W.C. No. 3-908-058Industrial Claim Appeals Office.
December 18, 1995
FINAL ORDER
The personal representatives of the claimant’s estate (personal representatives) seek review of a final order of Administrative Law Judge Stuber (ALJ), which denied their request to “enforce an oral settlement agreement.” We affirm.
The pertinent facts are undisputed. The claimant sustained a compensable injury in 1987. In October 1989, the claimant and the respondents entered into a “Stipulation for Compromise Settlement of All Claims.” The stipulation stated that the claimant was permanently and totally disabled as a result of the 1987 injury. The stipulation further provided that the respondents would pay the claimant $26,292 in a lump sum, and that the claimant would continue to receive monthly permanent total disability benefits. However, the monthly benefits were to be reduced by $153.57 per month on account of the lump sum payment. The stipulation was approved by the Director of the Division of Workers’ Compensation on October 20, 1989.
In April 1994, the respondent-insurer (CCIA) retained John Alme for the purpose of trying to negotiate a full and final settlement of the claim. On October 4, 1994, Alme and the claimant’s attorney reached an oral agreement under which the CCIA was to pay the claimant $40,000 in a lump sum and purchase an annuity to pay the claimant $9,665 per year for five years.
Meanwhile, on September 28, 1994, the claimant was involved in a car accident in which he sustained serious injuries. The claimant was incapacitated, and on October 5, 1994, co-conservators were appointed for the purpose of handling the claimant’s affairs, including the settlement.
On October 8, 1994, before the settlement documents were prepared by Alme or executed by the co-conservators, the claimant died from injuries sustained in the car accident. On October 10, 1994, the CCIA directed Alme not to proceed with preparation of the settlement documents. Subsequently, the personal representatives of the claimant’s estate filed a motion seeking to enforce the agreement.
The ALJ found that the oral agreement to settle the claim had not been reduced to writing or approved by the Division of Workers’ Compensation as required by § 8-43-204, C.R.S. (1995 Cum. Supp.) [formerly § 8-53-105]. Consequently, the ALJ denied the motion to enforce the settlement agreement.
On review, the personal representatives’ first argument is that the ALJ erred in applying § 8-43-204 to this case. They reason that the claim was “settled” in October 1989, and that the oral agreement constituted an enforceable “modification” of the prior settlement. We are not persuaded.
Section 8-42-124(1), C.R.S. (1995 Cum. Supp.) [formerly § 8-52-107], provides that claims for compensation may not be “released, or commuted except as provided” under the Act. Section 8-43-204 states as follows:
“An injured employee may settle all or any part of any claim for compensation, benefits, penalties, or interest . . . Such a settlement shall be in writing and shall be signed by a representative of the employer or insurer and signed and sworn to by the injured employee. The settlement shall be reviewed in person with the injured employee and approved in writing by an administrative law judge or the director of the division prior to the finalization of such settlement . . . .”
Our courts have consistently held that all of the statutory requirements set forth in § 8-43-204 must be satisfied prior to the time a settlement becomes legally enforceable. Cook v. McLister, 820 P.2d 1167 (Colo.App. 1991); City Market, Inc. v. Industrial Claim Appeals Office, 800 P.2d 1335 (Colo.App. 1990); Oxford Chemicals, Inc. v. Richardson, 782 P.2d 843 (Colo.App. 1989). Strict enforcement of these requirements is reflective of the General Assembly’s intent that settlements be fair, clear and completely understood by the parties. See City Market, Inc. v. Industrial Claim Appeals Office, supra.
It may be true, as the personal representatives argue, that settlement agreements are subject to “enforcement” in accordance with the law of contracts. See Cary v. Chevron, U.S.A., 867 P.2d 117 (Colo.App. 1993). However, “enforcement” of the terms of a settlement agreement is a separate matter from modification of the terms. Although parties may be entitled to contractual remedies for violation of a settlement agreement, the plain meaning of § 8-42-124(1) and § 8-43-204 does not permit parties to alter the fundamental rights and liabilities of a settlement agreement without satisfying the statutory requirements. To hold otherwise would eviscerate the legislative mandate for administrative control and approval of settlements.
Here, the “oral agreement” between the claimant’s attorney and Mr. Alme constitutes a fundamental alteration of the terms of the 1989 settlement agreement. Unlike the 1989 agreement, the “oral agreement” provided for termination of the claimant’s entitlement to monthly permanent total disability benefits in exchange for a lump sum payment and purchase of an annuity. Therefore, we reject the argument that the “oral agreement” was enforceable as a “modification” of the 1989 settlement.
The personal representatives also argue that the holding of the Supreme Court in Estate of Huey v. J.C. Trucking, Inc., 837 P.2d 1218
(Colo. 1992), requires a different result. The Huey court held that, for purposes of former § 8-50-105(2) [currently § 8-41-503(2)], a claim for benefits “accrues” at the time of the compensable injury rather than the date benefits are adjudicated and awarded. Therefore, the personal representatives reason that where the only “impediment” to approval of a settlement is the death of the claimant, the right to the settlement proceeds has “accrued,” and there is no logical basis for permitting the insurer to dishonor the obligation to which it agreed before the claimant’s death. We are not persuaded by this argument.
First, Huey involved temporary total disability benefits which were liquidated and determinable, although not adjudicated, at the time of the claimant’s death. Moreover, the court’s opinion was concerned with the specific meaning of the word “accrued” as used in former § 8-50-105(2). That statute concerns “accrued and unpaid” compensation benefits where the claimant leaves “dependents.”
This case, unlike Huey, does not involve a claim for past due compensation benefits. To the contrary, the oral agreement between the parties contemplated settlement of CCIA’s obligation to pay permanent total disability benefits so long as the claimant lived. Thus, unlike the situation in Huey, this is not a case where the claimant’s estate would be denied past due benefits based on the vagaries of the workers’ compensation docket. To the contrary, this is a case where the claimant’s estate could receive a windfall payment of “benefits” based on the fortuitous negotiations just prior to the claimant’s death.
In any event, we do not perceive that Huey can be construed as altering the statutory requirements for the formation of a binding settlement agreement. To the extent that authorities from other jurisdictions have reached other conclusions, we find those authorities inconsistent with prevailing Colorado law.
IT IS THEREFORE ORDERED that the ALJ’s order, dated April 19, 1995, is affirmed.
INDUSTRIAL CLAIM APPEAL PANEL
___________________________________ David Cain
___________________________________ Bill Whitacre
NOTICE
This Order is final unless an action to modify or vacate the Order iscommenced in the Colorado Court of Appeals, 2 East 14th Avenue, Denver,Colorado 80203, by filing a petition to review with the court, withservice of a copy of the petition upon the Industrial Claim Appeals Officeand all other parties, within twenty (20) days after the date the Orderwas mailed, pursuant to §§ 8-43-301(10) and 307, C.R.S. (1995 Cum.Supp.).
Copies of this decision were mailed December 18, 1995 to the following parties:
Personal Representatives of The Estate of Kenneth W. Covert, % Albert E. Anderson, 4350 Wadsworth Blvd., Ste. 240, Wheat Ridge, CO 80033
Navajo Express, Inc., 5300 E. 56th Ave., Commerce City, CO 80022-3827
Colorado Compensation Insurance Authority, Attn: C. Kriksciun, Esq. (Interagency Mail)
Marshall A. Fogel, Esq., 1199 Bannock St., Denver, CO 80204
(For the Claimant)
By: ____________________