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James B. Biggs
James B. Biggs
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Kansas Court Rules Worker Compensation Settlements Are Appealable

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The Kansas Court of Appeals has determined that the Workers Compensation Appeals Board has the authority to review an injured workers lump sum settlement award approved by an administrative law judge pursuant to K.S.A. 44-531(a).

In Grajeda v. Aramark Corp., et al (Docket #94,501) the main issue brought before the court was exactly that. Can the Kansas Workers Compensation Board review a full and final lump sum settlement award which had been approved by an administrative law judge and accepted by the injured worker?

The facts surrounding this case are that the claimant, Grajeda, sought workers compensation benefits for injuring her upper back and left arm. She was given a 5% whole body impairment for her injury by both Drs. C. Reiff Brown and Paul S. Stein. Following those ratings, Grajeda and her employer, Aramark, negotiated a one-time lump sum settlement of $5,000. Part of the settlement language read:

“This is full and final settlement of all claims arising out of claimant’s accident on 08/11/03 and each and every working day thereafter. This settlement is agreed by all parties to constitute a K.S.A. 44-531 complete and full redemption. Claimant waives formal notice of this hearing and believes it is in his/her best interest to receive this settlement in one lump sum.”

The settlement hearing was then held and the claimant was advised of her various rights before accepting the settlement. The ALJ approved the settlement after reviewing the settlement worksheet and concluded that it was “fair, just and reasonable.” At the settlement hearing, counsel for Aramark and Bankers presented a $5,000 settlement check to Grajeda’s attorney. After the hearing, Grajeda obtained a new attorney and applied to have her lump sum settlement reviewed by the Board. As part of her application, Grajeda indicated that she had not negotiated the check given to her by Aramark and Bankers.

In her brief to the Appeals Board, Grajeda argued the ALJ failed to comply with K.S.A. 44-531(a) because he did not expressly find the lump sum payment was in Grajeda’s best interest. She also claimed the ALJ violated administrative regulations designed to ensure that Grajeda fully understood the medical evidence regarding her disability. Aramark and Bankers argued the Board had no jurisdiction to review Grajeda’s lump sum settlement award. In the alternative, Aramark and Bankers argued Grajeda received a proper settlement hearing and her lump sum settlement award should be approved. The Appeals Board found that it had authority to review the settlement, but ultimately did not render a decision as to whether the settlement was in Grajeda’s best interest. Instead, the Appeals Board remanded the matter back to the ALJ for a further deliniation of the issues and taking of evidence.

Upon review to the Court of Appeals, Aramark and Bankers claim the Board did not have jurisdiction to hear Grajeda’s appeal. The Court of Appeals noted that K.S.A. 2005 Supp. 44-551(b)(1) provides in part:

All final orders, awards, modification of awards, or preliminary awards under K.S.A. 44-534a and amendments thereto made by an administrative law judge shall be subject to review by the board upon written request of any interested party within 10 days.

As such, K.S.A. 2005 Supp. 44-551(b)(1) clearly provides the Board with jurisdiction to review final orders and awards made by an ALJ. There is no dispute that a lump settlement qualifies as a final order or an award. Thus, in the absence of contrary authority, 44-551(b)(1) provided the Board with jurisdiction to review Grajeda’s settlement award.

To the contrary, Aramark and Bankers argue that K.S.A. 2005 Supp. 44-551(b)(1) must be read in conjunction with K.S.A. 44-531(a), dealing with lump sum settlements, which provides:

(a) Where all parties agree to the payment of all or any part of compensation due under the workers compensation act or under any award or judgment, and where it has been determined at a hearing before the administrative law judge that it is for the best interest of the injured employee or the dependents of a deceased employee, or that it will avoid undue expense, litigation or hardship to any party or parties, the administrative law judge may permit the employer to redeem all or any part of the employer’s liability under the workers compensation act by the payment of compensation in a lump sum, except that no agreement for payment of compensation in a lump sum shall be approved for nine months after an employee has returned to work in cases in which the employee, who would otherwise be entitled to compensation for work disability, is not entitled to work disability compensation because of being returned to work at a comparable wage by the employer who employed the worker at the time of the injury giving rise to the claim being settled. . . . Upon paying such lump sum the employer shall be released and discharged of and from all liability under the workers compensation act for that portion of the employer’s liability redeemed under this section.

(Emphasis added.)

The Court held that K.S.A. 44-531(a) does not limit the Board’s jurisdiction to review a lump sum settlement award. The statute only provides that an employer is released from liability upon paying a lump sum settlement to an employee. The legislature’s intent that an employer be released from liability after payment of a lump sum settlement does not necessarily mean that the legislature also intended to prohibit review by the Board. In summary, K.S.A. 2005 Supp. 44-551(b)(1) provided the Board with statutory authority to review Grajeda’s lump sum settlement award after it had been approved by the ALJ. The Board did not err in finding that it had jurisdiction to consider Grajeda’s appeal.

The second issue posed to the Court was whether the Appeals Board erred by remanding the case back to the ALJ? Aramark and Bankers argued that even if the Board did have jurisdiction to hear Grajeda’s appeal, the settlement hearing complied with the provisions of the Workers Compensation Act and the Board should have approved the settlement award.

However, Grajeda contends the settlement hearing was deficient in three respects. First, that the ALJ failed to expressly find that the lump sum settlement was in Grajeda’s best interest, as required by K.S.A. 44-531(a). Second, that the ALJ failed to comply with K.A.R. 51-3-9, which requires a claimant to testify that he or she has read the medical reports introduced as evidence at the settlement hearing, or has had the reports read to him or her, and that the claimant fully understands the medical evidence regarding disability. Finally, that the the settlement should not have been approved because the ALJ failed to determine whether Grajeda had been back to work for more than 9 months, as required by K.S.A. 44-531(a).

The Court held that it would be premature to address the merits of this claim. The parties should first be allowed to compile an evidentiary record for the ALJ to address Grajeda’s request to set aside the settlement award. The ALJ’s decision will then be subject to review by the Appeals Board. Then, once a final order as been entered by the Appeals Board the issue will be ripe for appellate review.