Padilla v. Industrial Com'n of Colorado, 83SC64

• Decision Date: 11 February 1985
• Docket Number: No. 83SC64,83SC64
• Citation: 696 P.2d 273
• Parties: John J. PADILLA, Petitioner, v. INDUSTRIAL COMMISSION OF COLORADO, Charles McGrath, Director, Division of Labor, Department of Labor and Employment, State of Colorado; and Beatrice Foods Co., Inc., Respondents.
• Court: Colorado Supreme Court

Page 273

696 P.2d 273

John J. PADILLA, Petitioner, v. INDUSTRIAL COMMISSION OF COLORADO, Charles McGrath Director, Division of Labor, Department of Labor and Employment, State of Colorado; and Beatrice Foods Co., Inc., Respondents.

No. 83SC64.

Supreme Court of Colorado En Banc.

Feb. 11, 1985.

Rehearing Denied March 11, 1985.

Carroll, Bradley & Froede, P.C., John S. Carroll, Joan W. Froede, Westminster, for petitioner.

L. Duane Woodard, Atty. Gen., Charles B. Howe, Deputy Atty. Gen., Joel W. Cantrick, Sol. Gen., Patricia A. Blizzard, Mary Ann Whiteside, Asst. Attys. Gen., for respondents Industrial Commission and Charles McGrath.

DeMoulin, Anderson, Campbell & Laugesen, P.C., Robert L. McGahey, Jr., Kathleen M. Janski, Denver, for respondent Beatrice Foods Co., Inc.

Colorado Defense Lawyers Association, Craig C. Eley, Eley & Eley, Denver, amicus curiae.

KIRSHBAUM, Justice.

We granted certiorari to review the decision of the Colorado Court of Appeals in Padilla v. Industrial Commission, No. 82CA0562 (Colo.App. Jan. 20, 1983) (not selected for official publication), affirming the Industrial Commission's denial of a request by claimant, John J. Padilla, that his case requesting workers' compensation benefits be reopened. The Commission's final order adopted the ruling of a hearing officer that the case could not be reopened because Padilla had voluntarily waived his statutory right to reopen by executing a written settlement agreement of his initial claim. We reverse. ¹ On August 7, 1978, Padilla injured his back while employed by Beatrice Foods Company (Beatrice), and was unable to return to work because of persistent back pain. On February 4, 1979, Beatrice, a self-insured employer, filed an admission of liability and began making temporary total disability payments to Padilla. ² Padilla continued to experience pain, and a lumbar laminectomy was performed on his back in July of 1979.

On October 19, 1979, Beatrice and Padilla executed a "Stipulation for Settlement and Final Release of All Claims." The agreement provided that Padilla would accept $11,017.20, representing a seven and one-half percent permanent disability as a working unit, "in full settlement of this matter" and that Beatrice would pay any future medical expenses resulting from the accident "up to the statutory maximum of $20,000." The stipulation contains the following pertinent language:

John J. Padilla, hereby releases and forever discharges Beatrice ... for any and all claims, demands, damages, actions, causes of action or claims of any kind or nature whatsoever, known and unknown, with the exception of future medical ... expenses arising from the accident of August 7, 1978, and coming within the statutory limit of $20,000 ... which have resulted or may in the future develop from the accidental injuries sustained by Mr. Padilla on August 7, 1978.

The agreement also states that its terms had been explained to Padilla by his attorney and that its provisions were fully understood and accepted "for the purpose of making a full and final compromise adjustment and settlement of any and all claims, disputed or otherwise, and for the express purpose of precluding forever any further additional claims arising out of the accidental injury of August 7, 1978."

The parties filed a motion with the Director of the Division of Labor, pursuant to the provisions of Rule XVII(13) of the Colorado Workmen's Compensation Rules of Procedure, for approval of the stipulation for settlement. ³ On October 22, 1979, the Director entered an order approving the settlement and dismissing the matter with prejudice as to the claims for temporary and permanent disability arising from the accident.

Padilla continued to experience pain in his back after October of 1979. Padilla's treating physician also concluded that osteoarthritis had developed in Padilla's left hip, and on December 1, 1980, further surgery was performed. On December 30, 1980, Padilla filed a "Petition to Reopen" with the Division of Labor, asserting that his physical condition had worsened. ⁴ On January 12, 1981, Beatrice filed a response to the petition to reopen, arguing that the petition should be denied because Padilla's condition had not worsened and because under the terms of the stipulated settlement agreement Padilla was precluded from reopening his claim.

