Harmon v. Lute's Const. Co., Inc., 16081

• Decision Date: 26 December 1986
• Docket Number: No. 16081,16081
• Citation: 112 Idaho 291,732 P.2d 260
• Parties: Tommy HARMON, Claimant-Appellant, v. LUTE'S CONSTRUCTION COMPANY, INC., Employer, and Industrial Indemnity Company, Surety, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 260

732 P.2d 260

112 Idaho 291

Tommy HARMON, Claimant-Appellant, v. LUTE'S CONSTRUCTION COMPANY, INC., Employer and Industrial Indemnity Company, Surety, Defendants-Respondents.

No. 16081.

Supreme Court of Idaho.

Dec. 26, 1986.

Rehearing Denied Feb. 11, 1987.

Emil F. Pike, Jr., Twin Falls, for claimant-appellant.

Alan K. Hull, of Quane, Smith, Howard & Hull, Boise, for defendants-respondents.

BAKES, Justice.

Claimant Tommy Harmon appeals a decision of the Industrial Commission denying his request to set aside a lump sum agreement between Harmon and his employer's surety which had previously been approved by the commission. Harmon contends that the lump sum agreement fails to adequately compensate him for permanent disability suffered as a result of an industrial accident and should be set aside on grounds of fraud. We affirm the commission's decision denying relief.

Claimant was injured in an industrial accident on September 29, 1980, while working as a hole digger for Lutes Construction Company. He sustained injuries to his spine (central disc herniation) when he slipped and was hit in the shoulder by a Throughout claimant's treatment and recovery from his injury, claimant was in contact and consulted by agents of employer's surety. Once it became clear to the surety's representatives dealing with claimant's case that he could not return to heavy manual labor, these individuals discussed other employment opportunities with claimant. As a result of such discussions, claimant, in September and October of 1981, expressed an interest in pursuing self employment in a small business and indicated that he would prefer to receive a lump sum settlement of his worker's compensation claim rather than statutory periodic payments. Claimant desired to have a lump sum settlement in order to provide him with sufficient start-up capital to begin his small business. Pursuant to claimant's request, employer's surety prepared a lump sum agreement which awarded claimant approximately $25,000. ¹ The lump sum agreement was signed on October 20, 1981, and submitted to the Industrial Commission for its approval. The commission initially rejected the settlement "on the grounds that they thought that there wasn't sufficient medical justification to lump the case." The commission then received a report from one of claimant's treating physicians indicating that a settlement would be in claimant's best interests due to the apparent functional overlay to his complaints of pain. After receiving this report, the commission then approved the settlement agreement on November 16, 1981.

[112 Idaho 292] hydraulic ram. Claimant was treated for his injuries by Dr. Robert J. Porter, an orthopedic surgeon in Twin Falls. Dr. Porter performed surgery to repair the herniated disk on November 4, 1980. Both that surgery and a subsequent exploratory surgery failed to relieve claimant of the pain he suffered following the accident. Claimant remained totally disabled from work following the first surgery, with significant residual pain. Claimant was subsequently enrolled in a physical rehabilitation program in Boise. In October of 1981, Dr. Porter rated claimant impaired to the extent of 20% of the whole man. It was Dr. Porter's opinion that claimant had stabilized from a physiological point of view and that further medical treatment would not be helpful. Both Dr. Porter and Dr. Robert Burton, a Boise neurologist to whom claimant was referred by Dr. Porter, agreed that there was a "functional" aspect to claimant's pain and that settlement of claimant's pending worker's compensation claim might relieve or reduce claimant's complaints of pain. Neither doctor felt that further medical treatment was appropriate.

In May of 1983, over a year and a half after the settlement agreement was approved by the commission, claimant sought to have the commission set aside the agreement on grounds of fraud or manifest injustice. The commission denied claimant's request based on the following conclusion:

"Surety's actions in this case, in entering into a lump sum settlement with Claimant, were consistent with the recommendations of both physicians involved and consistent with Claimant's own expressed wishes. Nothing in the record indicates that Surety misled Claimant in any manner, or that Surety otherwise committed actual or constructive fraud. Smith v. King, 100 Idaho 331 ; Faw v. Greenwood, 100 Idaho 387 ; McGhee v. McGhee, 82 Idaho 367 . At the time the lump sum settlement was entered into, Claimant was totally disabled from work, but both physicians and Claimant agreed that Claimant would most likely be able to participate in light duty self-employment once he had the funds to do so. Surety's execution of the lump sum settlement at Claimant's request was not fraudulent, and there is no basis in law for setting it aside at this time."

