D. Dillard v. Villas Care Pavillion (Majority Opinion)

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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Diane Dillard, Appellant v. Villas Care Pavillion BEFORE: : : : : : : No. 1101 C.D. 2007 SUBMITTED: September 7, 2007 HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE RENÃ E COHN JUBELIRER, Judge HONORABLE JIM FLAHERTY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY PRESIDENT JUDGE LEADBETTER FILED: February 29, 2008 Diane Dillard appeals from the February 23, 2007 order of the Court of Common Pleas of Philadelphia County that, in pertinent part, sustained the preliminary objections of the Commonwealth of Pennsylvania, Insurance Department Bureau of Special Funds (the Fund) and dismissed Dillard s complaint with prejudice. We affirm.1 1 On May 7, 2007, the Superior Court transferred Dillard s appeal to this court because it involved the Commonwealth of Pennsylvania, Insurance Department Bureau of Special Funds. We note, however, that if this were an ordinary breach of contract action against the Commonwealth, then Dillard should have brought her case in the Board of Claims and not the common pleas court. In any event, given our determination that Dillard s complaint clearly has no merit, we have decided this appeal in the interest of judicial economy. See Banacol Mktg. Corp. v. Penn Warehousing and Distrib., Inc., 904 A.2d 1043 (Pa. Cmwlth. 2006). The background of this case is as follows. Dillard suffered a disabling injury in 1991 while working for Villas Care Pavillion.2 A notice of compensation payable was issued, providing for the payment of workers compensation benefits. Due to the insolvency of employer s workers compensation carrier, the Fund became responsible for paying Dillard s workers compensation benefits.3 In 2005, the Fund filed a petition to terminate Dillard s workers compensation benefits, which was assigned to a Workers Compensation Judge (WCJ) for disposition. After the evidentiary record closed but before the WCJ acted on the petition, the Fund offered to pay Dillard $35,000.00 for a full compromise and release. Dillard accepted the proposed offer and urged the Fund to pursue the compromise and release process as set forth in Section 449 of the Workers Compensation Act (Act).4 Before the parties could proceed, however, the WCJ circulated a decision and order granting the Fund s termination petition. Notwithstanding the WCJ s order, Dillard renewed her request to have the Fund engage in the compromise and release process. When the Fund refused to do so, Dillard filed a civil complaint in the court of common pleas. In her complaint, Dillard alleged that the Fund s letter proposing the settlement and Dillard s letter accepting the terms thereof constituted a contract. She averred that the Fund was in breach of contract in that it had refused to honor the terms of the parties settlement agreement. 2 The Fund filed preliminary Although Villas Care Pavillion was named as a party, it apparently was never served and, thus, the court never obtained personal jurisdiction over it. Therefore, it appears that the trial court s order is final. Pa. R.A.P. 341. 3 Inservco Insurance Services, Inc. provided third-party claim adjustment services to the Fund. Inservco filed a notice of non-participation in this matter pursuant to Pa. R.A.P. 908. 4 Act of June 2, 1915, P.L. 736, added by Section 22 of the Act of June 24, 1996, P.L. 350, as amended, 77 P.S. § 1000.5. 2 objections to the complaint, alleging that it was legally insufficient to support a claim in that the parties had never completed the compromise and release process. The trial court sustained the Fund s preliminary objections and dismissed Dillard s complaint with prejudice. The court rejected Dillard s common law contract claim, noting the absence of an executed compromise and release, approved and signed by a WCJ. Dillard s appeal from the trial court s order followed. On appeal,5 Dillard argues that the Fund was in breach of a binding written contract when it refused to proceed with the settlement process and comply with all of the necessary formalities required by the Act to enter into a compromise and release settlement. She asserts that two of the leading cases in the compromise and release area, Rissmiller v. Workers Compensation Appeal Board (Warminster Township), 768 A.2d 1212 (Pa. Cmwlth. 2001) and Blessing v. Workers Compensation Appeal Board (Heintz Corporation), 737 A.2d 820 (Pa. Cmwlth. 1999), are distinguishable from her situation in that neither one involved an offer and acceptance, stated in writing, signed by both parties and specifically setting forth a mutual intention to be bound. Further, Dillard contends that, as part of the consideration for the agreement, the parties respective correspondence indicates that the Fund was to proceed with the necessary hearing required by the Act in order to secure approval of the agreement. Dillard maintains that, if the Fund had carried out its 5 In ascertaining whether the trial court properly sustained the preliminary objections, we must determine the sufficiency of the factual averments by examining the complaint along with any documents and exhibits attached thereto. We must ascertain the legal sufficiency of the complaint and whether it would permit recovery if ultimately proven. We will reverse the trial court s order only where there has been an error of law. Le-Nature s, Inc. v. Latrobe Mun. Auth., 913 A.2d 988 (Pa. Cmwlth. 2006), appeal denied, ___ Pa. ___, 913 A.2d 988 (2007). 