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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Muncipality of Anchorage v. Stenseth (11/25/2015) sp-7064

Muncipality of Anchorage v. Stenseth (11/25/2015) sp-7064

          Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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) 264-0608, fax (907) 264-0878, email  



                     THE  SUPREME  COURT  OF  THE  STATE  OF  ALASKA  


                                                             )         Supreme  Court  No.  S-15546  

                       Appellant,                            )  

                                                             )         Alaska  Workers'  Compensation  

          v.                                                 )         Appeals  Commission  No.   13-008  



LEE O. STENSETH,                                                                           

                                                             )         O P I N I O N  



                       Appellee.                             )         No. 7064 - November 25, 2015  


_______________________________ )  


                    Appeal  from the  Alaska  Workers'  Compensation Appeals  


                    Commission, Laurence Keyes, Commission Chair.  


                    Appearances:   Shelby L. Nuenke-Davison, Anchorage, for  


                    Appellant.   Robert   A.   Rehbock,   Rehbock   &  Rehbock,  


                    Anchorage, for Appellee.  


                    Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and  


                    Bolger, Justices.  


                     STOWERS, Justice.  



                    The Alaska Workers' Compensation Board dismissed an employer's fraud  


petition  after  deciding  that  the  parties  had  reached  an  enforceable  settlement.   The  


employer appealed the dismissal, arguing that any settlement of its fraud petition was  


void because the settlement did not meet the requirements set out in the Alaska Workers'  


Compensation Act and the Board's regulations.  The Alaska Workers' Compensation  


Appeals Commission affirmed the Board's decision. The employer appeals, arguing that  

----------------------- Page 2-----------------------

the Commission's interpretation of the statute is incorrect and that the Commission                                                                                                                                                                                                                                                     

incorrectly   interpreted   our   decisions   about   estoppel.     We   affirm the                                                                                                                                                                                                                                            Commission's  


II.                           FACTS AND PROCEEDINGS                                             

                                                            Lee Stenseth was injured at work many years ago.                                                                                                                                                                                   He and his employer,   

the Municipality of Anchorage,                                                                                                             entered into acompromiseandrelease agreement (C&R)                                                                                                                                                                       

in August 1996 in which Stenseth waived all future benefits except medical benefits in                                                                                                                                                                                                                                                                                                   

exchange for $37,000. Stenseth retired from the Municipality in 1996, but he continued                                                                                                                                                                                                                                                                

to   receive   medical   benefits   for   his   work-related   injury,   including   narcotic   pain  


                                                            In late 2006 Stenseth was charged with multiple felonies related to selling                                                                                                                                                                                                                             

or delivering narcotics that he had acquired, some from forged prescriptions modeled on                                                                                                                                                                                                                                                                                                

the prescriptions for his work-related injury.                                                                                                                                                              Stenseth pleaded guilty to a number of                                                                                                                                     

felonies and served time in jail; he was released in June 2010.                                                                                                                                                                                           

                                                            In April 2012 the Municipality filed a petition under AS 23.30.250(b)                                                                                                                                                                                                                                                              1  

alleging that Stenseth had obtained workers' compensation benefits by making a false  


 statement or misrepresentation for the purpose of obtaining benefits.  It asked for an  


order reimbursing it for "all benefits, costs and attorney's fees paid as a result of the  


misrepresentations."  Stenseth denied that he had made any misrepresentations for the  


purpose of obtaining benefits.  


                              1                             AS 23.30.250(b) provides in part, "If the board, after a hearing, finds that                                                                                                                                                                                                                                         

a person has obtained . . . medical treatment                                                                                                                                                                          .  . . by knowingly making a false or                                                                                                                           

misleading statement or representation for the purpose of obtaining that benefit, the                                                                                                                                                                                                                                                                                              

board shall order that person to make full reimbursement of the cost of all benefits                                                                                                                                                                                                                                                                         


                                                                                                                                                                                           -2-                                                                                                                                                                              7064

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                    The  parties  agreed  to  mediate  their  dispute,  with  an  Alaska  Workers'  


Compensation  Board  hearing  officer,  William  Soule,  acting  as  the  mediator.                                          The  


mediation occurred in early November 2012.   The letter from hearing officer Soule  


confirming the mediation asked that the parties "come with authority to settle, or a way  


to obtain adequate authority, during normal[] Alaska business hours."  At the time the  


Municipality  was  represented  by  attorney  Trena  Heikes;  Law  Henderson,   the  


Municipality's workers' compensation administrator, did not attend the mediation in  

person but participated by telephone.  Henderson later testified that Heikes called him  


periodically throughout the day to discuss the negotiations. Both Heikes and Henderson  


thought they had authority to settle the case.  


                    The  parties  reached  some  type  of  agreement  at  the  mediation.                                    The  


following  week  Heikes  wrote  to  attorney  Robert  Rehbock,  who  was  representing  


Stenseth,  to  "summarize  the  settlement  reached  at  mediation  last  Friday."                                      Heikes  


summarized the agreement as follows:  


                    MOA has agreed to accept either $30,000.00 cash to be paid  


                    within  90  days  from  today  or  a  Promissory  Note  for  


                    $40,000.00 secured by a Confession of Judgment Without  


                    Action and a Deed of Trust on the home . . . in Wasilla,  


                    Alaska in exchange for its waiver of over $125,000.00 it  


                    claims  is  due  under  AS  23.30.250(b).                       The  note  will  be  


                    payable  at  $500.00  per  month  and  will  accrue  interest  at  


                    3.5%. Mr. Stenseth is to commence these monthly payments  


                    immediately with the balance either in cash within 90 days or  


                    execute  the  Note,  Confession  of  Judgment  and  have  his  


                    daughter execute the Deed of Trust.  


