Standard C&R Forms Clash With Defendant’s Expectations & Tips for Creating a Challenge-Proof C&R

An important case regarding the terms of a settlement agreement has just originated from the Los Angeles WCAB. Despite the fact that it has not been designated a “significant panel decision” we believe that the rationale of the Appeals Board’s decision will be followed in subsequent cases.

In the case under discussion the defendant resolved a cumulative trauma claim by C&R and added a relatively standard addendum which included the following language: “All claims of injury to any body part, system or condition not listed in this Compromise and Release are hereby dismissed with prejudice.”

“Not good enough”, said WCJ Schulman when the applicant hired a new lawyer and filed a specific injury claim that occurred within the alleged CT period that had just been resolved and after she had been terminated from her employment. The applicant’s new specific injury claim was allowed to proceed on its merits.

In Orellana v. United Care Services (2015) (ADJ9913367) , the applicant alleged a specific back injury on September 22, 2014. She had previously litigated a CT injury to her back and other body parts through October 1, 2014. The CT claim was settled by a C&R that was approved on December 10, 2014. The C&R agreement included the above quoted addendum as well as a stipulation that the applicant did not sustain any other injuries other than those listed in the C&R.

Defendant argued in the subsequent specific injury case that it had bought its peace as to any prior specific injury claims because the addendum included language that resolved all claims of injury not listed in the C&R. This argument did not persuade the WCJ or the Appeals Board for the following reasons.

Specifically, the WCJ pointed out that the standard Compromise and Release form has an important provision at Paragraph 3 limiting its scope “to settlement of the body parts, conditions, or systems and for the dates of injury set forth in Paragraph No. 1 despite any language to the contrary in this document or any addendum.”

The applicant had not yet litigated the specific injury of September 22, 2014 when the C&R of the CT claim was approved. It is unknown from the Appeals Board’s decision whether her deposition was taken before the matter of the validity of the new specific injury claim came up for trial. At trial she overcame a post-termination defense with unrebutted testimony that she had reported the specific injury to a supervisor and sought medical treatment before her termination.

This WCAB panel decision illustrates the pitfalls of paragraph 3 of the standard Compromise and Release form. Where a conflict exists between the C&R form and an attached addendum, the WCAB can and probably will resolve that conflict in favor of the Applicant.

This was also a missed opportunity for the defendant. Any time you are resolving a CT claim, it is vital that you are aware of the facts of your claim so that any unfiled specific dates of injury which may be known to the defendant on reasonable inquiry are created with Applications and ADJ numbers at the time of settlement. Had this been done, the C&R of the cumulative trauma claim probably would have resolved all issues with this employee.

As to the post-termination aspect of this case the defendant asserted that the specific injury claim was not reported prior to the applicant’s termination. However the defendant did not introduce any evidence to rebut the applicant’s trial testimony that she reported the injury to certain named persons at her job. Specifically, the defendant did not bring to the trial those persons to whom the applicant claimed she reported the specific injury. Whether those rebuttal witnesses would have been believed by the WCJ to support the post-termination defense is a matter of speculation. However the defendant did not give itself that opportunity.

What this Means for You

Retaining counsel who is aware of the intricacies of Compromise and Release settlements is vital to making sure that closed claims stay closed. Your GMK attorney is well versed in these situations and can take specific steps to assure that a settled claim remains resolved.

There may be a silver lining of sorts in the Appeals Board’s decision because the ruling seems to suggest that the parties may agree to strike the form language of Paragraph 3 when the intended agreement is contradicted by the form language.

If you are settling a claim by C&R by which you intend to incorporate all other purportedly unknown or unfiled claims the language of Paragraph 3 of the form C&R must be eliminated with agreement by the applicant.

Any time you are settling a CT claim, review the record carefully for “hidden specific injuries” that may be buried in the applicant’s testimony or in the medical records. Declining to settle only on the existing pleadings and assuring that your settlement encompasses those unfiled specific claims should tip the odds in your favor for preparing settlement documents that stick.