AGUIRRE v. WORKERS COMPENSATION APPEALS BOARD

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Court of Appeal, Second District, Division 4, California.

Angel AGUIRRE, Petitioner, v. WORKERS' COMPENSATION APPEALS BOARD et al., Respondents.

No. B053690.

Decided: July 22, 1991

 Fred L. Wright, Torrance, for Petitioner. Gaylord, Bartos & Weber and Ned L. Gaylord, Anaheim, for Respondents Harpers and Liberty Mut. Ins. Co. No appearance for respondent W.C.A.B.

We review a decision in which respondent Workers' Compensation Appeals Board (Board) concluded an order approving a compromise and release should not be vacated.   In the compromise and release, the parties purported to settle potential claims for “any future injuries the applicant might have while in rehabilitation.”   Because the language in the compromise and release purporting to release liability for any future injuries sustained during rehabilitation was not explained to the applicant, because that language was unclear, and because the compromise and release did not expressly release liability for prior injuries sustained during rehabilitation, we conclude the workers' compensation judge (WCJ) erred in approving the compromise and release.

FACTS

Applicant alleged that while employed by Harpers as a sheet metal worker, he sustained an industrial injury to his back while lifting a heavy object on August 13, 1986.

Dr. Ray Craemer concluded that applicant was permanently precluded from very heavy work and needed vocational rehabilitation.   Dr. Leonid  Modilevsky concluded applicant was prophylactically limited to light work and might need vocational rehabilitation.

Applicant participated in a plan for rehabilitation as an automotive tune-up mechanic.   According to medical reports filed with the Board, on February 2, 1988, or February 5, 1988, applicant assertedly sustained an injury to his back when he slipped forward while performing an electrical test on a car during his participation in the vocational rehabilitation plan.

On February 9, 1988, the parties signed a compromise and release.   In the compromise and release, they noted applicant claimed an industrial injury to his low back occurred on August 13, 1986, and stated “[t]he parties hereby agree to settle any and all claims on account of said injury” for the gross amount of $11,000.   The compromise and release is on a Board form containing the following language:  “Upon approval of this compromise agreement by the Workers' Compensation Appeals Board or a workers' compensation judge and payment in accordance with the provisions hereof, said employee releases and forever discharges said employer and insurance carrier from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury․ [¶]  Unless otherwise expressly ordered by a workers' compensation judge, approval of this agreement DOES NOT RELEASE ANY CLAIM APPLICANT MAY NOW OR HEREAFTER HAVE FOR REHABILITATION OR BENEFITS IN CONNECTION WITH REHABILITATION.”

The following additional language was typewritten on the compromise and release:  “․  It is the intention of this compromise and release to settle for all claims and all liabilities arising out of the injury sustained on August 13, 1986.   Applicant is in rehabilitation and this Compromise and Release is to cover any and all periods of disputed temporary disability in rehabilitation, if any.   As money is also set forth in this Compromise and Release to be paid for any future injuries the applicant might have while in rehabilitation (Rogers [sic] case )”  The compromise and release did not mention the alleged prior injury assertedly sustained during vocational rehabilitation.   The record does not indicate whether applicant may have sustained an injury in vocational rehabilitation after the compromise and release was signed.   The record is silent as to whether on February 9, 1988, when the compromise and release was signed, defendants had been informed of the alleged injury recently incurred during rehabilitation or whether applicant was aware that the rehabilitation incident in which his back condition was assertedly aggravated could be considered an industrial injury.

On March 1, 1988, the workers' compensation judge approved the compromise and release.

 On March 29, 1988, Dr. Brendan Clifford reported applicant was temporarily totally disabled because the injury sustained during vocational rehabilitation had aggravated his back.

On June 22, 1989, Dr. Edwin Gromis reported that as a result of the alleged February 1988 injury applicant was permanently limited to light work with a minimum of physical effort and needed vocational rehabilitation.

Applicant moved to vacate the order approving the compromise and release.   Jose L. Chavez, Jr., the attorney who represented applicant in connection with the compromise and release, testified as to his participation in the settlement.   He first testified that he believed the case had been settled at the Board at a settlement conference.   When the record was shown to reflect that no settlement conference had been held, he then testified that the case was apparently settled over the telephone with Mr. Gaylord.   He conceded that in that event the applicant would have subsequently come into his office to sign the compromise and release agreement.   He, at one time, asserted that he explained the agreement in detail to applicant.   He next testified that he had no present recollection of when Mr. Aguirre came into his office to sign the settlement papers and no present recollection of what he said to Mr. Aguirre about the content of the settlement agreement.

