Opinion ID: 2626668
Heading Depth: 3
Heading Rank: 5

Heading: Regulatory Violations

Text: Smith maintains that the partial C & R did not comply with the regulatory requirements of 8 AAC 45.160 in that not all of his medical records were submitted with the agreement. [26] He also argues that the partial C & R should be set aside because he did not have the opportunity to appear at the hearing before the Board approved the partial C & R and because the Board did not order an independent medical examination pursuant to AS 23.30.012. He additionally contends that the Board violated his due process rights in conducting the hearing without him. Finally, Smith insists that the Board should not have approved the partial C & R before the IDET procedure because he was not medically stable and did not know the extent of his disabilities when he signed the partial C & R. When it considered Smith's request to set aside the partial C & R, the Board mistakenly believed that no hearing had been held before approval of the settlement and rejected Smith's due process claim, deciding that the Alaska Workers' Compensation Act does not require a hearing before approval of a settlement and finding that no one had requested a hearing on the settlement in Smith's case. [27] The Board relied on AS 23.30.012 in concluding that no hearing was required. We agree with the Board that neither a hearing nor an impartial medical examination is required by this section of the statute: the Board has the discretion to order a medical examination or to hold a hearing, but it is not required to do so. [28] But AS 23.30.110(c) required the parties to appear at the scheduled hearing because they entered into the settlement only one week before the originally scheduled hearing date of October 17, 2002. [29] Smith's non-attorney representative attended the hearing, but Smith did not. His absence is unexplained. [30] The Board found at the conclusion of the October 2002 hearing that the partial C & R appear[ed] to be in Smith's best interest, but it is not clear from the record whether the Board applied the correct subsection of its regulation when it examined the settlement. [31] The Board was required to determine whether the settlement was in Smith's best interest: Board regulations generally prescribe Board review of settlement agreements as well as a finding that the agreement is in the employee's best interest. [32] In Smith's case, however, the Board needed to make a more searching inquiry. When an employee waives permanent benefits before medical stability and rating, a Board regulation, 8 AAC 45.160(e), creates a presumption that the settlement is not in the employee's best interest, and the Board cannot approve the settlement unless there is a showing that waiver of these benefits is in the employee's best interest. 8 AAC 45.160(e) provides: An agreed settlement in which the employee waives medical benefits, temporary or permanent benefits before the employee's condition is medically stable and the degree of impairment is rated, or benefits during rehabilitation training after the employee has been found eligible for benefits under AS 23.30.041(g) is presumed not in the employee's best interest, and will not be approved absent a showing by a preponderance of the evidence that the waiver is in the employee's best interest.... This regulation affords protection to employees. Because the parties to a workers' compensation settlement agreement cannot later avoid an agreement when they are mistaken about the extent of the employee's injury, [33] the regulation effectively requires the parties either to delay settlement until the employee has a clearer idea of the extent of his disability or to produce affirmative evidence that waiver is in the employee's interest. We conclude that 8 AAC 45.160(e) applied in Smith's case because he was not medically stable when the partial C & R was filed with the Board and that the Board erred as a matter of law by ignoring this regulation when it approved the partial C & R. Smith relied on 8 AAC 45.160 before the Board and the Commission, as well as before this court, insisting throughout the proceedings that the Board erred in approving the partial C & R before he had the IDET procedure, while he was still being treated for his work-related injury. Although he did not specifically reference subsection (e) of 8 AAC 45.160, Smith did raise the issue that he was not medically stable when the partial C & R was signed at the Board hearing, in his briefing before the Commission, and again in his briefing before us. And in pleadings before the Board, Smith complained that the Board chairman did not state what was the best interest of the employee during a C & R hearing. At oral argument before us, he stated that the Board, in approving the partial C & R before the IDET procedure, did not protect him. Because we treat pleadings of pro se litigants less stringently than those of lawyers, we conclude that Smith adequately raised the issue that we decide here. [34] Here, the partial C & R was equivocal at best in addressing Smith's medical stability. [35] It noted that Dr. Klimow had found him medically stable in August 2001 but also showed that Smith was getting TTD benefits and that his TTD benefits were continuing. [36] At the hearing to approve the partial C & R, counsel for CSK Auto mentioned both that Dr. Klimow had rated Smith in 2001 and that Smith was still receiving TTD benefits. The summary form that accompanied the partial C & R noted Dr. Klimow's five percent whole person impairment rating from 2001. But CSK Auto had accepted that Smith was notand had never beenmedically stable in July 2002 when it reclassified all of his PPI benefits as TTD benefits. In March 2002 Smith's treating physician, Dr. Anderson, had recommended that Smith undergo an IDET procedure to relieve his back pain. In July 2002 the adjuster contacted Dr. Klimow, who agreed that Smith might benefit from the procedure. The adjuster then noted, We now have no dispute as to stationary date as the initial doctor agrees with the IDET. Because there was no factual dispute, we conclude that Smith was not medically stable when he signed the partial C & R. Because Smith was not medically stable and the agreement waived PTD benefits, this partial settlement was presumed not to be in his best interest and could not be approved absent a showing by a preponderance of the evidence that Smith's waiver of permanent total disability benefits was in his best interest. [37] The Board has interpreted its regulation as requiring some evidence that the settlement is in the employee's best interest. [38] Generally, the Board considers the employee's testimony in reaching a decision about his best interest. [39] Here, the Board did not identify what evidence, if any, overcame the presumption that the partial C & R was not in Smith's best interest. It is not clear from the transcript whether the Board considered Smith medically stable when it approved the partial C & R. The Board did not ask Smith's representative what evidence might overcome the presumption that the settlement was not in Smith's best interest; it simply inquired whether she discussed with Smith the difficulties in overturning workers' compensation settlements. The Board could not question Smith about the partial C & R because he was not there. In the partial C & R, Smith gave up rights to both reemployment and PTD benefits in exchange for $10,000. At oral argument before us, counsel for CSK Auto conceded that if Smith were permanently and totally disabled as a result of his injury, his claim could perhaps be worth hundreds of thousands of dollars. The Board did not identify any evidence that might have overcome the presumption that waiver of PTD benefits before medical stability was not in Smith's interest. We are troubled by the Board's ready approval of the agreement in the absence of testimony from Smith, particularly in light of the fact that the Board had incomplete medical records before it when it approved the agreement. [40] While failure to submit complete medical records might not be reversible error in all cases, [41] here it underscores the Board's lack of a complete record before approval of the agreement, when the agreement was presumed not to be in Smith's interest. Moreover, the partial C & R contained only two statements about Smith's best interest: an assertion that the parties believed the settlement was in the best interest of the employee and a statement that the employee believed the partial C & R represented a fair and equitable settlement of this matter in his best interests. These boilerplate assertions are inadequate to overcome a presumption that waiver of PTD benefits was not in Smith's best interest. The Board's failure to follow its own regulation regarding settlement of claims before medical stability, its holding the hearing in Smith's absence, together with the waiver of a benefit with potentially significant value, convince us that the Board's action in approving the settlement, and later failing to set it aside, was an abuse of discretion. [42] The Commission erred as a matter of law in affirming the Board's order. [43]