EMPLOYERS MAY NEED TO OBTAIN A NEW MEDICAL OPINION IN ORDER TO CONTROVERT FUTURE MEDICAL BENEFITS AFTER SETTLEMENT
August 10, 2006
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://22.214.171.124/workcomp/2006/06-0206.doc