I

Claimant contends on appeal that the commission's decision is erroneous as a The statutory scheme regarding workmen's compensation in general, and lump sum agreements in particular, is clear and must be given effect. A worker injured in an industrial accident is entitled to compensation for any resulting permanent disability. I.C. § 72-201 et seq. A determination of the degree of disability involves evaluations of both medical and non-medical factors. I.C. §§ 72-425, -430. The medical factors involve an evaluation of the claimant's permanent impairment pursuant to I.C. § 72-424.

[112 Idaho 293] matter of law and without support in the record. We find claimant's argument to be without merit.

"72-424. Permanent impairment evaluation.--'Evaluation (rating) of permanent impairment' is a medical appraisal of the nature and extent of the injury or disease as it affects an injured employee's personal efficiency in the activities of daily living, such as self-care, communication, normal living postures, ambulation, elevation, traveling, and nonspecialized activities of bodily members."

The non-medical factors to be considered in making the disability evaluation include "age, sex, education, economic and social environment." I.C. § 72-425. ² The purpose behind evaluating both medical and non-medical factors and, indeed, behind the award of permanent disability is to determine and "to compensate the claimant for his loss of earning capacity or his reduced ability to engage in gainful activity." Baldner v. Bennett's, Inc., 103 Idaho 458, 461, 649 P.2d 1214, 1217 (1982).

Once a determination is made regarding the degree of a claimant's permanent disability, compensation for that disability may be awarded either through periodic payments, I.C. §§ 72-408, -409, or through a single lump sum payment, I.C. § 72-404. The particular method of compensation is left largely to the discretion of the parties, subject to the approval of the Industrial Commission, I.C. §§ 72-404, 72-711. However, once a lump sum compensation agreement is approved by the commission, that agreement becomes an award and is final and may not be reopened or set aside absent allegations and proof of fraud. I.C. § 72-718; Vogt v. Western General Dairies, 110 Idaho 782, 718 P.2d 1220 (1986); Fountain v. T. Y. & Jim Hom, 92 Idaho 928, 453 P.2d 577 (1969).

Since, in the present case, the compensation award was made by means of a lump sum agreement, the commission correctly held that Harmon's allegations of manifest injustice were insufficient, even if proven, to permit the commission to set aside the agreement. Thus, we find claimant's arguments on appeal that the commission erred in so holding to be without merit.

The only grounds sufficient to permit the commission to set aside claimant's award would be allegations and proof of fraud on the part of employer's surety in procuring the agreement. In order for claimant to succeed on grounds of fraud he must prove the following elements by clear and convincing evidence: " '(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted on by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his consequent and proximate injury.' " Faw v. Greenwood, 101 Idaho 387, 389, 613 P.2d 1338, 1340 (1980) The commission, after a full hearing, specifically found, citing Faw v. Greenwood, supra, that claimant failed in his burden of proof:

[112 Idaho 294] quoting Mitchell v. Siqueiros, 99 Idaho 396, 401, 582 P.2d 1074, 1079 (1978).

"Nothing in the record indicates that Surety misled Claimant in any manner, or that Surety otherwise committed actual or constructive fraud."

As we held in Faw, " '[W]hether fraud has been proven by clear and convincing evidence is for the determination of the trier of fact [and] [o]n appeal that determination will not be reversed where supported by competent, substantial, though conflicting evidence.' " Faw v. Greenwood, 101 Idaho at 389, 613 P.2d at 1340, quoting Smith v. King, 100 Idaho 331, 334, 597 P.2d 217, 220 (1979). We have examined the record in the present case and find the commission's determination supported by substantial competent evidence therein.

The record indicates that surety's agent, Mr. MacMillan, fully explained to claimant his compensation options. He explained the differences between a lump sum agreement and a regular compensation agreement. Claimant was told that under a regular compensation agreement periodic (monthly) payments would be made to compensate him for his disability and that he would be fully covered for any future medical expenses incurred as a result of his disability. He was further told that under a lump sum agreement his rights to future compensation and medical benefits would be foreclosed; the surety's liability for such amounts would be fully discharged upon its payment of the lump sum amount. The undisputed testimony before the...