Title: Lindekugel v. Fluor Alaska, Inc.

State: alaska

Issuer: Alaska Supreme Court

Document:

934 P.2d 1307 (1997) John LINDEKUGEL, Appellant, v. FLUOR ALASKA, INC., Alaska Pacific Assurance Co., and the Alaska Workers' Compensation Board, Appellees. No. S-7360. Supreme Court of Alaska. March 28, 1997. William J. Soule, Law Office of William J. Soule, Anchorage, for Appellant. Randall J. Weddle, James E. Hutchins, Faulkner, Banfield, Doogan & Holmes, Anchorage, for Appellees Fluor Alaska, Inc., and Alaska Pacific Assurance Co. Before COMPTON, C.J., RABINOWITZ, MATTHEWS, and EASTAUGH, JJ. MATTHEWS, Justice. On August 26, 1976, John Lindekugel suffered a serious back injury while working for Fluor Alaska.[1] Lindekugel and Fluor entered into a compromise and release on May *1308 21, 1979, settling Lindekugel's various disability claims for a lump sum payment of $225,000. The compromise and release explicitly preserved Fluor's obligation to pay future medical benefits. It was approved by the Board. In 1981 Lindekugel went to work for George Easley Construction Company. On October 8th of that year he reinjured his back when he slipped while carrying a heavy sheet of plywood. In March of 1983, he filed an application for adjustment of claim against Fluor and Easley, seeking medical cost reimbursement from Fluor and Easley and disability payments from Easley. The claim referred to both accidents. It came on for hearing on May 12, 1983. At the hearing, but out of the presence of Lindekugel, Gil Johnson, attorney for Lindekugel, announced his desire to dismiss the claim against Fluor, stating that a settlement had been reached with Easley although a compromise and release form putting the terms of the settlement in writing had not been drafted. The hearing chairman indicated that the hearing would be continued until the compromise and release form was submitted for approval. Randall Weddle, attorney for Fluor, objected to continuing the hearing, since he had an out-of-state medical witness ready to testify. Weddle requested an immediate dismissal with prejudice of the claim against Fluor. After an off-the-record discussion, Johnson agreed to dismiss the claim against Fluor with prejudice. After further discussion the chairman stated: "Dismiss [Fluor] with prejudice. Okay. Thank you." The chairman then stated that the hearing was continued with respect to the Lindekugel/Easley claim until the compromise and release "was worked out." As it turned out, quite a bit of working out was necessary. The Lindekugel/Easley compromise and release was finally filed in 1990. It proposed that Easley would pay Lindekugel $45,000, reciting that Easley had already paid $21,665.85. The compromise and release provided that Easley would not be responsible for "current or future medical benefits" for Lindekugel. The Board disapproved of the Lindekugel/Easley compromise and release. In a written opinion dated February 6, 1991, the Board noted many deficiencies in the compromise and release notably it failed to describe at least five surgeries performed on Lindekugel after January 14, 1983. The Board concluded that the compromise and release was not in Lindekugel's best interest. In so concluding the Board stressed the public purpose rather than private rights aspect of workers' compensation, quoting Professor Larson's treatise on Workmen's Compensation Law as follows: The Board was specifically concerned about the waiver of future medical benefits, quoting Professor Larson to the effect that an employee should almost never be permitted to waive them: The Board encouraged Lindekugel to pursue a claim against Fluor for medical expenses: Eventually Lindekugel hired a new attorney who on September 30, 1993, filed a claim against Fluor for medical expenses. Fluor answered, denying liability based on the oral dismissal with prejudice of May 12, 1983. The Board held that the oral order was valid. Lindekugel appealed to the superior court, which affirmed the Board. Lindekugel now appeals to this court. Lindekugel makes two arguments. First, he contends that the stipulation to dismiss Fluor with prejudice was "an agreement in regard to a claim" within the meaning of former subsection.210(b) of AS 23.30. Because the agreement was not set forth on a form prescribed by the Board and because the Board did not find it to be in the best interest of Lindekugel, he contends that it was, to use the language of subsection .210(b), "void for any purpose." Second, and alternatively, Lindekugel argues that the Board abused its discretion in not setting aside the stipulation for good cause shown. In response, Fluor argues first that assuming that the stipulation was invalid under subsection .210(b), it was merely voidable rather than void ab initio. As a voidable decision it is now enforceable since it was not corrected through a timely appeal or motion for reconsideration. Second, Fluor contends that the stipulation to dismiss the claim with prejudice was not "an agreement in regard to a claim" within the meaning of subsection.210(b). Third, Fluor contends that the stipulation for dismissal with