EXCERPT, CHAPTER 15
§ 15:111 Opening of Settlements
In a 2004 case, the Commonwealth Court, noting that a need for finality exists in workers’ compensation settlements, applied the rule of collateral estoppel to bar a claimant’s attempt to set aside a C&R on grounds of mental incompetency. Stiles v WCAB (DPW), 853 A.2d 1119 (Pa. Commw. 2004). The court noted that claimant, who settled in 2000 and tried to open in 2001, had testified under oath that she knew what she was doing, and also that she had counsel representing her.
In Commonwealth Court, claimant argued that error had been committed by the WCJ’s ruling that collateral estoppel barred her reopening attempt as a matter of law. The court disagreed: “[T]he WCJ presiding over a compromise and release agreement hearing is mandated to determine that ‘the claimant understands the full legal significance of the agreement.’ Inherent in that responsibility is a requirement that the WCJ determine that the claimant is mentally competent to comprehend the legal ramifications of entering into such an agreement. This is exactly what [the first] WCJ did.... Thus, claimant’s mental competence was an issue actually litigated at the [C&R] hearing.... Based on this same reasoning, claimant’s mental competence was essential to the judgment approving the C&R agreement and material to the adjudication that did so. Therefore, collateral estoppel does preclude relitigation of this question.”
A second issue existed in the case. In this regard, claimant, in seeking to set aside her C&R also argued that she had not been represented by counsel of her choice. The WCJ and Board had ruled that claimant was collaterally estopped from advancing this argument as well. In this regard, the WCJ, Board and court all agreed that claimant, at the C&R hearing, and in her paperwork, had certified that she had been represented by an attorney of her own choosing. Also, she originally testified that she was satisfied with her attorney’s representation.
§ 15:111A Practice Note: Opening of Settlements and Mental Incompetence
As indicated above, the Commonwealth Court in 2004 applied the rule of collateral estoppel to bar a claimant’s attempt to set aside a C&R on grounds of mental incompetence. The court noted that claimant, who settled in 2000 and tried to open in 2001, had testified under oath that she knew what she was doing, and also that she had counsel present.
One judge dissented, advancing the view that the WCJ does not determine legal competence at the C&R hearing at all. To the contrary, “[the initial WCJ’s ruling] was on claimant’s veracity, and claimant’s mental competence was not an issue actually litigated at the hearing.... Based on the same reasoning, claimant’s mental competence was not essential to the judgment approving the C&R agreement nor material to the adjudication that did so.” Indeed, the dissent argued that “the WCJ lacks the medical training that would qualify him to make this specific determination. ...[Further, the initial WCJ] did not consider expert medical testimony on the subject of claimant’s mental competence....”
This reasoning may be subject to challenge. In a workers’ compensation C&R, an on-the-record hearing is held in every case, and the majority was certainly correct in stating that the apparent competence of the witness is an issue. As a practical matter, this is one reason why the claimant is asked about whether he or she is under the influence of mind-altering substances. Were the answer yes, the hearing would presumably be aborted based on a concern that the witness was not mentally competent.
On the other hand, it is worth noting that a settlement in the civil realm can be set aside upon proof of mental incompetence: “A valid release is an absolute bar to recovery for everything included in the release, and it can only be set aside...in the presence of clear, precise, and indubitable evidence of fraud, accidental means or incompetence of the party who is alleged to have signed it.” Dorenzo v General Motors Corp., 334 F. Supp. 1155 (E.D. Pa. 1971).
The Superior Court has explained, notably, that a presumption exists “that an adult is competent to execute a release, and thus, a signed document yields the presumption that it accurately expresses the state of mind of the signing party....” The “burden of amassing sufficient evidence of invalidity to justify submission to the jury is a heavy one. To meet the burden, the evidence must be ‘clear, precise, and indubitable.’” Of course, the burden is on the party trying to get around the release. Taylor v Avi, 415 A.2d 894 (Pa. Super. 1979).
Given that this is the civil practice, one may, like the dissent, question the workers’ compensation rule. Arguably, the civil rule should be the same rule as applies in the C&R context, and the claimant should at least have been given the chance to show that she lacked capacity to enter into a contract.
On the other hand, the claimant who settles in a C&R must appear before a judge, and hence some level of determination of fitness to contract is indeed made. Second, approval of a C&R is an adjudication, and in effect a judicial ratification of the settlement. This is not usually the case in the civil realm. Further, the lay impression of the WCJ at the C&R does have probative value in the determination of claimant’s capacity, notwithstanding the dissent’s concerns.
In the Superior Court case discussed above, which grew out of a motor vehicle accident, the defendant’s adjuster visited the plaintiff and secured a release from her in exchange for a payment of $400.00. Later, the plaintiff tried to sue, and the defendant predictably set up the release as a bar. Plaintiff won a verdict, but the trial court granted judgment to the defendant notwithstanding the verdict, based on the release. Plaintiff, in the court’s view, had not shown lack of competency with her testimony about “lapses of memory...irritability, and an inability to reason logically....”
To the contrary, the greatest weight was to be afforded to the testimony of the adjuster, “who observed the speech and conduct of appellant” on the day of execution of the release. While testimony of her doctors (who had not seen her that day) “is admissible and entitled to some weight, the testimony of [the adjuster]...is entitled to greater weight....” Taylor v Avi, 415 A.2d 894 (Pa. Super. 1979).
