governing stipulations in existence as of
the 1983 hearing was 8 AAC 45.050(c)(10). It provided:
Stipulations between the parties may be
made at any time in writing prior to the
submission of the proceeding or may be made
orally or in the course of any hearing.
(A) Such stipulation shall be binding
upon the parties thereof unless permission be
given for good cause to withdraw therefrom.
(B) The Board may base its findings upon
the facts as they appear from the evidence, or
may cause further testimony to be taken or
investigation made in the manner prescribed by
the Act, any stipulation to the contrary
notwithstanding.
The regulation governing settlements in existence as of
the 1983 hearing was 8 AAC 45.160. It provided in relevant part:
Agreed Settlements. (a) Agreements which
provide for the payment of less than the full
amount of compensation due or to become due,
and which undertake to release the employer
from all future liability, will be approved
only where it appears that a reasonable doubt
exists as to the rights of the parties or that
the approval would be for the best interest of
the parties.
(b) All agreed settlements must conform
strictly to the requirements of AS 23.30.210.
. . . .
(d) The board will inquire into the
adequacy of all compromises, and may, in its
discretion, set the matter for hearing to take
evidence when necessary to determine whether
such agreement shall be approved or
disapproved.
Currently, the Board has in effect regulations requiring
stipulations waiving an employee's right to benefits to comply with
current AS 23.30.012 (former subsection .210(b)) and providing that
settlements waiving medical benefits are presumptively
unreasonable. (EN3)
1. Was the Oral Stipulation for Dismissal with Prejudice an
Agreement Regarding a Claim within the Meaning of
Subsection .210(b)?
We answer this question in the affirmative.
The stipulation is "an agreement in regard to a claim"as
we interpret that term. The meaning of the statutory term
"agreement in regard to a claim"is clarified by the third sentence
of subsection .210(b), which explains that the agreement, "[i]f
approved by the board . . . discharges the liability of the
employer. . . ." The emphasized language thus indicates that it is
not every "agreement in regard to a claim"that is covered by
subsection .210(b) -- for stipulations as to procedural matters and
as to facts would come within a broad construction of that term --
but only those agreements which have the effect of discharging the
liability of the employer.
This interpretation is consistent with the Board's
interpretation of the statute as reflected in regulations in effect
at the time of the 1983 hearing, 8 AAC 45.050(c)(10) and 8 AAC
45.160, and in current regulations, 8 AAC 45.050(f)(3) and 8 AAC
54.160(c) (see supra n.3 and preceding text) (all cited regulations
provide that stipulation waiving employee's rights to benefits must
conform with the section currently numbered .012).
Because the oral stipulation for dismissal with prejudice
discharged the liability of an employer, we conclude that the oral
stipulation was an "agreement regarding a claim"within the meaning
of subsection .210(b). (EN4)
2. What Is the Effect of Noncompliance with Subsection
.210(b)?
Subsection .210(b) expressly provides that where its
terms are not complied with, "the agreement is void for any
purpose." Lindekugel argues that the oral order of dismissal is
also void since its only basis was the void stipulation. Fluor
argues that the oral order was merely voidable and became
enforceable after the time for appealing or seeking reconsideration
passed. In our view Lindekugel has the better of this argument for
three reasons.
The first and most important is the legislative language.
The phrase "void for any purpose"is a clear indication that the
legislature intended that no legal consequences should flow from an
agreement covered by subsection .210(b) which does not meet its
requirements.
Second, the purpose of the "void for any purpose"
language in subsection .210(b) is to prevent poorly conceived
agreements from discharging an employer's liability. Underlying
this purpose are reasons which are both personal to the injured
worker and social in character. The personal reasons are premised
on the thought that the injured worker should not give up his or
her rights except with knowledge and deliberation concerning the
consequences. Included in the social reasons is the thought that
if the injured worker improvidently surrenders his or her rights
society may ultimately bear the burden of the worker's decision
through public welfare or private charity. To allow a non-
complying settlement agreement to be validated by an order subverts
these purposes.
The social reasons have special force when considering
whether the oral order based on the stipulation should be regarded
as void or merely voidable. In Perry v. Newkirk, 871 P.2d 1150,
1154-55 (Alaska 1994), we held that a superior court judgment
approving a stipulation in a divorce case terminating the father's
parental rights was void rather than merely voidable because of the
public interest in the subject matter. The public interest in the
subject matter of this case is also strong, as the Board concluded
in denying approval of the 1990 compromise with Easley which would
have waived medical benefits. See supra pp. 3-5.
