Weems v. American International Adjustment Co.

874 P.2d 72, 319 Or. 140, 1994 Ore. LEXIS 49
CourtOregon Supreme Court
DecidedJune 2, 1994
DocketWCB TP-91026; CA A75753; SC S40726
StatusPublished
Cited by6 cases

This text of 874 P.2d 72 (Weems v. American International Adjustment Co.) is published on Counsel Stack Legal Research, covering Oregon Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Weems v. American International Adjustment Co., 874 P.2d 72, 319 Or. 140, 1994 Ore. LEXIS 49 (Or. 1994).

Opinions

GILLETTE, J.

In this workers’ compensation case, petitioners asked the Workers’ Compensation Board to approve, pursuant to ORS 656.587 (discussedposi), aproposed settlement of a third-party action to which a paying agency had refused to give its approval. The Board disapproved the settlement. On judicial review, the Court of Appeals affirmed the Board’s decision. Weems v. American International Adjustment Co., 123 Or App 83, 858 P2d 914 (1993). We allowed review and now affirm the decision of the Court of Appeals.

Claimant sustained a compensable injury to his left leg while operating an industrial-sized garbage compactor on his employer’s loading dock. Two clamping bolts came loose from the compactor while claimant was working with it. The compactor moved, crushing claimant’s left leg; the leg had to be amputated at mid-thigh.

In addition to claiming and receiving compensation under the Workers’ Compensation Law, ORS chapter 656, claimant commenced a negligence action against Metropolitan Disposal Corporation, the owner of the compactor, and EE Equipment, Inc., a company that serviced the compactor (collectively referred to as MDC).1 Claimant’s wife joined in the action, seeking damages for loss of consortium. Claimant asserted in his complaint that MDC knew or should have known that the bolt-clamping mechanism was inadequate or failing. MDC denied any negligence and asserted in response that claimant’s injury was due to his own negligence.

Following settlement negotiations conducted before a circuit court judge, claimant and MDC agreed to settle his negligence claim for $250,000. At the same time, claimant’s wife and MDC agreed to settle her loss of consortium claim for $330,000. The settlement then was tendered to the paying agencies for their approval. A “paying agency,” in this context, is a self-insured employer or workers’ compensation insurer paying benefits to the worker or beneficiaries with a [143]*143third-party right of action. ORS 656.576.2 In this case, the paying agencies were American International Adjustment Co. and AIG Risk Management (collectively referred to as AIAC). AIAC asserted its right, under ORS 656.587, to disapprove the settlement of claimant’s negligence claim. That statute provides:

“Any compromise by the worker or other beneficiaries or the legal representative of the deceased worker of any right of action against an employer or third party is void unless made with the written approval of the paying agency or, in the event of a dispute between the parties, by order of the board.”

ORS 656.580 provides that the paying agency has a lien against a claimant’s third-party claim. Under that statute, the paying agency’s lien “shall be preferred to all claims except the cost of recovering such damages.” ORS 656.580(2). ORS 656.593 sets out the procedure for distributing the proceeds of any damages recovered in a third-party action. In the event that the claimant settles the action, “the paying agency is authorized to accept such a share of the proceeds as may be just and proper.” ORS 656.593(3).

In the face of AIAC’s disapproval of the proposed settlement, claimant and MDC asked the Workers’ Compensation Board to approve the settlement under ORS 656.587 which, as noted, permits the Board to approve a claimant’s settlement of a third-party action when the paying agency refuses to do so. In support of their petition to the Board, claimant and MDC submitted affidavits from MDC’s counsel and from the circuit court judge who presided over the settlement negotiations. Both MDC’s counsel and the judge opined that the proposed settlement was “reasonable.” AIAC submitted opposing affidavits that opined that the proposed settlement was “so grotesquely out of proportion as to be far outside the maximum possible range of reasonableness.” AIAC argued that the proposed settlement was, in fact, an attempt to allocate an excessive share of the settlement money to the wife’s loss of consortium [144]*144claim, thereby circumventing AIAC’s lien on claimant’s negligence claim. That hen totaled, more than $200,000.

The Board disapproved the proposed settlement of $250,000 between claimant and MDC, concluding that the settlement appeared to be “grossly unreasonable.” Claimant and MDC sought judicial review in the Court of Appeals, arguing that the Board’s decision to disapprove the settlement was not supported by substantial evidence. Claimant and MDC also argued that the Board should have been bound by the settlement conference judge’s opinion of the reasonableness of the settlement in the absence of “clear and convincing evidence” to the contrary. The Court of Appeals rejected the arguments of claimant and MDC and affirmed the decision of the Board.

The first issue on review that we consider is the role of a settlement judge’s opinion of reasonableness in the Board’s process of approving a settlement under ORS 656.587. As noted earlier, that statute provides:

“Any compromise by the worker or other beneficiaries or the legal representative of the deceased worker of any right of action against an employer or third party is void unless made with the written approval of the paying agency or, in the event of a dispute between the parties, by order of the board.”

By its terms, ORS 656.587 grants to the Board, not to a settlement judge, the authority to approve a claimant’s compromise of a third-party action when the paying agency refuses to give its approval.3 The settlement judge has no authority to approve or disapprove a claimant’s compromise of a third-party action. Under ORS 656.587, any such compromise is “void” unless approved by the paying agency or the Board.4

[145]*145Notwithstanding that unequivocal statutory grant of approval authority to the Board, claimant and MDC contend that this court should require the Board, as a matter of law, to defer to the opinion of the settlement judge regarding the reasonableness of a settlement, unless there is “clear and convincing evidence” to the contrary. For the reasons that follow, we decline to impose on the Board the rule of deference proposed by claimant and MDC.

Claimant and MDC argue that deference by the Board to the opinion of the settlement judge is necessary to further the important public policy in favor of settlements.

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Cite This Page — Counsel Stack

Bluebook (online)
874 P.2d 72, 319 Or. 140, 1994 Ore. LEXIS 49, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weems-v-american-international-adjustment-co-or-1994.