Court Opinion

ID: 3158064
Source: CourtListenerOpinion
Date Created: 2015-11-25 18:03:45.462682+00
Date Added: 2024-06-11T11:57:25.261909
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
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               THE SUPREME COURT OF THE STATE OF ALASKA

MUNICIPALITY OF ANCHORAGE, )
                                )                       Supreme Court No. S-15546
            Appellant,          )
                                )                       Alaska Workers’ Compensation
     v.                         )                       Appeals Commission No. 13-008
                                )
LEE O. STENSETH,                )                       OPINION
                                )
            Appellee.           )                       No. 7064 – November 25, 2015
_______________________________ )

              Appeal from the Alaska Workers’ Compensation Appeals
              Commission, Laurence Keyes, Commission Chair.

              Appearances: Shelby L. Nuenke-Davison, Anchorage, for
              Appellant. Robert A. Rehbock, Rehbock & Rehbock,
              Anchorage, for Appellee.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              STOWERS, Justice.

I.    INTRODUCTION
              The Alaska Workers’ Compensation Board dismissed an employer’s fraud
petition after deciding that the parties had reached an enforceable settlement. The
employer appealed the dismissal, arguing that any settlement of its fraud petition was
void because the settlement did not meet the requirements set out in the Alaska Workers’
Compensation Act and the Board’s regulations. The Alaska Workers’ Compensation
Appeals Commission affirmed the Board’s decision. The employer appeals, arguing that
the Commission’s interpretation of the statute is incorrect and that the Commission
incorrectly interpreted our decisions about estoppel. We affirm the Commission’s
decision.
II.   FACTS AND PROCEEDINGS
              Lee Stenseth was injured at work many years ago. He and his employer,
the Municipality of Anchorage, entered into a compromise and release agreement (C&R)
in August 1996 in which Stenseth waived all future benefits except medical benefits in
exchange for $37,000. Stenseth retired from the Municipality in 1996, but he continued
to receive medical benefits for his work-related injury, including narcotic pain
medication.
              In late 2006 Stenseth was charged with multiple felonies related to selling
or delivering narcotics that he had acquired, some from forged prescriptions modeled on
the prescriptions for his work-related injury. Stenseth pleaded guilty to a number of
felonies and served time in jail; he was released in June 2010.
              In April 2012 the Municipality filed a petition under AS 23.30.250(b)1
alleging that Stenseth had obtained workers’ compensation benefits by making a false
statement or misrepresentation for the purpose of obtaining benefits. It asked for an
order reimbursing it for “all benefits, costs and attorney’s fees paid as a result of the
misrepresentations.” Stenseth denied that he had made any misrepresentations for the
purpose of obtaining benefits.

      1
             AS 23.30.250(b) provides in part, “If the board, after a hearing, finds that
a person has obtained . . . medical treatment . . . by knowingly making a false or
misleading statement or representation for the purpose of obtaining that benefit, the
board shall order that person to make full reimbursement of the cost of all benefits
obtained.”

                                           -2-                                     7064

             The parties agreed to mediate their dispute, with an Alaska Workers’
Compensation Board hearing officer, William Soule, acting as the mediator. The
mediation occurred in early November 2012. The letter from hearing officer Soule
confirming the mediation asked that the parties “come with authority to settle, or a way
to obtain adequate authority, during normal[] Alaska business hours.” At the time the
Municipality was represented by attorney Trena Heikes; Law Henderson, the
Municipality’s workers’ compensation administrator, did not attend the mediation in
person but participated by telephone. Henderson later testified that Heikes called him
periodically throughout the day to discuss the negotiations. Both Heikes and Henderson
thought they had authority to settle the case.
             The parties reached some type of agreement at the mediation. The
following week Heikes wrote to attorney Robert Rehbock, who was representing
Stenseth, to “summarize the settlement reached at mediation last Friday.” Heikes
summarized the agreement as follows:
             MOA has agreed to accept either $30,000.00 cash to be paid
             within 90 days from today or a Promissory Note for
             $40,000.00 secured by a Confession of Judgment Without
             Action and a Deed of Trust on the home . . . in Wasilla,
             Alaska in exchange for its waiver of over $125,000.00 it
             claims is due under AS 23.30.250(b). The note will be
             payable at $500.00 per month and will accrue interest at
             3.5%. Mr. Stenseth is to commence these monthly payments
             immediately with the balance either in cash within 90 days or
             execute the Note, Confession of Judgment and have his
             daughter execute the Deed of Trust.
Heikes then memorialized a post-mediation exchange:
             I have since discussed the matter with Mr. Henderson today
             and spoken with you regarding that discussion. As I
             explained, Mr. Henderson prefers to either wait on the C&R
             until payment has been made OR make the agreement

