20.20.19 Compromise and Release of Benefits

Many workers' compensation claims are settled by the parties by means of a Compromise and Release Agreement that only becomes effective if approved by a Workers' Compensation Administrative Law Judge.

It is extremely important that whichever party prepares the Compromise and Release Agreement be certain that the applicant's correct current address be inserted on the settlement papers inasmuch as that will most likely be the address to which the applicant's settlement proceeds are sent. In Barrett Business Services Inc v. W.C.A.B. (Rivas) (2012) 77 Cal.Comp.Cases 213 (Published), the employer prepared the Comprise and Release Agreement but failed to put applicant's current address on the agreement and the check was sent to the incorrect address and cashed by a thief. Inasmuch as applicant's counsel had previously informed the defendant of a change of address, defendant had to reissue a new check in the amount of $17,000 to the applicant.

In order for an executed Compromise and Release Agreement to settle an alleged discrimination claim, under Labor Code section 132a, the agreement must contain clear and nontechnical language informing the applicant that he or she is releasing any claim for such discriminatory benefits and must contain sufficient facts surrounding the allegation of discrimination and the employer's rebuttal evidence so that the Judge, as well as the parties, can determine the desirability of releasing the benefits and the adequacy of the consideration in light of the strength of the claim. (Morehouse v. W.C.A.B. (1984) 49 Cal.Comp.Cases 313 (Published).) In this case, the Court specifically found the Board's present Compromise and Release form 15 inadequate in informing the parties on this issue. See also, Sompo Japan Insurance Company of America, et al. v. W.C.A.B. (Lark) (2011) 76 Cal.Comp.Cases 1247 (Writ Denied) where the Board found that a provision in a severance agreement packages purporting to waive applicant's right to bring a workers' compensation claim was not valid.

In Hartman v. Mathes & Bolinger Furniture Company (1991) 56 Cal.Comp.Cases 351, the Court noted that a workers' compensation settlement may, if correct language is used, settle any potential claim under the FEHA. See also Denny v. Universal City Studio Inc. (1992) 57 Cal.Comp.Cases 750 (Published).

If a civil settlement encompasses a worker's compensation claim that portion of the settlement relating to the release of the worker's compensation claim must be approved by a Worker's Compensation Judge to be valid. In Steller v. Sears, Roebuck and Company (2010) 75 Cal.Comp.Cases 1146 (Published), the Court of Appeal, Second District, explains how this should be accomplished by stating, in part:

We construe the judgment as encompassing both the disability discrimination and workers' compensation claims. But, as indicated, pursuant to Labor Code sections 5001 and 5002, the settlement agreement could not compromise or release appellant's workers' compensation claim without the approval of the WCAB...

The requirement that the WCAB approve a compromise and release of workers' compensation liability is set forth in the California Administrative Code, Title 8, section 10882: ''The Workers' Compensation Appeals Board shall inquire into the adequacy of all compromise and release agreements and stipulations with request for award, and may set the matter for hearing to take evidence when necessary to determine whether the agreement should be approved or disapproved, or issue findings and awards.''

Both the trial court and the parties are presumed to have known that a settlement of the workers' compensation claim would require the WCAB's approval. The record does support the conclusion that the attorneys and the trial court were aware of this rule and that the WCAB approval was contemplated in the future. (People v. Stowell (2003) 31 Cal.4th 1107, 1114 [79 P.3d 1030, 6 Cal. Rptr. 3d 723] [''we apply the general rule 'that a trial court is presumed to have been aware of and followed the applicable law' '']; Alpha Beta Food Markets v. Retail Clerks Union Local 770 (1955) 45 Cal.2d 764, 771 [291 P.2d 433] ['' 'all applicable laws in existence when an agreement is made, which laws the parties are presumed to know and to have had in mind, necessarily enter into the contract and form a part of it, without any stipulation to that effect, as if they were expressly referred to and incorporated' ''].) Accordingly, we hold where, as here, the parties seek to settle both a civil action and a related worker's compensation at a superior court settlement conference, it must be conditional upon WCAB approval. This is a practical and workable solution to the procedural difficulty presented. We presume that counsel and clients act in good faith at settlement conference and would only settle upon fair terms that will, in most cases, be acceptable to the WCAB. We need not, and do not comment on the allocation of attorney fees in the WCAB action. The amount of attorney fees is addressed to the discretion of the workers' compensation judge. 2....