On February 18, 1981, Padilla filed a "First Amended Petition to Reopen" which reiterated the allegation that Padilla's physical condition had worsened, and alleged that the petition to reopen should be granted on the ground of mistake. ⁵ Appended to this amended petition were physicians' letters stating that Padilla's physical condition had worsened. Beatrice responded to the amended petition by referring to its previous statement of position.

On May 4, 1981, a hearing was held before a hearing officer for the Division of Labor. Padilla testified that his physical condition had deteriorated after he entered into the stipulation for settlement and that he had not been able to return to work since the accident. ⁶ He also testified that when he signed the settlement he understood that his condition would improve and that he would be able to return to the type of work he had performed prior to the accident. Under cross-examination, Padilla testified that the settlement "was just settling whatever damages had been made at the time and it was sort of a final thing" and that he understood he was giving up his right to any future benefits other than future medical expenses.

On January 19, 1982, the hearing officer entered an order denying the petition to reopen. The order stated that "the claimant may well have somewhat more back pain now than he had at the time he settled his claim" and that the stipulation "does not contain specific language concerning a waiver of the right to reopen." The order also contains the following pertinent language:

[T]he only possible and logical way of interpreting the language in the settlement documents ... is that the claimant fully understood ... that he was waiving and forever foregoing a right to reopen for temporary total or any further compensation for permanent disability.

* * *

[T]here is no compelling reason to permit the claimant, who was an adult advised by competent counsel, to reopen this case where he has waived his right to do so.

* * *

[T]he claimant has not proved any mistake of any kind sufficient to permit the claimant to set aside this stipulation and release, and that any mistake in this case was unilateral on the part of the claimant.

Padilla petitioned for review, and the Commission affirmed, adopting the hearing officer's ruling. Padilla appealed the Commission's final order on two grounds: that the Commission erroneously construed the stipulation as a bar to a petition to reopen, and that the evidence before the hearing officer established a mistake about the severity of Padilla's injuries when the stipulation was executed. The Court of Appeals held that "the referee was correct in concluding that claimant's mistaken belief did not warrant setting aside the stipulation."

We granted Padilla's petition for certiorari to consider whether the provisions of the Workmen's Compensation Act (the Act) which authorize the reopening of awards are applicable to Padilla's settled claim. We conclude that under the Act claims resolved by settlement agreements remain subject to the reopening provisions of the statute in the same manner as claims resolved by the granting of an award, and that parties may not by private agreement modify this strong legislative policy.

The Workmen's Compensation Act represents the decision of our General Assembly to protect employees injured in the course of their employment from becoming wards of the public. Industrial Commission v. London Guarantee & Accident Co., 66 Colo. 575, 185 P. 344 (1919). It has long been recognized that, consistent with the beneficent purpose of the Act, its provisions are to be interpreted liberally in favor of the rights of injured workers. James v. Irrigation Motor & Pump Co., 180 Colo. 195, 503 P.2d 1025 (1972); Granite Construction Co. v. Leonard, 40 Colo.App. 20, 568 P.2d 500 (1977). The light of this humanitarian purpose must illuminate the construction of the Act's provisions.

Two separate sections of the Act address the issue of the reopening of an award. Section 8-51-108(2), 3 C.R.S. (1973), provides as follows:

At any time, and from time to time, during the period for which compensation has been awarded for either permanent total or permanent partial disability, upon application of any party in interest, the director shall require such injured employee to be examined by one or more physicians, and, upon petition from any such interested party supported by a showing that the disability of such injured employee has undergone a change in degree since the entry of such award, the case shall be reopened, and the compensation previously awarded shall be modified, terminated, or continued as the evidence may require.

Section 8-53-119, 3 C.R.S. (1973), ⁷ contained the following pertinent language at the time Padilla filed his petition to reopen:

Upon his own motion on the ground of error, mistake, or a change in condition, the director, at any time within six years from the date of accident in cases where no compensation has been paid, or at any time within two years after the date last payment becomes due and payable or within six years from the date of accident, whichever is longer, in cases where compensation has been paid, and after notice of hearing to the parties interested, may review and reopen any award and, on such review, may make an award ending, diminishing, maintaining, or increasing compensation and any medical benefits previously awarded.... Any such order made by the director shall be subject to review by the commission.

Section 8-51-108(2) requires the Director to exercise authority under specified...