                                           -3-                                     7064

             voidable at MOA’s option in the event of default . . . . You
             claim this changes the terms of the settlement. I am not so
             sure. Rather, MOA believes this merely is a way of moving
             forward in the manner in which I initially expressed: to wait
             to file the C&R until all payment was made.
She gave a deadline for a response.
             Rehbock responded, essentially rejecting the Municipality’s new proposal;
he wrote, “We were and remain prepared to [compromise] on the original terms.” He
also said that he had been “directed to make a one-time further offer directly to the
MOA, your principal[,] if you will allow your client to receive it.” His letter did not
contain the “further offer,” but a letter from Heikes dated December 5 said:
             This will confirm MOA’s response to your client’s new
             settlement proposal . . . . I have tendered Mr. Stenseth’s
             proposal to my client and, as I explained, have been advised
             MOA wishes to maintain the previous settlement amounts
             verbally agreed to by the parties at the November 9, 2012
             mediation. Thus, in exchange for $30,000.00 in certified
             monies by February 22, 2013 (90 days from the
             November 13, 2012 letter of confirmation), MOA would
             execute any and all documents necessary for its full release
             of Mr. Stenseth from any further liability to MOA under
             AS 23.30.250.
             Rehbock wrote and accepted the Municipality’s offer on December 11,
saying: “My client accepts your post mediation offer to pay $30,000.00 by latest
February 22, 2013 in exchange for a complete release of all rights and claims against
Mr. Stenseth arising of or in connection with AS 23.30.250.” Rehbock also informed
Heikes that Stenseth had “arranged for the funds” and that the funds were in Rehbock’s

                                          -4-                                     7064

possession. Rehbock suggested a “tender in exchange for releases to be simultaneously
filed with the Board, so to meet any requirement of AS 23.30.012.”2
              Heikes emailed Rehbock six days later, informing him of “an internal
glitch,” a “need to get higher ups to sign off.” She then wrote, “Higher ups demand
closure of narcotics. Under [the] circumstances that shouldn’t be a problem, . . . right?”
Rehbock responded in less than an hour, “No it is not ok. The offer was accepted.”
Rehbock tendered the funds, in the form of two cashier’s checks, to the Municipality on
or about December 18, 2012; the tender was refused.
              The “glitch” to which Heikes referred was a misunderstanding about the
limit of her and Henderson’s settlement authority. Henderson later testified that the limit
for settlement without approval was $50,000, but evidently neither Heikes nor
Henderson understood the limit applied to forbearance. They thought they could settle
as long as the amount set out in the agreement was $50,000 or less. Someone later
corrected their misunderstanding.
              Stenseth filed a petition with the Board on December 18, asking the Board
to dismiss the Municipality’s fraud petition because the Municipality had “breached [its]

       2
              AS 23.30.012(a) provides:
              At any time after death, or after 30 days subsequent to the
              date of the injury, the employer and the employee . . . have
              the right to reach an agreement in regard to a claim for injury
              or death under this chapter, but a memorandum of the
              agreement in a form prescribed by the director shall be filed
              with the division. Otherwise the agreement is void for any
              purpose. Except as provided in (b) of this section, an
              agreement filed with the division discharges the liability of
              the employer for the compensation, notwithstanding the
              provisions of AS 23.30.130, 23.30.160, and 23.30.245, and
              is enforceable as a compensation order.