Mr. Chavez testified that it was his custom and practice, if he was not present in the office when the client came in to sign the settlement, to have a paralegal read verbatim to the client from the compromise and release.   Mr. Chavez thereafter testified that in this instance he read verbatim to applicant the language purporting to settle benefits for future injuries sustained during rehabilitation and explained that language to applicant.   Mr. Chavez subsequently testified, however, that he merely read the language to applicant and told him he would be settling his case.   Mr. Chavez later denied having said that he told applicant a future injury in rehabilitation might exceed the amount of the settlement.   Mr. Chavez ultimately testified that he recalled personally reading verbatim to Mr. Aguirre the language purporting to waive benefits for any future injuries sustained during rehabilitation and asking Mr. Aguirre if he understood what had been read to him;  Mr. Aguirre answered yes, and there was thereafter no need for Mr. Chavez to explain the compromise and release.

Mr. Chavez attempted to explain why his signature did not appear on the copy of the compromise and release which was given to the client when the client signed it.   Mr. Chavez finally conceded that he could not explain why his signature did not appear on that copy of the document.   Mr. Chavez also conceded that this document was executed in the manner usually employed  in his office when his secretary, paralegal or interpreter explains the compromise and release to the client.

Despite the evidence that the language purporting to release liability for future injuries sustained during rehabilitation was not explained to applicant, the WCJ's summary of evidence reported that Mr. Chavez had testified that he is bilingual and he explained the compromise and release to the applicant before applicant signed it, and that he told Mr. Aguirre the compromise and release would cover any future injuries applicant might sustain during vocational rehabilitation.

Applicant testified he received only three years of education in Mexico and does not speak English.   He stated Mr. Chavez did not explain the compromise and release to him.   He asserted an interpreter informed him he would receive a gross settlement of $11,000 if he signed the compromise and release and the document would “close his case.”   Applicant stated the interpreter “did not explain that if he was injured while in rehabilitation that he would not receive any benefits.”

The WCJ denied the motion to set aside the order approving the compromise and release and determined the Board had no jurisdiction to consider the rehabilitation injury case.   In his opinion on decision, the WCJ explained he was convinced applicant was aware of the ramifications of the waiver of the right to seek workers' compensation benefits for any future injuries sustained in vocational rehabilitation.

Applicant petitioned for reconsideration.   In the petition he informed the Board that he had ordered a transcript of the proceedings before the WCJ.  However, he did not point out any specific, material defect in the summary of evidence.

In his report on reconsideration, the WCJ stated Mr. Chavez appeared to him to be a credible and persuasive witness and great weight should be given to the WCJ's decision as to credibility.   The WCJ stated applicant was represented by competent counsel, the provisions of the compromise and release were explained to applicant in Spanish, and, despite the language regarding money being set forth in the compromise and release for any future injuries sustained during rehabilitation, applicant was anxious to settle the case.   The WCJ concluded the order approving the compromise and release should not be set aside and the Board had no jurisdiction to consider the injury allegedly sustained during rehabilitation.

The Board adopted the WCJ's report and denied reconsideration.   The Board stated it was not necessary to await preparation of a transcript  because applicant did not allege any inaccuracy or inadequacy in the summary of evidence.

DISCUSSION

Applicant contends the order approving the compromise and release should be vacated because the language purporting to waive the right to benefits for any future injury in rehabilitation is unclear.

In Rodgers v. Workers' Comp. Appeals Bd. (1985) 168 Cal.App.3d 567, 569–570, 576, 214 Cal.Rptr. 303, the compromise and release contained statements that “[a]ny Rehabilitation will be presented solely in companion cases” and on Board approval of the agreement and defendants' payment under its provisions the employee “releases and forever discharges said employer and insurance carrier from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury ․”  (Emphasis in original.)   Division Three of this court held the language was not sufficient to waive a claim for ordinary workers' compensation benefits for a “new and future injury” sustained in a vocational rehabilitation program.  (Id. at pp. 575–576, 214 Cal.Rptr. 303.)   The court noted the compromise and release did not specifically refer to a claim for future injury in rehabilitation.  (Ibid.)  The court stated the purpose of the language that “[a]ny Rehabilitation will be presented solely in companion cases” was unclear and noted the right to rehabilitation benefits may not ordinarily be settled.  (Ibid.)

