While litigation is by nature adversarial, reaching a settlement agreement can be one of the most rewarding moments. However, several recent decisions in the Nebraska Workers’ Compensation Court have been a gentle reminder that reaching a dollar figure in terms of a settlement agreement is only the first step of an entire process, a process which deserves equal attention by the defense attorney.
There are essentially two methods by which the parties can memorialize a full and final settlement: a Release of Liability or a Lump Sum Settlement. Regardless of which filing is applicable, both must be filed with, and approved by the Court. Until the Court enters an order dismissing the claim with prejudice, settlement has not been perfected. In several recent cases, the Court has addressed disputes over the settlement process. This article explores those decisions.
(1) Pay Settlements Timely
Pursuant to Neb. Rev. Stat. § 48-139(4), once the Court enters an order of dismissal with prejudice, the defendant must pay the settlement value within thirty days of the date the Release of Liability was filed with the Court. Failure to pay the settlement within 30 days results in a 50% penalty on the total amount owed. By way of example, if a defendant fails to pay a $50,000.00 settlement, the employee is entitled to an additional penalty of $25,000.00. The same 50% penalty applies to lump sum settlements which are not paid within 30 days of the date the Court enters an Order approving the same. Neb. Rev. Stat. § 48-125(3).
Every year, the Court addresses a handful of claims where the defendant fails to pay the settlement within the allotted 30 day time period. In February of 2021, Judge Hoffert awarded a penalty for a staggering $57,500.00 when the employer paid a settlement 40 days after a Release of Liability had been filed. The employer attempted to excuse its tardiness by saying a “series of unfortunate circumstances,” led to the late payment including the insurer inadvertently sending the check to the wrong firm, the attorney who received the check had COVID and was in quarantine, and the check again being sent to the wrong person from there. While sympathetic, Judge Hoffert highlighted that the law is mandatory in nature, and he had no discretion in the decision.
Because the law is not flexible, several recent cases have questioned how exactly to calculate thirty days. In February of 2022, Judge Fridrich had to answer that very question when presented with the argument that a settlement check, albeit received by the employee on the 32nd day, was still timely because of Martin Luther King Day. Citing Herrington v. P.R. Ventures, LLC, 279 Neb. 754, 781 N.W.2d 196 (2010), Judge Fridrich highlighted that if the 30th day is either a Sunday or a holiday for which the Compensation Court is closed, then the employer must pay the injured worker the next day which is not either a Sunday or a day the Court is closed. In the case at bar, the 30th day was a Sunday and the 31st day was a holiday (Martin Luther King Day). Therefore, despite the fact the payment was received on the 32nd day, the payment was not late, and no penalty was awarded.
Judge Stine was also recently asked to answer when to start counting the 30 days. As it frequently happens, an employee will sign a Release of Liability several days before the document is actually filed with the Court. In June of 2022, an employee attempted to argue that the 30 days to pay a settlement runs from the date the employee signed the release rather than the date it was filed with the Court. Quickly overruling that argument, Judge Stine highlighted that the 30 days only runs when the Release is filed with the Court.
(2) Scope of Settlements
While the vast majority of settlements in Nebraska are for “full and final settlements” meaning the employee waives all of his or her rights to benefits, there are times when the employee only waives a portion of his or her claim. For example, an employee may waive their future indemnity benefits but will keep his or her right to future medical care open. In cases where less than the entire claim is going to be resolved, it’s important to pay careful attention to ensure the settlement documents details the scope of benefits being waived.
On one end of the spectrum, in March of 2022, an employee filed a Motion asking the Court to enforce the settlement demand and require the defendant to pay certain outstanding medical bills and vocational rehabilitation. Contrary to that argument, Judge Fridrich highlighted that nowhere in the settlement agreements were those terms exempted (meaning, they were forever waived when the Court approved the settlement documents).
Contrast this with Judge Fridrich’s decision in a May of 2019 when he held that, by leaving open the employee’s right to future medical care, the employee was entitled to any and all treatment which resulted by virtue of the accepted back injury.
(3) Settlements Aren’t Perfected Until Filed
It sometimes happens that the parties agree to a settlement figure, only for one of the parties to thereafter change his or her mind. At least once a year, the Court is asked to enforce a settlement agreement that had not yet been approved by the Court.
In July of 2019, Judge Block was asked to enforce a settlement agreement against a defendant who, for whatever reason, decided to withdraw its agreement to settlement. The evidence showed that neither a Lump Sum Settlement Application nor Release was signed by the parties. Judge Block very clearly stated the Court does not have the authority to enforce a settlement agreement unless the same had been approved by the Court.
Judge Martin made the exact same holding in the May of 2021 case of Brayman v. Packaging Corporation of Amercia. In that case, no settlement documents had been filed with the Court. Judge Martin wrote, “While the Court understands plaintiff’s frustration by defendant’s action, or rather inaction, what she is seeking is specific performance of the settlement agreement. Specific performance is an equitable remedy. The Nebraska Workers’ Compensation Court does not have equity jurisdiction… Therefore, the Court has no alternative but to deny plaintiff’s Motion.”
These cases serve as a reminder that agreeing to a settlement figure isn’t the ending step. Until the correct documents are filed and approved by the Court, a settlement is not yet final. If you have questions about a settlement issue, please contact any of the lawyers at CPW by phone or email. Want to ensure you don’t miss out on the next post in the CPW compendium series? Be sure to subscribe to our newsletter.