CT: Commissioner’s Decision That Waiver of Comp Benefits Was Not Supported by Consideration Upheld by State Supreme Court

In a decision officially to be released on Tuesday (October 1), the Supreme Court of Connecticut has affirmed a decision of the state’s Workers’ Compensation Review Board that in turn had affirmed a commissioner’s refusal to approve a termination agreement between an employee and an employer pursuant to the Connecticut Workers’ Compensation Act where the commissioner found, based upon the employee’s testimony and a review of the agreement itself, that there was no consideration to support the plaintiff’s release of his workers’ compensation claim [Leonetti v. Macdermid, Inc., 2013 Conn. LEXIS 303 (Oct. 1, 2013)].  

According to the plaintiff’s testimony, he was told he was being terminated and he was offered a termination agreement that paid him $70,228 in severance pay, as well as some additional benefits, but required that he sign a release that included a waiver of further workers’ compensation benefits related to a work-related injury to his back that occurred four years prior. The commissioner found that, because the payment made to the plaintiff was based on the length of his employment and did not include any money for the plaintiff’s workers’ compensation claim, there was no consideration to support the plaintiff’s release of that claim and, accordingly, the commissioner declined to approve the agreement pursuant to Conn. Gen. Stat. § 31–296. The commissioner also concluded that, without approval under § 31–296, the agreement did not effectively waive the parties’ rights and obligations under the Act. The defendant-former employer appealed, but the Board found, inter alia, that the commissioner had correctly concluded that the agreement was not binding upon the parties without approval under § 31–296, and that the record contained sufficient evidence to support the commissioner’s conclusion that defendant offered no consideration to the plaintiff in exchange for his release of his workers’ compensation claim. The board, accordingly, affirmed the decision of the commissioner, and the plaintiff appealed.

As to defendant’s contention that the agreement was “fully executed” and that as such, its recitation that consideration had been given established prima facie evidence that had to be rebutted by plaintiff, the Supreme Court disagreed, indicating that since the agreement had to be approved by the Workers’ Compensation Commission, it could hardly be considered fully executed, that when, as was the case here, the employer was the proponent of the agreement and the claimant opposed the agreement as it related to his or her workers’ compensation claim, the burden rested with the employer to demonstrate that adequate consideration had been paid for the workers’ compensation claim. The court added that this rule was especially applicable where evidence regarding the employer’s practices with respect to payment of severance and compensation for release of claims was within the control of the employer and where there are concerns of unequal bargaining power–the plaintiff had been told that if he did not sign the agreement it would be withdrawn. It was undisputed that plaintiff suffered a 10 percent permanent disability and might need surgery at some future time. Plaintiff indicated he signed because he needed the money.

As to defendant’s contention that the plaintiff signed the agreement never intending to be bound by it, that plaintiff’s actions were improper and, indeed, “fraudulent,” and that such improper actions should not be supported and sustained by the Board, the Supreme Court observed that “the lodestar of the workers’ compensation statutory scheme is the assurance that an injured employee receives fair and just compensation for injuries that fall within the purview of the act.” The court indicated that regardless of the claimant’s intention in signing the agreement, the Board properly concluded that the commissioner’s refusal to approve the agreement was supported by the evidence; nothing had been paid for the release of plaintiff’s workers’ compensation claim. The enforceability of the remainder of the agreement was not a question for the workers’ compensation forum, and the commissioner and the Board properly refused to decide that aspect of the dispute between the plaintiff and defendant.