Opinion ID: 1867704
Heading Depth: 1
Heading Rank: 8

Heading: Setting Aside the Settlement

Text: Erin Truckways contends that the trial court erred in setting aside the settlement for three reasons. First, it argues that the trial court erred in concluding that the procedural safeguards contained in Tennessee Code Annotated section 50-6-206 (2005) (section 206) were not met. Next, it argues that Dennis' petition to set aside the settlement was untimely. Finally, it argues that the settlement should not have been set aside under Tennessee Rule of Civil Procedure 60.02. Dennis argues that the procedures in section 206 were not adhered to, that his petition was timely, and that Rule 60.02 is not relevant because the trial court did not rely on it. We agree with Dennis and affirm the trial court. Section 206, which has not been amended in pertinent part since the date of Dennis' injury, sets forth the requirements and procedures for settling workers' compensation cases. The section provides that the parties shall have the right to settle all matters of compensation between themselves.... Tenn.Code Ann. § 50-6-206(a)(1). The section states that settlements generally must be reduced to writing and approved by a chancery or circuit court, id., but permits [t]he commissioner of labor and workforce development or the commissioner's designee, rather than a court, to approve a settlement if the following safeguards are followed: (A) The settlement agreement has been signed by the parties; (B) The commissioner or the commissioner's designee has determined that the employee is receiving, substantially, the benefits provided by the Workers' Compensation Law, compiled in this chapter, or, in cases subject to subsection (b), the best interest of the employee; and (C) If the employee was not represented by counsel at a benefit review conference, the settlement agreement shall be reviewed by a specialist within the department who was not associated with the employee's case. Id. § -206(c)(1). [1] The section further provides that, [a]mong the parties, a settlement approved by the commissioner pursuant to this subsection (c) shall be entitled to the same standing as a judgment of a court of record.... Id. § -206(c)(2). Section 206 also imposes certain additional procedural safeguards when the employee is not represented by counsel. First, the section requires that if the employee is not represented, the parties shall seek the approval of a court pursuant to subsection (a), unless the parties agree to seek approval from the department pursuant to this subsection (c). Id. § -206(c)(3)(B) (emphases added). Additionally, the section provides that if the employee is unrepresented, the commissioner or the commissioner's designee shall thoroughly inform the employee of the scope of benefits available under the Workers' Compensation Law . . . the employee's rights[,] and the procedures necessary to protect those rights. Id. § -206(c)(5) (emphasis added). Dennis first argues that the trial court properly set aside the settlement because Byas did not determine[ ] that the employee is receiving, substantially, the benefits provided by the Workers' Compensation Law as required by section 206(c)(1)(B). He argues that because he was entitled to permanent total disability, he did not receive substantially the benefits to which he was entitled, and so the specialists Byas and Gaines necessarily could not have determined that he was receiving the benefits to which he was entitled. Dennis also notes that the settlement documents only refer to permanent partial disability, without mentioning permanent total disability. Because, as we conclude below, the trial court correctly determined that Dennis is permanently and totally disabled, we agree that he did not receive substantially the benefits to which he was entitled as directed by section 206(c)(1)(B). Dennis also argues that the mediation did not comply with section 206(c)(3)(B), which requires that settlements involving unrepresented employees be approved by the court unless the parties agree to seek approval from the department instead. We agree with Dennis that this safeguard was violated as well. The settlement agreement was not approved by a court; rather, it was approved by Workers' Compensation Specialist Gaines. There is no indication on the settlement agreement and no other proof in the record that the parties agreed to have a representative from the department approve the settlement rather than submitting it to the court. Finally, Dennis argues that neither Byas nor Gaines thoroughly inform[ed] him of the scope of benefits available under the Workers' Compensation Law, or of his rights and the procedures necessary to protect those rights as required by section 206(c)(5). Erin Truckways argues that because Workers' Compensation Specialists are not intended to be advocates for unrepresented employees, they are only required to volunteer minimal information to employees about the types of benefits available. Therefore, the Specialists are not required to explain the differences between those benefits to unrepresented employees. The statute, however, states that employees must be [ t]horoughly informed of the scope of benefits, not just the fact that benefits exist. In our view, the statute requires a detailed explanation of the full range of benefits available to each employee, including but not limited to an explanation of the difference between permanent partial disability benefits and permanent total disability benefits, the amount and duration of compensation available under each type of