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Garcia v. Department of Labor & Industry Employment Relations Division

Court of Workers Compensation of Montana

October 23, 1997

STEPHEN T. GARCIA Petitioner
v.
DEPARTMENT OF LABOR & INDUSTRY EMPLOYMENT RELATIONS DIVISION/ UNINSURED EMPLOYERS' FUND Respondent/Insurer for JULIE MANIACI Employer.

          Submitted: August 25, 1997

          ORDER ON APPEAL

          Mike McCarter Judge

         Summary: Allegedly uninsured employer and workers' compensation claimant entered into settlement agreement, but the Department of Labor and Industry, whose approval of the settlement agreement is required by section 39-71-519, MCA (1995), refused to give approval because the Uninsured Employers' Fund was not a party to the agreement. This appeal followed. After the appeal was filed, the claimant, Julie Maniaci, repudiated the settlement agreement, interjecting the issue whether the appeal had become moot.

         Held: Claimant's purported repudiation of the settlement agreement does not moot the appeal because the settlement agreement became binding on claimant when executed, with the Department's approval merely an express contingency on performance. Because the Department's failure to approve the agreement is appealable to this Court, see Ingraham v. Champion Int'l, 243 Mont 42, 793 P.2d 769 (1990), the right to appeal existed at the time the agreement was executed and is part of the agreement. Until the appeal is resolved, claimant is bound by the agreement and cannot repudiate. As for the underlying issue, the Court holds the Department erred by disapproving the agreement because the UEF was not a party. Section 39-71-519, MCA (1995), which governs the settlement, expressly allows settlement by "any" of the enumerated parties. (Note: see order dated 11/7/97 amending this decision with regard to whether the UEF is an insurer, but not changing the holdings herein.)

         Topics:

Constitutions, Statutes, Regulations and Rules: Montana Code Annotated: section 39-71-519, MCA (1995). Because section 39-71-519, MCA (1995) expressly allows settlement among "any" of the parties enumerated in the statute, the Department of Labor could not disapprove a settlement between a claimant and an allegedly uninsured employer on the ground the Uninsured Employers' Fund was not a party to the agreement.
Settlements: Generally. Because section 39-71-519, MCA (1995) expressly allows settlement among "any" of the parties enumerated in the statute, the Department of Labor could not disapprove a settlement between a claimant and an allegedly uninsured employer on the ground the Uninsured Employers' Fund was not a party to the agreement.
Settlements: Generally. Claimant and allegedly uninsured employer entered into a settlement agreement, which was disapproved by the Department of Labor on the ground the Uninsured Employers' Fund was not a party. While the propriety of that disapproval was on appeal to the Workers' Compensation Court, claimant purported to repudiate the settlement agreement and argued the appeal was moot. The WCC held claimant's attempt to repudiate the settlement agreement did not moot the appeal because the agreement became binding on claimant when executed, with the Department's approval merely an express contingency on performance. Because the Department's failure to approve the agreement was appealable to this Court, see Ingraham v. Champion Int'l, 243 Mont 42, 793 P.2d 769 (1990), the right to appeal existed at the time the agreement was executed and was part of the agreement. Until the appeal is resolved, claimant is bound by the agreement and cannot repudiate.
Uninsured Employers' Fund: Generally. Because section 39-71-519, MCA (1995) expressly allows settlement among "any" of the parties enumerated in the statute, the Department of Labor could not disapprove a settlement between a claimant and an allegedly uninsured employer on the ground the UEF was not a party to the agreement.

         Stephen T. Garcia (Garcia) has two pending cases before this Court, both arising out of an alleged injury suffered by Julie Maniaci[1](Maniaci) on November 10, 1996. Maniaci was employed by Garcia, who had no workers' compensation coverage at the time of the alleged injury. According to the various pleadings and documents in the Court files, Maniaci submitted a claim to the Uninsured Employers' Fund (UEF), which accepted liability for her injury.

         As noted, there are two pieces to this litigation. The first is a petition filed by Garcia against Maniaci on June 29, 1996, in which Garcia requests the Court to "[d]isallow" Maniaci's claim and "[e]liminate the judgment against my firm to compensate Julie [Maniaci] for wages and health care." (Petition for Hearing in WCC No. 9607-7579.) The second, which is the subject of this Order, is a June 18, 1997 appeal from the refusal of the Department of Labor and Industry (Department) to approve the settlement petition executed between Garcia and Maniaci. The appeal has been fully briefed and ready for decision.

         Factual Background for Appeal

         The appeal arises out of a settlement agreement reached between the parties while the first petition was pending. On May 15, 1997, Garcia and Maniaci executed a petition for full and final compromise settlement on a disputed liability basis and submitted it to the Department for approval. A copy of the petition is attached to the Notice of Appeal as Exhibit A(2).

         The petition states that Garcia "has disputed any liability for the claim" made by Maniaci. It then provides that Garcia shall pay claimant $7, 000 "in a proposed full and final compromise settlement of all claims provided by or referenced in the Montana Workers' Compensation Act" and that Maniaci,

in signing and submitting this petition to the Department of Labor and Industry, further understands that the above named employer [Garcia] is forever released from payment of compensation or damages pursuant to any and all remedies in the workers' compensation court or district court as provided for or referenced in the Montana Workers [sic] Compensation Act for injuries claimed to have been suffered as indicated above.

         Finally, the agreement provides:

The claimant hereby petitions the Department, with the concurrence of the above named employer, for approval of this petition and that the claim be fully and finally closed based on the agreement set forth above. If the petition is approved, the claim will be forever closed and can never be reopened.
At the time of the settlement agreement, Maniaci was represented by an attorney. That representation appears from the Employment Relations Division Settlement/advance Recap Sheet which is attached to the petition as Exhibit A(3) and from Maniaci's correspondence with the Court.
On June 9, 1997, the Department rejected the settlement. (Order Denying a Full and Final Compromise Settlement.) The denial was based on the fact that the UEF was not a party to the settlement:
IT IS THEREFORE ORDERED the petition be denied based on the information that insurer, Uninsured Employers Fund and claimant have not reached an agreement. The Department considers Uninsured Employers Fund an insurer. [Sic.]

(Notice of Appeal, Exhibit A(1).)

         This appeal followed. On July 16, 1997, the Court received and filed Petitioner's Initial Brief in Support of Notice of Appeal setting ...


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