CHRISTIAN L MELAAS, Applicant

KERRY INC, Employer

LIBERTY INSURANCE CORP, Insurer

The employer submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued on January 18, 2001. At issue is whether the order affirming the compromise agreement between the parties on June 8, 2000, should be set aside pursuant to Wis. Stat. § 102.16(1).

The commission has carefully reviewed the entire record in this matter, and hereby sets aside the Findings and Order below and substitutes the following therefor:

The applicant suffered a conceded work injury to his neck on June 28, 1999, and underwent a cervical diskectomy and an arthrodesis fusion at the C3-4 level, as a result of his work injury. The applicant's treating physician rated his permanent disability at nine percent, as compared to permanent partial disability, while the adverse medical examiner rated the applicant at five percent permanent partial disability, due to his work injury. The parties entered into a compromise agreement, which provided for a payment equivalent to seven percent permanent partial disability, and the department entered an order affirming the compromise agreement on June 8, 2000.

On his own motion, the administrative law judge reopened the compromise agreement and set it aside in an order dated January 18, 2001, on the basis that the compromise agreement was based on a mutual mistake of fact. The administrative law judge stated in a letter to the parties on November 22, 2000, that by departmental directive issued on August 21, 2000, it had become the practice of the department to follow the commission's interpretation that the applicant's cervical diskectomy and arthrodesis fusion resulted in a minimum permanent disability rating of ten percent, and not five percent. Prior to August 21, 2000, the department had not adopted the commission's interpretation, and in fact, had held to the interpretation that the language contained in Wis. Admin. Code § DWD 80.32 provided for a five percent minimum rating for the cervical diskectomy and fusion. The administrative law judge stated that because the statute sets the minimum rate of disability, the fact that the treating physician and the adverse examiner arrived at lower ratings, is of no legal effect, and therefore, there was no compromisable issue in respect to permanent partial disability, and since the interpretation of law was substantive in nature rather than procedural, its application was retroactive for all injuries to which the 1994 amendments to Wis. Admin. Code § DWD 80.32(11) were applicable. The administrative law judge set aside his previous order in January 2001, and held that the employer was liable for a ten percent permanent partial disability to the body as a whole.

Wis. Stat. § 102.16(1), states that every compromise of any claim for compensation may be reviewed, set aside, modified or confirmed by the department within one year from the date the compromise is filed with the department or from the date an award has been entered, based thereon, or the department may take that action upon application made within one year. The employer contends in its petition for commission review that the administrative law judge erred in issuing an order setting aside the compromise agreement without conducting a hearing. The employer states that Wisconsin Statutes and case law provide that compromise agreements in worker's compensation cases may be reviewed and set aside, modified or confirmed by the department, if application is made within one year. However, on its face, the language of Wis. Stat. § 102.16(1) does not require that a hearing be held, in the case of a department action, to reopen a compromise agreement. The statute clearly provides that the department, on its own motion, can reopen, review and set aside the award. The statute provides that every compromise of any claim for compensation may be reviewed and set aside, modified or confirmed by the department within one year from the date of compromise, and in the alternative, the department may take that action upon application made within one year. Therefore, the administrative law judge was within his authority and discretion to reopen the compromise agreement in this case.

However, the commission finds that there was no basis to set aside the order affirming the compromise agreement in this case. The administrative law judge had indicated that there was a mutual mistake underlying the compromise agreement and order issued on June 8, 2000. However, at the time that the parties entered into the agreement, and the agreement was affirmed by the department in June of 2000, the department interpreted the applicable statute to provide that there was only a minimum five percent rating for a cervical diskectomy and fusion. The parties had a right to rely on the department's interpretation at the time that it entered into the agreement. Certainly, the parties were free to note the commission's interpretation of a minimum of ten percent permanent partial disability for a cervical diskectomy and fusion, and negotiate on that basis whatever the competing physicians had opined in their reports. However, the parties freely negotiated and agreed upon an amount of seven percent permanent partial disability.

The commission does not find that there was any mutual mistake of fact in this case. The department affirmed the compromise agreement, based on its interpretation of the amount considered a minimum for the surgical procedure by the department at that time, and the parties had a right to rely upon the department's interpretation. A compromise agreement will not be set aside in the absence of gross inequity, important new evidence, fraud, duress or mutual mistake. In this case, the commission does not find that there is any evidence that there were sufficient grounds to set aside the compromise agreement entered into by the parties in good faith, with the approval of the department. Therefore, the administrative law judge's order setting aside the compromise agreement, and ordering the employer to pay ten percent permanent partial disability is hereby set aside and the prior compromise agreement is reinstated.

NOW THEREFORE, this

The Findings and Order of the administrative law judge are set aside and the commission's Findings and Order substituted therefor. The compromise issued June 8, 2000, is hereby reinstated.

Dated and mailed July 19, 2001
melaach . wsd : 175 : 8   ND § 10.5 

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

cc: Attorney Laura L. Salerno

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uploaded 2001/07/23