Heikes then memorialized a post-mediation exchange:  


                    I have since discussed the matter with Mr. Henderson today  


                    and  spoken  with  you  regarding  that  discussion.                               As  I  


                    explained, Mr. Henderson prefers to either wait on the C&R  


                    until  payment  has  been  made  OR  make  the  agreement  

                                                               -3-                                                         7064

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                    voidable at MOA's option in the event of default . . . .  You  


                    claim this changes the terms of the settlement.  I am not so  


                    sure.  Rather, MOA believes this merely is a way of moving  


                    forward in the manner in which I initially expressed:  to wait  


                    to file the C&R until all payment was made.  


She gave a deadline for a response.  


                    Rehbock responded, essentially rejecting theMunicipality's new proposal;  


he wrote, "We were and remain prepared to [compromise] on the original terms."  He  


also said that he had been "directed to make a one-time further offer directly to the  


MOA, your principal[,] if you will allow your client to receive it."  His letter did not  


contain the "further offer," but a letter from Heikes dated December 5 said:  


                    This  will  confirm  MOA's  response  to  your  client's  new  


                    settlement proposal . . . .   I have tendered Mr. Stenseth's  


                    proposal to my client and, as I explained, have been advised  


                    MOA wishes to maintain the previous settlement amounts  


                    verbally agreed to by the parties at the November 9, 2012  


                    mediation.   Thus, in exchange for $30,000.00 in certified  


                    monies        by     February         22,     2013       (90     days      from       the  


                    November  13,  2012  letter  of  confirmation),  MOA  would  


                    execute any and all documents necessary for its full release  


                    of Mr. Stenseth from any further  liability  to MOA under  


                    AS 23.30.250.  


                    Rehbock wrote and accepted the Municipality's offer on December 11,  


saying:       "My  client  accepts  your  post  mediation  offer  to  pay  $30,000.00  by  latest  


February 22, 2013 in exchange for a complete release of all rights and claims against  


Mr. Stenseth arising of or in connection with AS 23.30.250."  Rehbock also informed  


Heikes that Stenseth had "arranged for the funds" and that the funds were in Rehbock's  

                                                               -4-                                                         7064

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possession. Rehbock suggested a "tender in exchange for releases to be simultaneously                                                                                                                    

filed with the Board, so to meet any requirement of AS 23.30.012."                                                                                                                            2  

                                      Heikes emailed Rehbock six days later, informing him of "an internal  


glitch," a "need to get higher ups to sign off."  She then wrote, "Higher ups demand  


closure of narcotics.  Under [the] circumstances that shouldn't be a problem, . . . right?"  


Rehbock responded in less than an hour, "No it is not ok.  The offer was accepted."  


Rehbock tendered the funds, in the form of two cashier's checks, to the Municipality on  


or about December 18, 2012; the tender was refused.  


                                      The "glitch" to which Heikes referred was a misunderstanding about the  


limit of her and Henderson's settlement authority. Henderson later testified that the limit  


for  settlement  without  approval  was  $50,000,  but  evidently  neither  Heikes  nor  


Henderson understood the limit applied to forbearance.  They thought they could settle  


as long as the amount set out in the agreement was $50,000 or less.   Someone later  


corrected their misunderstanding.  


                                      Stenseth filed a petition with the Board on December 18, asking the Board  


to dismiss the Municipality's fraud petition because the Municipality had "breached [its]  


                   2                 AS 23.30.012(a) provides:                        

                                     At any time after death, or after 30 days subsequent to the                                                                                             

                                      date of the injury, the employer and the employee . . . have                                                                                         

                                     the right to reach an agreement in regard to a claim for injury                                                                                         

                                      or   death   under   this   chapter,  but   a   memorandum   of   the  

                                      agreement in a form prescribed by the director shall be filed                                                                                              

                                     with the division.                                  Otherwise the agreement is void for any                                                                   

                                     purpose.     Except   as   provided  in  (b)   of   this   section,   an  

                                      agreement filed with the division discharges the liability of                                                                                                     

                                     the   employer   for   the   compensation,  notwithstanding   the  

                                     provisions of AS 23.30.130, 23.30.160, and 23.30.245, and                                                                                                     

                                      is enforceable as a compensation order.                                                       

                                                                                                                      -5-                                                                                                            7064

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contract   of   settlement   terms   negotiated   by   the   parties   at   the   November   9,   2012  

mediation." Several draft settlements were exchanged subsequent to Stenseth's petition,                                                                             

accompanied   by   emails between                                       the attorneys.                   Stenseth   took   the position                             that the   

settlement  he   accepted   on   December   11   was   binding   on   the   parties   unless   they  

renegotiated. Thepartiesexchangedsomeproposalsandcounter-proposals                                                                                       about several  

issues, including a release of narcotic-related treatment in exchange for an agreement by                                                                                       

the Municipality to pay part of Stenseth's attorney's fees related to the dispute about the                                                                                   

                                               3    The Board held a hearing on Stenseth's petition in February  

settlement's existence.                                                                                                                                          


                            The Board limited the February hearing to consideration of Stenseth's  


petition  to  dismiss  the  Municipality's  fraud  claim;  it  declined  to  consider  the  


Municipality's petition, madeorally at a prehearing conference, that the written evidence  


of settlement negotiations be excluded.  In her opening statement, Heikes said that both  


she and Henderson thought they had authority to settle for the agreed-upon amount, but  


they did not in fact have authority. The Municipality argued that the settlement was void  


because it had not been submitted to the Board as required by AS 23.30.012.   The  


hearing  officer  questioned  both  attorneys  about  the  applicability  of  section  .012.  


