IMPORTANT NOTICE
NOT TO BE PUBLISHED OPINION
THIS OPINION IS DESIGNATED "NOT TO BE PUBLISHED."
PURSUANT TO THE RULES OF CIVIL PROCEDURE
PROMULGATED BY THE SUPREME COURT, CR 76.28(4)(C),
THIS OPINION IS NOT TO BE PUBLISHED AND SHALL NOT BE
CITED OR USED AS BINDING PRECEDENT IN ANY OTHER
CASE IN ANY COURT OF THIS STATE; HOWEVER,
UNPUBLISHED KENTUCKY APPELLATE DECISIONS,
RENDERED AFTER JANUARY 1, 2003, MAY BE CITED FOR
CONSIDERATION BY THE COURT IF THERE IS NO PUBLISHED
OPINION THAT WOULD ADEQUATELY ADDRESS THE ISSUE
BEFORE THE COURT. OPINIONS CITED FOR CONSIDERATION
BY THE COURT SHALL BE SET OUT AS AN UNPUBLISHED
DECISION IN THE FILED DOCUMENT AND A COPY OF THE
ENTIRE DECISION SHALL BE TENDERED ALONG WITH THE
DOCUMENT TO THE COURT AND ALL PARTIES TO THE
ACTION.
RENDERED: MARCH 23, 2017
NOT TO BE PUBLISHED
~uprtttt!o~!:!s~!w?tttff ~ ~ l
LANDY MILLS APPELLANT
ON APPEAL FROM COURT OF APPEALS
V. CASE NO. 2015-CA-001168-WC
WORKERS' COMPENSATION BOARD NO. 13-WC-00153
NALLY AND HAMILTON ENTERPRISES, APPELLEES
HONORABLE J. GREGORY ALLEN, ADMINISTRATIVE
LAW JUDGE AND WORKER'S COMPENSATION BOARD
MEMORANDUM OPINION OF THE COURT
AFFIRMING
I. FACTUAL AND PROCEDURAL BACKGROUND.
Landy Mills filed a workers' compensation claim against Nally and
Hamilton (Nally) when he was injured during the course of his employment.
Mills claimed to have injured his back, his right leg, and his right foot. At the
hearing, Mills and Nally agreed to a $40,000 lump-sum agreement that
included interest, attorney's fees, vocational rehabilitation, temporary total
disability, permanent total disability, permanent partial disability, a waiver of
the right to reopen, and a waiver of medical expenses. This settlement
agreement acted as a total dismissal of the claim with prejudice.
The agreement contained, in pertinent part, the following key terms and
conditions:
In consideration of the lump sum payment set forth above, the
Plaintiff and the Defendant hereby agree that the Plaintiff.
completely releases and forever discharges the Defendant from any
and all liability for further reopening for income benefits pursuant
to KRS 342.125 based on an increase in occupational disability,
statutory disability, or any other theory of recovery which the
Plaintiff now has, or which may hereafter accrue or otherwise be
acquired, on account of, or which may in any way grow out of the
alleged work-related injury and that the Plaintiffs claim for
benefits shall be dismissed with prejudice. Plaintiff shall have no
right to reopen for increased occupational disability benefits
in consideration of the amounts paid pursuant to this
agreement. $8,000.00 of the lump sum settlement to the
Plaintiff constitutes consideration for the waiver of the right
to reopen. $8,000.00 of the lump sum constitutes consideration
for the waiver of all past, present, and future medical expenses. No
past or future medical bills will be paid by the Defendant-
Employer. $500.00 of the lump sum is specifically paid as
consideration for the waiver of all claims for vocational
rehabilitation. The remainder of the settlement proceeds
constitutes consideration for the waiver of all claims for income
benefits including temporary total disability; permanent partial
disability; permanent total disability; interest and attorney fees.
The agreement also recognized that Mills was apprised to the terms and
conditions and fully understood he was dismissing future benefits with
prejudice.
The Chief Administrative Law Judge (CAW) approved the settlement
agreement on.August 27, 2013. In the time leading up to approving the
agreement, Mills had received an MRI of his lumbar spine and was referred to
Dr. Bean for surgical intervention on August 26, 2013-the day before the
CAW approved the settlement. Accordingly, on September 6, 2013, Mills filed a
"Motion to Set Aside Proposed Settlement," asserting his need for surgery as
the basis for setting aside the agreement. Nally objected to both Mills's
characterization of the motion and the merits of his petition. In Nally's view,
2
the motion was, by its terms, a motion to reopen the case, that the express
terms of the agreement prevented Mills from pursuing.
The CAW granted Mills's motion. But on appeal, the Board dismissed the
appeal after determining that the CAW treated the motion to set aside the
settlement as a motion to reopen Mills's claim. Under Kentucky Rules of Civil
Procedure (CR) 54.02(1) and (2), an order is only appealable if it terminates the
action itself, acts to decide all matters litigated by the parties, determines all
the rights of the parties, and divests the AW of his or her authority. The Board
then reasoned that because the CAW's order only determined that Mills made
a prima facie showing that he may prevail under evidence proffered in favor of
reopening, the order was not final and appealable. The order failed to show a
change in disability caused by the injury and there was no final award. So the
Board dismissed and the case was then reassigned to an AW.
The AW then ordered that the settlement agreement was valid and
enforceable under KRS 342.265 and that Mills's motion to set aside the
agreement did not comport with Kentucky administrative regulations. Under
KRS 325.265, a reopening may be justified through evidence the agreement
was procured by fraud, mistake, or newly-discovered evidence that could not
have been discovered by due diligence. Mills's referral to Dr. Bean occurred
before the agreement, so the AW concluded his new need for surgery did not
amount to newly-discovered evidence. Mills acknowledged that he fully
understood and consented to the terms of the agreement, so the AW concluded
that the plain language waived Mills's ability to reopen the claim.
