Case Update - Mediation in Workers' Compensation Claims

The North Carolina Industrial Commission began a mandatory mediation program in 1995. Since then the statistics have been pretty steady with almost 75% of all mediations ending in settlement. The current mediation related issues at the Industrial Commission mostly focus on the enforcement of mediated settlement agreements (msa) and here's a 1st quarter case update for your consideration. The main lesson as mediator is to make sure you have all the required language in the agreement and make sure it is signed!

McAllister v Wellman, Inc, IC 144769 March 2008

In this case, the parties reached a msa concerning the payment of medical expenses pre 11/16/04 in a pre Hyler claim. The case went to hearing on a claim for additional medical expenses post 11/16/04. At hearing, DC Harris approved the msa and rejected a compromise settlement agreement which included “an overreaching release of all claims . . . [which] might be construed as more expansive than the language in the mediated settlement agreement.” From a practice standpoint, you may want to explore specific release language with counsel at mediation.

Hinceman v Food Lion IC 391486 FC March 2008

The parties reached agreement at mediation for the payment of $60,000 plus payment of all related and authorized medical bills. Defendant prepared a clincher; however, claimant declined to sign. At the DC and Full Commission hearing, the Commission considered the testimony of claimant’s former counsel concerning the nature of the settlement and of counsel’s review of the settlement with claimant.

The issue of claimant’s mental capacity was also raised and the Commission considered medical testimony concerning claimant’s psychological condition and medications taken on the date of mediation. The Commission gave greater weight to Dr. Aronoff’s opinion that claimant did have “the mental competence to understand and comprehend the consequences of her actions at the mediation.”

As a result the Full Commission enforced the msa and then conducted a Rule 502 review. While post mediation medical evidence showed continued treatment; nonetheless, the Full Commission held that the settlement “was fair and just to all parties at the time the agreement was entered into.” The Full Commission explained that “The Industrial Commission may not set aside an agreement ‘merely because one party to the agreement acquired new information or evidence.’” (citing Glenn v McDonald’s, 109 N.C. App. 45 (1993))

This decision is well worth your review as it provides an excellent review of the law around mental capacity, the enforcement of msa’s per Lemly, and the “time” to be used for review as it relates to after acquired information.

Branch v Dollar Tree IC 564626 February 2008 The parties reached agreement at mediation and executed a msa. A clincher was subsequently drafted, but claimant refused to sign. Defendant requested a hearing to enforce the msa. At hearing, claimant argued that some of her medical records were missing at the time of mediation; however, DC Ledford found that since claimant did not supply additional records then there were no additional records to review. Further, DC Ledford found that claimant had received extensive medical treatment and review of her condition.

With respect to the msa, DC Ledford held that claimant understood the msa and was not coerced into signing it. Claimant’s former counsel had withdrawn; however he “thought plaintiff got a ‘good deal’ as to the amount of money paid by defendants to obtain the clincher.” The mediator prepared an affidavit which included a statement that “plaintiff actively participated in the mediated settlement conference.”

DC Ledford held that “[t]here was a meeting of the minds among the parties as to all essential terms of the agreement at the mediated settlement conference held on June 25, 2007, including the payment of medical bills. The terms set forth in the Mediated Settlement Agreement are sufficiently certain and definite, and sufficient to form a binding contract.” DC Ledford also made a number of the standard 97-17 and Rule 502 findings and enforced the msa as fair and in the best interests of all parties.

Without reviewing the msa, it is unclear from this decision whether the 97-17 and Rule 502 language was included in the msa or was incorporated by the Deputy holding. While the better practice would be to include the language in the msa, this case suggests that the Commission can also supply the needed language.

Mooring v Target Stores IC 002328 January 2008 The parties reached a msa in February 2002 and a clincher was subsequently executed and approved by the IC. Claimant continued with medical treatment, had a back fusion surgery and was found disabled by Social Security.

In November 2006, claimant requested a hearing seeking to set aside the clincher. Claimant argued that the clincher had been approved without all medical and vocational reports and records. DC Deluca agreed and held that the “failure to submit all medical records voids the Settlement Agreement.” DC Deluca also held that “Defendants have not advanced any grounds that require enforcement of the compromise settlement agreement or the mediated settlement agreement.”

It appears that the decision not to enforce the msa is based primarily on fairness and best interests as opposed to some technical defect of the msa.