                            Henderson and Stenseth were the only hearing witnesses.5                                                                         Henderson  


agreed that he had authorized Heikes to write the letter memorializing the agreement  


reached through mediation; he said he thought the letter "was an offer" and that he  


              3             The  parties  had  stipulated  that  Stenseth  would  pay  his  own  attorney's  fees.  

              4             A  second  mediation  was  attempted  in  January  2013.  

              5             Stenseth  intended  to  call  hearing  officer/mediator  Soule  as  a  witness.   The  

Municipality   objected,   and   the   Board   Chair   agreed   that   he   could   not   be   called   as   a  


                                                                                       -6-                                                                                7064

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intended to bind the Municipality when he authorized it.  Henderson also testified that  


he authorized Heikes to write the letter in which the Municipality rejected Stenseth's  


post-mediation offer and said it wanted to return to the original agreement.  Henderson  


agreed that he was aware Heikes could bind the Municipality and that nothing in the  


letter suggested she did not have that authority; he acknowledged that the letter did not  


"discuss  authority."              The  parties  ultimately  agreed  that  the  tender  was  made  on  


December 18.  


                    Henderson explained the basis of the misunderstanding about authority.  


The limit for settlement without approval from others was $50,000, but because he  


generally negotiated payments to others rather than from  them, it did not occur to either  


him or Heikes that the limit applied to the amount the Municipality would forbear. They  


both thought they had authority to settle when they attended the November mediation  


because they evidently thought they could settle as long as the amount in the agreement  


was $50,000 or less, even if the Municipality was compromising a claim that it alleged  


exceeded $100,000. In answer to a question from Heikes about whether there had "been  


a  settlement  agreement  in  this  case,"  Henderson  answered,  "Not  that  I  know  of."  


                     Stenseth testified about his understanding of the negotiations as well as his  


understanding  of  and  response  to  the  Municipality's  discovery  requests.                                         He  was  


cross-examined about his criminal convictions; he testified that none of the charges was  


"directly related to workers' comp."  He agreed that he had not signed a C&R in 2013  


as he had in 1996. Stenseth answered questions fromhis attorney about negotiations that  


happened after the December 11, 2012 letter accepting the Municipality's settlement  


terms; according to Stenseth, he was willing to agree to some additional conditions but  


not others.  


                    In closing Stenseth argued that settlement agreements are contracts, that he  


and the Municipality had entered into a valid contract to settle his case, and that the  

                                                                -7-                                                         7064

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Board should enforce the settlement.  The Municipality argued that the settlement was  


void because it did not comply with AS 23.30.012 and that section .012 must apply  


because the Board's jurisdiction is limited to "claims."  


                    Because  a  hearing  on  the  Municipality's  fraud  petition  was  already  


scheduled for early March 2013, in late February the Board issued a "summary interim  


order"  dismissing  the  Municipality's  petition.                            The  Board  decided  there  was  an  


enforceable contract.  It noted that after 2005 Board approval was not required for all  


settlements and specifically was not required for settlements in which both parties were  


represented by Alaska attorneys.  The Board determined it had the inherent equitable  


authority  to  enforce  the  contract  and  dismissed  the  Municipality's  petition  under  


AS 23.30.250(b).  


                    In  its  final  decision,  the  Board  decided  the  parties  had  entered  into  a  


contract to settle the case in December 2012, finding the following: "Employer made an  


offer encompassing all the essential terms.  Employee unequivocal[ly] accepted those  


terms.       Employee's  promise  to  pay  and  Employer's  promise  to  forebear  [sic]  are  


consideration, and both parties' letters evince the intent to be bound."                                           The Board  


decided the Municipality should be equitably estopped from denying the authority of its  


employees to settle the case on  the terms set out in  the December  correspondence  


because there was no way Stenseth or his attorney could have known prior to accepting  


the offer that Henderson and Heikes had exceeded their authority.  


                    With respect to the provisions of AS 23.30.012, the Board noted first that  


the  statute  had  been  amended  in  2005  to  dispense  with  Board  approval  of  some  


settlements, including many settlements in which the parties are represented by attorneys  

                                                                -8-                                                         7064

----------------------- Page 9-----------------------


licensed   to   practice   in   Alaska.     The   Board   decided  that  in   this   case,   the   parties'  

settlement   had   been   submitted   to   the   Board   through  the   filing   of   the   December  

correspondence.     Relying   on  one   of   its   regulations,   the   Board   then   said   that   any  

regulatory requirements as to the required form of the agreement were procedural and                                                          

                                                                                                                         7  It waived the procedural  

could be         waived if "manifest injustice" would otherwise result.                                                                                

requirements because the requirements "would have served no purpose" in the case and  


manifest injustice would result if the agreement were not enforced.  


                          TheMunicipality appealed to theCommission, arguing that theBoard erred  


in finding that there was a binding settlement between the parties.  The Commission  


determined  that  (1)  neither  AS  23.30.012  nor  the  Board's  settlement-agreement  


regulations applied to this case; (2) the Board's findings about the existence of a contract  


were  supported  by  substantial  evidence;  (3)  the  Board  properly  applied  equitable  


estoppel against the Municipality; and (4) there was no need to satisfy the technical  


requirements of the regulations. In deciding that AS 23.30.012 did not apply to this case,  


the Commission interpreted that statute as applying only to claims for injuries; because  


the fraud petition did not involve a claim for injury, the Commission reasoned that  


section .012 did not apply.  The Municipality appeals.  


