Davis v. Christiana Care Health Services.

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY

KENNETH S. DAVIS, )
)
Claimant-Below, Appellant, ) C. A. No.: N14A-05-012 VLM
)
v. )
)
CHRISTIANA CARE HEALTH )
SERVICES, )
)
Employer-Below, Appellee. )

OPINION

Submitted: November 20, 2014
Decided: February 27, 2015

Upon Consideration of Appellant’s Appeal of the Decision of the
Industrial Accident Board, REVERSED and REMANDED.

Michael B. Galbraith, Esquire, Weik, Nitsche, Dougherty & Galbraith,
Wilmington, DE, Attorney for Appellant.

Maria Paris Newill, Esquire, and Gregory P. Skolnik, Esquire, Heckler &
Frabizzio, Wilmington, DE, Attorneys for Appellee.

MEDINILLA, J.

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 INTRODUCTION

Claimant Kenneth S. Davis (“Claimant”) appeals a decision of the Industrial

Accident Board (the “Board”) which dismissed his Petition to Determine

Additional Compensation Due on the basis that Claimant’s compensable, work-

related injury had been settled by an earlier agreement between the parties.

Employer Christiana Care Health Services (“Employer”) maintains that the

Board’s decision should be affirmed because the parties intended the earlier

settlement to resolve Claimant’s Petition for additional benefits, including his

claim for permanent impairment. Because the Court finds that the Board’s

interpretation of the prior settlement agreement was erroneous, the decision is

REVERSED and REMANDED for further proceedings consistent with this

opinion.

FACTUAL AND PROCEDURAL HISTORY1

Claimant alleged that on August 21, 2012, he suffered a work injury to his

lower back when he slipped and fell while in the scope of his employment. As a

result, Claimant received medical treatment through First State Surgery Center,

Neurosurgical Consultants and Christiana Care Health Services. He filed a

1
Recitation of the facts and procedural history is adopted primarily from the Board’s hearing,
Kenneth S. Davis v. Christiana Care Health Services, Hearing No. 1387075, Decision on
Petition to Determine Additional Compensation Due (May 15, 2014).
2
Petition to Determine Compensation Due before the Board on December 11, 2012.

A Hearing on the Merits was scheduled for May 29, 2013.

Prior to the hearing date, by letter dated March 18, 2013, Employer extended

an offer to settle Claimant’s then-pending petition. Specifically, the

correspondence from Employer advised settlement authority to: (1) “acknowledge

the 8/21/12 work accident and a lumbar spine contusion—resolved;” and (2)

“acknowledge a limited course of medical treatment[.]” In response, Claimant’s

counsel e-mailed Employer’s counsel on May 13, 2013 and accepted Employer’s

offer as their acceptance of a “low back injury” and further stated his

“understanding that this will resolve all issues presently pending before the

[B]oard.”

On May 16, 2013, Employer sent a confirmation letter to Claimant’s

counsel, confirming that a resolution had been reached in the matter, reiterating the

above-stated offer, and adding that she had “requested that my client send medical

only Agreements and Final Receipts . . . .” Employer drafted the formal

documentation of their agreement, which included both a State of Delaware Office

of Workers’ Compensation Agreement as to Compensation Form (the “Agreement

Form”) as well as a Receipt for Compensation Paid (the “Receipt”). The

Agreement Form provided for the payment of “medical only” expenses and

categorized the nature of the injury as “lumbar spine contusion, resolved.” The

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Receipt expressly stated that “the total sum of $0.00 was in settlement due for the

“medical only disability of [Claimant].” Further, the Receipt acknowledged:

Your signature on this receipt will terminate your right to
receive the workers’ compensation benefits specified above on
the date indicated. This form is not a release of the employer’s
or the insurance carrier’s workers’ compensation liability. It is
merely a receipt of compensation paid. The claimant has the
right within five years after the date of the last payment to
petition the Office of Workers’ Compensation for additional
benefits [emphasis added].
Employer informed the Board on May 16, 2013 that there was no need for a

Hearing on the Merits, as the parties had resolved their claims.