Footnote 2. '' 'Wise ajudicaton has its own time for ripening.' (Citation.)'' (Berry v. City of Santa Barbara (1995) 40 Cal.App.4th 1075, 1088 [47 Cal. Rptr. 2d 661].) In his briefs, appellant conclusionaly mentions this theoretical problem. We exercise restraint and do not decide an issue which may never arise.

Obviously, a Superior Court Judge has the power to approve a settlement, other than a workers' compensation action, that includes an agreement of an employee who has a workers' compensation case pending, to resign his or her position from the work for which he or she has not yet settled the workers' compensation claim. In Corbin v. City of Los Angeles Department of Public Works et al., (2012) 77 Cal.Comp.Cases 224 (Unpublished), the applicant settled several causes of action, including discrimination, retaliation, and hostile work environment, at a Superior Court trial and included in the settlement an agreement to resign her position, which she held with the city of Los Angeles for 13 years. The settlement at the Superior Court did not include a settlement of a worker's compensation claim which she had pending at the Workers' Compensation Appeals Board against the City.

Thereafter, the City attempted to enforce the settlement agreement including the retirement and Ms. Corbin appealed from the trial Court's order granting a motion to enforce the settlement agreement including her retirement. The Court of Appeal, Second District, in affirming the judgment enforcing the settlement agreement, stated, in part:

When a party files a motion to enforce a settlement agreement  [*7] under section 664.6, a trial court may enter judgment pursuant to a stipulated settlement if the stipulation is made orally on the record before the court. “These requirements minimize the possibility of conflicting interpretations of the stipulation or its effect. [Citations.] A section 664.6 motion is appropriate, however, even when issues relating to the binding nature or terms of the settlement are in dispute,  [**228]  because, in ruling upon the motion, the trial court is empowered to resolve these disputed issues and ultimately determine whether the parties reached a binding mutual accord as to the material terms. [Citations.]” (In re Marriage of Assemi (1994) 7 Cal.4th 896, 905 [30 Cal. Rptr. 2d 265, 872 P.2d 1190] (Assemi).) “[I]n ruling upon a section 664.6section 664.6 motion for entry of judgment enforcing a settlement agreement, and in determining whether the parties entered into a binding settlement of all or part of a case, a trial court should consider whether (1) the material terms of the settlement were explicitly defined, (2) the supervising judicial officer questioned the parties regarding their understanding of those terms, and (3) the parties expressly acknowledged their understanding of and agreement to be bound by those  [*8] terms. In making the foregoing determination, the trial court may consider declarations of the parties and their counsel, any transcript of the stipulation orally presented and recorded by a certified reporter, and any additional oral testimony. [Citations.] The standard governing review of such determinations by a trial court is whether the trial court's ruling is supported by substantial evidence. [Citations.]” (Id. at p. 911.)

“Consistent with the venerable substantial evidence standard of review, and with our policy favoring settlements, we resolve all evidentiary conflicts and draw all reasonable inferences to support the trial court's finding that these parties entered into an enforceable settlement agreement and its order enforcing that agreement.” (Osumi v. Sutton (2007) 151 Cal.App.4th 1355, 1360 [60 Cal. Rptr. 3d 693].)

I. Mutual Consent

Corbin argues on appeal, as she did in the trial court, that she did not hear or comprehend during the settlement conference that she was agreeing to retire from City employment. She argues that a valid contract was not formed because there was no mutual consent—that is, no meeting of the minds—regarding the material terms of the agreement. We disagree....See also Tobar Industries (Phan) v. W.C.A.B. (2012) 77 Cal.Comp.Cases 300 (Writ Denied).

However, generally defendants refuse to agree to insert language in a Compromise and Release Agreement, stipulation, or agree that a Judge may issue a Minute Order wherein defendants agree to "hold harmless" an applicant as a result of any litigation by a lien claimant in the case. The reason for this reluctance is that defendants fear that they may be subjecting themselves to providing a civil or criminal attorney to such an applicant, depending on the circumstance. See also section 40.24.0 of this book.