             6            AS 23.30.012(b) ("The agreement shallbereviewed by apanel of the board                                                                 

if the claimant . . . is not represented by an attorney licensed to practice in this state, the                                                                       

beneficiary   is   a   minor   or   incompetent,   or   the   claimant   is   waiving   future   medical  


             7            See 8 AlaskaAdministrativeCode(AAC) 45.195 (2011) (permitting Board  


to waive or modify a "procedural requirement in this chapter . . . if manifest injustice to  


a party would result from a strict application of the regulation").  


                                                                                   -9-                                                                           7064

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III.        STANDARD OF REVIEW                

                        In   an    appeal    from    the    Alaska    Workers'    Compensation    Appeals  


 Commission, we review the Commission's decision rather than the Board's.                                                                         

                                                                                                                                         We apply  




 our independent judgment to questions of law that do not involve agency expertise. 


Interpretation of a statute is a question of law to which  we  apply our independent  


judgment, interpreting the statute according to reason, practicality, and common sense,  


 considering  the  meaning  of  the  statute's  language,  its  legislative  history,  and  its  



purpose.            We do not mechanically apply the plain meaning rule but use a sliding scale  


 approach to statutory interpretation, in which "the plainer the statutory language is, the  



more convincing the evidence of contrary legislative purpose or intent must be." 


                        We review questions of contract formation de novo when there are no  

                               12     We  independently  review  the  Commission's  conclusion  that  



 factual  disputes. 

 substantial evidence in therecord supports the Board's factual findings by independently  


reviewing the record and the Board's findings.13  


            8           Shehata v. Salvation Army                        , 225 P.3d 1106, 1113 (Alaska 2010) (citing                           

Barrington v. Alaska Commc'ns Sys. Grp., Inc.                                        , 198 P.3d 1122, 1125 (Alaska 2008)).                   

            9           Id.  

            10          State, Div. of Workers' Comp. v. Titan Enters., L.L.C., 338 P.3d 316, 320  


 (Alaska  2014)  (citing Monzulla  v.  Voorhees  Concrete  Cutting,  254  P.3d  341,  345  


 (Alaska 2011)).  


            11          McDonnell  v.  State  Farm  Mut.  Auto.  Ins.  Co.,  299  P.3d  715,  721  


 (Alaska 2013) (internal quotation marks, alterations, and citations omitted).  


            12          Chilkoot  Lumber  Co.  v.  Rainbow  Glacier  Seafoods,  Inc.,  252  P.3d  


 1011, 1014 (Alaska 2011).  


            13          Shehata, 225 P.3d at 1113.  


                                                                          -10-                                                                    7064

----------------------- Page 11-----------------------

                         Whether a regulation applies to a case is reviewed using the independent     


judgment standard.                                                                                                                                                   

                                        Weusedifferent standards ofreviewwhen interpretingregulations:  


we  "typically  interpret  regulations  with  some  deference  to   the  agency's  own  


 interpretation," but when the agency that promulgated the regulation is not a party to the  


 action and "has not otherwise offered an interpretation," we apply our independent  

                   15  We review an agency's application of its regulation to the facts of a case "to  


 determine whether the agency's decision was arbitrary, unreasonable, or an abuse of  


 discretion."16  "We will find an abuse of discretion when we are left with the definite and  


 firm conviction that a mistake has been made."17  


IV.          DISCUSSION  

                                                                                                                    18  Commonlawstandards  

                         Aworkers' compensation settlement is acontract.                                                                          


 of contract formation and rescission apply to workers' compensation settlements to the  


 extent these standards are not overridden by statute.19                                                  We have recognized a strong  


policy favoring settlements.20   Here, the Municipality contends that AS 23.30.012 voids  


             14           Garner v. State, Dep't of Health & Soc. Servs., Div. of Med. Assistance                                                                ,  

 63 P.3d 264, 267 (Alaska 2003).                  

             15           Tea  ex  rel.  A.T. ,  278  P.3d   1262,   1263  (Alaska  2012).  

             16          Burke  v.  Houston  NANA,  L.L.C.,  222  P.3d  851,  857  (Alaska  2010).  

             17          Id.  

             18          Seybert           v.      Cominco    Alaska                   Exploration,                 182       P.3d         1079,         1093  

 (Alaska  2008)  (citing   Williams  v.  Abood ,  53  P.3d   134,   139  (Alaska  2002)).  

