While working as a welder for Gene Bennett Company, David Gross, who had a history of prior back problems dating from an injury suffered in 1997, fell through a ceiling, landing on a concrete floor 10 to 12 feet below.  He was treated by Dr. Thomas Florian, who eventually released him to return to full duty work.  Later, Gross sought additional treatment from Dr. David Allen, an orthopaedic surgeon.

An MRI of Gross’ low back showed evidence of mild degenerative changes.  A second MRI performed nine months later revealed a herniated disc at L4-5.  At that point, Gross requested a hearing, contending that his herniated disc resulted from the fall at work 14 months earlier. 

The parties stipulated in their pretrial agreement that the defendants had accepted Gross’ claim on a “medical only” basis.  Later, after the case was appealed to the Full Commission, it entered an opinion and award favorable to claimant which stated that greater weight had been given to Dr. Allen’s opinions than those of Dr. Florian.  The Commission interpreted Dr. Allen’s testimony as a sufficient basis for concluding that the herniated disc found on claimant’s second MRI was a compensable progression of the injuries he sustained in his fall at work.  

As legal authority for its resolution of the causation issue, the Commission cited Perez v. American Airlines, a 2005 Court of Appeals decision that applied to claims in which compensability is admitted on a Form 60 the “Parsons presumption” that if the Commission finds that a compensable injury occurred, all of the injured worker’s future medical treatment is presumed to be causally related.  The welding company and its insurer appealed the Commission’s ruling to the Court of Appeals, which in Gross v. Gene Bennett Co., a unanimous opinion filed on January 18, held that the “Parsons presumption” does not apply in “medical only” cases, because in such cases there has been neither a prior finding of compensability by the Commission nor an admission of liability by the defendants.

In the Parsons and Perez cases, the Court of Appeals placed the burden of proof on the defendants to rebut the presumption of causal connection and prove that the employee’s ongoing complaints and medical treatment were not causally related to his original work-related injury.  But, in Gross, the Court distinguished Parsons and Perez, noting that in Parsons, the Commission made a specific determination of compensability, and in Perez, the defendants had admitted compensability on a Form 60.   The Court held that “in the absence of an admission of compensability of an injury by the employer or an agreement between the parties, the Parsons presumption cannot arise at the initial hearing on compensability before the Commission.”  This is so because “it has long been the law of this State that acceptance of a claim on a medicals-only basis ‘cannot in any sense be deemed an admission of liability.’”

No presumption of medical causation having arisen from the defendants’ acceptance of Gross’ claim on a “medical only” basis, the Court went on to review the evidence of record on the issue of causal connection and find that the testimony of Dr. Allen, upon which the Commission had relied in concluding that there was a relationship between claimant’s original injury and his disabling condition, did not rise above the level of mere possibility or speculation and, therefore, was not legally sufficient to support the Commission’s award of benefits. 

Dr. Florian testified that claimant must have suffered a new injury to develop the herniated disc that was seen on the second MRI, but missing from the first.  When asked for his opinion on the subject, Dr. Allen was unable to say if the herniated disc’s presence established that a new injury had occurred.  And, he added that only if claimant had not had prior back problems would he be able to state to a reasonable degree of medical certainty that the herniated disc was likely related to his original on-the-job injury.  But, as claimant’s medical records clearly established, and the Commission specifically found, that he had previously injured his back, the Court concluded that the testimony from Dr. Allen upon which claimant was relying to establish causal connection did not rise above the level of possibility or speculation and, therefore, was insufficient support for the Commission’s award of benefits.

Risk Handling Hint:  Ever since  Parsons and Perez, it has been an open question as to whether acceptance of a claim on a medical only basis is sufficient to give the injured employee the benefit of the “Parsons presumption” that his later medical problems and treatment were caused by his initial work-related injury.  With the ruling in Gross, risk managers can now accept “medical only” claims and subsequently assert, and indeed successfully maintain, a defense if the employee later alleges additional medical problems, attempts to link them to his on-the-job injury and claims entitlement to indemnity compensation as a result. 

Settlement Agreement Containing Employment Release Held Unenforceable

Andre Kee, a Certified Nursing Assistant with Caromont Health, Inc., injured her back turning a patient, but continued to work under light duty restrictions.  Five months later, when her doctor took her out of work, she requested a hearing.  At a Commission-ordered mediated settlement conference, Caromont offered Kee two options:  (1) it would accept her claim as compensable if she would return to light duty work or (2) it would pay her a lump sum settlement in exchange for a clincher and her agreement to resign from her job and release all of her employment rights. 

Kee accepted Caromont’s clincher settlement offer and the parties executed a written agreement at the settlement conference which provided that Caromont would pay Kee $20,000 and the entire mediator’s fee for her agreement to pay her own medical bills, execute a standard compromise settlement agreement that complied with N.C.G.S. § 97-17, and sign a resignation and employment release.  The mediated settlement agreement specifically provided that Caromont’s payment of Kee’s share of the mediator’s fee would be the consideration for her resignation and release. 

When defense counsel prepared and sent a clincher to Kee, she refused to sign it, so  Caromont requested a hearing to enforce the agreement that she signed at mediation.  The hearing was held by Deputy Commissioner Phillip Holmes, who subsequently entered an opinion and award approving the settlement.

However, Kee appealed to the Full Commission, which reversed the deputy commissioner and ruled that the mediated settlement agreement was unenforceable because it failed to comply with Industrial Commission Rule 502(2)(e), which provides that no compromise settlement agreement will be approved by the Commission unless it contains the following language or its equivalent: “no rights other than those arising under the provisions of the Workers’ Compensation Act are compromised or released.”

Caromont appealed the Full Commission’s opinion to the Court of Appeals, which on January 4, in Kee v. Caromont Health, unanimously affirmed the Commission’s refusal to enforce the settlement that the parties had agreed to at mediation.  The Court rejected Caromont’s argument that the Commission could have severed the offending resignation and release provision from the agreement the parties executed at the settlement conference, and that would have brought it into compliance with all statutory requirements and applicable Commission rules. 

The Court was also not persuaded by Caromont’s citation to and reliance on American National Electric Corporation v. Poythress Commercial Contractors, Inc., which held that “when a contract contains provisions which are severable from an illegal provision and are in no way dependent upon the enforcement of the illegal provision for their validity, such provisions may be enforced.”  In the Court’s view, even if the resignation and release provision were severed from the rest of the agreement, it would still not comply with Rule 502(2)(e), as it did not contain the language required by that rule, i.e., that “no rights other than those arising under the provisions of the Workers’ Compensation Act are compromised or released.”  In order to enforce the parties’ settlement agreement, the Court would have had to add language to the agreement, not merely excise the objectionable portion of the agreement.  This, the Court was unwilling to do.  Therefore, since the agreement signed at mediation did not contain the language required by Rule 502(2)(e), the Court ruled that the Commission was correct in refusing to enforce  it.

Risk Handling Hint:  In light of the decision in Kee, risk managers are cautioned to carefully examine the terms of any settlement agreement that the mediator might produce for the parties to use, so as to ensure that it contains all of the language required by Rule 502.  At the same time, if the negotiations at mediation lead the parties to agree that the injured worker will resign from her employment and release whatever employment rights she might have, the terms of that agreement should be carefully drafted so as to avoid being in violation of Rule 502.