Eight months later, on January 23, 2014, Claimant underwent a medical

evaluation with Dr. Rodgers who opined that claimant had suffered an 8%

permanent impairment to the lumbar spine causally related to the August 21, 2012

work injury. On February 27, 2014, Claimant filed a Petition to Determine

Additional Compensation Due (the “Permanency Petition”) pursuant to 19 Del. C.

§ 2326. On April 16, 2014, Employer requested a Legal Hearing and asked the

Board to dismiss the Permanency Petition on the grounds that it was contrary to the

parties’ prior agreement that the injury had been “resolved.” On May 15, 2014, the

Board conducted a Legal Hearing and found that because the May 2013 agreement

categorized the injury as a “lumbar spine contusion – resolved,” there could be no

permanent impairment and, therefore, Claimant’s Petition for Additional Benefits

was dismissed with prejudice.
4
 This appeal followed.

PARTIES’ CONTENTIONS

Employer contends that the decision of the Board to dismiss the Permanency

Petition should be affirmed. According to Employer, the May 2013 email

correspondence, the Agreement and the Final Receipt included language that the

injury had “resolved,” which is susceptible to only one reasonable interpretation:

the parties’ agreement that the claims being settled as a “resolved” injury included

a future claim for permanent impairment. Employer therefore contends that the

Board’s decision must be affirmed.

Claimant, however, argues that the Parties’ agreement resolved issues that

were “presently pending” before the Board, which did not include a claim for

permanent impairment. Since he was not pursuing a claim for a permanent

impairment at the time the agreement was made, there could be no resolution – and

no meeting of the minds – regarding permanency at the time of the May 2013

agreement. Accordingly, Claimant contends that the May 2013 agreement did not

relinquish his rights to receive future benefits, including permanent impairment,

and argues that the Board erred in dismissing his Permanency Petition.

STANDARD OF REVIEW

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 On appeal from the Industrial Accident Board, this Court’s role is to

determine whether substantial evidence exists to support the Board’s decision, and

to examine the Board’s findings and conclusions for legal error.2 Substantial

evidence has been defined as “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion,” 3 and is “more than a mere scintilla but

less than a preponderance.”4 This Court reviews legal determinations of the Board

de novo. 5 The interpretation of the terms of a settlement agreement is reviewed for

an error of law.6

DISCUSSION

Delaware law favors the voluntary settlement of contested suits, and such

arrangements will bind parties when they agree to all material terms and intend to

be bound by the contract.7 When interpreting the meaning of contracts, Delaware

courts apply the objective theory—that is, a contract’s construction should be that

which would be understood by a reasonable person.8 At issue in this case is the

reasonable interpretation of the term “resolved” in the context of the parties’

2
Harasika v. State, 2013 WL 1411233, at *3 (Del. Super. Feb. 28, 2013).
3
Histed v. E.I. DuPont de Nemours & Co., 621 A.2d 340, 342 (Del. 1993).
4
Kiefer v. Nanticoke Health Servs., 979 A.2d 1111 (Del. 2009).
5
Bundy v. Corrado Bros., 1998 WL 283460, at *2 (Del. Mar. 25, 1998).
6
Chavez v. David's Bridal, 979 A.2d 1129, 1133 (Del. 2008).
7
Wittington v. Dragon Group LLC, 2013 LEXIS 112 (Del. Ch. May 1, 2013).
8
Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010).
6
agreement, and whether that term equates to Claimant being barred from pursuing

a future Worker’s Compensation claim for that injury.

The Board heard the legal arguments of counsel and determined that the

permanency claim relating to Claimant’s August 21, 2012 back injury should be

dismissed because the parties’ agreed that the work injury had “resolved” in their

May 2013 agreement. The Board ruled that because the injury was deemed

“resolved,” that there was no basis for a permanent impairment claim. The Board

stated, “[t]hese facts plainly evidence that there was an express agreement that the

injury accepted would be a ‘resolved’ lumbar spine contusion and nothing more.”