             19          Id.  

             20          See,  e.g., Mullins  v.  Oates,  179 P.3d  930,  937  (Alaska 2008)  (quoting  


Municipality of Anchorage v. Schneider, 685 P.2d 94, 98 (Alaska 1984)); see also Kazan  


v. Dough Boys, Inc., 201 P.3d 508, 514-15 (Alaska 2009) (setting out policy reasons that  



                                                                              -11-                                                                       7064

----------------------- Page 12-----------------------

 any settlement the parties may have reached because the agreement was not submitted                                                                                                                                                                                                                                                                            

to the Board "in a form prescribed by the director," as that statutory section requires.                                                                                                                                                                                                                                                                                                                                                            It  

 additionally  contends   that   if   a   settlement   contract   was   formed,   the   Board   and  

 Commission did not enforce the correct agreement because Stenseth abandoned the first                                                                                                                                                                                                                                                                                                                                                     

 settlement   in   favor   of   a   second   one.     Finally,   the   Municipality   contends   that   the  

 Commission erred in its application of equitable estoppel because not all of the elements                                                                                                                                                                                                                                                                                                                        

were met in this case.                                                               

                                   A.	                                The Commission Correctly Determined That Substantial Evidence In                                                                                                                                                                                                                                                                                                             

                                                                      The Record Supported The Board's Finding That The Parties Settled                                                                                                                                                                                                                                                                                   

                                                                      The Case In December 2012.                                                                                                      

                                                                      TheMunicipality does notdirectly question theCommission'sdecisionthat                                                                                                                                                                                                                                                                                                   

 substantial evidence supported the Board's finding that a settlement contract was formed                                                                                                                                                                                                                                                                                                                                  

 in the exchange of letters dated December 5 and 11.                                                                                                                                                                                                                               Instead, the Municipality argues                                                                                                         

that the Commission and the Board did not enforce the parties' most recent settlement.                                                                                                                                                                                                                                                                                                                                                                            

 Whether   a   contract   of   settlement   existed  and  what   its   terms   encompassed   is   an  

underlying question that we address first.                                                                                                                                                   

                                                                     We agree with the Commission that substantial evidence supported the                                                                                                                                                                                                                                                                                                     

 Board's finding that the parties entered into a binding settlement, the terms of which                                                                                                                                                                                                                                                                                                                                       

were set out in the correspondence dated December 5 and 11, 2012 between Heikes and                                                                                                                                                                                                                                                                                                                                                         

 Rehbock.    "The formation of an express contract requires an offer encompassing its                                                                                                                                                                                                                                                                                                                                                             

 essential terms, an unequivocal acceptance of the terms by the offeree, consideration[,]                                                                                                                                                                                                                                                                                    

                                                                                                                                                 21               All four elements are present here.  In its December 5  

 and an intent to be bound."                                                                                                                                                                                                                                                                                                                                                                                                                            

                                   20                                 (...continued)  


 support enforcement of settlement agreements).  

                                   21                                 Childs v. Kalgin Island Lodge                                                                                                                                 , 779 P.2d 310, 314 (Alaska 1989) (citing                                                                                                                                               

Hall v. Add-Ventures, Ltd.                                                                                                                , 695 P.2d 1081, 1087 n.9 (Alaska 1985)).                                                                                                                                          

                                                                                                                                                                                                                      -12-	                                                                                                                                                                                                            7064

----------------------- Page 13-----------------------

letter, the Municipality made a written offer to Stenseth with the intent of binding the                                                                                                                      

Municipality.   The offer was specific and covered all essential terms. There was mutual                                                                                                             

consideration: Stenseth agreed to pay $30,000 to the Municipality, and the Municipality                                                                                               

agreed to release Stenseth from liability under AS 23.30.250.                                                                                             Stenseth unequivocally   

accepted the offer in writing.                       

                                 The Municipality does not appear to take the position, as it did before the                                                                                                  

Commission,   that   no   agreement   was   ever   reached.     Instead,   it   contends   that,  after  

Stenseth filed his petition to enforce the first settlement, the parties abandoned the                                                                                                                       

December settlement and entered                                                         into a second settlement.                                         Although "a party can                             

                                                                                                                                                                                     22  there is no  

abrogate an existing contract by accepting a new contract in its place,"                                                                                                                                       

evidence that the parties here actually reached a new agreement.  Pointing to an email  


from Heikes, the Municipality asserts that in January 2013, after Stenseth emailed a  


proposed settlement to the Municipality, "[t]he Municipality accepted the terms and  


advised  that  it  was  reviewing  the  document."                                                                           But  the  email  does  not  show  "an  


                                                                                                                                                                                                  23   After  

unequivocal acceptance" of Stenseth's offer, as required for contract formation.                                                                                                                         


noting that Stenseth had "substantially changed" the previous draft settlement, Heikes  


wrote, "MOA will not sign as written."  She subsequently sent another draft settlement,  


which Stenseth rejected. The parties attended a second mediation in late January, which  


included a discussion of a further exchange of consideration.  Continuing to negotiate,  


absent a new agreement, does not abrogate an existing settlement contract.24  


                 22              Chilkoot   Lumber   Co.   v.   Rainbow   Glacier   Seafoods,   Inc.,   252   P.3d  

 1011,   1016   (Alaska   2011)   (citing   RESTATEMENT   (SECOND)   OF   CONTRACTS      279  


                 23              Childs, 779 P.2d at 314 (citing Hall, 695 P.2d at 1087 n.9).  


                 24              Chilkoot Lumber Co., 252 P.3d at 1016.  


                                                                                                      -13-                                                                                               7064

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                                                       The   Municipality   argues   that   the   continuing   negotiations   between   the  

 attorneys after Stenseth filed his petition to dismiss undercut the notion that the parties                                                                                                                                                                                                                                            

 intended to be bound by the agreement set out in the earlier letters.  But this argument   

 ignores the fact that Stenseth had filed a new petition; resolving that dispute would                                                                                                                                                                                                                                                  

provide both parties a reason for continuing to negotiate.                                                                                                                                                                                There is nothing inconsistent                                           

 in trying to negotiate an agreement on the new petition while continuing to assert that the                                                                                                                                                                                                                                                           

Municipality   was   bound   by   the   settlement   created   when   Stenseth   accepted   the  

Municipality's December 5 offer of settlement.                                                                                                                                                    The factual record does not support the                                                                                                              

Municipality's assertion that a later settlement replaced the first.                                                                                                                                                                                 

                            B.	                        The Commission Correctly Determined That AS 23.30.012 Did Not                                                                                                                                                                                                                              

                                                       Apply To This Settlement.                                         

                                                       The Municipality argues that the Commission reversed longstanding law   

 and  practice   in   deciding   that   AS   23.30.012   did   not   apply   to   void   the   settlement  


 agreement in this case.                                                                                                                                                                                                                                                                                                                              

                                                                                                              Stenseth responds that the Board decisions upon which the  


Municipality relies are irrelevant because they predate statutory amendments that have  


 a direct bearing on this case.  