Whaley v McLamb IC 548959 FC January 2008 The parties did not reach agreement at mediation, but claimant later agreed to a settlement. A clincher was drafted, but claimant declined to execute it. The claim was later denied by DC Holmes who held that no enforceable msa had been reached. On appeal, the FC, Balance, Mavretic and Scott affirmed, also holding that there was no enforceable msa. This is another case that confirms the law in this area – if you want an enforceable msa, get it in writing!

Case Review for 2007

There were several appellate cases in 2007 of interest to mediators and attorneys who represent clients in mediation. The key lesson as an advocate – read release language with care. For mediators, consider what if any role you play in facilitating a conversation about release language as part of a mediated settlement agreement.

In Weaver as Administrator of the Estate of Frankie M. Vamper v Saint Joseph of Pines, Inc., __ N.C. App. __ (2007) the parties (Vamper and Saint Joseph’s) had previously conducted mediation over a debt collection issue. The case reached a settlement with an agreement that Vamper would execute a Release. The Release was general in nature and when the Weaver’s, as Administrator of the Vamper Estate, later brought a negligence and wrongful death claim, the Court held that the Release barred such a claim.

The Court reviewed the earlier Memorandum of Mediated Settlement, an affidavit from the attorney representing Vamper in the debt collection action and the subsequent Release and held that there was no mutual mistake. The Court explained that “[i]t is immaterial that neither the Release nor the Mediation Settlement Agreement specifically mentions the claim at issue in this case or that the possible existence of this claim never arose during the mediation.” Thus, for lawyers representing parties in mediation, this case and Carpenter, noted below, should be a strong wake up call to pay close attention to post mediation release language.

In Capps v NW Sign Industries of North Carolina, Inc., __ N.C. App. __ (2007) the plaintiff sought a commission from his former employer - NW Sign Industries. The parties reached an agreement at mediation and the issue on appeal was whether the mediated settlement agreement contemplated a subsequent more detailed agreement or not. The Court of Appeals held that the mediated settlement agreement was enforceable as the agreement of the parties. In so doing, the Court noted that the parties and their counsel had offered affidavit evidence as to statements made in mediation. There is also mention of a mediator affidavit, but no details as to its content. This is another example of our Courts supporting the notion that agreements reached in mediation are governed by contract law and if the elements are present, then the agreement will be valid and enforceable.

In Sandoval v Pillowtex, __ N.C. App. __ (2007) Judge Tyson, Jackson and Stroud, in an unpublished decision, affirmed a Full Commission decision to enforce the mediated settlement agreement. Here the Court continues to follow the Lemly decision.

At mediation claimant was represented, had a translator present to assist in the discussion and executed a mediated settlement agreement. Claimant later declined to execute a clincher explaining that she thought the mediated settlement agreement was for the payment of $7,500 for three months for a total of $22,500 rather than a one time payment of $7,500. The Full Commission enforced the mediated settlement agreement for $7,500.

On appeal, claimant argued that a “Guatemalan Spanish speaking interpreter” was needed; however, the Court disagreed relying, in part, on a Full Commission finding that claimant’s treating physician “felt that plaintiff was able to communicate effectively in English . . .” The Court also noted that N.C. Gen. Stat. § 97-80(c) (2005) allows that “ ‘the Commission may order parties to participate in mediation . . . ’ ” and that agreements are to be reduced to writing.

Further, in addition to citing Lemly for its adherence to general contract law, the Court also noted that “one who signs a contract is presumed to know its contents, and an illiterate person signing an instrument without request that it be read to him is chargeable with negligence for which the law affords no redress, unless he has been lulled into security or thrown off his guard and deceived.” Citing Ellis v. Mullen, 34 N.C. App. 367, 370, 238 S.E.2d 187, 189 (1977) (citing W. R. Grace & Co. v. Strickland, 188 N.C. 369, 124 S.E. 856 (1924)).

In conclusion, the Court held that the Full Commission findings of fact were supported by competent evidence and that the conclusions of law were “not erroneous as a matter of law.”

Finally, in Carpenter v Morris et al, __ N.C. App. __ (2007) the Court of Appeal’s, in another unpublished decision, held that what is written in the mediated settlement agreement and what is stated in the Report of Mediator does not control over the language in a subsequently signed general release. In Carpenter, an agreement was reached at mediation with one of the defendant’s, but not all, and this was noted in the mediated settlement agreement and the Report of Mediator. However, when the plaintiff later signed a general release with standard language releasing “all other firms, persons, corporations, associations or partnerships” then the defendants who were not a party to the mediated agreement were released. From a practice standpoint, this case is a strong reminder to pay careful attention to the documents both at mediation and post mediation when additional concluding documents are signed.