3
Mills then filed a motion for reconsideration with the AW. Specifically,
Mills asserted that he had not filed a motion to reopen under the terms of KRS
325 .265 and insisted his motion was in fact a motion to set aside the
agreement. The AW denied the petition for reconsideration. In his order, the
AW reiterated that the Board determined that though Mills did not label his
original motion as such, it was in fact a motion to reopen to be considered
under the provisions of KRS 325.265. Mills appealed to the Board again.
The Board affirmed the AW. In reaching its decision, the Board again
found there was no basis for setting aside the previously approved settlement.
KRS 325.265(4) provides that the only remedy once an agreement has been
approved by an AW is for a party to move to reopen under KRS 342.125. And
this process involves two steps: (1) a claimant files a prima facie motion
providing sufficient information to demonstrate a substantial possibility of
success; and (2) if he succeeds in demonstrating a prima facie case, the matter
is assigned to an AW to set additional proof time to fully adjudicate the merits
of reopening. The Board held that the CAW's original order setting aside the
agreement was not controlling because it amounted to making a ruling prior to
taking proof on the questions of fraud, mistake, or newly discovered evidence.
Mills then appealed to the Kentucky Court of Appeals.
The Court of Appeals affirmed the Board. The appellate court held that
filing a motion to reopen under KRS 342.125 was his exclusive remedy from
the approved settlement agreement, despite his efforts to style his motion as
one to set aside the settlement. And as such, thepanel concluded the CAW's
4
order setting aside the agreement should have stated it was reopening the
claim-in essence, determining that Mills established a prima facie case. The
court then ruled that the agreement was valid and supported by substantial
evidence, with Mills acknowledging that he entered into the agreement
knowingly and received monetary consideration in exchange for waiving his
right to reopen. Because Mills failed to prove the existence of fraud, mistake, or
newly discovered evidence, the Court of Appeals ruled that the AW had no
basis for reopening the claim. Mills appealed to this Court.
II. ANALYSIS.
Standard of Review.
On appellate review of the Board's decision in a workers' compensation
appeal, our role "is to correct the Board only where the ... Court believes the
Board has overlooked or misconstrued controlling statutes or precedent, or
committed an error in assessing the evidence so flagrant as to cause gross
injustice."1 This is a highly deferential standard and we will only displace the
Board's judgment with our own upon a finding of grave error. As such, Mills
faces an uphill battle to succeeding on appeal.
The Board's Opinion was Supported by Substantial Evidence.
Mills's essential argument on appeal is that the Board failed to apply the
doctrine of res judicata in rendering its decision. He correctly highlights that
the doctrine indeed does apply to workers' compensation claims. 2 In this
1 Weste~ Baptist Hosp. v. Kelly, 827 S.W.2d 685,687 (Ky. 1992).
2 See Whittaker v. Cecil, 69 S.W.3d 69, 72 (Ky. 2002).
5
context, the CAW to set aside the agreement. So according to Mills, the AW
ignored res judicata when he ruled that the settlement agreement is
enforceable.
Nally alternatively argues, as both the Board and the Court of Appeals
agreed, that an approved settlement agreement carries the same full force and
effect as an award from ajudge. 3 Additionally, Nally reminds us that a claimant
may waive his right to reopen his claim as part of a settlement agreement.4 And
indeed, we have recognized that settlement agreements are favored and should
be enforced whenever possible.s Nally contends that once the settlement was
approved, Mill's only avenue for relief was a motion to re-open the claim under
the strictures of KRS 342.125. We agree.
KRS 342.265(4) provides .that "If the parties have previously filed an
agreement which has been approved by the administrative law judge, and
compensation has been paid or is due in accordance therewith and the parties
thereafter disagree, either party may invoke the provisions of KRS 342.125,
which remedy shall be exclusive." This would appear to contemplate today's
case perfectly. Here both parties entered into a settlement agreement, the
agreement was approved by an AW, and Mills received valued consideration in
the form of $8,000 in exchange for his right to re-open. By the express terms of
3 See Bell v. Consol of Kentucky, Inc., 294 S.W.3d 459,462 (Ky. App. 2009) (citing Jude
v. Cubbage, 251 S.W.2d 584, 586 (Ky. 1952)).
4 See Richey v. Perry Arnold, Inc., 391 S.W.3d 705, 710 (Ky. 2012).
s See Beale v. Faultless Hardware, 837 S.W.2d 893 (Ky. 1992).
6
this statute, Mills's only way to alter the approved agreement is to invoke the
terms of KRS 342.125. And he did not move the Board on those grounds.
But moreover, Mills's settlement agreement expressly contracted away
his right to reopen this claim. In Whittaker v. Pollard, we held that though a
settlement award may be reopened under KRS 342.125, a reopening may
nonetheless still be precluded by the terms of the underlying agreement.6 Here,
there are no allegations of fraud or bad faith in entering the settlement
agreement. Mills received a lump sum of $8,000 in exchange for vacating his
statutory right to reopen his claim. To us, it seems clear that the Board was
correct in rejecting his attempts to continue this workers' compensation claim
once the agreement had been approved.
III. CONCLUSION.
For the reasons stated above, we affirm the Board's ruling that Mills may
not reopen his claim.
All sitting. All concur.
6 25 S.W.3d 466 (Ky. 2000).
7