                                                       Alaska Statute 23.30.012 provides in relevant part:  


                                                                                   (a)                     At  any  time  after  death,  or  after  30  days  


                                                        subsequent  to  the  date  of  injury,  the  employer  and  the  

                            25                         The Municipality contends that the Commission improperly "changed the                                                                                                                                                                                                                           

 law, after the fact" and applied a change in the law retroactively in this case.                                                                                                                                                                                                                                                            This  

 argument has no merit.                                                                          As a general rule, legal decisions apply in the case announcing                                                                                                                                                   

the rule as well as subsequent cases.                                                                                                                    As we stated in                                                      Vienna v. Scott Wetzel Services,                                                                

Inc., "Absent special circumstances, a new decision of this court will be given effect                                                                                                                                                                                                                                                                    in  

 the case immediately before the court                                                                                                                    , and will be binding in all subsequent cases . . . ."                                                                                                                                                      

 740 P.2d 447, 449 (Alaska 1987) (emphasis added) (quoting                                                                                                                                                                                              Plumley v. Hale                                                    , 594 P.2d            

497, 502 (Alaska 1979)) (internal quotation marks omitted).                                                                                                                                                                                            The Municipality fails not                                                                      

 only to point to any special circumstances that would exempt it from this rule but also                                                                                                                                                                                                       

to recognize the statutory changes that undercut the authority of the Board cases it cites.                                                                                                                                                                                                                                               

                                                                                                                                                                          -14-	                                                                                                                                                                 7064

----------------------- Page 15-----------------------


                    employee . . . have the right to reach an agreement in regard  


                    to  a  claim  for  injury  or  death  under  this  chapter,  but  a  


                    memorandum of the agreement in a form prescribed by the  


                    director  shall  be  filed  with  the  division.                     Otherwise,  the  


                    agreement is void for any purpose. Except as provided in (b)  


                    of   this   section,   an   agreement   filed   with   the   division  


                    discharges the liability of the employer for the compensation,  


                    notwithstanding the provisions of AS 23.30.130, 23.30.160,  


                    and 23.30.245, and is enforceable as a compensation order.  


                               (b)  The agreement shall be reviewed by a panel of the  


                    board if the claimant . . . is not represented by an attorney  


                    licensed to practice in this state . . . or the claimant is waiving  


                    future  medical  benefits.                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  


                    AS 23.30.130, 23.30.160, and 23.30.245.   The agreement  


                    shall be approved by the board only when the terms conform  


                    to the provisions of this chapter . . . .  


                    This section permits an injured worker and his employer to settle a "claim  


for injury or death" and requires the parties to an agreement to file it with the Board "in  


a form prescribed by the director." The applicability of this section to the agreement the  


parties reached depends on whether they reached "an agreement in regard to a claim for  


injury or death under this chapter."  


                    The Municipality first contends that the Commission erred in deciding that  


AS 23.30.012 and the Board's regulations about settlements do not apply unless a formal  


workers' compensation claim is filed.  The Municipality also argues that the Board's  


regulations define "claim" broadly enough to encompass its fraud petition because that  


regulation  defines  "claim"  as  including  "any  matter  over  which  the  board  has  

                                                               -15-                                                         7064

----------------------- Page 16-----------------------


jurisdiction."                            Stenseth responds that the Municipality misinterprets the Commission's                                                                                 

 decision  and  that    "claim"    in    AS    23.30.012    refers    to    the    employee's    right    to  

 compensation.   He argues that the Commission correctly interpreted the statute because                                                                                                                          

 the Municipality's petition did not involve an "injury" as that word is defined in the                                                                                                                                        


                                    The Municipality's argument is based on a distinction between two uses of                                                                                                                     

                                                                                                                                                               27   but that distinction was  

 the word "claim" in workers' compensation proceedings,                                                                                                                                                                     

 immaterial to the Commission's decision.  The Commission decided that AS 23.30.012  


 did not apply because the settlement did not involve a "claim for injury or death" and did  


 not discharge the employer's liability for compensation; instead "the settlement covered  


 efforts  on  the  part  of  [the  Municipality]  to  recoup  benefits  it  had  paid  Stenseth."  


 Alaska Statute 23.30.395(24) defines "injury" as an "accidental injury or death arising  


 out of and in the course of employment, and an occupational disease or infection that  


 arises naturally out of the employment or that naturally or unavoidably results from an  


                                                 28   Because the legislature defined "injury" for purposes of the Alaska  

 accidental injury."                                                                                                                                                                                                 


 Workers' Compensation Act, we apply that definition of "injury" here.29  


                  26                8 AAC 45.900(5) (2011).                          

