June 26, 2015
Pat Tate, as administrator of the estate of Michael C. Traffanstedt, deceased
Liberty Mutual Insurance Company and Dover Corporation d/b/a Heil Corporation
from DeKalb Circuit Court. (CV-13-900322).
Judge., Judge. Thompson, P.J., and Pittman, Moore, and
Donaldson, JJ., concur.
December 2006, Michael C. Traffanstedt entered into an
agreement to settle a workers' compensation claim against
his employer, Dover Corporation d/b/a Heil Corporation
(" Heil" ) (" the 2006 settlement
agreement" ). The 2006 settlement agreement provided
that future medical benefits would be left open. In 2011,
Traffanstedt and Heil entered into a settlement agreement as
to his future medical benefits (" the 2011 settlement
agreement" ), which was submitted to the trial court for
approval, as required by Ala. Code 1975, § 25-5-56, a
part of the Alabama Workers' Compensation Act (" the
Act" ), Ala. Code 1975, § 25-5-1 et seq. The trial
court did not approve the 2011 settlement agreement.
again sought approval of a settlement agreement as to his
future medical benefits in early 2013 (" the 2013
settlement agreement" ). A hearing before the trial
court for its approval of the 2013 settlement agreement had
been set for February 6, 2013. Traffanstedt died on February
5, 2013, for reasons unrelated to his work-related injury.
Thus, the hearing did not take place.
Mutual Insurance Company (" Liberty Mutual" ), the
workers' compensation insurance carrier for Heil, had
issued a check for $70,000 in satisfaction of the 2013
settlement agreement. The check provided that it could not be
negotiated before court approval of the 2013 settlement
agreement. After Traffanstedt's death, Liberty Mutual
refused to honor the check. Thus, on October 16, 2013, the
administrator of Traffanstedt's estate, Pat Tate, sued
Heil and Liberty Mutual, seeking a judgment declaring that
Liberty Mutual and Heil were bound by the 2013 settlement
agreement and alleging breach of contract.
moved for a summary judgment, and Liberty Mutual filed a
cross-motion for a summary judgment; Heil adopted Liberty
Mutual's arguments at the summary-judgment hearing.
Liberty Mutual and Heil argued that Tate's claims were
barred by the exclusivity provisions of the Act, see Ala.
Code 1975, § § 25-5-52 and 25-5-53, and that they
were not bound by the 2013 settlement agreement because that
settlement agreement was not made valid by court approval
before Traffanstedt's death. After the trial court
considered the arguments of the parties, it entered a summary
judgment in favor of Liberty Mutual and Heil. Tate appealed
to our supreme court, which transferred the appeal to this
court because, it determined,
the appeal fell within this court's subject-matter
jurisdiction. See Ala. Code 1975, § 12-3-10.
appeal, Tate argues that the trial court erred in concluding
both that the action was barred by the exclusivity provisions
of the Act and that the 2013 settlement agreement was not
valid because it had not yet been approved by the trial
court. Tate contends that a settlement agreement in a
workers' compensation action is treated like any other
contract, see Jones v. Ruth, 31 So.3d 115, 118
(Ala.Civ.App. 2009) (construing a settlement agreement "
like any other contract" to determine what claims the
agreement released); thus, he contends, the 2013 settlement
agreement was binding on the parties even though it had not
yet been approved by the trial court when Traffanstedt died.
To support his contention that the trial court's approval
of the settlement before Traffanstedt's death was not
necessary to make the settlement valid, Tate chiefly relies
on Nationwide Mutual Insurance Co. v. Wood, 121
So.3d 982 (Ala. 2013), in which our supreme court determined
that two insurers could not unilaterally withdraw from a
settlement of a minor's tort claims after the minor's
death despite the fact that the trial court had yet to
approve the settlement.
Mutual and Heil argue that the trial court correctly
determined that the 2013 settlement agreement was not
enforceable. They contend that the Act does not permit
recovery of medical benefits by a deceased employee's
estate and that the exclusivity provisions of the Act prevent
Tate from seeking to enforce the 2013 settlement agreement
outside the provisions of the Act. Liberty Mutual and Heil
also contend that a workers' compensation settlement
agreement is not treated like other settlement agreements.
Sager v. Royce Kershaw Co., 359 So.2d 398, 400
(Ala.Civ.App. 1978) (" Section 25-5-56 clearly removed
settlement of work[ers'] compensation claims from the
ambit of principles applicable to the settlement and release
of ordinary personal injury claims." ).
review a summary judgment de novo; we apply the same standard
as was applied in the trial court. A motion for a summary
judgment is to be granted when no genuine issue of material
fact exists and the moving party is entitled to a judgment as
a matter of law. Rule 56(c)(3), Ala. R. Civ. P. A party
moving for a summary judgment must make a prima facie showing
" that there is no genuine issue as to any material fact
and that [it] is entitled to a judgment as a matter of
law." Rule 56(c)(3); see Lee v. City of
Gadsden, 592 So.2d 1036, 1038 (Ala. 1992). If the movant
meets this burden, " the burden then shifts to the
nonmovant to rebut the movant's prima facie showing by
'substantial evidence.'" Lee, 592 So.2d
at 1038. " [S]ubstantial evidence is evidence of such
weight and quality that fair-minded persons in the exercise
of impartial judgment can reasonably infer the existence of
the fact sought to be proved." West v. Founders Life
Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.
