RENDERED: AUGUST 24, 2017
TO BE PUBLISHED
jupttlttt Q.Inurf nf t!ttnfurku
2016-SC-000406-WC
LARRY KIDD APPELLANT
ON APPEAL FROM COURT OF APPEALS
CASE NO. 2015-CA-001239-WC
v. WORKERS' COMPENSATION BOARD
NO. 13-WC-89060
CROSSROCK DRILLING, LLC; APPELLEES
HON. STEVEN G. BOLTON,
ADMINISTRATIVE LAW JUDGE; AND
WORKERS' COMPENSATION BOARD
OPINION OF THE COURT BY JUSTICE VANMETER
AFFIRMING
When an employer and employee reach a settlement agreement with
respect to a worker's compensation case, proof of settlement must be filed,
either by memorandum or by satisfactory proof of settlement. At issue.in this
case is whether the Administrative Law Judge ("AW") erred in failing to give
effect to a settlement agreement reached after the issuance of its Order and
Opinion, and raised 1n a.petition to reconsider. We hold that the AW did not
err and therefore affirm both the Workers' Compensation Board and the Court
of Appeals. Larry Kidd now appeals to determine whether the AW should have
considered the terms of the settlement.
. I. FACTUAL AND PROCEDURAL HISTORY.
In late.2013, Kidd filed a claim alleging work-related injuries against his
employer, Crossrock Drilling, LLC. Following a December 2014 hearing on the
contested issues,! Kidd's attorney and Crossrock's insurance adjuster engaged
in settlement negotiations. The AW and Crossrock's attorney were unaware of
these negotiations. On February 24, 2015, the adjustor indicated agreement
that Crossrock would make· a $55,000 lump-sum payment with a waiver of
vocational rehabilitation benefits. Kidd's attorney was to prepare appropriate
settlement documents.
Four days prior, however, on February 20, the AW issued its opinion and
award denying Kidd permanent partial disability, permanent total disability,
and future medical benefits. The effect of the award was that Kidd was entitled
to approximately $17,600 for temporary total disability. Kidd's attorney
received the opinion and award on February 25.
Kidd timely filed a petition for reconsideration based on the settlement
reached prior to receipt of the opinion. The AW denied the petition, concluding
that Kidd failed to properly present the settlement by filing Form 1102 or by
presenting a verified motion to adopt the settlement agreement, thus the
1 The contested issues were work-relatedness/ causation; injuxy within the
meaning of KRS Chapter 342; retention of physical ability: to return to the same type of
work performed at the time of injuxy; duration of temporary total disability; income
·benefits under KRS 342.730; unpaid or contested medical expenses; and extent and
duration of benefit multipliers.
2 The Department of Workers' Claims' standard form for settlement agreements.
2
settlement was outside the scope of a petition for rehearing. Both .the Board
and the Court of Appeals affirmed. Kidd now appeals.
II. ANALYSIS.
The sole issue on appeal is whether Kidd properly preserved the issue of
the alleged settlement agreement. The AW, the Board, and the Court of
Appeals all held that Kidd did not properly raise this issue, and the AW did not
err in declining to review the agreement.
The issue of correspondence constituting a settlement agreement in
worker's compensation is not a new one. Kidd argues that this case fits within
existing jurisprudence allowing correspondence to sufficiently memorialize a
settlement agreement without a formal filing. See Coaljie_ld Tel. Co. v.
Thompson, 113 S.W.3d 178, 181 (Ky. 2003) (holding that KRS 342.265(1) does
not require a form.al document that is signed by the parties or their
representative when correspondence between·the parties clearly indicates the
terms to which they have agreed, and the terms of the agreement are not
asserted to be incomplete; the AW should then address "the substance of the
agreement rather than its form[]"); Skaggs v. Wood Mosaic Corp., 428 S.W.2d
617, 619 (Ky. 1968) (holding that an agreement is not required to be in writing
"at least so long as there is written evidence (such as the letter and cancelled
checks in this case) for the 'memorandum' which the statute says shall be
filed(]"); see also Hudson v. Cave Hill Cemetery, 331 S.W.3d 267, 271 (Ky. 2011)
(holding the essential terms of an agreement must be settled by the written
evidence in order for the agreement to be complete: the agreement was
3
incomplete because the lump sum proceeds to be allocated to a Medicare Sets
Aside Account had not been settled, and "[t]he allocation is an essential
element of a settlement that includes such an account[]").
