§9.65 Commutation

• Library: Workers' Compensation Law Deskbook Vol. 2 (2020 Ed.)

E. (§9.65) Commutation

Settlements in lump sum by commutation (not to be confused with compromise settlements under § 287.390, RSMo Supp. 2018, as discussed in §§9.61–9.64 above) are proceedings related to payment of compensation in one lump sum under § 287.530.1, RSMo 2016. Section 287.530.1 refers to redemption of compensation payable in whole or in part by payment of a lump sum equal to the commutable value of future installments, taking into account life contingencies and expectancies with commutation at present value, calculated in accordance with 8 CSR §§ 50-5.030 and 50-5.040.

Commutation is justified only under certain circumstances as provided in § 287.530.1. These are:

1. that commutation will be in the best interest of the employee or dependents of the deceased employee;

2. that it will avoid undue expense or undue hardship to either party;

3. that the employee or dependent has removed or is about to leave the United States; or

4. that the employer has sold or otherwise disposed of the greater part of the business assets.

It has been held that, because the four grounds above stated are in the disjunctive, it is only necessary to show compliance with one of the four items to support an award of commutation. Hanley v. Carlo Motor Serv. Co., 130 S.W.2d 187 (Mo. App. E.D. 1939). Commutation does not bar reopening of the case on changes of condition, and the last day covered by the commutation is the controlling date as concerns the statute of limitations. Bruce v. Mo.-Kan.-Tex. R. Co., 73 S.W.2d 425 (Mo. App. W.D. 1934), overruled in part by Wentz v. Price Candy Co., 175 S.W.2d 852 (Mo. 1943).

But a plain reading of § 287.530.1 recognizes that any proposed lump-sum settlement agreement under an application for a “commutation” must be equal to the value of the future weekly payments. Absent a showing that the lump sum is equal to the commutable value of the future installments, the application for commutation will be disallowed and not approved by the Commission. Dickemann v. Costco Wholesale Corp., 550 S.W.3d 65 (Mo. banc 2018). In affirming the Commission decision to not approve the parties’ application for commutation, the Court in Dickemann noted that "commutation is a departure from the normal method of payment and is to be allowed only when it clearly appears that some unusual circumstances warrant such a departure." Id. at 68.

Commutation is not a Settlement

Any attempt to circumvent this requirement by endeavoring to classify the...