3 obligations, there would have been no question that a WCJ would have approved their agreement in that he would have been required only to ascertain the intent of the parties to settle. Moreover, Dillard contends that the WCJ s subsequent order granting the Fund s termination petition should have no effect on the existence of the parties binding written contract because, prior to that decision, there was a valid offer, acceptance and terms set forth in writing as to the parties respective obligations. Dillard thus maintains that whatever happened subsequent to the formation of that contract should have no bearing on the rights and duties of the parties as outlined in their agreement. In response, the Fund maintains that the correspondence between the two attorneys could not have created an enforceable settlement because, absent approval from a WCJ, there can be no settlement in workers compensation cases. Additionally, the Fund proffers the well-established principle that, if there is anything less than full compliance with Section 449, there can be no enforceable settlement.6 To that effect, the Fund rejects Dillard s attempts to distinguish Rissmiller and Blessing, pointing out that this court affirmed the Workers Compensation Appeal Board s refusal to entertain evidence of agreements in those cases, not because the settlement discussions were oral, but because the criteria of Section 449 were not met.7 The Fund emphasizes that, in the present case, Dillard 6 Fratta v. Workers Comp. Appeal Bd. (Austin Truck Rental), 892 A.2d 888 (Pa. Cmwlth.), appeal denied, 588 Pa. 771, 905 A.2d 501 (2006); Lebid v. Workers Comp. Appeal Bd. (County of Chester), 771 A.2d 79 (Pa. Cmwlth. 2001); Rissmiller; Blessing. 7 In Rissmiller, the claimant sought to introduce evidence of an alleged oral agreement after insurers refused to reduce anything into writing. Noting that a compromise and release settlement was never submitted, this court affirmed the board s refusal to disregard the statutorily (Footnote continued on next page ¦) 4 failed to aver compliance with any of the requirements outlined in section 449. Thus, the Fund contends that the trial court correctly dismissed her complaint as legally insufficient. In addition, the Fund points out that common law contract principles have no place in the workers compensation arena. It notes that there is no common law right to workers compensation benefits, the recovery of which is governed by statute.8 As an initial matter, this court categorically rejects Dillard s contention that presenting a WCJ with a compromise and release stipulation is a mere formality. Significantly, the legislature in Section 449 refers to the document submitted for approval as the proposed compromise and release by stipulation. 77 P.S. § 1000.5(b) (Emphasis added). In addition, the language of that Section provides that [t]he workers compensation judge shall not approve any compromise and release agreement unless he first determines that the claimant understands the full legal significance of the agreement. Id. (Emphasis added). In light of the well-established tenet that the compromise and release provisions of Section 449 must be strictly construed, we decline to presume that _____________________________ (continued ¦) imposed procedure in Section 449 and allow evidence of an oral agreement under common law contract principles. In Blessing, the agreement was reduced to writing and even executed by the claimant. The claimant, however, died before the scheduled hearing and employer at that hearing withdrew any oral agreement to the compromise and release stipulation. This court upheld the board s refusal to consider evidence of a written compromise and release agreement signed only by the claimant, strictly construing the Section 449 requirement that any agreement had to be signed by both parties. 8 Indeed, Section 303(a) of the Act, 77 P.S. § 481(a), provides that workers compensation benefits are the exclusive remedy for employees work-related injuries. 5 the legislature inserted the submission and approval safeguard as mere surplusage.9 Section 1921(a) of the Statutory Construction Act of 1972, 1 Pa. C.S. § 1921(a) ( [e]very statute shall be construed, if possible, to give effect to all its provisions. ). This court in summarizing Section 449 has noted without ambiguity that [t]his section provides that settlement agreements are not valid or binding until approved by a WCJ. Farner v. Workers Compensation Appeal Board (Rockwell Int l), 869 A.2d 1075, 1078 (Pa. Cmwlth. 2005) (Emphasis added). Therefore, the parties were well aware that the agreement could not be binding until submitted to a WCJ and approved, and equally aware of the risk that the case might be decided before the compromise and release process was completed. Claimant s suggestion that the parties agreement included a mutual intent to go forward on the same terms in that event, i.e., even after the case was decided in favor of one party or the other, is simply disingenuous and finds no support in the letters which Dillard claims create a contract. For the above reasons, we affirm the trial court s order. _____________________________________ BONNIE BRIGANCE LEADBETTER, President Judge 9 One workers compensation treatise author has opined that [t]he approval is not simply a rubber-stamp or other merely bureaucratic act, but first requires fact-finding with regard to whether the claimant understands the full legal significance of the agreement. 8 West s Pa. Prac., Workers Compensation § 15:108 (2002) (footnote omitted). 6 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Diane Dillard, Appellant v. Villas Care Pavillion : : : : : : No. 1101 C.D. 2007 ORDER AND NOW, this 29th day of February 2008, the order of Court of Common Pleas of Philadelphia County in the above captioned matter is hereby AFFIRMED. _____________________________________ BONNIE BRIGANCE LEADBETTER, President Judge

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