Third, Fluor's argument is based on the assumption that
the oral order of the hearing officer was a final and appealable
order. Fluor states:
An appeal of a decision of an admini-
strative agency must be brought within 30 days
of the filing of a final order. Appellate
Rule 602(a)(2); Diedrich v. City of Ketchikan,
805 P.2d 362, 365 (Alaska 1991).
Appellate Rule 602(a)(2) as it existed in 1983 read as follows:
The time within which an appeal may be
taken to the superior court from an
administrative agency shall be 30 days from
the date that the order appealed from is
mailed or delivered to the appellant. If a
request for agency reconsideration is timely
filed before the agency, the notice of appeal
must be filed within 30 days after the
agency's reconsideration decision. (EN5)
The language of Appellate Rule 602(a)(2) requiring mailing or
delivery of the order in question implies that a written order is
necessary in order to trigger the thirty-day period. Diedrich,
cited by Fluor, is not to the contrary for there was a written
order in that case. 805 P.2d at 364 n.1. A review of our case law
has not revealed any case in which we have held that an oral
administrative order was a final order for the purposes of
triggering the thirty-day appeal period expressed in Appellate Rule
602(a) or its predecessor, Appellate Rule 45. Similarly, AS
23.30.125(a) requires that a final order be written, since oral
orders cannot be filed:
A compensation order becomes effective
when filed in the office of the board as
provided in AS 23.30.110 and, unless
proceedings to suspend it or set it aside are
instituted as provided in (c) of this section,
it becomes final on the 31st day after it is
filed.
3. Remaining Issues
The above discussion effectively disposes of this case.
The oral order dismissing Fluor was void. Lindekugel's claim for
medical expenses against Fluor thus remains to be decided. Fluor's
claim of waiver fails for the same reasons that the stipulation
cannot be enforced. Johnson's agreement to the stipulation is the
predicate for the waiver argument, and the agreement is void. The
two-year period of AS 23.30.110(c) (EN6) is not a bar, for
Lindekugel requested a hearing within two years of Fluor's
controversion. See Huston v. Coho Electric, 923 P.2d 818 (Alaska
1996); Tipton v. Arco Alaska, 922 P.2d 910 (Alaska 1996). We need
not decide whether the Board abused its discretion in failing to
set aside the stipulation, for it was void. (EN7)
The decision of the superior court affirming the decision
of the Board is REVERSED, and this case is REMANDED to the superior
court with instructions to reverse the Board's decision and remand
the case to the Board for further proceedings.
ENDNOTES:
1. Fluor was insured by ALPAC/INA for workers' compensation
purposes.
2. The statute has now been renumbered; it currently appears,
confusingly, as section .012 rather than subsection .210(b).
3. 8 AAC 45.050(f)(3) (1996) provides:
Stipulations of fact or to procedures are
binding upon the parties to the stipulation
and have the effect of an order unless the
board, for good cause, relieves a party from
the terms of the stipulation. A stipulation
waiving an employee's right to benefits under
the Act is not binding unless the stipulation
is submitted in the form of an agreed
settlement, conforms to A.S. 23.30.012 and 8
AAC 45.160, and is approved by the board.
8 AAC 45.160(c)(1996) provides in relevant part:
Every agreed settlement must conform
strictly to the requirements of AS 23.30.012
. . . .
8 AAC 45.160(e) (1996) provides in relevant part:
Agreed settlements in which the employee
waives medical benefits or benefits during
rehabilitation training are presumed unreason-
able and will not be approved absent a showing
that the waiver is in the employee's best
interests.
4. In accordance with this interpretation, we note that
stipulations governed by 8 AAC 45.050(c)(10) which have the effect
of discharging an employer's liability must also satisfy the
statutory requirements of subsection .210(b).
5. In its current form, Appellate Rule 602(a)(2) has the
following additional language which was not present in 1983:
The 30-day period for taking an appeal does
not begin to run until the agency has issued a
decision that clearly states that it is a
final decision and that the claimant has
thirty days to appeal. An appeal that is
taken from a final decision that does not
include such a statement is not a premature
appeal.
6. The last sentence of AS 23.30.110(c) provides: "
If the employer controverts a claim on a
board-prescribed controversion notice and the
employee does not request a hearing within two
years following the filing of the
controversion notice, the claim is denied."
7. Fluor argues that if Johnson had not agreed to the stipulation
it would have presented its medical witness who would have
testified that the medical expenses incurred by Lindekugel between
the second accident on October 8, 1981, and the hearing, May 12,
1983, were caused by the second accident. Fluor does not argue
that the witness is now unavailable or that the same testimony
cannot be obtained from another witness. But there will be a
duplication of expenses which must be borne by Fluor. We note that
if Fluor's witness had testified and persuaded the Board, the
Board's decision on the merits would not have discharged Fluor as
to future medical expenses -- those incurred after the hearing.
Lindekugel, and Easley, would always be free to contend that the
second accident had consequences which were limited in character
and that medical expense claims presented at future hearings
remained Fluor's responsibility. Thus Fluor's claim that it was
prejudiced by not going forward at the 1983 hearing is plausible,
but the prejudice it may have suffered is not as significant as
Fluor implies.
]]>
