Signed Mediation Agreement Binds Employer/Carrier to $1 Million Payment in Spite of Worker’s Death Seven Days After Mediation

Observing that after a 2007 amendment to S.C Code § 42-9-390, an agreement settling a workers’ compensation dispute no longer had to be approved by the Commission if both parties were represented by counsel, a South Carolina appellate court held that an employer and carrier were required to file a mediated settlement agreement with the Commission and follow through on the payment of the $1 million called for in the agreement in spite of the fact that the injured worker was killed in an unrelated auto accident seven days after the parties had signed the mediated agreement [Ex parte Horne, 2022 S.C. App. LEXIS 82 (Aug. 3, 2022)]. The deceased, his attorney, the employer, the carrier, and the mediator had all signed the mediator’s agreement and were awaiting final paperwork from the carrier. With its decision, the appellate court reversed a determination by the state’s Industrial Commission that had ruled the deceased worker’s claim abated with his death because it had not been approved by the Commission.

Background

In November 2011, King was injured in a work-related accident. On May 20, 2014, the Commission awarded him permanent and total disability benefits, which were paid in a lump sum on September 10, 2014, as well as medical benefits for the remainder King’s of his life. On June 2, 2016, the employer, its carrier, and King attended mediation. Mediation was successful, and the parties agreed to settle King’s claim regarding his future medical benefits for $1 million, and signed a document titled “Agreement Following Mediation Conference” (the Agreement). The Agreement was signed by King, King’s attorney, the employer, carrier, their attorney, and the mediator. On the same day, the mediator filed a Form 70, stating the issues were settled at mediation and the employer/carrier “shall submit the Final Agreement [and] Release, Consent Order, Form 16A, or other appropriate documentation regarding the agreement to the Commission.”

Fatal Auto Accident

Seven days after mediation, on June 9, 2016, King died in an unrelated car accident. The same day, the employer’s carrier sent King’s attorney a letter with the $1 million settlement check, indicating they were in the process of finalizing the Agreement and Final Release but wanted to get the check to the attorney so that he could place it in trust account. The carrier stated the check represented a full and final settlement of all claims and requested King’s attorney hold the check until the Commission informed them the Agreement and Final Release were approved.

Five days later, the carrier informed King’s attorney that it had stopped payment on the check. The employer and carrier later withdrew from the settlement because they believed King’s claim abated at his death. The employer/carrier did not file a copy of the agreement with the Commission.

King’s attorney sought to file the agreement. After the hearing, the Single Commissioner concluded the Agreement was not enforceable because King never executed or signed an Agreement and Final Release, resulting in one never being filed with the Commission in accordance with S.C. Code § 42-9-390 and state regulations. The Single Commissioner found a mediation agreement was not synonymous with an Agreement and Final Release and state regulations regarding mediation did not indicate a mediation agreement was binding once signed. She relied on Mackey v. Kerr-McGee Chemical Co., 280 S.C. 265, 312 S.E.2d 565 (Ct. App. 1984), which found a party could withdraw from an agreement until it was approved by the South Carolina Industrial Commission. The Commission affirmed the Single Commissioner’s order in full and King’s estate appealed.

Appellate Court Decision

King’s estate argued that the Commission erred in finding the Agreement the parties signed at mediation was not enforceable. The appellate court agreed. The court noted an important amendment to the Workers’ Compensation Act in 2007. Prior to the amendment, a workers’ compensation settlement agreement was not binding until it had been approved by the Commission. The 2007 amendment to Section 42-9-390 altered the landscape, however. The court stressed:

The relevant difference between the pre-amendment version of the statute and the present one is that the current version no longer requires the Commission’s approval of a settlement agreement when both parties are represented by counsel. It simply requires the employer to file a copy of the settlement agreement with the Commission [Opinion, p. 6].

Filing with Commission was Prefuctory Only

The Court stressed that Mackey was a pre-amendment decision. The amended statute no longer requires Commission approval of settlement agreements if both parties are represented by counsel. Here, the Agreement in this case only had to be filed with the Commission by the employer/carrier, which was simply a perfunctory act.

Agreement Had Been Reached

The Court noted that from the record, it appeared the only reason the employer/carrier did not file the Agreement with the Commission was because King unexpectedly died. Neither side provided testimony or evidence that either side had expressed a desire to withdraw from the Agreement after it was signed by all parties. In fact, King’s attorney filed a motion requesting permission to file the Agreement and a Form 50 requesting the Agreement be filed with and enforced by the Commission. The Agreement language provided the case was “fully and completely resolved by agreement.” The same day the parties signed the Agreement, the mediator filed a Form 70, stating the issues were settled and Respondents will submit “documentation regarding the agreement to the Commission.” The carrier had already written the $1,000,000 settlement check to King on June 4 and mailed it to King’s attorney. The court found the parties had substantially complied with the statute.

The Court concluded that the employer/carrier were required to file the Agreement with the Commission regardless of King’s untimely death.