Enforcement of workers' compensation settlements.

• Author: Bolton, Brian
• Position: Florida

Most lawyers are aware that the majority of lawsuits settle at mediation. (1) Interestingly, in Florida, the workers' compensation judge of compensation claims (JCC) may consider only workers' compensation cases that have been mediated. (2) Consequently, a large number of workers' compensation matters settle rather than proceed to trial. (3) This article explores the law governing enforcement of workers' compensation settlements, as well as methods to maintain an enforceable agreement that will not be vacated.

Upon reaching an agreement in a workers' compensation matter, it is common for a preliminary summary of settlement terms to be approved by the parties. It is tempting to consider the mediation a success at this point. However, a successful mediation and settlement agreement is one which ends all disputes. Unfortunately, once a case has "settled" at mediation or through other informal negotiations, disputes often arise as the parties attempt to formalize and finalize their preliminary agreement with documents containing lengthier and more specific terminology.

Disputes over settlements are increasingly frequent in workers' compensation cases. They may occur when an injured worker attempts to withdraw from a settlement because the parties cannot reach agreement as to specific terms, the injured worker develops "buyer's remorse," or for a myriad of other reasons.

The psychological issues involved in obtaining a successful workers' compensation settlement can be quite complex. (4) These issues include anger directed against a former employer, disputes over the handling of claims by the workers' compensation insurance carrier, the lack of an ongoing relationship between the injured worker and the other parties, and fear upon reconsideration by the claimant of the extent of their injuries. (5) Successful mediator interventions often enable the parties to move beyond these impediments to settlement during the mediation process. (6) After the mediation concludes, however, the psychological dynamics outlined above may disrupt the exchange and execution of documents necessary to achieve a successful, completed settlement. Further, these issues become more problematic for the lawyers involved as workers' compensation settlements are governed by both Florida contract law and specific statutory provisions for global settlements under the Florida workers' compensation law. (7)

Application of Contract Law

In Florida, the interpretation of workers' compensation settlement agreements is governed by contract law. (8) The elements which compose every contract (namely offer, acceptance, and agreement on essential terms) are necessary in order to have a binding workers' compensation settlement. (9) Such agreements "are highly favored and will be enforced whenever possible." (10) The construction of a workers' compensation settlement agreement, like any other contract, is generally a question of law, unless its terms are susceptible to more than one construction. In that case, a factual issue is presented regarding the intended effect of the settlement, which is then to be determined by the JCC. (11) The Florida workers' compensation law confines the application of contract law as it may be applied to workers' compensation cases. F.S. [sub section] 440.20(11)(a) governs settlement of denied claims in which a claimant is not represented by counsel. This statute provides for settlement upon joint petition of the parties for a lump-sum payment in exchange for the employer's or carrier's release from liability for future medical expenses, future payments of compensation, and any other benefits provided under the statute. Settlements shall be allowed at any time in any case in which the employer or carrier has filed a written notice of denial within 120 days after the employer receives notice of the injury. The JCC must give consideration to the matters of all interested parties, and the JCC may or may not enter a compensation order approving the parties' proposed settlement agreement.

Alternatively, F.S. [sub section]440.20(11)(b) governs accepted workers' compensation claims, that is, claims in which a claimant has been receiving benefits and the accident has not been contested. This section also addresses claimants who are not represented by counsel. Upon joint petition to the JCC, the parties may enter into a lump-sum payment in exchange for the employer's or carrier's release from liability for future medical expenses, future payments of compensation, and any other benefits allowable under the statute at any time after the claimant has reached maximum medical improvement (MMI). The JCC must determine if settlement will definitely aid the rehabilitation of the injured worker or is otherwise clearly in the best interests of the person entitled to compensation. The JCC retains the discretion to enter an order approving the settlement. In contrast, F.S. [section]440.20(11)(c) provides for settlements involving represented claimants and does not require JCC consideration, except for the approval of an attorneys' fee. (12)

Jurisdiction

The statutory amendments of October 1, 2001, removed the JCC's obligation and authority to consider the best interests of the parties and either approve or disapprove settlements involving represented claimants. Following that amendment, it was thought by some that a JCC no longer had jurisdiction over a represented workers' compensation settlement under F.S. [section]440.20(11)(c). (13) Indeed, in Marchenko v. Sunshine Cos., 894 So. 2d 311 (Fla. 1st DCA 2005), the First District Court of Appeal affirmed the conclusion that the JCC did not have jurisdiction to vacate an agreement reached between the parties as the claimant was represented, and the case was settled privately under F.S. [section]440.20(11)(c). (14) There is merit to the argument that JCCs lack jurisdiction to consider represented settlements. In Pace v. Miami-Dade County Sch. Bd., 868 So. 2d 1286 (Fla. 1st DCA 2004), the First DCA had held that a JCC had no authority...