Smith v. Csk Auto, Inc.

• Decision Date: 03 April 2009
• Docket Number: No. S-12690.,S-12690.
• Citation: 204 P.3d 1001
• Parties: Terry L. SMITH, Appellant, v. CSK AUTO, INC., Royal and SunAlliance, and Wilton Adjustment Service, Appellees.
• Court: Alaska Supreme Court

204 P.3d 1001

Terry L. SMITH, Appellant, v. CSK AUTO, INC., Royal and SunAlliance, and Wilton Adjustment Service, Appellees.

No. S-12690.

Supreme Court of Alaska.

April 3, 2009.

Terry L. Smith, pro se, Fairbanks.

Robert L. Griffin and Krista M. Schwarting, Griffin & Smith, Anchorage, for Appellees CSK Auto, Inc. and Royal and SunAlliance.

Before: FABE, Chief Justice, MATTHEWS, EASTAUGH, CARPENETI, and WINFREE, Justices.

OPINION

FABE, Chief Justice.

I. INTRODUCTION

An employee who injured his back at work signed a partial compromise and release (C & R) of his workers' compensation claim, waiving reemployment benefits and permanent total disability benefits in exchange for $10,000. The Alaska Workers' Compensation Board approved the partial C & R. About two years later, the employee petitioned to vacate the partial C & R on a number of grounds. The Board and the Alaska Workers' Compensation Appeals Commission rejected his arguments. Because we determine that the Board failed to follow its own regulations when it approved the partial C & R, we reverse the decisions of the Commission and the Board and remand for further proceedings.

II. FACTS AND PROCEEDINGS

While working for CSK Auto in March 2001, Terry Smith hurt his back unloading cases of antifreeze from a truck. He worked the rest of that shift but sought medical attention the next day. CSK Auto paid temporary total disability (TTD) and medical benefits related to the injury.¹ Smith received treatment from doctors in both the Fairbanks area and Anchorage and began to see Dr. Susan Klimow in May 2001. After treatment and a course of physical therapy, Dr. Klimow determined that Smith was medically stable but could not return to the work he was doing when he injured his back; she rated him as having a five percent whole person permanent partial impairment (PPI) as a result of the injury. Dr. Klimow treated Smith until December 2001, when he changed doctors to Dr. Roy Pierson. Dr. Pierson later referred Smith to Dr. Susan Anderson.

CSK Auto requested a reemployment eligibility evaluation for Smith after receiving Dr. Klimow's assessment. The reemployment benefits administrator (RBA) determined that Smith was not eligible for benefits because in November 2001 Dr. Klimow had approved job descriptions for three jobs in the local labor market that Smith had done in the previous ten years.² Smith appealed the RBA decision to the Board in January 2002.

Smith continued to receive medical treatment for his back throughout 2002. In March 2002 Dr. Anderson recommended an Intradiscal Electrothermal Therapy (IDET) procedure. The adjuster who was working on Smith's case later contacted Dr. Klimow to see if she agreed with Dr. Anderson that Smith might benefit from an IDET procedure. When Dr. Klimow indicated her agreement with Dr. Anderson, the adjuster reclassified all the PPI benefits Smith had received as TTD benefits and began to pay Smith TTD benefits again.

In July 2002 Barbara Williams, a non-attorney representative, entered an appearance on Smith's behalf. Williams attended a prehearing conference where the parties agreed to a hearing on Smith's claim; the hearing was scheduled for October 17, 2002. In the month before the hearing, Williams and CSK Auto negotiated a partial settlement of Smith's claim. According to the terms of the partial C & R, Smith received $10,000 as payment for his reemployment benefits and permanent total disability (PTD) benefits. CSK Auto agreed to be responsible for future reasonable and necessary medical care related to the injury as well as other future benefits, except for those Smith specifically waived. CSK Auto retained the right to contest future medical benefits. Smith signed the partial C & R on October 10, 2002. The partial C & R was filed with the Board, which approved it on October 17, 2002, after a brief hearing. Williams was present at the hearing, but Smith was not.

Smith underwent the IDET procedure about two weeks after the partial C & R was approved. He had scheduled the procedure with Dr. Anderson before signing the agreement, but the adjuster did not complete travel arrangements for the procedure until after Smith had signed the partial C & R.

