Contracts and Compensation

Much discussion has occurred in recent months a bout contracts. The world is full of contracts, legally binding agreements between parties. The potential implications of COVID-19 and contracts are seen in the creation of COVID-19 presumptions of compensability by Executive and Legislative action across the country. This is discussed in a paper published by Sedgwick Institute recently. 
The point is that contracts exist largely to allow parties predictability. The onset of COVID impacted that because state laws intervened to change parties' commitments and obligations under contracts, essentially changing the agreements that had been entered. In the months after a vaccine (hopefully) diminishes the immediate threat of this virus, there may be litigation regarding the position changes implicated by legal challenges to retroactive effects, separation of powers, and emergency action. 
Contracts are a critical part of workers' compensation. It is a contract, in fact, that alters the usual relationship of responsibility for injury. Under the common law, and thus throughout much of American history, when a person was injured at work they had a common law right to sue their employer in tort. As the industrial revolution progressed, and labor migrated from agriculture to manufacturing, statutory intervention occurred first with employer liability acts and then with workers' compensation concepts adapted from Germany and Great Britain. 
The early efforts of the 19th century focused on decreasing employer liability and did not benefit the worker. The early 20th century, however, brought the workers' compensation concept that provided new benefits and responsibilities to both employer and employee. Some such efforts were deemed unconstitutional, largely in challenges by employers on the basis of "taking," the liability without fault element. But, in time, the U.S. Supreme Court saw value in the contractual adaptation of tort law in the so-called "Grand Bargain" (a contract of sorts between employers and employees, albeit a legislative contract). 
One cannot forget that there is also a major component of contract in the sale of risk. The vast majority of employers in America thus become contractually responsible for injuries to their workers. They, in turn, make contracts with other businesses to assume that risk of loss in exchange for some amount of money. The exchange thus described is between an employer (customer) and insurance company (vendor) by which the cost of a potential injury (loss) is sold to the vendor in exchange for a fee (insurance premium). This is a simplification, but illustrative hopefully. This is a major contractual element of the overall world of workers' compensation. 
What do insurance contracts cover? There is debate and discussion about that question and the onset of COVID-19/SARS-CoV-2. What do the contracts define, delineate, include, and exclude? How were they written, are they clear? A recent discussion of business interruption illustrates the methodology that courts may engage in interpreting these contracts. See Physical Damage and Ambiguity in the News
It may also be important to remember that although the responsibilities of "carriers" are set forth in many state workers' compensation laws, those statutes tend to describe the responsibility for work injury, medical care, and wage replacement as "employer" responsibilities. The involvement of the employer's carrier may come down to that contract between employer and carrier more than it is dependent upon the details of the law. Contracts, yet again. 
Thus, the very foundation of workers' compensation is contract. Whether in the grand sense of the Grand Bargain, or in the more mundane realization that it is the contract of employment between employer and employee that forms the foundation of the relationship, the potential for injury and thus workers' compensation. Contract is critical to workers' compensation.
The implication of contract is further seen in the fact that a large volume of workers' compensation situations are also closed through a contract. As is common in a variety of legal disputes in the U.S., parties often elect to forego the opportunity to proceed to trial and litigate their differences. They instead enter into compromise agreements with each other by which such disputes are resolved, often to the disappointment of all parties (one believes it paid too much and the other believes it received too little). Despite their disappointment in that regard, though, they form contracts (called "releases") to memorialize and formalize their elected resolution. 
Workers' compensation has similarities. In a general sense, the majority of jurisdictions allow injured workers and employers to resolve their differences through stipulations (issues) or settlements (entire case). Some are more maternal/paternal than others, with judges in some states making inquiry into sufficiency of settlements and having authority to withhold approval or contract terms. Florida had that oversight process into the 1990s, and then opted for a hybrid. If the Florida injured workers is represented by counsel, judicial review is limited to attorney fee amount and child support recovery, but if unrepresented, the judge is required to inquire more fully before approval. 
Throughout the history of workers' compensation, there has been some tendency for misunderstanding about terms of settlements/resolutions. There is also, in all contracts, the potential for what psychologists call "buyer's remorse." It seems that once we have made an agreement, as simple as buying a new appliance even, we may go through "cognitive dissonance," as we strive to come to terms with our decision and confront our own doubts. This can lead us to perhaps seek a way out of a deal. When one side of an agreement seeks to withdraw, the other side(s) may seek to enforce the deal. And, in the dispute that follows, it may be that the two sides express different perceptions as to what the deal actually was. 
There is therefore a persistence with motions to compel settlement agreements. Recently, there has been some perception of increased frequency of disputes about agreements as workers' compensation matters have shifted to telephonic attendance as the norm. The ability to attend mediation telephonically is set forth in Rule 60Q6.110(5)(a), and usually "the mediator shall have discretion to allow any party and/or that party’s attorney of record to appear at the mediation conference by telephone upon the party’s written request." 
However, on March 14, 2020 the OJCC mandated telephonic mediation attendance for all, a response to the threats of Covid-19/SARS-CoV-2. When that mandate expired at the end of May, operations returned to the mediator discretion rule. but by the end of June logistics supported return to the mandatory telephonic paradigm that has since persisted. Many attorneys and mediators were spending significant time in the "request" and "approve" roles to seek ongoing telephonic attendance on a case-by-case basis. 
The telephonic process is more time consuming for the mediator. Several attorneys have noted that it is conversely less time-consuming from their perspective as they are not travelling to/from the district office, and they are more productive in their office in the event that a mediation is delayed. The elimination of commute time and waiting room time has been expressed as a benefit. Furthermore, the elimination of the need to make individual case requests for such accommodation is seen as also enhancing productivity. For the most part, attorneys have been accepting or even complimentary of the telephonic paradigm.