                                            -5-                                      7064

contract of settlement terms negotiated by the parties at the November 9, 2012
mediation.” Several draft settlements were exchanged subsequent to Stenseth’s petition,
accompanied by emails between the attorneys. Stenseth took the position that the
settlement he accepted on December 11 was binding on the parties unless they
renegotiated. The parties exchanged some proposals and counter-proposals about several
issues, including a release of narcotic-related treatment in exchange for an agreement by
the Municipality to pay part of Stenseth’s attorney’s fees related to the dispute about the
settlement’s existence.3 The Board held a hearing on Stenseth’s petition in February
2013.4
              The Board limited the February hearing to consideration of Stenseth’s
petition to dismiss the Municipality’s fraud claim; it declined to consider the
Municipality’s petition, made orally at a prehearing conference, that the written evidence
of settlement negotiations be excluded. In her opening statement, Heikes said that both
she and Henderson thought they had authority to settle for the agreed-upon amount, but
they did not in fact have authority. The Municipality argued that the settlement was void
because it had not been submitted to the Board as required by AS 23.30.012. The
hearing officer questioned both attorneys about the applicability of section .012.
              Henderson and Stenseth were the only hearing witnesses.5 Henderson
agreed that he had authorized Heikes to write the letter memorializing the agreement
reached through mediation; he said he thought the letter “was an offer” and that he

         3
              The parties had stipulated that Stenseth would pay his own attorney’s fees.
         4
              A second mediation was attempted in January 2013.
         5
            Stenseth intended to call hearing officer/mediator Soule as a witness. The
Municipality objected, and the Board Chair agreed that he could not be called as a
witness.

                                           -6-                                       7064

intended to bind the Municipality when he authorized it. Henderson also testified that
he authorized Heikes to write the letter in which the Municipality rejected Stenseth’s
post-mediation offer and said it wanted to return to the original agreement. Henderson
agreed that he was aware Heikes could bind the Municipality and that nothing in the
letter suggested she did not have that authority; he acknowledged that the letter did not
“discuss authority.” The parties ultimately agreed that the tender was made on
December 18.
              Henderson explained the basis of the misunderstanding about authority.
The limit for settlement without approval from others was $50,000, but because he
generally negotiated payments to others rather than from them, it did not occur to either
him or Heikes that the limit applied to the amount the Municipality would forbear. They
both thought they had authority to settle when they attended the November mediation
because they evidently thought they could settle as long as the amount in the agreement
was $50,000 or less, even if the Municipality was compromising a claim that it alleged
exceeded $100,000. In answer to a question from Heikes about whether there had “been
a settlement agreement in this case,” Henderson answered, “Not that I know of.”
              Stenseth testified about his understanding of the negotiations as well as his
understanding of and response to the Municipality’s discovery requests. He was
cross-examined about his criminal convictions; he testified that none of the charges was
“directly related to workers’ comp.” He agreed that he had not signed a C&R in 2013
as he had in 1996. Stenseth answered questions from his attorney about negotiations that
happened after the December 11, 2012 letter accepting the Municipality’s settlement
terms; according to Stenseth, he was willing to agree to some additional conditions but
not others.
              In closing Stenseth argued that settlement agreements are contracts, that he
and the Municipality had entered into a valid contract to settle his case, and that the

                                           -7-                                       7064

Board should enforce the settlement. The Municipality argued that the settlement was
void because it did not comply with AS 23.30.012 and that section .012 must apply
because the Board’s jurisdiction is limited to “claims.”
             Because a hearing on the Municipality’s fraud petition was already
scheduled for early March 2013, in late February the Board issued a “summary interim
order” dismissing the Municipality’s petition. The Board decided there was an
enforceable contract. It noted that after 2005 Board approval was not required for all
settlements and specifically was not required for settlements in which both parties were
represented by Alaska attorneys. The Board determined it had the inherent equitable
authority to enforce the contract and dismissed the Municipality’s petition under
AS 23.30.250(b).
             In its final decision, the Board decided the parties had entered into a
contract to settle the case in December 2012, finding the following: “Employer made an
offer encompassing all the essential terms. Employee unequivocal[ly] accepted those
terms. Employee’s promise to pay and Employer’s promise to forebear [sic] are
consideration, and both parties’ letters evince the intent to be bound.” The Board
decided the Municipality should be equitably estopped from denying the authority of its
employees to settle the case on the terms set out in the December correspondence
because there was no way Stenseth or his attorney could have known prior to accepting
the offer that Henderson and Heikes had exceeded their authority.
             With respect to the provisions of AS 23.30.012, the Board noted first that
the statute had been amended in 2005 to dispense with Board approval of some
settlements, including many settlements in which the parties are represented by attorneys

