When is a Full and Final Settlement Not Final?

When is a Full and Final Settlement Not Final?

Written by Chris Wilson, Esq.

Edited by Bob McAdam, Esq. 

Two recent decisions from the Court of Appeals of Virginia and the Virginia Workers’ Compensation Commission create uncertainty regarding when employers and carriers can be sure that there will be no further litigation in settled workers’ compensation claims.

The case decided by the Full Commission, Greatheart Jr. v. City of Hampton, JCN VA00001102641 (Apr. 12, 2022) involved an application by the claimant seeking to compel the employer and carrier to pay the balance of bills for medical services the claimant received on October 29, 2015. The claimant’s workers’ compensation claim settled full and final on November 1, 2019. The defendants argued that the settlement Order extinguished the claimant’s right to seek payment of unpaid medical balances, and that the claimant therefore lacked standing to pursue his claim.

As is common in accepted workers’ compensation claims, the employer and carrier agreed as part of the settlement to pay for all reasonable, necessary, and causally related medical treatment rendered from the date of the accident through the date the settlement Order was entered by the Commission. The Order, however, also included language stating that the settlement “shall be and hereby is a complete extinguishment of all claims of any nature whatsoever of the claimant . . . that are now due or that hereafter may become due . . . including, but not limited to, claims for . . . medical benefits . . . .” Documentation submitted by the claimant indicated the carrier had partially paid the bill in question in 2016, leaving a balance of roughly $8,000. The bill also showed a “WC CREDIT ADJUSTMENT” had been applied, with no further payment owed.

On this evidence, the Commission ruled in favor of the employer and carrier, finding that the language in the settlement Order between the parties was clear and unambiguous. Although the Order stated that the employer was responsible for medical treatment through the date of entry, by accepting the lump sum payment offered by the employer the claimant had agreed to extinguish his right to bring “all claims for benefits of any nature whatsoever” that were due as of the date the Order was entered by the Commission, or that became due thereafter. The Commission also noted that the bill submitted by the claimant indicated on its face that no further balance was due, and that the medical provider—which was not a party to the case—had not indicated any debt was owed to it by the defendants.

An unpublished decision from the Court of Appeals handed down on June 28, 2022 seems to call into question the Commission’s decision in Greatheart, but may be distinguishable. In that case, Bockelman v. Millers Landscaping, No. 1170-21-1 (Va. Ct. App. June 28, 2022), the claimant sought full payment of medical bills that had been partially paid by his own private health insurer. As in Greatheart, the submitted bills indicated the medical provider had already written off the remaining balance. In addition, Bockelman filed the application many years after the claim had settled full and final. The settlement Order included the standard agreement by the defendants to pay “all reasonable, necessary and authorized medical expenses” incurred through date of entry of the Order, but unlike in Greatheart, there is no indication that the settlement agreement included the key language in which the claimant agreed to the “extinguishment of all claims” following entry of the Order.

In Bockelman, the Full Commission denied the claimant’s application on jurisdictional grounds, noting that the medical treatment that gave rise to the billing dispute took place in early 2012, prior to a July 1, 2012 legislative amendment to Virginia Code Section 65.2-714(A). That amendment provides that the Commission “shall also retain jurisdiction for employees to pursue payment of charges for medical services notwithstanding that bills or parts of bills . . . may have been paid by a source other than an employer.” Citing its own prior rulings and decisions by the Court of Appeals, the Commission determined that the amendment did not apply retroactively; therefore, because the claimant’s cause of action arose before the July 1, 2012 amendment, and his application was for payment of bills already paid by his private health insurer and written off by the provider, he had no right of action to pursue the claim.

On review, the Virginia Court of Appeals focused not on the legislative amendment to Code Section 65.2-714(A), but rather on the fact that the employer and carrier in Bockelman had agreed as part of the settlement to pay the claimant’s medical expenses through the date of entry of the settlement Order. The Court ruled that the Commission had jurisdiction to hear the claimant’s claim regardless of the timing of the treatment because it involved a dispute between a medical provider, employee, and employer over who was responsible for payment of the claimant’s medical expenses—a dispute squarely within the Commission’s jurisdiction under the Act. After ruling there was no jurisdictional bar to the application, the Court held the settlement agreement itself controlled, and bound the defendants to their agreement to pay causally related medical expenses.

Although the outcome in Bockelman seems to be at odds with the decision in Greatheart, the key difference between these cases appears to be the language of the settlement pleadings themselves. There is no indication that the settlement Order in Bockelman included the critical language in which the claimant agreed to the extinguishment of any and all claims, including those for medical expenses. The defendants in Bockelman made an entirely different argument, grounded in legislative changes to the Act that they argued prevented the claimant from bringing the claim regardless of the terms of the settlement agreement. The Court of Appeals in Bockelman simply held that the terms of the parties’ agreement were controlling, which suggests that the outcome for Bockelman would have been very different if the settlement Order had included the same language as in the Greatheart case.

The Workers’ Compensation Commission’s decision in Greatheart Jr. v. City of Hampton, JCN VA00001102641 (Apr. 12, 2022) has been appealed to the Virginia Court of Appeals and we will be following this decision closely.[1]

Given the willingness of the both the Commission and the Court of Appeals of Virginia Court  to give binding effect to settlement agreements between employees and employers KPM’s workers’ compensation attorneys have already developed settlement language intended to prevent claims like those discussed above, and to ensure that full and final settlements actually put an end to litigation.

If you have questions regarding applications for payment of medical expenses, or how to ensure finality in workers compensation settlements, please call one of our workers’ compensation attorneys and we will be happy to discuss these issues with you.

 

[1] The parties have submitted their briefs to the Court of Appeals. An opinion should be released  in the next two months or so.

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