Thus, in a telephonic norm, we must remember that just because mediation is telephonic that does not remove the necessity of documentation. The Rules specifically describe process in that regard. The rule mandates that those attending telephonically must "provide an e-mail address" to allow the exchange of documents. Upon conclusion of the mediation, the mediator "shall prepare a report stating which issues or claims in dispute are resolved and which remain unresolved." Rule 60Q6.110(7). 
The mediation "is not concluded until the signed report is returned to the mediator." Rule 60Q6.110(5)(b). As the old saying goes, no job is finished until the paperwork is done. Most importantly, " Any party appearing by telephone has stipulated to be bound by that party’s attorney of record’s signature on the mediation report." Rule 60Q6.110(5).
Thus, the outcome of a mediation should be in writing and should be signed. That may mean the parties sign, which is better, and yet could mean that the lawyers sign and thereby bind their clients. That reportedly comes as a surprise to some, but attorneys are generally "agents" with a significant ability to act for and on behalf of their clients. Those actions may come to be binding on the client through aspects of agency law including actual authority, express authority, implied authority, and even apparent authority. There is a great deal of power in the agency relationship, and as either Uncle Ben or a French revolutionary once noted, "with great power comes great responsibility." 
It is noteworthy that in the pre-2001 Florida workers' compensation system, judicial approval and findings were necessary for all settlements. The requirements of Fla. Stat. §440.20(12)(1991) made no distinction regarding whether or not a Claimant was represented by counsel. The statutory provisions of Fla. Stat. §440.20(12)(a)(1991) included the Legislature's express policy that settlements of future benefits were allowed only if such lump sum would "definitely" aid the claimant's rehabilitation, or was "clearly" in the claimant's best interests. 
Such determinations would necessarily be findings of fact made by the Judge of Compensation Claims. Further, settlements of workers' compensation benefits under any of the subsections of Fla. Stat. §440.20(12)(1991) required the entry of an order of the Judge of Compensation Claims. The signature on a mediation agreement then was perhaps not as conclusive or binding as it could later become.
Therefore, prior to 2001, either party could elect to withdraw from any settlement agreement until that agreement was considered by the Judge of Compensation Claims, specific factual findings were made, and an order approving the proposed settlement was entered. The Supreme Court explained in Brantley v. ADH Bldg. Contractors, Inc., 215 So. 2d 297 (Fla. 1968) the rationale for allowing either party to withdraw from a proposed settlement. It noted that the law required conclusion of the "best interest of claimant," and at times this involved "such investigations as he considers necessary." This responsibility was "not merely a perfunctory, mechanical act. It requires the exercise of quasi-judicial judgment."
However, the 2001 amendments changed that paradigm with a substantial alteration to settlement of worker's compensation claims. Settlement since then are divided into two subsets: (1) settlement of claims in which the injured worker, or "claimant" is represented by counsel, Fla. Stat. §440.20(11)(c) ; and (2) settlement of claims in which the claimant is not represented by counsel, Fla. Stat. §440.20(11)(a) and (b). The role and responsibility, and thus the jurisdiction, of the Office of the Judges of Compensation Claims is therefore demonstrably and markedly different in the settlement of claims in which the injured worker is represented by counsel versus claims in which the injured worker is unrepresented. 
Clearly, settlements effected between unrepresented injured workers and their employer or carrier are still not effective until a "joint petition" of the parties is considered by the Office of the Judges of Compensation Claims and specific factual findings are made by the Judge. Therefore, it is clear that an agreement by an un represented injured worker cannot be effective or binding prior to the consideration and approval of the Joint Petition by the Judge. The reasoning and holding of Brantley therefore still control the efficacy of settlements which occur between unrepresented injured workers and their employers.
However, the reasoning and holding of Brantley does not apply to settlements involving injured workers with attorneys. In those cases, it is the worker's attorney that fulfills the role of determining the injured worker's "best interests." 
For a contract, there must be a "meeting of the minds." The two sides of the negotiation can decide the terms of the agreement. They each can put forward what they believe is critical to agreement, and they are unlikely to initially and easily agree. Often, they may need the assistance of a professional conciliator or mediator to help them with both self-analysis and communication. The process may be lengthy and involved, and a test of patience. However, for those who remember the words of Mick Jagger ("You can't always get what you want, But if you try sometime you find, You get what you need"), and who focus on her/his respective priorities while conceding on other issues, there is a high probability of success through negotiation. 
When an agreement is reached, it is written about either by the mediator/conciliator, or by one or more of the parties and her/his attorney. That agreement may be critical if either party thereafter experiences "buyer's remorse" or disputes any of the terms of the agreement. Litigants should remember that settlements are highly favored as a means to conserve judicial resources, and will be enforced when it is possible to do so. See, Robbie v. City of Miami, 469 So.2d 1384, 1385 (Fla. 1985).
Thus, workers' compensation is largely intertwined with contracts. The concept forms its foundation. Contracts are involved in the vast majority of resolutions within the system. Those who would represent clients or settle cases in their employment would do well to understand contracts, their implications, and intricacies. 
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    About The Author

    • Judge David Langham

      David Langham is the Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims at the Division of Administrative Hearings. He has been involved in workers’ compensation for over 25 years as an attorney, an adjudicator, and administrator. He has delivered hundreds of professional lectures, published numerous articles on workers’ compensation in a variety of publications, and is a frequent blogger on Florida Workers’ Compensation Adjudication. David is a founding director of the National Association of Workers’ Compensation Judiciary and the Professional Mediation Institute, and is involved in the Southern Association of Workers’ Compensation Administrators (SAWCA) and the International Association of Industrial Accident Boards and Commissions (IAIABC). He is a vocal advocate of leveraging technology and modernizing the dispute resolution processes of workers’ compensation.

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