                                           -8-                                     7064

licensed to practice in Alaska.6 The Board decided that in this case, the parties’
settlement had been submitted to the Board through the filing of the December
correspondence. Relying on one of its regulations, the Board then said that any
regulatory requirements as to the required form of the agreement were procedural and
could be waived if “manifest injustice” would otherwise result.7 It waived the procedural
requirements because the requirements “would have served no purpose” in the case and
manifest injustice would result if the agreement were not enforced.
              The Municipality appealed to the Commission, arguing that the Board erred
in finding that there was a binding settlement between the parties. The Commission
determined that (1) neither AS 23.30.012 nor the Board’s settlement-agreement
regulations applied to this case; (2) the Board’s findings about the existence of a contract
were supported by substantial evidence; (3) the Board properly applied equitable
estoppel against the Municipality; and (4) there was no need to satisfy the technical
requirements of the regulations. In deciding that AS 23.30.012 did not apply to this case,
the Commission interpreted that statute as applying only to claims for injuries; because
the fraud petition did not involve a claim for injury, the Commission reasoned that
section .012 did not apply. The Municipality appeals.

       6
              AS 23.30.012(b) (“The agreement shall be reviewed by a panel of the board
if the claimant . . . is not represented by an attorney licensed to practice in this state, the
beneficiary is a minor or incompetent, or the claimant is waiving future medical
benefits.”).
       7
             See 8 Alaska Administrative Code (AAC) 45.195 (2011) (permitting Board
to waive or modify a “procedural requirement in this chapter . . . if manifest injustice to
a party would result from a strict application of the regulation”).

                                             -9-                                         7064

III.   STANDARD OF REVIEW
             In an appeal from the Alaska Workers’ Compensation Appeals
Commission, we review the Commission’s decision rather than the Board’s.8 We apply
our independent judgment to questions of law that do not involve agency expertise.9
Interpretation of a statute is a question of law to which we apply our independent
judgment, interpreting the statute according to reason, practicality, and common sense,
considering the meaning of the statute’s language, its legislative history, and its
purpose.10 We do not mechanically apply the plain meaning rule but use a sliding scale
approach to statutory interpretation, in which “the plainer the statutory language is, the
more convincing the evidence of contrary legislative purpose or intent must be.”11
             We review questions of contract formation de novo when there are no
factual disputes.12   We independently review the Commission’s conclusion that
substantial evidence in the record supports the Board’s factual findings by independently
reviewing the record and the Board’s findings.13

       8
             Shehata v. Salvation Army, 225 P.3d 1106, 1113 (Alaska 2010) (citing
Barrington v. Alaska Commc’ns Sys. Grp., Inc., 198 P.3d 1122, 1125 (Alaska 2008)).
       9
             Id.
       10
            State, Div. of Workers’ Comp. v. Titan Enters., L.L.C., 338 P.3d 316, 320
(Alaska 2014) (citing Monzulla v. Voorhees Concrete Cutting, 254 P.3d 341, 345
(Alaska 2011)).
       11
            McDonnell v. State Farm Mut. Auto. Ins. Co., 299 P.3d 715, 721
(Alaska 2013) (internal quotation marks, alterations, and citations omitted).
       12
            Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc., 252 P.3d
1011, 1014 (Alaska 2011).
       13
             Shehata, 225 P.3d at 1113.

                                          -10-                                      7064

             Whether a regulation applies to a case is reviewed using the independent
judgment standard.14 We use different standards of review when interpreting regulations:
we “typically interpret regulations with some deference to the agency’s own
interpretation,” but when the agency that promulgated the regulation is not a party to the
action and “has not otherwise offered an interpretation,” we apply our independent
judgment.15 We review an agency’s application of its regulation to the facts of a case “to
determine whether the agency’s decision was arbitrary, unreasonable, or an abuse of
discretion.”16 “We will find an abuse of discretion when we are left with the definite and
firm conviction that a mistake has been made.”17
IV.   DISCUSSION
             A workers’ compensation settlement is a contract.18 Common law standards
of contract formation and rescission apply to workers’ compensation settlements to the
extent these standards are not overridden by statute.19 We have recognized a strong
policy favoring settlements.20 Here, the Municipality contends that AS 23.30.012 voids

