On September 9, 2014 the Missouri Court of Appeals issued a ruling in Pierce v. Zurich American Insurance Company, (WD77095, Sept. 9, 2014) that is extremely troubling.
The Facts: Pierce ("claimant") sustained an injury to his a knee in 2009. He underwent two authorized surgeries but the treating surgeon stated that he would eventually require a total knee replacement ("TKR") due to his pre-existing degenerative arthritis, not due to the injury. The Claimant then found an expert who opined that the future need for the TKR was the result of the 2009 injury. The case was settled in 2012 for 26% of the knee but the parties added a handwritten stipulation providing that medical would remain open for one year. The Settlement Stipulation contained the standard language stating that the claim was being concluded except as provided in Sec. 287.140.8 (the "reactivation provision"). This provision states (in part) that the settled cases can be re-opened under limited circumstances such as where the employee needs a life-saving surgical procedure or is in need of new, or the modification of an existing, prosthetic device (and an orthopedic joint is mentioned in the list of the medical devices which constitute covered medical treatment under that section that "may" have to be provided).
Within a month of settlement approval, the claimant demanded the TKR based upon the open medical settlement provision. The insurer then sent him back to the treating physician who again stated that the need for the KJR was due to the pre-existing condition so the insurer denied authorization for the TKR.
The litigation: The claimant then filed a declaratory judgment action in circuit court to enforce the settlement agreement (and also accusing the insurer of WC fraud). The circuit court dismissed the case for lack of subject matter jurisdiction and the claimant appealed. On appeal, the claimant argued that the Division of Workers’ Compensation lost jurisdiction due to the settlement, and that 287.140.8 only applies where there has been a prior award covering the medical device at issue. The insurer argued that only the Division has jurisdiction to decide an issue involving 287.140.8.
The Ruling: After going through a somewhat convoluted discussion of the jurisdiction issue, the appellate court held that the TKR clearly fell under the reactivation provision and ordered the circuit court case dismissed since the lower court lacked the statutory authority to resolve the issues involving the application of 287.140.8.
The Problem: This insurer’s immediate problem is that they probably thought that the settlement closed out their medical exposure for the disputed TKR but if so, they were mistaken. Although the Division (or Commission) will now have to interpret and apply 287.140.8, the language in the appellate court’s decision may compel an award in the claimant’s favor unless the fact that liability for the TKR remains disputed allows the Division or Commission to avoid ordering that the settlement be reopened (reactivated) under 287.140.8.
As to other existing and future claims, understand that Sec. 287.140.8 is referred to in the Division’s pre-printed Settlement Stipulation form. However, even if it is deleted in some way, the section could still be held to apply.
The Possible Solution: First, in settling cases, don’t add an open medical provision where there is a possible, much less a known, need for future, but disputed, medical treatment or if such a provision is added, clearly limit the provision so that disputed treatment won’t be covered. Second, although deleting any reference to Sec. 287.140.8 when using pre-printed form could demonstrate an intent that it not apply, it would be better yet to state clearly that the settlement is intended to also close out the claimant’s rights under 287.140.8 (if the claimant will agree to that provision and the Division will approve the settlement in that form).
Questions or comments? If so contact Jkennedy@evans-dixon.com, call 314-552-4020, or contact any of the Firm’s Missouri workers’ compensation attorneys.
Copyright: Evans & Dixon, L. L. C. 2014