1989); see Ala. Code 1975, § 12-21-12(d).
statutory provisions relevant to our discussion are all a
part of the Act. Sections 25-5-52 and 25-5-53, commonly
referred to as the exclusivity provisions of the Act,
prohibit any action seeking workers' compensation
benefits through means other than those provided for in the
" Except as provided in this chapter [i.e., the Act], no
employee of any employer subject to this chapter, nor the
personal representative, surviving spouse, or next of kin of
the employee shall have a right to any other method, form, or
amount of compensation or
damages for an injury or death occasioned by an accident or
occupational disease proximately resulting from and while
engaged in the actual performance of the duties of his or her
employment and from a cause originating in such employment or
" The rights and remedies granted in this chapter [i.e.,
the Act] to an employee shall exclude all other rights and
remedies of the employee, his or her personal representative,
parent, dependent, or next of kin, at common law, by statute,
or otherwise on account of injury, loss of services, or
death. Except as provided in this chapter, no employer shall
be held civilly liable for personal injury to or death of the
employer's employee, for purposes of this chapter, whose
injury or death is due to an accident or to an occupational
disease while engaged in the service or business of the
employer, the cause of which accident or occupational disease
originates in the employment. In addition, immunity from
civil liability for all causes of action except those based
upon willful conduct shall also extend to the workers'
compensation insurance carrier of the employer; to a person,
firm, association, trust, fund, or corporation responsible
for servicing and payment of workers' compensation claims
for the employer; to an officer, director, agent, or employee
of the carrier, person, firm, association, trust, fund, or
corporation; to a labor union, an official, or representative
thereof; to a governmental agency providing occupational
safety and health services, or an employee of the agency; and
to an officer, director, agent, or employee of the same
employer, or his or her personal representative. Nothing in
this section shall be construed to relieve a person from
criminal prosecution for failure or neglect to perform a duty
imposed by law.
" For the purpose of this section, a carrier, person,
firm, association, trust, fund, or corporation shall include
a company or a governmental agency making a safety inspection
on behalf of a self-insured employer or its employees and an
officer, director, agent, or employee of the company or a
25-5-56 governs settlement of workers' compensation
claims and provides, in pertinent part:
" The interested parties may settle all matters of
benefits, whether involving compensation, medical payments,
or rehabilitation, and all questions arising under this
article [i.e., Article 3, § § 25-5-50 through -93]
and Article 4 [§ § 25-5-110 through -123] of this
chapter [i.e., the Act] between themselves, and every
settlement shall be in an amount the same as the amounts or
benefits stipulated in this article. No settlement for an
amount less than the amounts or benefits stipulated in this
article shall be valid for any purpose, unless a judge of the
court where the claim for compensation under this chapter is
entitled to be made, or upon the written consent of the
parties, a judge of the court determines that it is for the
best interest of the employee or the employee's dependent
to accept a lesser sum and approves the settlement. The court
shall not approve any settlement unless and until it has
first made inquiry into the bona fides of a claimant's
claim and the liability of the defendant; and if deemed
advisable, the court may hold a hearing thereon. .... Upon
settlements being approved, judgment shall be entered thereon
and duly entered on the records of the court in the same
have the same effect as other judgments or as an award if the
settlement is not for a lump sum. ..."
that the parties discussed the nearly identical case of
Austin v. Providence Hospital, 155 So.3d 1028
(Ala.Civ.App. 2014), in the hearing on the summary-judgment
motions. However, as aptly noted by the trial court, this
court affirmed the judgment declining to enforce a settlement
agreement that had not been approved by the trial court
before the death of the employee in Austin solely because the
appellant in Austin had failed to raise an argument on appeal
as to one of the grounds for the summary judgment in that
case -- namely, that the exclusivity provisions of the Act
barred the action to enforce the contract. Thus, Austin
provides no guidance in the present case.
parties agree that the reduction of future medical benefits,
which are typically unknown and uncertain, to a lump sum is
considered to be " [a] settlement for an amount less
than the amounts or benefits stipulated in" the Act.
§ 25-5-56. Thus, they also agree that the 2013
settlement agreement required court approval. That is where
their agreement ends, however.