In reaching its holding, the Rodgers court relied on Johnson v. Workmen's Comp. App. Bd. (1970) 2 Cal.3d 964, 88 Cal.Rptr. 202, 471 P.2d 1002 and Sumner v. Workers' Comp. Appeals Bd. (1983) 33 Cal.3d 965, 191 Cal.Rptr. 811, 663 P.2d 534.   In Johnson the court concluded the employee had waived his dependents' rights to death benefits by signing a compromise and release containing a waiver of those rights, but the court criticized form language in the compromise and release as not clearly alerting injured employees of the consequences of the release.  (Johnson, supra, 2 Cal.3d at pp. 973–974, 88 Cal.Rptr. 202, 471 P.2d 1002.)   The form language criticized by the court in Johnson read as follows:  “ ‘Upon approval of the Compromise Agreement by the Workmen's Compensation Appeals Board or a referee, and payment in accordance with the provisions hereof, said employee releases and forever discharges said employer and insurance carrier from all claims and causes of action, whether now known or ascertained, or which may hereafter arise or develop as a result of said injury, including any and all liability of said employer and said insurance carrier and each of them to the dependents, heirs, executors, representatives, administrators or assigns of said employee.’ ”   (Id. at pp. 968–969, 88 Cal.Rptr. 202, 471 P.2d 1002, emphasis by the Johnson court.)   There is substantially  similar form language in the compromise and release in the present case.   In Johnson the court stated that although the form language releases death benefits, “it does not expressly refer to them, and a layman executing that form might be unaware of the fact that he was releasing any claim of his spouse or children to such benefits.”  (Johnson v. Workmen's Comp. App. Bd., supra, 2 Cal.3d at p. 974, 88 Cal.Rptr. 202, 471 P.2d 1002.)

The court noted that under California Code of Regulations, title 8, chapter 4.5, section 10882, the Board must inquire into the adequacy of all compromise and release agreements.   The court explained the purpose of the Board's inquiry is to “ ‘protect[ ] [workers] who might agree to unfortunate compromises because of economic pressure or lack of competent advice.’  [Citation.]”  (Johnson v. Workmen's Comp. App. Bd., supra, 2 Cal.3d at p. 973, 88 Cal.Rptr. 202, 471 P.2d 1002.)   The court declared:  “We think the board can, and should, devise a form for compromise and release of disability claims which (1) notifies the applicant of the consequences of the release in clear and nontechnical language, and (2) does not compel the release of death benefits when the parties and the referee lack sufficient information to weigh the desirability of releasing these benefits and the adequacy of the compensatory consideration.”  (Id. at p. 974, 88 Cal.Rptr. 202, 471 P.2d 1002.)

In Sumner v. Workers' Comp. Appeals Bd., supra, 33 Cal.3d 965, 191 Cal.Rptr. 811, 663 P.2d 534, the employee entered into a compromise and release based on advice by a representative of his employer.   The employee did not have the benefit of independent counsel, and the impact of the settlement on death benefits was not mentioned to him.  (Id. at p. 972, 191 Cal.Rptr. 811, 663 P.2d 534.)   The court held that if a compromise and release was on a form that did not comply with Johnson, the court would no longer preclude inquiry into whether the release of death benefits was knowing and voluntary.   (Sumner v. Workers' Comp. Appeals Bd., supra, 33 Cal.3d at pp. 972–973, 191 Cal.Rptr. 811, 663 P.2d 534.)

 In Carter v. County of Los Angeles (1986) 51 Cal.Comp.Cases 255, 258 (in bank), the Board held there is no established public policy against releasing liability for future injuries that might occur in vocational rehabilitation and that are a “compensable consequence” of the original industrial injury.   The Board defined “compensable consequence” as “a secondary incident which, although perhaps a new and distinct injury, is not a new and independent injury but rather the direct and natural consequence of the primary incident.  [Citations.]”  (Ibid.)   The Board concluded that in determining the adequacy of a release, the Board must consider whether the release is couched in clear, nontechnical language sufficient to apprise the parties it releases liability only for injuries during vocational rehabilitation that are compensable consequences of the primary injury and does not release vocational rehabilitation benefits.  (Ibid.)

In Carter the Board stated:  “We emphasize that this aspect of the settlement agreement must be limited to normal benefits of prospective injuries during rehabilitation that fall under the compensable consequence rule.   A release will not bar a claim for compensation where the subsequent injury occurs while rendering service to another under a vocational rehabilitation plan which creates an employment relationship.   This would be a new and independent injury which cannot presently be settled by agreement.  (Labor Code § 5000 et seq.)”  (Carter v. County of Los Angeles, supra, 51 Cal.Comp.Cases at p. 258, fn. omitted.)   The Board concluded language that the “[s]ettlement liquidates ․ any claims which may arise out of a future rehabilitation plan” (id. at p. 256, emphasis in original) was so broad it required clarification outside the written agreement to ascertain the parties' intent and the proposed settlement thus lacked the specificity and clarity required for Board approval.  (Id. at p. 259.)   The Board stated the language appeared on its face to release liability even for further rehabilitation benefits, notwithstanding Labor Code section 5100.6.  (Carter, supra, 51 Cal.Comp.Cases at p. 259.) 1

In Huntington Memorial Hospital v. Workers' Comp. Appeals Bd. (1990) 55 Cal.Comp.Cases 356, writ denied, the applicant had sustained an industrial injury to the right shoulder.   The parties signed a compromise and release that included the following statement:  “ ‘Also as a part of consideration herein applicant agrees to settle all disability resulting from an injury occurred [sic ] during Rehabilitation pursuant to Rogers [sic ] case.’ ”   (Id. at p. 356.)   Subsequently, the applicant sustained an injury to the left shoulder during rehabilitation.