      14
             Garner v. State, Dep’t of Health & Soc. Servs., Div. of Med. Assistance,
63 P.3d 264, 267 (Alaska 2003).
      15
             Tea ex rel. A.T., 278 P.3d 1262, 1263 (Alaska 2012).
      16
             Burke v. Houston NANA, L.L.C., 222 P.3d 851, 857 (Alaska 2010).
      17
             Id.
      18
            Seybert v. Cominco Alaska Exploration, 182 P.3d 1079, 1093
(Alaska 2008) (citing Williams v. Abood, 53 P.3d 134, 139 (Alaska 2002)).
      19
             Id.
      20
             See, e.g., Mullins v. Oates, 179 P.3d 930, 937 (Alaska 2008) (quoting
Municipality of Anchorage v. Schneider, 685 P.2d 94, 98 (Alaska 1984)); see also Kazan
v. Dough Boys, Inc., 201 P.3d 508, 514-15 (Alaska 2009) (setting out policy reasons that
                                                                          (continued...)

                                          -11-                                      7064

any settlement the parties may have reached because the agreement was not submitted
to the Board “in a form prescribed by the director,” as that statutory section requires. It
additionally contends that if a settlement contract was formed, the Board and
Commission did not enforce the correct agreement because Stenseth abandoned the first
settlement in favor of a second one. Finally, the Municipality contends that the
Commission erred in its application of equitable estoppel because not all of the elements
were met in this case.
       A.	    The Commission Correctly Determined That Substantial Evidence In
              The Record Supported The Board’s Finding That The Parties Settled
              The Case In December 2012.
              The Municipality does not directly question the Commission’s decision that
substantial evidence supported the Board’s finding that a settlement contract was formed
in the exchange of letters dated December 5 and 11. Instead, the Municipality argues
that the Commission and the Board did not enforce the parties’ most recent settlement.
Whether a contract of settlement existed and what its terms encompassed is an
underlying question that we address first.
              We agree with the Commission that substantial evidence supported the
Board’s finding that the parties entered into a binding settlement, the terms of which
were set out in the correspondence dated December 5 and 11, 2012 between Heikes and
Rehbock. “The formation of an express contract requires an offer encompassing its
essential terms, an unequivocal acceptance of the terms by the offeree, consideration[,]
and an intent to be bound.”21 All four elements are present here. In its December 5

       20
             (...continued)
support enforcement of settlement agreements).
       21
             Childs v. Kalgin Island Lodge, 779 P.2d 310, 314 (Alaska 1989) (citing
Hall v. Add-Ventures, Ltd., 695 P.2d 1081, 1087 n.9 (Alaska 1985)).

                                           -12-	                                     7064

letter, the Municipality made a written offer to Stenseth with the intent of binding the
Municipality. The offer was specific and covered all essential terms. There was mutual
consideration: Stenseth agreed to pay $30,000 to the Municipality, and the Municipality
agreed to release Stenseth from liability under AS 23.30.250. Stenseth unequivocally
accepted the offer in writing.
             The Municipality does not appear to take the position, as it did before the
Commission, that no agreement was ever reached. Instead, it contends that, after
Stenseth filed his petition to enforce the first settlement, the parties abandoned the
December settlement and entered into a second settlement. Although “a party can
abrogate an existing contract by accepting a new contract in its place,”22 there is no
evidence that the parties here actually reached a new agreement. Pointing to an email
from Heikes, the Municipality asserts that in January 2013, after Stenseth emailed a
proposed settlement to the Municipality, “[t]he Municipality accepted the terms and
advised that it was reviewing the document.” But the email does not show “an
unequivocal acceptance” of Stenseth’s offer, as required for contract formation.23 After
noting that Stenseth had “substantially changed” the previous draft settlement, Heikes
wrote, “MOA will not sign as written.” She subsequently sent another draft settlement,
which Stenseth rejected. The parties attended a second mediation in late January, which
included a discussion of a further exchange of consideration. Continuing to negotiate,
absent a new agreement, does not abrogate an existing settlement contract.24

      22
           Chilkoot Lumber Co. v. Rainbow Glacier Seafoods, Inc., 252 P.3d
1011, 1016 (Alaska 2011) (citing RESTATEMENT (SECOND) OF CONTRACTS § 279
(1981)).
      23
             Childs, 779 P.2d at 314 (citing Hall, 695 P.2d at 1087 n.9).
      24
             Chilkoot Lumber Co., 252 P.3d at 1016.