This Court finds that the Board’s interpretation of the parties’ agreement as

evidenced by its May 15, 2014 Order is unsupported by the evidence presented at

the Legal Hearing. Employer’s March 18, 2013 offer to avoid a proceeding on the

merits before the Board did two things: it acknowledged that Claimant suffered a

compensable, work-related lumbar spine contusion, and it agreed to compensate

Claimant for limited medical expenses related to that injury. The Agreement

Form, signed by the parties and dated May 21, 2013, expressly states that

Employer was acknowledging a work-related injury to the lumbar spine and agreed

to pay “medical only” expenses. 9 The argument by Employer’s Counsel at the

9
Two separate areas in the Agreement call for the date and probable length of the disability. The
typed responses are “medical only.” In a handwritten note on the Agreement, there is a notation
7
Legal Hearing, consistent with the express language in the Agreement and Final

Receipt, was that the offer was made to acknowledge a lumbar spine contusion and

a limited course of treatment through the date of the defense medical

examination.10 It was not to resolve claims related to permanent impairment. The

Agreement Form expressly does not compensate Claimant for permanent

impairment.

To the extent that the Court is asked to interpret this contract, there is much

ado about the word “resolved” in this case. It is used interchangeably to argue that

the case and/or the injury had resolved. Employer concedes that it was the defense

medical evaluator who originally provided a medical opinion that the injury had

resolved. That description of the injury was then inserted in the Agreement Form

that that Claimant signed when Employer agreed to pay his medical bills and to

acknowledge the injury as work related. The record describes an injury that may

have been opined as “resolved” from a medical standpoint (i.e., no additional

medical treatment needed). However, merely because an injury is described as

resolved does not mean that a claimant’s case is fully “resolved” to the extent it

precludes him from raising additional claims that he might be entitled to receive

for his work-related injury.

that reads “MO-$0.” The area for “permanent partial disability” (permanent impairment) is not
checked.
10
Hr’g Transc. at 4.
8
 The record before this Court indicates that the original Petition to Determine

Compensation Due was not for a claim of permanent impairment pursuant to 19

Del. C. § 2326. Claimant’s 8% permanent impairment had not been rated at the

time the parties entered into the May 2013 agreement when Employer merely

acknowledged the work accident and agreed to pay “medical only” expenses. As

such, the Board’s legal conclusion that there can be no permanent impairment,

without more, was erroneous. While the prior medical description that the injury

had resolved may provide Employer a valid position to defend permanent

impairment, Claimant should not be precluded from bringing his claim before the

Board for its consideration.

The Workers’ Compensation Act has clear provisions as set out in 19 Del. C.

§ 2358(a) that allow parties to settle their cases through global resolutions via the

commutation process. To do so requires Board approval, which is granted if the

Board determines that a lump-sum settlement is in the Claimant’s best interest.

There was no such approval sought or obtained in this case. The Board’s

interpretation of the parties’ agreement places undue influence on the term

“resolved,” leading to the broad implications and an erroneous interpretation that

the 2013 settlement settled any and all future claims. Accordingly, the Board’s

9
interpretation of the “resolved” language is inconsistent with the agreement of the

parties and the letter and spirit of Delaware’s Worker’s Compensation Act.11

Title 19, Section 2326 of the Delaware Code guarantees compensation to an

employee who is permanently impaired as a result of a work injury. 12 A claim

under Section 2326 allows a claimant to be compensated for permanent injuries

sustained as the result of a work-related accident resulting in the loss of or loss of

use of any member or part of the body. A determination under Section 2326 is

separate and apart from a determination related to whether an injury is work-

related, or whether medical treatment is reasonable and necessarily related to an

alleged work injury.