In the opinion of the Board, the injury sustained during rehabilitation was a compensable consequence of the original industrial injury.   The Board concluded the language of the release lacked specificity and clarity, the release was not couched in nontechnical language sufficient to apprise the parties that liability was released only for injuries during rehabilitation that were the compensable consequence of the original injury, and the release was so broad that it required clarification from sources outside the  agreement.  (Id. at p. 357.)   The Board stated that an attempt to release “any injury” may be impermissible as an attempt to release liability for an injury during an employment relationship with another employer.   (Ibid.)

 In the present case, the language, “As money is also set forth in this Compromise and Release to be paid for any future injuries the applicant might have while in rehabilitation (Rogers [sic ] case ),” is even less clear than the language criticized by the Board in Huntington Memorial Hospital v. Workers' Comp. Appeals Bd., supra, 55 Cal.Comp.Cases 356.   For the reasons stated in Rodgers, Carter, and Huntington Memorial Hospital, the language in the compromise and release in the present case did not fairly apprise applicant that by signing the compromise and release, he would be waiving the right to regular workers' compensation benefits to which he might be entitled for future injuries sustained during vocational rehabilitation.   Viewed in the light of the entire record (see Lamb v. Workmen's Comp. Appeals Bd. (1974) 11 Cal.3d 274, 280–281, 113 Cal.Rptr. 162, 520 P.2d 978), Mr. Chavez' testimony does not support the WCJ's finding that the language purporting to release liability for any future injuries sustained during rehabilitation was explained to applicant.   Thus, Mr. Chavez' testimony does not support the WCJ's finding that applicant knowingly waived the right to seek workers' compensation benefits for any future injuries sustained during vocational rehabilitation.

 For the foregoing reasons, we conclude the WCJ erred in approving the compromise and release.2  Moreover, neither the WCJ nor Board has made any determination as to the nature of the alleged February 1988 injury, and although reference was made to settlement of “all periods of disputed temporary disability in rehabilitation, if any,” the compromise and release did not expressly state that any past injuries sustained during vocational rehabilitation were being settled.   Because the compromise and release had no language expressly stating that liability for regular workers' compensation benefits resulting from an injury previously sustained during rehabilitation was being released and because the record does not reflect that the parties  discussed the impact of the settlement on any injury previously sustained during rehabilitation, the agreement may not be construed as releasing liability for any injury previously sustained during vocational rehabilitation.  (Cf. Sumner v. Workers' Comp. Appeals Bd., supra, 33 Cal.3d at p. 972, 191 Cal.Rptr. 811, 663 P.2d 534;  Johnson v. Workmen's Comp. App. Bd., supra, 2 Cal.3d at p. 974, 88 Cal.Rptr. 202, 471 P.2d 1002.) 3

Because the prospective settlement of any future injuries in rehabilitation was invalid but the settlement was based on the August 13, 1986, injury and the possibility of future injuries in rehabilitation, the Board's order denying reconsideration must be annulled and the matter remanded with directions that the Board grant reconsideration and vacate the order approving the compromise and release.   Upon remand, the Board should consider whether or not restitution of the amounts applicant received under the compromise and release would be equitable in the present case.  (See Ryerson Concrete Co. v. Workmen's Comp. Appeals Bd. (1973) 34 Cal.App.3d 685, 689, 110 Cal.Rptr. 319 [inequitable to allow recoupment of excessive penalty received in good faith];  Silva v. Industrial Acc. Com. (1924) 68 Cal.App. 510, 515–517, 229 P. 870 [benefits received under compromise and release must ordinarily be restored before compromise and release is vacated];  Jones v. McDonnell Douglas Corp. (1983) 79 LB 106–174, 83 LB 120–423, 11 Cal. Workers' Comp. Rptr. 225 [compromise and release involves public policy considerations not present with other contracts;  in determining whether to require restitution as a condition to setting aside order approving compromise and release, WCJ must consider equities of situation and purposes of workers' compensation system;  restitution may be required if applicant can repay, applicant entered into settlement agreement with improper motives, or amount of settlement was generous in view of the risks of litigation].)

Because we have concluded the order approving the compromise and release must be vacated, we need not address applicant's remaining contentions.4

 DISPOSITION

The August 27, 1990 order of respondent Workers' Compensation Appeals Board denying reconsideration is annulled, and the matter is remanded to the Board.   Upon remand, the Board is directed to grant applicant's petition for reconsideration, vacate the order approving the compromise and release, and conduct further proceedings consistent with the views expressed herein.

ARLEIGH M. WOODS, Presiding Justice.

GOERTZEN and EPSTEIN, JJ., concur.

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