Ryan v. Potlatch - Supreme Court Rules that Workers' Compensation Settlement Agreements May Close Out Conditions Reasonably Contemplated at the Time of the Agreement

In Ryan v. Potlach, The Minnesota Supreme Court ruled that a workers’ compensation settlement agreement may close out not only work-related injury that is the subject of the agreement, but also complications or conditions that can be reasonably contemplated at the time of the agreement.

In Ryan, Virgenia Ryan suffered a back injury while moving heavy paper products with Potlatch Corporation, on May 16, 2002. After undergoing surgery on September 5, 2002 and continuing to have symptoms, Ryan alleged a Gillette-type injury to her lower back. Ryan and Potlatch entered into a settlement agreement on a full, final, and complete basis later in 2003. After many years, Ryan’s back pain returned and she underwent additional dual back surgeries in 2009. In January 2013, Ryan filed a claim petition alleging a lumbar spine injury with consequential depression and anxiety Potlatch moved to dismiss the claim petition on the grounds that Ryan was required to file a petition to vacate the settlement agreement.

The compensation judge denied Potlatch’s motion to dismiss and found that the 2003 settlement agreement did not foreclose a claim for chronic pain and related depression. Thus, Ryan was not required to petition to vacate the 2003 settlement agreement in her attempt to seek benefits for a consequential psychological injury. The Workers’ Compensation Court of Appeals affirmed, stating “a prior stipulation for settlement does not close out claims from the same incident but not mentioned in the stipulation absent evidence that the subsequent claims were contemplated by the parties when they entered into the stipulation.” Ryan v. Potlatch Corp., 2015 WL 5003607 at*3 (WCCA July 13, 2015).

In considering what claims are covered by a prior settlement agreement entered into under the Workers’ Compensation Act, the Minnesota Supreme Court considered its previous holding in Sweep v. Hanson Silo Co., 391 N.W.2d 817 (Minn. 1986) and stated that the WCCA has misconstrued its holding in Sweep. In that case, the Court did affirm that a settlement agreement could not close out other distinct, work-related injuries not at issue in the claim petition, and therefore, not in dispute at the time of the settlement, but it did not address whether an agreement may close out conditions or complications that arise from, or are a consequence of the work injury.

The court stated “it is not necessary that a condition or complication be specifically referenced in the settlement agreement.” In Ryan’s case, depression was a psychological condition arising out of her work injury and Ryan did not present evidence establish that her condition was not reasonably contemplated at the time the parties entered into the agreement.

The Court noted that the proper procedure for filing a consequential injury claim is to file a petition to vacate the original settlement agreement. Additionally, in its analysis of Ryan, the Court considered the relevant language of the settlement agreement, focusing on whether the language indicated a settlement of all claims arising out of a work injury.

The case can be found here: http://mn.gov/law-library-stat/archive/supct/2016/OPA151404-07132016.pdf.