                  27                See Jonathan v. Doyon Drilling, Inc.                                                              , 890 P.2d 1121, 1124 (Alaska 1995)                                               

 (holding   that   word   "claim"   in   AS   23.30.110(c)   meant   written   claim   for   workers'  

 compensation  benefits);  Suh  v.  Pingo  Corp.,  736  P.2d  342,  346  (Alaska  1987)  


 (discussing when employer can controvert a worker's right to compensation ("claim")                                                              

 before the worker files a written claim).                                              

                  28                AS 23.30.395(24).  


                  29                See AS 01.10.040(a) (requiring words to be construed using legislative  



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----------------------- Page 17-----------------------

                                             We agree with the Commission that the Municipality's fraud petition is not                                                                                                                                                                 

a claim for "injury" as that term is defined in AS 23.30.395.  This definition limits the                                                                                                                                                                                               

applicability   of   AS   23.30.012(a),   and   the   Municipality  does   not   explain   how   its  

allegation of fraud is an "injury" as that term is used in the statute.                                                                                                                                                                          Nor does the                          

Municipality discuss any legislative history that might suggest some meaning other than                                                                                                                                                                                             

the statute's plain meaning.                                                                    We thus agree with the Commission that an employer's                                                                                                        

                                                                                                                                                                                                                               30          As  a  result,  the  

fraud   petition  is  not  a   "claim   for   injury"   under   AS   23.30.012.                                                                                                                                                                                                       

settlement did not need to be "in a form prescribed by the director"; the Board could  


determine the existence of a settlement and the terms of that settlement based on the  


parties' correspondence.31  


                      30                     Because the parties were both represented by Alaska attorneys, the Board                                                                                                                                                        

did not have to approve the settlement or evaluate whether it was in Stenseth's best                                                                                                                                                                                                

interests in any event.  AS 23.30.012(b).  No one alleges that Stenseth was a minor or                                                                                                                                                         

incompetent, nor did he waive future medical benefits.                                                                                                                                  Id.   Thus, even if AS 23.30.012                                        

applied, theonlyapplicable                                                                 statutory  requirement wouldhavebeen that "amemorandum                                                                                                   

of the agreement in a form prescribed by the director shall be filed with the division."                                                                                                                                                                                                             

AS 23.30.012(a).   We have previously held that the Board can waive these procedural                                                                               

requirements,   as   it   did   here.     See   Cole   v.   Ketchikan   Pulp  Co.,  850  P.2d   642,   647  

(Alaska 1993) (holding that Board could waive requirement that settlement be signed by                                                                                                                                                                                                    

the parties and remanding to determine whether the requirement should be waived).                                                                                                                                                                                   

Thus, even if the statute applied, the Board did not exceed its authority in refusing to                                                                                                                                                                                                   

void the parties' settlement contract.                                                       

                      31                     Relatedly, the Municipality contends the Commission misconstrued the  


Board's regulation about settlements because that regulation required that all settlement  


agreements "must be submitted in writing to the board, must be signed by all parties to  


the action and their attorneys or representatives, if any, and must be accompanied by [a]  


form . . . ."  8 AAC 45.160(b) (2011).  But even assuming the regulation could have  


some applicability independent of AS 23.30.012, the Board can waive these procedural  


requirements  if  "manifest  injustice"  would  result  from  "strict  application  of  the  


regulation."  8 AAC 45.195.  The Board decided manifest injustice would result in this  


case if it strictly applied the regulation, and the Municipality has not questioned the  



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----------------------- Page 18-----------------------

                                                            The   Municipality   argues   that   under   the   Commission's   analysis,   an  

employee who waives benefits when settling a fraud petition will not be accorded the                                                                                                                                                                                                                                                     

protections   of   AS   23.30.012.     While   this   hypothetical   raises   interesting   questions  

concerning AS 23.30.012(b), Stenseth did not waive his future medical benefits in this                                                                                                                                                                                                                                                                                             

 settlement.   We observe, however, that when an employee compromises benefits in a                                                                                                                                                                                                                                                                                                           

 settlement, those benefits are from a work-related injury, and the resulting settlement                                                                                                                                                                                                                                                             

would discharge some of the employer's liability.   That is not the case here, where the                                                                                                                                                                                                                                                                                              

employer    sought    reimbursement.       We    affirm    the    Commission's    decision    that  

AS 23.30.012 is not applicable to the settlement here.                                                                                                                                                                    

                              C.	                           The   Commission   Correctly   Concluded   That   Equitable   Estoppel  

                                                            Prevented The Municipality From Avoiding The Settlement.                                                                                                                                                                                  

                                                            In addition to relying on statutory and regulatory defenses to enforcing the                                                                                                                                                                                                                                              

 settlement, the Municipality also asserted that no settlement existed because Henderson                                                                                                                                                                                                                                                           

and Heikes exceeded their authority when they made the December 5 offer.                                                                                                                                                                                                                                                                         The Board   

applied equitable estoppel to prevent the Municipality from avoiding the settlement,                                                                                                                                                                                                                                                             

finding that all the elements of estoppel were met.                                                                                                                                                                                     The Commission agreed with the                                                                                                               

Board's analysis.   

                                                            The   Municipality   argues   here   that   the   Commission   applied   equitable  

estoppel incorrectly because Stenseth could not reasonably have relied on the settlement                                                                                                                                                                                                                                                              

and because there was no "resulting prejudice" to him.                                                                                                                                                                                                According to the Municipality,                                                   

 Stenseth's continuing efforts to settle the case after he filed his petition in December                                                                                                                                                                                                                                                           

indicate that the first settlement did not exist and that Stenseth did not rely on it.                                                                                                                                                                                                                                                                                        The  

Municipality further contends that it would be unjust to make it abide by the terms of the                                                                                                                                                                                                                                                                                            

 settlement.     Stenseth   responds   that   (1)   he   suffered   prejudice   in   the   form of                                                                                                                                                                                                                                                                    added  

                              31                            (...continued)  


Board's use of its discretion here.  