In July 2003, after Dr. Anderson determined that Smith was medically stable, CSK Auto required him to attend an independent medical evaluation (IME) for an impairment rating. Dr. Patrick Radecki conducted the IME. Dr. Radecki concluded that Smith was unintentionally magnifying his symptoms. Dr. Radecki believed that Smith had "mild degenerative disc disease" unconnected to his work injury and recommended that Smith not have further medical care related to the work injury. Shortly after Dr. Radecki's evaluation, CSK Auto controverted continuing medical care. Smith responded by rescinding all of his medical releases. Smith discharged Williams as his representative on June 4, 2004, and in a petition dated December 31, 2004, asked the Board to set aside the partial C & R based on fraud, duress, or misrepresentation.

In his petition Smith alleged that (1) he did not know the extent of his injuries when he signed the partial C & R, while CSK Auto's attorney and the insurance adjuster, Susan Kosinski, did and (2) CSK Auto was not paying Smith's medical bills as promised. Smith later added other reasons to rescind the partial C & R. Among the theories he advanced to set the agreement aside were (1) collusion between Williams and the opposing party; (2) failure to file all medical records as required by regulation; (3) misrepresentations to the Board about the identity of his treating physician; (4) threats to refuse the IDET procedure if Smith did not agree to the settlement; (5) delay in notification that the IDET procedure had been approved as evidence that CSK Auto was using the procedure as leverage to make him sign the agreement; (6) the Board's failure to order an impartial medical examination; and (7) a violation of his due process rights because he did not appear before the Board prior to approval of the partial C & R.

The Board held a hearing on Smith's petition to set aside the partial C & R on February 16, 2006. Smith represented himself. Smith and his brother testified on Smith's behalf. Williams and Kosinski testified on behalf of CSK Auto. Smith testified that he was not getting the benefit of his bargain with CSK Auto because he was no longer getting medical benefits. According to Smith, the IDET procedure failed, and he now had other spinal problems that would cost over $200,000 to treat. Because of CSK Auto's controversion of his medical care, he was unable to get needed treatment. Smith also testified that the adjuster sometimes changed her mind or controverted treatment. Smith alleged that Williams told him he would not have the IDET procedure done unless he signed the partial C & R. Smith stated that he noticed when he signed the partial C & R that not all of the medical records had been submitted to the Board, but he said he did not object because he would not have had the IDET procedure unless he signed the agreement. Smith admitted that he had scheduled the IDET procedure with his physician before he signed the partial C & R, but he said that he did not know the procedure had been preauthorized.

Williams testified that she discussed CSK Auto's initial settlement offer of $7,500 with Smith and that she and Smith discussed making a counteroffer, ending up with a figure of $10,000. She stated that she also discussed CSK Auto's response to the counteroffer with Smith. Williams indicated she told Smith that she was unwilling to represent him at a hearing on the reemployment benefits appeal and advised him that he had little chance of prevailing in the appeal; she said that she only became involved in Smith's case to try to help him settle it. She testified that she discussed the waiver of PTD and reemployment benefits with Smith and that he voiced no concerns about missing medical records. Williams also testified that she believed Smith was aware before he signed the partial C & R that the IDET procedure had been approved.

Kosinski testified that Smith was receiving medical and TTD benefits during negotiations and that she never told Smith that the IDET procedure was contingent on his signing the partial C & R. She also testified that she approved the IDET procedure the day after Smith's physician requested it but did not tell Smith that it was approved because normally she left it up to the doctor to contact the patient and schedule the procedure. She said that when a workers' compensation claimant is represented, it is not her practice to communicate directly with the claimant. She indicated that Smith contacted her on October 7 about making travel arrangements for the IDET procedure and that she made them on October 14. Kosinski denied having told Williams or Smith that Smith would not get medical treatment if he did not sign the partial C & R. She also denied having refused to approve a medical procedure for Smith.

In its March 2006 decision on the petition, the Board refused to set aside the partial C & R. The Board first stated that a C & R can only be set aside because of fraud or duress on the part of the employer; Smith's complaints about Williams misleading him were therefore irrelevant to the issue whether the agreement should be set aside. The Board found that Smith was not credible when he testified that he did not understand the terms of the partial C & R, but that even if he did not understand it, his misunderstanding could not be a basis for setting it aside. The Board found no credible, specific evidence of misrepresentation, fraud, or duress on the part of CSK Auto to coerce Smith to sign the agreement. It held that Smith's current lack of medical benefits was not a reason to set aside the partial C & R because medical benefits were not affected by it. Finally, with respect to Smith's argument that the partial C & R should be...