                                         -13-                                      7064

              The Municipality argues that the continuing negotiations between the
attorneys after Stenseth filed his petition to dismiss undercut the notion that the parties
intended to be bound by the agreement set out in the earlier letters. But this argument
ignores the fact that Stenseth had filed a new petition; resolving that dispute would
provide both parties a reason for continuing to negotiate. There is nothing inconsistent
in trying to negotiate an agreement on the new petition while continuing to assert that the
Municipality was bound by the settlement created when Stenseth accepted the
Municipality’s December 5 offer of settlement. The factual record does not support the
Municipality’s assertion that a later settlement replaced the first.
       B.	    The Commission Correctly Determined That AS 23.30.012 Did Not
              Apply To This Settlement.
              The Municipality argues that the Commission reversed longstanding law
and practice in deciding that AS 23.30.012 did not apply to void the settlement
agreement in this case.25 Stenseth responds that the Board decisions upon which the
Municipality relies are irrelevant because they predate statutory amendments that have
a direct bearing on this case.
              Alaska Statute 23.30.012 provides in relevant part:
                    (a) At any time after death, or after 30 days
              subsequent to the date of injury, the employer and the

       25
              The Municipality contends that the Commission improperly “changed the
law, after the fact” and applied a change in the law retroactively in this case. This
argument has no merit. As a general rule, legal decisions apply in the case announcing
the rule as well as subsequent cases. As we stated in Vienna v. Scott Wetzel Services,
Inc., “Absent special circumstances, a new decision of this court will be given effect in
the case immediately before the court, and will be binding in all subsequent cases . . . .”
740 P.2d 447, 449 (Alaska 1987) (emphasis added) (quoting Plumley v. Hale, 594 P.2d
497, 502 (Alaska 1979)) (internal quotation marks omitted). The Municipality fails not
only to point to any special circumstances that would exempt it from this rule but also
to recognize the statutory changes that undercut the authority of the Board cases it cites.

                                           -14-	                                     7064

              employee . . . have the right to reach an agreement in regard
              to a claim for injury or death under this chapter, but a
              memorandum of the agreement in a form prescribed by the
              director shall be filed with the division. Otherwise, the
              agreement is void for any purpose. Except as provided in (b)
              of this section, an agreement filed with the division
              discharges the liability of the employer for the compensation,
              notwithstanding the provisions of AS 23.30.130, 23.30.160,
              and 23.30.245, and is enforceable as a compensation order.
                     (b) The agreement shall be reviewed by a panel of the
              board if the claimant . . . is not represented by an attorney
              licensed to practice in this state . . . or the claimant is waiving
              future medical benefits. If approved by the board, the
              agreement is enforceable the same as an order or award of the
              board and discharges the liability of the employer for the
              compensation notwithstanding the provisions of
              AS 23.30.130, 23.30.160, and 23.30.245. The agreement
              shall be approved by the board only when the terms conform
              to the provisions of this chapter . . . .
              This section permits an injured worker and his employer to settle a “claim
for injury or death” and requires the parties to an agreement to file it with the Board “in
a form prescribed by the director.” The applicability of this section to the agreement the
parties reached depends on whether they reached “an agreement in regard to a claim for
injury or death under this chapter.”
              The Municipality first contends that the Commission erred in deciding that
AS 23.30.012 and the Board’s regulations about settlements do not apply unless a formal
workers’ compensation claim is filed. The Municipality also argues that the Board’s
regulations define “claim” broadly enough to encompass its fraud petition because that
regulation defines “claim” as including “any matter over which the board has

                                             -15-                                    7064

jurisdiction.”26 Stenseth responds that the Municipality misinterprets the Commission’s
decision and that “claim” in AS 23.30.012 refers to the employee’s right to
compensation. He argues that the Commission correctly interpreted the statute because
the Municipality’s petition did not involve an “injury” as that word is defined in the
statute.
               The Municipality’s argument is based on a distinction between two uses of
the word “claim” in workers’ compensation proceedings,27 but that distinction was
immaterial to the Commission’s decision. The Commission decided that AS 23.30.012
did not apply because the settlement did not involve a “claim for injury or death” and did
not discharge the employer’s liability for compensation; instead “the settlement covered
efforts on the part of [the Municipality] to recoup benefits it had paid Stenseth.”
Alaska Statute 23.30.395(24) defines “injury” as an “accidental injury or death arising
out of and in the course of employment, and an occupational disease or infection that
arises naturally out of the employment or that naturally or unavoidably results from an
accidental injury.”28 Because the legislature defined “injury” for purposes of the Alaska
Workers’ Compensation Act, we apply that definition of “injury” here.29