                                                                                                                                                                                         -18-	                                                                                                                                                                                                     7064  

----------------------- Page 19-----------------------

attorney's fees and costs; (2) his reliance on the settlement was reasonable because the                                                                                                                   

offer   he   unequivocally   accepted   was   made   by   the   Municipality's  attorney,   the  

Municipality's "sole representative" in the case; and (3) no special consideration should                                                                                                          

be given to the Municipality as a government here because it is acting solely in its                                                                                                                        

capacity as an employer.            

                                We   agree   with   the   Commission   that   equitable   estoppel   prevents   the  

Municipality from denying the authority of its agents, Heikes and Henderson, to settle                                                                            

this case on the terms in the December 2012 correspondence. Even if the Municipality's                                                                                         

agents    exceeded    their   actual    authority    during    the    settlement    negotiations,    the  

Municipality could be estopped to deny their lack of authority if Stenseth proved the                                                                                                                      

                                                                                                                32     "(1) the governmental body asserts a  

elements of estoppel against the government:                                                                                                                                                                    

position by conduct or words; (2) the private party acts in reasonable reliance thereon;  


(3) the private party suffers resulting prejudice; and (4) the estoppel serves the interest  


                                                                                         33   The Commission decided all elements were met,  

of justice so as to limit public injury."                                                                                                                                                                


and we agree.  


                                 The Municipality does not contest that its agents asserted a position in the  


settlement negotiations, but it argues that no other element was met.   It claims that  


Stenseth could not have relied on the offer because he continued to negotiate after he  


filed his petition to dismiss the fraud petition.  But as we noted earlier, there is nothing  


inconsistent about attempting to negotiate a settlement related to the petition to dismiss  


                32              See RESTATEMENT  (THIRD) OF  AGENCY   2.03 cmt. g (2006) (noting that                                              

sovereign can be estopped to deny its agent's lack of authority).                                                                  

                33              Pfeifer v. State, Dep't of Health & Soc. Servs., Div. of Pub. Assistance,  


260 P.3d 1072, 1082 (Alaska 2011) (quoting Allen v. State, Dep't of Health & Soc.  


Servs., Div. of Pub. Assistance, 203 P.3d 1155, 1164 (Alaska 2009)) (internal quotation  


marks omitted).  


                                                                                                    -19-                                                                                              7064

----------------------- Page 20-----------------------

while still maintaining that the original settlement should be enforced.                                                                                                                                                                               Furthermore,  

there was no way Stenseth or his attorney could have known that Henderson and Heikes                                                                                                                                                                                           

had   exceeded   their   authority.     As   the   Board   found,   neither   Henderson   nor   Heikes  

understood   the   limits   of   their   authority,   and   they   were   both   "relatively   high-level  

employees."     The   settlement   offer   was   on   Municipal   letterhead   and   signed   by   the  

attorney for the Municipality.                                                                          We hold that Stenseth's reliance on the Municipality's                                                                                      

conduct in negotiating the December settlement was reasonable.                                                                                                                       

                                              We agree with Stenseth that he suffered prejudice from the Municipality's                                                                                                                              

attempt to avoid the settlement.  Stenseth incurred additional attorney's fees and costs                                                                                                                                                               

after the Municipality refused the tender of funds from                                                                                                                               Stenseth; the additional fees were                                                               

a direct consequence of the Municipality's actions.                                                                                                

                                              Finally, the estoppel serves the interest of justice.                                                                                                                        In evaluating the last                                         

element, we have approved balancing "the gravity of the injustice to the citizen if the                                                                                                                                                                                                     


doctrine is not applied" and "the injury to the                                                                                                      commonwealth if the doctrine is applied."                                                                                                            

The Municipality contends that enforcing the settlement bars it "from any chance of ever  


recovering" additional money from Stenseth. But the Municipality did not ask Stenseth  


to pay additional money in the negotiations following discovery of the "glitch." It would  


be unfair to Stenseth not to hold the Municipality to its bargain when he could not  


possibly  have  known  the  limits  on  the  scope  of  the  Municipality's  worker's  


compensation attorney's and its workers' compensation administrator's authority.  The  


settlement only involved one party, so there is little injury to the general public, and the  


claim is unproved.  The strong public policy in favor of settling disputes also weighs in  


                       34                    Municipalityof Anchorage v.                                                                        Schneider, 685 P.2d 94, 97 n.6 (Alaska 1984)                                                                                       

(quoting 2 C. A                                       NTIEAU, M                            UNICIPAL  CORPORATION  LAW    16A.06, at 16A-15 (1984))                                                                                                                          

(internal quotation marks omitted).                                                     

                                                                                                                                             -20-                                                                                                                                     7064

----------------------- Page 21-----------------------


favor of estoppel here.                                         We agree with the Commission that the Municipality was                                                  

properly estopped to deny the authority of its agents and the existence of a settlement in                                                                                                                      

this case.   

V.               CONCLUSION  

                                 We AFFIRM the Commission's decision.  


                35               See id. at 98 (citing policy in favor of settlements in deciding that estoppel  


should apply).  


                                                                                                     -21-                                                                                               7064  

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