Case Law Update

August 27, 2012

Commonwealth Court:

 

Hoang v. WCAB (Howmet Aluminum Casting, Inc.) No. 2277 CD 2001 (Pa. Cmwlth., filed August 20, 2012).

 

The claimant settled his workers’ compensation case via a full compromise and release (C&R). Over a month later, medical bills surfaced which were outstanding. After two unsuccessful attempts to obtain payment from the employer, the claimant filed a review and penalty petition. The WCJ rejected the claimant’s argument that the C&R should be rescinded based on a mutual mistake of fact, noting that there was no evidence that the employer was mistaken, no discussion of medical expenses during the C&R hearing, and no language in the agreement acknowledging that all work-related medical bills had been paid. The WCJ also determined that there was no violation of the Act and that all issues had been resolved via the C&R. Accordingly, the petitions were denied. On appeal to the Board, the claimant argued that the WCJ failed to address his argument that there was a unilateral mistake and inconsistent contractual terms. The Board rejected the claimant’s arguments and affirmed the WCJ’s decision. The claimant appealed to the Commonwealth Court.

 

The Commonwealth Court rejected the claimant’s first argument that the C&R should be rescinded based on a mutual mistake of fact. The Court acknowledged that it may rescind a C&R where there is clear evidence of fraud, deception, duress or mutual mistake. However, the party who wants to set aside a C&R on the basis of mutual mistake holds a heavy burden of proof and must produce evidence that is clear, precise and indubitable. Here, the claimant failed to produce any credible evidence that the employer was mistaken regarding the unpaid bills at the time of settlement. Furthermore, medical bills were never mentioned in the C&R nor at the C&R hearing. Accordingly, there was simply no credible evidence put forth to show a mutual mistake.

 

The Court also rejected the claimant’s alternative argument, that the C&R should be rescinded based on the doctrine of unilateral mistake of fact. In order to prevail, the claimant was required to produce evidence that the employer knew or had reason to know of his mistake at the time of the settlement as well as the employer’s intent. Here, the claimant failed to present credible evidence regarding the employer’s intent. There was also no evidence that the employer knew or should have known of claimant’s mistake regarding the unpaid medical bills.

 

Lastly, the Court also rejected the claimant’s final argument, that the C&R contained inconsistent terms, and that as a result, the agreement should be construed in his favor as foreclosing only future medical claims while preserving past medical claims.  In reviewing the agreement, the Court noted that paragraph 9, which asked the parties to summarize all medical benefits paid, or due and unpaid, up to the date of the agreement, stated “see paragraph 18,” which specifically stated that the C&R resolved all indemnity and medical and represented a full and final settlement of any claim, both past, present and future, against the employer. The Court found that the language sufficiently spelled out the intent of the parties and that claimant had the benefit of being represented when he entered into the agreement and could have included a provision in the document requiring the payment of prior medical expenses.

 

The Commonwealth Court affirmed the denial of the review and penalty petition.

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