Mutual and Heil argue that § 25-5-56 clearly states that
a settlement for less than the amount of benefits provided
for in the Act is not " valid for any purpose"
until its approval by the trial court. A noted commentator
agrees: " But an unapproved settlement for an amount
less than the compensation payable under the Act is not
binding on the parties." 2 Terry A. Moore, Alabama's
Workers' Compensation § 28:8, p. 676 (2d ed. 2013)
(footnote omitted). Based on this contention and the
contention that workers' compensation settlements are
" removed ... from the ambit of the principles
applicable to the settlement and release of ordinary personal
injury claims," Sager, 359 So.2d at 400,
Liberty Mutual and Heil urge this court to conclude that the
trial court correctly determined that the 2013 settlement
agreement could not be enforced.
argues that a workers' compensation settlement is
construed like any other contract, Jones, 31 So.3d
at 118, and that our supreme court has determined that court
approval of a settlement can be had after the death of the
injured plaintiff. See Wood, 121 So.3d at 987. Thus,
he contends that the trial court erred in determining that
the 2013 settlement agreement could not be enforced against
Liberty Mutual and Heil. He urges this court to reverse the
summary judgment in their favor and to require the trial
court to consider whether to approve the settlement agreement
under the principles espoused in Wood.
we see the parallel between Wood and the present case, we are
not persuaded that Wood compels reversal of the summary
judgment. Wood involved a minor who was injured in an
automobile collision. Wood, 121 So.3d at 984. The
minor and two insurers, the tortfeasor's insurer and the
minor's underinsured-motorist-insurance carrier, had
entered into a settlement agreement to resolve the
minor's tort claims against the tortfeasor. Id.
An agreement to settle a minor's tort claims must be
approved by a trial court after a hearing to determine
whether the settlement is in the best interest of the minor.
See Large v. Hayes, 534 So.2d 1101, 1105 (Ala.
1988). Because the minor died before the best-interest
hearing, Wood, 121 So.3d at 984, the insurers argued
that the settlement agreement was not enforceable.
Id. at 986. However, our supreme court explained
that the settlement agreement, as a contract between a minor
and the insurers, was voidable only
at the election of the minor and, thus, that the insurers
could not unilaterally withdraw their agreement merely
because the minor had died. Id. at 986. Instead, our
supreme court concluded, the best-interest hearing could be
held after the minor's death. Id. at 986-87.
Section 25-5-56 specifically provides that a settlement
agreement for an amount less than the amount of compensation
provided for in the Act requires court approval. Thus, in
that respect, the 2013 settlement agreement is like the
settlement agreement between the minor and the insurers in
Wood. However, unlike the settlement agreement in Wood, the
2013 settlement agreement is, by statute, not valid for any
purpose until approved by the court. See § 25-5-56.
Furthermore, unlike a settlement agreement involving a minor,
a workers' compensation settlement falls under the Act,
and compliance with the provisions of the Act is mandatory.
time the 2013 settlement agreement was reached, Traffanstedt
was complying with the Act by seeking approval of the 2013
settlement agreement under § 25-5-56. However, there is
no provision in the Act permitting a personal representative
to seek future medical benefits on behalf of a deceased
employee. Once Traffanstedt died, there was no longer any
avenue under the Act by which Tate could seek finalization of
the 2013 settlement agreement. Because the exclusivity
provisions of the Act preclude other causes of action seeking
to enforce rights under the Act, the declaratory-judgment and
breach-of-contract action instituted by Tate was barred by
§ § 25-5-52 and 25-5-53.
trial court correctly determined that the 2013 settlement
agreement was not enforceable by Tate. Accordingly, we
affirm the judgment of the trial court.
P.J., and Pittman, Moore, and Donaldson, JJ., concur.
Although the result may seem harsh, we are
not alone in reaching this result. See Odom v. Tosco
Corp., 12 Ark.App. 196, 672 S.W.2d 915 (1984)
(determining that a workers' compensation settlement was
not effective because the required commission approval had
not been received before the death of the employee);
Barncord v. State Dep't of Transp., 4 Kan.App.2d
368, 606 P.2d 501 (1980) (deciding that a workers'
compensation settlement agreement is not valid unless it has
been approved as required by statute before the death of the
employee); Trahan v. Liberty Mut. Ins. Co.,
188 So.2d 435 (La. Ct.App. 1966)(holding that a workers'
compensation settlement was not enforceable because it was
not approved as required by statute before the death of the
employee); and Sherlin v. Liberty Mut. Ins. Co., 584
S.W.2d 455 (Tenn. 1979) (concluding that a proposed
workers' compensation settlement agreement was not
binding because it was not approved by the court during the
lifetime of the injured employee); but see B. Frank Joy
Co. v. Isaac, 333 Md. 628, 636 A.2d 1016 (1994) (holding
that, once a settlement agreement is submitted for approval
by the Workers' Compensation Commission, an
employer/insurer cannot withdraw consent to the agreement
based upon the death of the employee); Ferreira v. Arrow
Mut. Liab. Ins. Co., 15 Mass.App.Ct. 633, 447 N.E.2d
1258 (1983) (concluding that an employer may not unilaterally
rescind a settlement agreement once it is submitted for
approval); and Rojo v. Loeper Landscaping,
1988-NMSC-065, 107 N.M. 407, 759 P.2d 194 (1988) (determining
that, once a settlement agreement is submitted for approval,
an employer/insurer may not rescind the settlement agreement
based solely upon the death of the employee).