W.C. No. 4-343-280.Industrial Claim Appeals Office.
August 10, 2004.
FINAL ORDER
The respondents seek review of an order of Administrative Law Judge Felter (ALJ Felter) which set aside a settlement agreement on grounds of mutual mistake of material fact. The respondents contend the evidence does not support the finding that the alleged mistake was “material” to the respondents’ decision to settle, and that the ALJ misconstrued certain medical evidence. The respondents further contend the ALJ improperly applied the preponderance of the evidence standard rather than the clear and convincing evidence standard of proof. We affirm.
The claimant sustained a compensable knee injury in November 1995. After several surgeries, he was placed at maximum medical improvement (MMI) by an authorized treating physician (ATP) on July 6, 1999. In November 1999 the claimant underwent a Division-sponsored independent medical examination (DIME) on the issues of MMI and medical impairment. The DIME physician agreed with the ATP’s date of MMI and assigned a 30 percent whole person impairment rating based on lower extremity impairment and psychological impairment from chronic pain syndrome.
On February 10, 2000, the respondents filed a Final Admission of Liability (FAL) admitting for the DIME physician’s whole person impairment rating. The claimant objected to the FAL and sought a hearing on the issues of medical benefits after MMI and permanent total disability (PTD) benefits.
However, on June 8, 2000, the parties entered into a settlement agreement. The settlement provided that the respondents would pay the claimant $85,000, which was understood to represent a “compromise with respect to Claimant’s claim of permanent total disability” and any remaining permanent partial disability. The claimant agreed to surrender all claims for additional benefits and the right to reopen based on worsened condition. The settlement acknowledged that the claimant was waiving his right to make claims for “unknown injuries, conditions or diseases as a consequence of the industrial injury.” The settlement was approved by order dated June 14, 2000.
In March 2001 the claimant filed a petition to reopen the settlement agreement alleging there was a mistake concerning his MMI status at the time of the settlement. Specifically, the claimant alleged that at the time of the settlement he was suffering from an infection of the left knee which was not diagnosed until it became acutely symptomatic shortly before July 4, 2000.
ALJ Felter, crediting the opinion of Dr. Wertz, found the infection was probably present on June 8, 2000, and the claimant would not have been considered at MMI if the infection had been diagnosed. The ALJ further found that there was a mutual mistake of material fact because the parties erroneously believed the claimant was at MMI on June 8. In support of this determination the ALJ credited the claimant’s testimony that he understood he was at MMI on June 8, and would not have agreed to settle if he had known the contrary. The ALJ further found that the respondents’ filing of the FAL evidenced their belief the claimant was at MMI at the time of the settlement, and that the claimant’s MMI status was a material fact considered by the respondents in deciding to settle the claim. (Findings of Fact 14, 17). Consequently, ALJ Felter ordered that the settlement agreement be set aside and the claim for benefits reopened.
Later, ALJ Muramoto ordered an award of temporary total disability and medical benefits based on the reopening. However, the respondents do not dispute the specifics of ALJ Muramoto’s order dated January 5, 2004.
I.
On review, the respondents first contend the evidence does not support the ALJ’s finding that there was “mutual mistake of material fact” sufficient to reopen the settlement. The respondents argue there is no evidence to show that they considered the claimant’s MMI status to be relevant to their decision to settle, and that any mistake was “unilateral at best.” In support of this proposition, the respondents point out the claimant testified that he did not know the significance of MMI to the respondents’ decision to settle. The respondents also argue that, contrary to Finding of Fact 14, the filing of the FAL did not evidence their understanding that the claimant was at MMI at the time of the settlement. We reject these arguments.
The settlement agreement could not be reopened except on a showing of fraud or mutual mistake of material fact. Section 8-43-204 (1), C.R.S. 2003. A “mutual mistake” of fact is common to all parties to the settlement. Cary v. Chevron U.S.A., Inc., 867 P.2d 117 (Colo.App. 1993). In the current context, the mistake must relate to the “extent, severity and likely duration” of the claimant’s condition at the time of settlement, not a prediction about the subsequent course of the claimant’s condition. Gleason v. Guzman, 623 P.2d 378 (Colo. 1981) Ursich v. Prudential Insurance Co., W.C. No. 3-934-376 (October 10, 1995), aff’d. Prudential Insurance Co. v. Ursich, (Colo.App. No. 95CA1869, September 12, 1996) (not selected for publication). In order to be “material,” the claimant must establish that: (1) the fact relates to a “basic assumption” on which the contract is made; (2) the party seeking the release from the settlement must show that the fact had a material effect on the agreed exchange of performances; and (3) the fact must not be one as to which the party seeking the relief bears the risk. See Halipern v. Dryden, 154 Colo. 231, 389 P.2d 590 (1964); Davis v. Critter’s Meat Factory, W.C. No. 3-063-709 (August 29, 1996).
The question of whether the claimant has proven a mutual mistake of material fact is one of fact to be decided by the ALJ. Maryland Casualty Co. v. Buckeye Gas Products Co., Inc., 797 P.2d 11 (Colo. 1990). Because the issue is factual in nature, we must uphold the ALJ’s resolution if supported by substantial evidence in the record. Section 8-43-301 (8), C.R.S. 2003. This standard of review requires us to view the evidence in a light most favorable to the prevailing party, and defer to the ALJ’s resolution of conflicts in the evidence, credibility determinations, and plausible inferences drawn from the record. If two equally plausible inferences exist, it is for the ALJ to determine which inference to draw. Wilson v. Industrial Claim Appeals Office, 81 P.3d 1117 (Colo.App. 2003).