       26
               8 AAC 45.900(5) (2011).
       27
             See Jonathan v. Doyon Drilling, Inc., 890 P.2d 1121, 1124 (Alaska 1995)
(holding that word “claim” in AS 23.30.110(c) meant written claim for workers’
compensation benefits); Suh v. Pingo Corp., 736 P.2d 342, 346 (Alaska 1987)
(discussing when employer can controvert a worker’s right to compensation (“claim”)
before the worker files a written claim).
       28
               AS 23.30.395(24).
       29
               See AS 01.10.040(a) (requiring words to be construed using legislative
definition).

                                          -16-                                      7064

             We agree with the Commission that the Municipality’s fraud petition is not
a claim for “injury” as that term is defined in AS 23.30.395. This definition limits the
applicability of AS 23.30.012(a), and the Municipality does not explain how its
allegation of fraud is an “injury” as that term is used in the statute. Nor does the
Municipality discuss any legislative history that might suggest some meaning other than
the statute’s plain meaning. We thus agree with the Commission that an employer’s
fraud petition is not a “claim for injury” under AS 23.30.012.30 As a result, the
settlement did not need to be “in a form prescribed by the director”; the Board could
determine the existence of a settlement and the terms of that settlement based on the
parties’ correspondence.31

      30
              Because the parties were both represented by Alaska attorneys, the Board
did not have to approve the settlement or evaluate whether it was in Stenseth’s best
interests in any event. AS 23.30.012(b). No one alleges that Stenseth was a minor or
incompetent, nor did he waive future medical benefits. Id. Thus, even if AS 23.30.012
applied, the only applicable statutory requirement would have been that “a memorandum
of the agreement in a form prescribed by the director shall be filed with the division.”
AS 23.30.012(a). We have previously held that the Board can waive these procedural
requirements, as it did here. See Cole v. Ketchikan Pulp Co., 850 P.2d 642, 647
(Alaska 1993) (holding that Board could waive requirement that settlement be signed by
the parties and remanding to determine whether the requirement should be waived).
Thus, even if the statute applied, the Board did not exceed its authority in refusing to
void the parties’ settlement contract.
      31
               Relatedly, the Municipality contends the Commission misconstrued the
Board’s regulation about settlements because that regulation required that all settlement
agreements “must be submitted in writing to the board, must be signed by all parties to
the action and their attorneys or representatives, if any, and must be accompanied by [a]
form . . . .” 8 AAC 45.160(b) (2011). But even assuming the regulation could have
some applicability independent of AS 23.30.012, the Board can waive these procedural
requirements if “manifest injustice” would result from “strict application of the
regulation.” 8 AAC 45.195. The Board decided manifest injustice would result in this
case if it strictly applied the regulation, and the Municipality has not questioned the
                                                                            (continued...)

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             The Municipality argues that under the Commission’s analysis, an
employee who waives benefits when settling a fraud petition will not be accorded the
protections of AS 23.30.012. While this hypothetical raises interesting questions
concerning AS 23.30.012(b), Stenseth did not waive his future medical benefits in this
settlement. We observe, however, that when an employee compromises benefits in a
settlement, those benefits are from a work-related injury, and the resulting settlement
would discharge some of the employer’s liability. That is not the case here, where the
employer sought reimbursement.          We affirm the Commission’s decision that
AS 23.30.012 is not applicable to the settlement here.
      C.	    The Commission Correctly Concluded That Equitable Estoppel
             Prevented The Municipality From Avoiding The Settlement.
             In addition to relying on statutory and regulatory defenses to enforcing the
settlement, the Municipality also asserted that no settlement existed because Henderson
and Heikes exceeded their authority when they made the December 5 offer. The Board
applied equitable estoppel to prevent the Municipality from avoiding the settlement,
finding that all the elements of estoppel were met. The Commission agreed with the
Board’s analysis.
             The Municipality argues here that the Commission applied equitable
estoppel incorrectly because Stenseth could not reasonably have relied on the settlement
and because there was no “resulting prejudice” to him. According to the Municipality,
Stenseth’s continuing efforts to settle the case after he filed his petition in December
indicate that the first settlement did not exist and that Stenseth did not rely on it. The
Municipality further contends that it would be unjust to make it abide by the terms of the
settlement. Stenseth responds that (1) he suffered prejudice in the form of added

      31
             (...continued)
Board’s use of its discretion here.

