Articles & Updates

The Missouri Supreme Court Affirms the LIRC’s Rejection of a PTD Settlement

by James B. Kennedy

Settling a permanent total disability (“PTD”) award which has become final has never been simple or easy. However in 2012, in Nance v. Maxon Electric, the Missouri Court of Appeals held that even a final award of PTD was a “claim” which could be settled as long as the settlement complied with the requirements of Sec. 287.390, and several later cases followed suit. Then came Dickemann v. Costco Wholesale Corp., SC96513, May 22, 2018.

Facts: Dickemann secured an award of PTD which became final on in April 2014. In November 2016, the parties agreed to settle the case for $400,000 and prepared settlement documents which appeared to comply with Sec. 287.390. Since the award was final, the settlement had to be submitted to the Labor and Industrial Relations Commission (“LIRC”) but upon submission, the LIRC refused to approve the settlement since the settlement agreement was not the settlement of a “claim” and the settlement amount was not equal to commutable value of the future PTD benefits are required by Sec. 287.530. The employer appealed and the case  eventually reached the Supreme Court.

The Court’s Holding: The Supreme Court agreed with the LIRC and in doing so overruled Nance v. Maxon Electric. The Court’s decision was driven by several conclusions. First, they noted that this is an attempt to commute a PTD award and that 287.530 requires that the commutation be based upon the commutable value of the future benefits, a number which the LIRC concluded was approximately $590,000. In addition, 287.530 requires a showing that the commutation, which is a departure from the preferred weekly payment of benefits, was in the employee’s best interests (and certain other requirements or considerations are also listed in the statute). Moreover, Section 287.390 covers the settlement of “claims hereunder” whereas a resolved case is no longer a “claim” at all. Thus, in the final analysis, the LIRC couldn’t approve a settlement of a no longer existing claim and could not commute the PTD award for less than the commutable value of the future benefits.

The Takeaway: First, don’t plan to settle any case after an award becomes final. It may still be a case, but it is no longer a “claim”. Second, if you want to attempt a commutation, assume that the LIRC will feel that the LIRC now has a mandate to closely examine any proposed commutation for strict compliance with the requirements of 287.530.

However, even if the award is final, if it is an award of future medical only, or you  want to settle medical but continue paying weekly benefits (say, in either situation, to settle based upon the creation of a Medicare Set Aside Trust), you may be successful. After all, unlike an award of a set amount of weekly compensation benefits, open medical awards can be modified by the LIRC and are probably still “claims” in which disputes can continue to arise.

Questions or Comments: Contact Jim Kennedy at 314-552-4020 or jkennedy@evans-dixon.com

Copyright: Evans & Dixon, LLC, 2018