Employers May Need to Obtain a New Medical Opinion

      The Board recently found that a post-settlement controversion of
future medical benefits that relied on a pre-settlement medical opinion was
invalid and in bad faith. Sanders v. Northstar Sand & Gravel, AWCB
Decision No. 06-0206 (July 26, 2006). The employee in this case, Marty
Sanders, incurred injuries to his low back. An Independent Medical
Examination (IME) was performed. The IME physicians opined that Mr.
Sander's low back condition was medically stable in early 2003 and
required no additional treatment. The parties subsequently entered into a
compromise and release agreement ("C&R") whereby the employee
agreed to waive all benefits, with an exception for future medical benefits
associated with the low back. The Board approved the C&R on September
1, 2005.

      Two months after Board approval of the C&R, Mr. Sanders continued
to complain of low back pain. A low back MRI was obtained.
Subsequently, the employer controverted medical benefits related to the
employee's low back (including the MRI) based on the pre-settlement IME
report that found that no additional treatment was required for the low
back condition. A claim was filed for medical benefits related to the low
back MRI.

      The Board found that the employer's post-settlement controversion of
medical benefits was invalid because it relied on a medical opinion obtained
prior to settlement. The Board determined that the employer's actions and
statements in this case indicated a "purpose to abandon or waive any legal
right to rely solely upon the records in the employers' possession prior to
the approval of the C&R." Thus, in the Board's opinion, the employer was
required to obtain new, post-settlement medical evidence in order to
support its post-settlement controversion of medical benefits. Because the
employer's post-settlement controversion relied on medical evidence
obtained prior to settlement, it was deemed invalid and in bad faith.

      The import of this holding is that when a settlement agreement leaves
open future medical benefits, an employer may be required to obtain new
medical evidence (likely in the form of a new IME report) in order to
controvert post-settlement medical benefits. The Board does attempt to
limit the holding in this case by stating that the decision here is "not a
finding that this or any employer is precluded from relying upon medical
records in its possession prior to Board approval [of a C&R]," but rather
the decision is based on the individual facts and circumstances presented in
this case. However, this is no guarantee that the Board won't find similar
circumstances in future cases. To alleviate the risk of a similar finding in
future cases, we suggest C&R agreements make it clear that all
pre-settlement defenses to future medical benefits are being preserved.

      The full text of this decision can be found at:
http://146.63.134.55/workcomp/2006/06-0206.doc

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      We are pleased to offer this information to help keep you informed.
But since we are lawyers, we include the following caveat: the information
contained herein is not intended as legal advice. Independent research and
analysis may be required in order to determine what effect recent decisions
or changes may have on your unique situation.

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Copyright © 2003 Russell, Wagg, Gabbert & Budzinski, P.C.
All rights reserved.

Employers May Need to Obtain a New Medical Opinion in
Order to Controvert Future Medical Benefits After Settlement

RUSSELL, WAGG, GABBERT & BUDZINSKI