benefit, and the eligibility requirements for each type of benefit. Erin Truckways argues that Dennis' claim that he was consistently told and that he believed that he could only get 400 weeks of benefits is implausible. First, Erin Truckways argues that because Dennis was represented by two different attorneys prior to pursuing his claim pro se, he must have known that he was at least potentially entitled to permanent total disability benefits. Attorney Lype testified by deposition that he filed a complaint alleging permanent total disability and, alternatively, permanent partial disability. Lype also testified that he would not have told Dennis that Dennis was only entitled to a maximum of 400 weeks of benefits, and that his usual practice is to send a copy of the complaint to the plaintiffs he represents. Dennis testified, however, that he did not read the complaint. Erin Truckways also points to the insurance adjuster Jones' testimony that she never told Dennis that he was only entitled to 400 weeks of benefits and that she told him that he could get benefits for the rest of his life. The trial court credited the testimony of Dennis and the mediator Byas over the testimony of Jones, and the evidence does not preponderate against the trial court's finding. Dennis testified consistently that he was never told he would be entitled to more than 400 weeks of benefits. Moreover, Byas testified that she probably did tell Dennis he could only get 400 weeks of benefits based on the fact that he was a paraplegic rather than a quadriplegic. Additionally, the Specialist who approved the settlement, Gaines, also had no recollection of discussing permanent total disability benefits with Dennis. In sum, we agree with the trial court's conclusion that [t]he workers' compensation specialists involved in this matter failed to perform their duties all to the detriment of the employee. As we explained in Lindsey v. Hunt, 215 Tenn. 406, 384 S.W.2d 441 (1964) (overruled on other grounds by Betts v. Tom Wade Gin, 810 S.W.2d 140, 144 (Tenn.1991)), when an employee is unrepresented in a workers' compensation settlement, the highest degree of care should be used by the reviewing judge to make sure that the rights of the employee are being upheld under the Compensation Law. The[re] is more than the welfare of the worker at stake in this respect, because the public also has a vested interest in the fair administration of the Compensation Laws. [T]he entire compensation system has been set up and paid for, not by the parties, but by the public. The public has ultimately borne the cost of compensation protection in the price of the product, and it has done so for the specific purpose of avoiding having the disabled victims of industry thrown on private charity or local relief. To this end, the public has enacted into law a scale of benefits which will forestall such destitution. It follows, then, that the employer and employee have no private right to thwart this objective by agreeing between them on a disposition of the claim that may, by giving the workman less than this amount, make him a potential public burden. Id. at 443-44 (quoting 2 Larson's Workmen's Compensation Law, § 82.41). Section 206 sets forth a number of procedural safeguards intended to protect the rights of unrepresented employees. Given the fact that at least three of these safeguards were ignored, and the fact that the evidence shows that Dennis did not understand the full range of his rights at the time he entered into the settlement, we affirm the trial court's decision to set aside the settlement. We also reject the employer's argument that Dennis' petition to set aside the settlement was untimely. The employer relies on section 206(a)(1), which provides in pertinent part, If it appears that any settlement approved by the court does not secure to the employee in a substantial manner the benefits of the Workers' Compensation Law, the settlement may, in the discretion of the trial judge, be set aside at any time within thirty (30) days after the receipt of such papers by the division, upon the application of the employee or the administrator of the division in the employee's behalf.... (Emphasis added.) As we have discussed, however, this settlement was not approved by the court, so in our view, the 30-day limit is not applicable. Although section 206 provides that settlements shall be entitled to the same standing as a judgment of a court of record, id. § -206(c)(2), the settlement was not approved in accordance with the other procedures set forth in section 206. Because Tennessee Code Annotated section 50-6-240 (2005) provides that [a] settlement is not effective unless it is approved in accordance with § 50-6-206, the settlement was not effective and is not entitled to the same standing as a judgment. Finally, Erin Truckways argues that the trial court erred in setting aside the settlement pursuant to Tennessee Rule of Civil Procedure 60.02. Rule 60.02 provides that relief may be had from judgments or orders for such reasons as mistake, excusable neglect, or fraud. The rule also provides, however, that it does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order or proceeding.... Id. We agree with Dennis that we need not analyze whether relief from the settlement would have been proper under Rule 60.02, because the trial court did not rely on the rule in setting aside the settlement. Rather, the court relied on its inherent authority to set aside the settlement where it did not comply with the applicable law, and we affirm the trial court's exercise of its discretion.