Claimant’s lumbar spine injury received a rating of 8% permanent

impairment on January 23, 2014. The issue of permanent impairment frequently

cannot be determined from a medical standpoint until a period of time has passed

since an injury occurred. 13 For that reason, the February 2014 Permanency

11
19 Del. C. § 2304. See Hirneisen v. Champlain Cable Corp., 892 A.2d 1056, 1059 (Del.
2006) (“In order to realize the fullest possible potential of the humane and beneficial purposes of
workers' compensation statutes, courts have accorded them a generally liberal interpretation . . .
The liberal interpretation is used to resolve any reasonable doubts in favor of the worker because
it was for the workers' benefit that the act was passed.”) (citation omitted).
12
19 Del. C. § 2326(g). See Chrysler Corp. v. Chambers, 288 A.2d 450 (Del. Super. Ct. 1972),
aff’d, 299 A.2d 431.
13
See Downing v. Antonelli, No. C.A. 90A-11-4, 1991 WL 215917, at *6 (Del. Super. Oct. 10,
1991) (“The time when an impairment becomes “fixed” refers to the date when the medical
condition would have stabilized, leaving little probability either of improvement or deterioration
of function”).

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Petition called upon the Board to hear evidence concerning whether Claimant

suffered permanent impairment as a result of the August 21, 2012 accident. The

Board should have heard evidence on this issue, rather than concluding as a matter

of law that “there can be no permanent impairment for a resolved injury.”

The Parties both argue their respective position regarding doctrines of res

judicata, collateral estoppel, and waiver. This Court has stated, “Where a

settlement agreement frees an employer of responsibility for an injury . . . that

provision of the settlement agreement operates as res judicata, and precludes the

Board from reviewing whether additional compensation for that injury is

necessary.” 14

Employer relies heavily on Chavez in support of its argument to affirm the

Board’s decision on the grounds of res judicata. Chavez is inapposite. In that

case, the “settlement resolution” between the parties expressly stated that “any and

all medical treatment after 8/15/05 will be denied as not reasonable or necessary

for work-related problems per Dr. Stephens.” When the claimant later brought a

petition alleging total disability after that date, this Court ruled that the Board

properly dismissed the claim with prejudice on the basis that the petition was

14
Chavez v. David's Bridal, 979 A.2d 1129, 1134 (Del. Super.), aff'd, 950 A.2d 658 (Del. 2008).
11
barred by res judicata. 15 In this case, on the other hand, Claimant did not

expressly waive further claims based on his injury, and thus Chavez is

distinguishable. 16

In this case, the “resolved” language in the settlement discussions did not

free Employer of responsibility for the injury indefinitely; rather, it resolved the

then outstanding dispute about whether Claimant had suffered a compensable,

work-related injury and whether his medical bills were reasonable and causally

related to the work accident. The issue of permanent impairment suffered by

claimant was not before the Board at the time the parties agreed to settle

Claimant’s original claims. That issue was never litigated and, therefore, cannot be

barred by the doctrines of res judicata or the parallel doctrines of collateral

estoppel and waiver. There is no evidence in the record that Claimant knowingly

waived his right to future benefits under the Worker’s Compensation Act.

As a result of these legal and factual errors, the Court finds that the Board

erroneously concluded that Claimant’s Permanency Petition was barred by the

May 2013 settlement. Unless and until the parties enter into a global commutation,

which requires Board approval and consideration for the relinquishment of future

15
The Chavez court also noted that the parties had separately settled the permanency issue.
Contrary to Employer’s assertion, Chavez did not bar the permanency claim on res judicata
grounds. Id.
16
Indeed, this Court finds Employer’s reliance on Chavez somewhat misleading, perhaps
inadvertently so, but the Court advises counsel to use caution when making representations that
the Court barred permanency claims where that issue is so central to this case.
12
benefits, the Act does not contemplate closing the door on a claimant’s ability to

seek benefits to which he may be entitled to receive before his claim for said

benefits ripens. The Court concludes that the Board’s decision to dismiss

Claimant’s permanency petition must be reversed.

CONCLUSION

The decision is hereby REVERSED and the matter is REMANDED for

further proceedings concerning the merits of Claimant’s permanency petition.

IT IS SO ORDERED.

/s/ Vivian L. Medinilla
Judge Vivian L. Medinilla

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