The respondents’ argument notwithstanding, substantial evidence supports the ALJ’s inference that the respondents believed the claimant to be at MMI on June 8, 2000, and that this assumed fact was “material” to their decision to settle. MMI exists when any “medically determinable physical or mental impairment as a result of injury has become stable and when no further treatment is reasonably expected to improve the condition.” Section 8-40-201 (11.5), C.R.S. 2003. MMI is the point at which the right to temporary disability benefits ends and the claimant’s entitlement to permanent disability benefits commences. Section 8-42-105
(3) (a), C.R.S. 2003; MGM Supply Co. v. Industrial Claim Appeals Office, 62 P.3d 1001 (Colo.App. 2002) (permanent disability cannot be determined until claimant reaches MMI). This principle applies to claims for PTD benefits, since PTD is dependent on proof that the effects of the injury have permanently rendered the claimant unable to earn wages in the same or similar employment. Section 8-40-201 (16.5) (a), C.R.S. 2003; Dyrkopp v. Industrial Claim Appeals Office, 30 P.3d 821, 822 (Colo.App. 2001) (PPD and PTD benefits both compensate for permanent loss of earning capacity although calculated differently).
Here, the respondents’ FAL reflects their belief, based on the DIME physician’s report, that the claimant’s medical condition was stable and he had sustained permanent medical impairment of 30 percent of the whole person. ALJ Felter plausibly inferred that this understanding of the facts had a material impact on the bargained for exchange reflected in the June 8 settlement agreement. The respondents knew at the time of the settlement that the claimant was seeking PTD benefits based on his alleged inability to earn any wages. The settlement itself states that the dispute concerning the extent of the claimant’s permanent disability, including the claim for PTD benefits, was “compromised” by the payment of $85,000. The ALJ could infer from this evidence that the respondents’ “basic assumptions” were that the claimant’s medical condition was stable and that the impact of the permanent restrictions on the claimant’s ability to earn wages was a disputed factual question. The ALJ could also infer that if the respondents had known the claimant was not at MMI on June 8 they would have been reluctant to settle because the degree of permanent impairment and its potential impact on the claimant’s ability to earn wages could not be predicted and compromised with any confidence. Indeed, the respondents did not agree to the June 8 settlement until after the claimant proceeded through the DIME process, and was found to be at MMI and assigned a permanent impairment rating Cf. Davis v. Critter’s Meat Factory, supra (finding that parties were mistaken concerning MMI was material to settlement because settlement mentioned the impairment rating for the claimant’s injuries, and the impairment rating could not be determined until MMI was reached).
The fact that the claimant did not know what influenced the respondents to settle does not change the result. The evidence and inferences cited above are sufficient to support the order without regard to the claimant’s knowledge of the respondents’ intentions.
The respondents next contend ALJ Felter erred in interpreting the testimony of Dr. Wertz. The respondents assert that Dr. Wertz unequivocally testified that the claimant was at MMI on June 8, 2000, and his condition worsened after the settlement. Therefore, the respondents reason, the evidence establishes there was no mistake because the claimant remained at MMI on June 8 and the worsening occurred after the settlement.
However, as the ALJ noted, the testimony of Dr. Wertz contained internal inconsistencies. The ALJ resolved the inconsistency to find that Dr. Wertz believed the claimant was suffering an infection on June 8, and had the infection been recognized the claimant would not have been at MMI. It was the ALJ’s province to resolve this inconsistency, and we may not substitute our judgment for his in this regard. Colorado Springs Motors, Ltd. v. Industrial Commission, 165 Colo. 504, 441 P.2d 21
(1968).
II.
The respondents next contend the ALJ erred in applying the preponderance of the evidence standard rather than the clear and convincing evidence standard when finding there was a mutual mistake of material fact with regard to the claimant’s MMI status. The respondents reason that because the claimant underwent a DIME on the issue of MMI, the DIME physician’s finding of MMI can be overcome only by clear and convincing evidence. We reject this argument.
The claimant was not challenging the DIME physician’s determination that he was at MMI on July 6, 1999. Rather, he alleged that at the time of the settlement on June 8, 2000, the condition had worsened because of the developing infection and the claimant was no longer at MMI. This argument, which was accepted by ALJ Felter, did not implicate the DIME physician’s finding that the claimant reached MMI at an earlier date. Consequently, the clear and convincing evidence standard has no application here and ALJ Felter correctly applied the preponderance of the evidence standard in determining the issue. Cordova v. Industrial Claim Appeals Office, 55 P.3d 186, 190 (Colo.App. 2002) (where claimant sought to reopen based on alleged worsened condition, original MMI date was not challenged and DIME physician’s opinion concerning cause of worsening was not entitled to special weight and not required to be overcome by clear and convincing evidence).
Insofar as the respondents have made other arguments, we find them to be without merit.
IT IS THEREFORE ORDERED that the orders of ALJ Felter dated March 3, 2003, and ALJ Muramoto dated January 5, 2004, are affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ David Cain
____________________________________ Bill Whitacre
John M. Young, Westminster, CO, BJ Services, Houston, TX, RSKCo, Denver, CO, Laurence J. Free, Denver, CO, (For Claimant).
John H. Sandberg, Lakewood, CO, (For Respondents).