Kidd contends that the email correspondence between the parties is
sufficient to memorialize the essential terms and that the AW erred in not
considering the substance of the settlement. However, the issue is not whether
the terms of the alleged settlement between Kidd and Crossrock's insurance
adjustor were complete but rather whether this settlement was properly
introduced into the record for the AW to consider at all.
By statute, in order for a settlement agreement to be enforced, it must be
filed with and approved by the AW. Specifically,
If the employee and employer ... reach an agreement
conforming to the provisions of this chapter in regard
to compensation, a memorandum of the agreement
signed by the parties or their representatives shall be
filed with the commissioner, and, if approved by ... an
administrative law judge, shall be enforceable
pursuant to KRS 342.305.
KRS3 342.265(1). "An agreement to settle a workers' compensation claim
constitutes a contract between the parties. Once approved, an agreement to
settle a claim becomes an award._" Whittaker v. Pollard, 25 S.W.3d 466, 469
(Ky. 2000) (citing Steams Coal & Lumber Co. v. Whalen, 266 Ky. 227, 98
S.W.2d 499 (1936)).
Although the omission of a Form 110 is not fatal to Kidd's claim, in its
3 Kentucky Revised Statutes.
4
absence, Kidd was required to file a verified motion with the correspondence
and sufficient documentation, which taken together, comprise a complete
memorandum of agreement. Skaggs, 428 S.W.2d at 619; KRS 342.265(1).
Kidd, however, never filed a verified motion; instead, he attempted to bring the
correspondence into the record via his petition for reconsideration. As a result,
the alleged terms of the settlement were never properly brought before the AW.
In a petition for reconsideration, the AW is "limited in the review to the
correction of errors patently appearing upon the face of the award, order, or
decision[.]" KRS 342.281. The AW could not have examined the terms of the
alleged settlement agreement when no verified motion or Form 11 O was_ filed
before him. We agree with the Court of Appeals that the AW and the Board
properly declined to address this issue.
III. CONCLUSION.
For the foregoing reasons, the· decision of the Court of Appeals is
affirmed.
All sitting. Minton, C.J.; Hughes, Keller, VanMeter, and Venters, JJ.,
concur. Wright, J., dissents by separate opinion which Cunningham, J., joins.
WRIGHT, J., DISSENTING: I respectfully dissent, as I believe the AW should
have treated Mr. Kidd's motion to reconsider as a motion to approve or enforce
a settlement agreement. While the motion was not verified as required by 803
KAR 25:010 § 6(2), as it contained no sworn statements, this defect could have
been easily rectified. I would also point out that this requirement is not found
5
in the statute granting jurisdiction, but rather, merely in an administrative
regulation.
Mr. Kidd submitted-the communications that formed the basis of the
settlement agreement with his motion. All that was absent was his notarized
signature. This is a classic case of form over substance, It serves neither the
administration of justice nor the purposes of the Workers' Compensation Act.
First, as a Court of Justice, it is better for us to resolve the issue on its merits
rather than tossing it out because the motion was not verified. Second, as this
Court has noted, we must be "mindful that the Workers' Compensation Act is
social legislation which is to be construed liberally and in a manner consistent
with accomplishing the legislative purpose." Apex Min. v. Blankenship, 918
S.W.2d 225, 229 (Ky. 1996). We have also acknowledged, "[a]lthough both the
employee and the employer have rights under the Act, the primary purpose of
the law is to aid injured or deceased workers." Zurich Am. Ins. Co. v. Brierly,
936 S.W.2d 561, 563 (Ky. 1996).
In keeping with the administration of justice and the purposes of the Act,
I would reverse and remand to the AW. The AW should give Mr. Kidd an
opportunity to submit an affidavit demonstrating the facts he alleges. The
parties should then present evidence as to the existence of the alleged
settlement agreement and the AW should hold an evidentiary hearing to
determine whether the emails submitted by Mr. Kidd constituted a binding
settlement agreement.
6
In this case, there would be no prejudice to the opposing side and the
oversight is easily corrected. A missing signature should i;iot deprive Mr. Kidd
of $55,000 if, indeed, the settlement agreement is deemed valid. That result is
not only unjust, but it flies in the face of our stated purposes for the Workers'
Compensation Act: to aid injured workers. The legal arena should not be a
large-scale game of "gotcha" where people win or lose based on technicalities.
Cunningham, J., joins.
COUNSEL FOR APPELLANT:
Glenn Martin Hammond
Matthew R. Hall
GLENN MARTIN HAMMOND LAW OFFICES, PLLC
COUNSEL FOR CROSSROCK DRILLING, LLC:
Timothy Joe Walker
Aziza Hanna Ashy
FOGLE KELLER PURDY, PLLC
7