By Traci Haynes, staff attorney, Gray

One of the most commonly asked questions at mediation is, “If I accept the initial payment of permanent partial disability, will it prevent me from requesting permanent total after the initial compensation period?” For years it has gone unanswered.

The Appeals Board heard arguments on this issue of first impression recently in Oldham v. Freeman Webb Company. At the Oct. 1 oral arguments, several thorny issues were dissected, and many lively exchanges occurred.

Facts

John Oldham broke his leg at work, and Freeman Webb Company accepted the claim. He settled his initial permanent partial disability award and filed for increased, extraordinary, or permanent total benefits when the period expired. Freeman disputed that Oldham could receive permanent total disability.

After the compensation hearing, the court awarded total disability benefits. The court stated that no “time component” within the statute prevented Oldham from later requesting permanent total, nor did the initial settlement documents “expressly preclude” him from seeking permanent total disability.

Freeman appealed, asserting that Oldham wasn’t entitled to permanent total benefits based on three bases: 1) contractual, 2) statutory, and 3) the rule of direct and natural consequences.

The Contract

Freeman’s attorney, Allan Grant, argued that Oldham wasn’t entitled to permanent total because of his previous settlement agreement for permanent partial disability. According to Freeman, even if the court had authority to order permanent total, the judge should’ve considered the settlement documents, which state:

“This document represents the entire agreement and the parties’ complete understanding with no representations or promises other than those in this agreement. All prior negotiations, representations and agreements are merged into this agreement . . . The parties signed this agreement, which is binding when the judge approves it.“

The documents also included language that Oldham could file a petition for benefit determination for increased benefits under section 50-6-207(3)(B) or extraordinary relief under 50-6-242(a). Permanent total benefits under 50-6-207(4) weren’t mentioned in the documents. The trial court found that while the documents didn’t expressly preserve the right for Oldham to seek permanent total, they also didn’t exclude that right, either.

Grant insisted that because Oldham was previously adjudicated as permanent partial under section 50-6-207(3), he couldn’t now assert that he is permanent total. Otherwise, injured workers could bring a permanent total claim years later.

According to Oldham’s attorney, Andrew Roberto, Freeman’s argument of accord and satisfaction is an affirmative defense that required a responsive pleading. But because Freeman didn’t plead it within the dispute certification notice, it was waived. Oldham reasoned that because the petition is considered a complaint, then the dispute certification notice is an answer.

During oral arguments, Presiding Judge Timothy Connor questioned Roberto about this argument, asking about the difference between the petition being signed by the party that files it, while the dispute certification notice isn’t signed by a party. He also asked whether it was the party’s response or the mediator’s. Roberto reasoned it was the party’s response because the mediator obtains the defenses from the party.

When asked about the absence of permanent total language in the settlement documents, Roberto responded that the parties used standard settlement documents and Freeman had an obligation to pay the initial award. He argued that unless the document said he was excluded from pursuing permanent total, he had the right to do so.

The Statute

Grant pointed out that the statute provides an offset for permanent partial benefits when an injured worker successfully brings a claim for benefits under sections 50-6-207(3) and 50-6-242. However, the statute doesn’t mention an offset for benefits under 50-6-207(4) because permanent partial wasn’t meant to be paid first in permanent total cases.

Judge Meredith Weaver asked Grant if to pursue permanent total, an employee must do that from the outset. He said yes.

Judge Connor then asked how an employee knows they are permanently totally disabled from the outset. Grant replied, “In this case, I would say if we review[ed] the record, Mr. Oldham knew. We didn’t[.]”

“But you’re suggesting this is true in every case, not just Mr. Oldham’s case?” Judge Connor asked.

“That is correct,” Grant replied, adding that his statutory interpretation aided in the efficiency of settling claims. He explained that if the Board held otherwise, it would reduce an employer’s incentive to settle the initial permanent partial award.

Judge Connor responded that section 50-6-207(3)(a) requires employers to pay permanent partial disability as of the date the employee reaches maximum medical improvement and is given an impairment rating. Then he asked, “You are suggesting if [injured workers] accept that payment, they are done with any possibility of perm total?”

Grant responded it was a “trade off.” Judge Connor pressed the point: “So, you’re obligated to make that payment, and once they made that payment, your client no longer has any potential for perm total?” Grant agreed.

Judge Connor reiterated, “So if the employee is unsure of whether they will ever go back to work after their injury and they are placed at MMI and given a rating, they have to say, ‘Nope, sorry, I can’t take this payment that you’re obligated to pay me, because I might be perm total.’” Grant responded that if the right to pursue permanent total disability was preserved in the original agreement, then the employee could accept the original permanent partial disability award.

Judge Connor then asked why the statute provides a method for requesting increased and extraordinary benefits by filing a new petition, and not in section 50-6-207(4) for permanent total benefits. Roberto responded that an injured worker can contractually reserve the right within the settlement documents, but in this case, he didn’t waive the right, either.

Roberto argued that if the Board were to decide that an injured worker couldn’t later seek permanent total after an initial award, it would result in a “prohibition not in the plain language of workers’ compensation. And requires the judicial branch to engage in a legislative process.’”

Judge Connor quizzed further, asking how a self-represented litigant would understand that taking a permanent partial settlement could potentially destroy his claim for permanent total benefits. And would this serve as a potential tactic for employers to “starve out” an injured worker and force him to accept the initial settlement instead?

Grant agreed that this could be the outcome in other cases but insisted that Oldham knew when he accepted the settlement that he would later pursue permanent total. Grant reasoned that the legislature added section 50-6-242 to serve as an easier way for self-represented litigants to receive additional benefits without having to prove permanent total. Grant urged, “The settlement approval means nothing if an employee can come back later[.]”

Direct and Natural Consequence

Lastly, Freeman argued that the court erred in finding that Oldham’s nonunion fracture was a direct and natural consequence of the work injury.

Freeman asserted that Oldham’s negligence (smoking and alleged medical noncompliance) broke the causal chain between the femur fracture and the nonunion. The trial court didn’t find medical proof that the resulting injury wasn’t a direct consequence of the work injury. Freeman disagreed and urged that the trial court used an incorrect standard; it was instead Oldham’s burden to prove every element of his claim by the preponderance of the evidence.

Roberto contended that no evidence suggested that Oldham’s smoking was more than 50% attributable to the nonunion. He pointed that smoking was a behavior that can be attributable to lung and heart disease, and if the Board agreed that smoking broke the causal chain, then it would also have to consider other behaviors such as running. “Running is a behavior . . . that over time can also provide injuries to your joints because of the stress.”

Judge Connor asked if the direct and natural consequences rule traditionally applied only to circumstances where there was another injury after the original injury. Grant stated that in this case, although there wasn’t an intervening injury, there was an intervening cause that prevented the proper healing of the fracture.

Judge Weaver asked whether the settlement documents served as an acceptance of the nonunion fracture (Freeman didn’t dispute the nonunion in the settlement documents). Grant responded that Freeman agreed to the fracture but hadn’t agreed to the nonunion.

The Board is expected to release its decision in this complicated case within the next two weeks.

Photo by the author. Fall in Tennessee is simply magical!