prejudice was governed by the Board's regulation concerning stipulations, 8 AAC 45.050(c)(10). Fourth, Fluor argues that Lindekugel has waived any right he might have had to reassert claims against Fluor because (1) his counsel agreed to dismiss them with prejudice, (2) Lindekugel delayed objecting to the effect of the stipulation for more than ten years, and (3) Lindekugel failed to bring the case to hearing within two years as required by AS 23.30.110(c). Fifth, Fluor argues that the Board did not abuse its discretion in failing to set aside the stipulation for dismissal with *1310 prejudice because (1) the Board lacked such discretion as the stipulation was encompassed in an order of the Board and (2) Lindekugel's delay in requesting relief and the prejudice to Fluor associated with that delay justified the Board in not reopening the claim. The statute which is central to the disposition of this claim is AS 23.30.210(b). In 1983 it read as follows: The regulation governing stipulations in existence as of the 1983 hearing was 8 AAC 45.050(c)(10). It provided: The regulation governing settlements in existence as of the 1983 hearing was 8 AAC 45.160. It provided in relevant part: Currently, the Board has in effect regulations requiring stipulations waiving an employee's right to benefits to comply with current AS 23.30.012 (former subsection .210(b)) and providing that settlements waiving medical benefits are presumptively unreasonable.[3] We answer this question in the affirmative. The stipulation is "an agreement in regard to a claim" as we interpret that term. The meaning of the statutory term "agreement in regard to a claim" is clarified by the third sentence of subsection .210(b), which explains that the agreement, "[i]f approved by the board ... discharges the liability of the employer. ..." The emphasized language thus indicates that it is not every "agreement in regard to a claim" that is covered by subsection .210(b) for stipulations as to procedural matters and as to facts would come within a broad construction of that term but only those agreements which have the effect of discharging the liability of the employer. This interpretation is consistent with the Board's interpretation of the statute as reflected in regulations in effect at the time of the 1983 hearing, 8 AAC 45.050(c)(10) and 8 AAC 45.160, and in current regulations, 8 AAC 45.050(f)(3) and 8 AAC 54.160(c) (see supra n. 3 and preceding text) (all cited regulations provide that stipulation waiving employee's rights to benefits must conform with the section currently numbered .012). Because the oral stipulation for dismissal with prejudice discharged the liability of an employer, we conclude that the oral stipulation was an "agreement regarding a claim" within the meaning of subsection .210(b).[4] Subsection .210(b) expressly provides that where its terms are not complied with, "the agreement is void for any purpose." Lindekugel argues that the oral order of dismissal is also void since its only basis was the void stipulation. Fluor argues that the oral order was merely voidable and became enforceable after the time for appealing or seeking reconsideration passed. In our view Lindekugel has the better of this argument for three reasons. The first and most important is the legislative language. The phrase "void for any purpose" is a clear indication that the legislature intended that no legal consequences should flow from an agreement covered by subsection .210(b) which does not meet its requirements. Second, the purpose of the "void for any purpose" language in subsection .210(b) is to prevent poorly conceived agreements from discharging an employer's liability. Underlying this purpose are reasons which are both personal to the injured worker and social in character. The personal reasons are premised on the thought that the injured worker should not give up his or her rights except with knowledge and deliberation concerning the consequences. Included in the social reasons is the thought that if the injured worker improvidently surrenders his or her rights society may ultimately bear the burden of the worker's decision through public welfare or private charity. To allow a noncomplying settlement agreement to be validated by an order subverts these purposes. The social reasons have special force when considering whether the oral order based on the stipulation should be regarded as void or merely voidable. In Perry v. Newkirk, 871 P.2d 1150, 1154-55 (Alaska 1994), we held that a superior court judgment approving a stipulation in a divorce case terminating the father's parental rights was void rather than merely voidable because of the public interest in the subject matter. The public interest in the subject matter of this case is also strong, as the Board concluded in denying approval of the 1990 compromise with Easley which would have waived medical benefits. See supra pp. 1308-09. Third, Fluor's argument is based on the assumption that the oral order of the hearing *1312 officer was a final and appealable order. Fluor states: Appellate Rule 602(a)(2) as it existed in 1983 read as follows: The time within which an appeal may be taken to the superior court from an administrative agency shall be 30 days from the date that the order appealed from is mailed or delivered to the appellant. If a request for agency reconsideration is timely filed before the agency, the notice of appeal must be filed within 30 days after the agency's reconsideration decision.