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attorney’s fees and costs; (2) his reliance on the settlement was reasonable because the
offer he unequivocally accepted was made by the Municipality’s attorney, the
Municipality’s “sole representative” in the case; and (3) no special consideration should
be given to the Municipality as a government here because it is acting solely in its
capacity as an employer.
              We agree with the Commission that equitable estoppel prevents the
Municipality from denying the authority of its agents, Heikes and Henderson, to settle
this case on the terms in the December 2012 correspondence. Even if the Municipality’s
agents exceeded their actual authority during the settlement negotiations, the
Municipality could be estopped to deny their lack of authority if Stenseth proved the
elements of estoppel against the government:32 “(1) the governmental body asserts a
position by conduct or words; (2) the private party acts in reasonable reliance thereon;
(3) the private party suffers resulting prejudice; and (4) the estoppel serves the interest
of justice so as to limit public injury.”33 The Commission decided all elements were met,
and we agree.
              The Municipality does not contest that its agents asserted a position in the
settlement negotiations, but it argues that no other element was met. It claims that
Stenseth could not have relied on the offer because he continued to negotiate after he
filed his petition to dismiss the fraud petition. But as we noted earlier, there is nothing
inconsistent about attempting to negotiate a settlement related to the petition to dismiss

       32
             See RESTATEMENT (THIRD) OF AGENCY § 2.03 cmt. g (2006) (noting that
sovereign can be estopped to deny its agent’s lack of authority).
       33
              Pfeifer v. State, Dep’t of Health & Soc. Servs., Div. of Pub. Assistance,
260 P.3d 1072, 1082 (Alaska 2011) (quoting Allen v. State, Dep’t of Health & Soc.
Servs., Div. of Pub. Assistance, 203 P.3d 1155, 1164 (Alaska 2009)) (internal quotation
marks omitted).

                                           -19-                                      7064

while still maintaining that the original settlement should be enforced. Furthermore,
there was no way Stenseth or his attorney could have known that Henderson and Heikes
had exceeded their authority. As the Board found, neither Henderson nor Heikes
understood the limits of their authority, and they were both “relatively high-level
employees.” The settlement offer was on Municipal letterhead and signed by the
attorney for the Municipality. We hold that Stenseth’s reliance on the Municipality’s
conduct in negotiating the December settlement was reasonable.
              We agree with Stenseth that he suffered prejudice from the Municipality’s
attempt to avoid the settlement. Stenseth incurred additional attorney’s fees and costs
after the Municipality refused the tender of funds from Stenseth; the additional fees were
a direct consequence of the Municipality’s actions.
              Finally, the estoppel serves the interest of justice. In evaluating the last
element, we have approved balancing “the gravity of the injustice to the citizen if the
doctrine is not applied” and “the injury to the commonwealth if the doctrine is applied.”34
The Municipality contends that enforcing the settlement bars it “from any chance of ever
recovering” additional money from Stenseth. But the Municipality did not ask Stenseth
to pay additional money in the negotiations following discovery of the “glitch.” It would
be unfair to Stenseth not to hold the Municipality to its bargain when he could not
possibly have known the limits on the scope of the Municipality’s worker’s
compensation attorney’s and its workers’ compensation administrator’s authority. The
settlement only involved one party, so there is little injury to the general public, and the
claim is unproved. The strong public policy in favor of settling disputes also weighs in

       34
              Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 n.6 (Alaska 1984)
(quoting 2 C. ANTIEAU, MUNICIPAL CORPORATION LAW § 16A.06, at 16A-15 (1984))
(internal quotation marks omitted).

                                           -20-                                       7064

favor of estoppel here.35 We agree with the Commission that the Municipality was
properly estopped to deny the authority of its agents and the existence of a settlement in
this case.
V.     CONCLUSION
             We AFFIRM the Commission’s decision.

       35
            See id. at 98 (citing policy in favor of settlements in deciding that estoppel
should apply).

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