[5] The language of Appellate Rule 602(a)(2) requiring mailing or delivery of the order in question implies that a written order is necessary in order to trigger the thirty-day period. Diedrich, cited by Fluor, is not to the contrary for there was a written order in that case. 805 P.2d at 364 n. 1. A review of our case law has not revealed any case in which we have held that an oral administrative order was a final order for the purposes of triggering the thirty-day appeal period expressed in Appellate Rule 602(a) or its predecessor, Appellate Rule 45. Similarly, AS 23.30.125(a) requires that a final order be written, since oral orders cannot be filed: The above discussion effectively disposes of this case. The oral order dismissing Fluor was void. Lindekugel's claim for medical expenses against Fluor thus remains to be decided. Fluor's claim of waiver fails for the same reasons that the stipulation cannot be enforced. Johnson's agreement to the stipulation is the predicate for the waiver argument, and the agreement is void. The two-year period of AS 23.30.110(c)[6] is not a bar, for Lindekugel requested a hearing within two years of Fluor's controversion. See Huston v. Coho Electric, 923 P.2d 818 (Alaska 1996); Tipton v. ARCO Alaska, 922 P.2d 910 (Alaska 1996). We need not decide whether the Board abused its discretion in failing to set aside the stipulation, for it was void.[7] The decision of the superior court affirming the decision of the Board is REVERSED, and this case is REMANDED to the superior court with instructions to reverse the Board's decision and remand the case to the Board for further proceedings. FABE, J., not participating. [1] Fluor was insured by ALPAC/INA for workers' compensation purposes. [2] The statute has now been renumbered; it currently appears, confusingly, as section .012 rather than subsection .210(b). [3] 8 AAC 45.050(f)(3) (1996) provides: Stipulations of fact or to procedures are binding upon the parties to the stipulation and have the effect of an order unless the board, for good cause, relieves a party from the terms of the stipulation. A stipulation waiving an employee's right to benefits under the Act is not binding unless the stipulation is submitted in the form of an agreed settlement, conforms to A.S. 23.30.012 and 8 AAC 45.160, and is approved by the board. 8 AAC 45.160(c)(1996) provides in relevant part: Every agreed settlement must conform strictly to the requirements of AS 23.30.012.... 8 AAC 45.160(e) (1996) provides in relevant part: Agreed settlements in which the employee waives medical benefits or benefits during rehabilitation training are presumed unreasonable and will not be approved absent a showing that the waiver is in the employee's best interests. [4] In accordance with this interpretation, we note that stipulations governed by 8 AAC 45.050(c)(10) which have the effect of discharging an employer's liability must also satisfy the statutory requirements of subsection .210(b). [5] In its current form, Appellate Rule 602(a)(2) has the following additional language which was not present in 1983: The 30-day period for taking an appeal does not begin to run until the agency has issued a decision that clearly states that it is a final decision and that the claimant has thirty days to appeal. An appeal that is taken from a final decision that does not include such a statement is not a premature appeal. [6] The last sentence of AS 23.30.110(c) provides: "If the employer controverts a claim on a board-prescribed controversion notice and the employee does not request a hearing within two years following the filing of the controversion notice, the claim is denied." [7] Fluor argues that if Johnson had not agreed to the stipulation it would have presented its medical witness who would have testified that the medical expenses incurred by Lindekugel between the second accident on October 8, 1981, and the hearing, May 12, 1983, were caused by the second accident. Fluor does not argue that the witness is now unavailable or that the same testimony cannot be obtained from another witness. But there will be a duplication of expenses which must be borne by Fluor. We note that if Fluor's witness had testified and persuaded the Board, the Board's decision on the merits would not have discharged Fluor as to future medical expenses those incurred after the hearing. Lindekugel, and Easley, would always be free to contend that the second accident had consequences which were limited in character and that medical expense claims presented at future hearings remained Fluor's responsibility. Thus Fluor's claim that it was prejudiced by not going forward at the 1983 hearing is plausible, but the prejudice it may have suffered is not as significant as Fluor implies.