Novak v. CJ Grossenburg and Son ( 1975 )

DUNN, Chief Justice.

The claimant, Frank Novak, filed a proper claim on June 12, 1972, seeking to recover further compensation under the Workmen’s Compensation Act for an injury to his back which occurred on January 15, 1969, while in the employ of C. J. Grossenburg and Son’s Shop (Grossenburg) of Winner, South Dakota. The Commissioner for the South Dakota Department of Labor and Management Relations (Commissioner) denied the claim on the grounds that the injury occurred in January 1969, and on December 11, 1969, the claimant signed a final receipt and release of Grossenburg and also of Federated Mutual Implement and Hardware Insurance Company (Federated), the employer’s insurer at that time, which was filed with the Commissioner pursuant to SDCL 62-7-5 and after 20 days became final under that statute. The circuit court affirmed the Commissioner and the claimant has appealed to this court. We reverse.

The claimant began his employment with Grossenburg in 1957 and except for a period of eight months in 1958 when he worked for the State Highway Department he had been employed steadily by Grossenburg up until March 17, 1972, the date of his disability.

On July 29, 1967, claimant injured his back in loading a baler while in the course of his employment. Iowa Mutual Insurance Company (Iowa Mutual), the employer’s insurer at that time, paid medical expenses resulting from this injury and the claimant returned to work on September 2, 1967, with no loss of pay.

On January 15, 1969, claimant sustained a further injury to his back while lifting, repair parts for a combine. This injury resulted in hospitalization and eventually in surgery when a laminectomy and diskectomy were done on February 6, 1969, by Dr. Jackson. Federated, which had been the employer’s insurer since November 1, 1967, paid the medical expenses and compensation under the Act for this injury. On December 11, 1969, claimant signed a full receipt and release of Federated and of Grossenburg, which was duly filed with the Commissioner, for the injuries received from the January 15, 1969 accident.

Meanwhile, claimant returned to work on or about June 1, 1969, with the employer. He experienced great pain which became progressively worse, and the claimant was forced to quit work and seek hospitalization in March of 1972. During this period there was no further injury that could be pinpointed to a particular time and place. Dr. Jackson testified that claimant’s condition was a “[progressive phenomenon from the operation three years previously and the degeneration takes place gradually.” At this time Dr. Jackson performed a spinal fusion on claimant’s back which resulted in a permanent, partial disability of 20% of the back and 10% of the whole man. This present claim is for compensation for loss of time, medical expenses and for this permanent, partial disability.

Iowa Mutual declined payment on the grounds that the statute of limitations had run and for the further reason that it was not the insurer at the time of the most recent injury that bears a causal relation to the disability.

Federated refused to pay on the grounds of the statute of limitations and for the further reason that it held a full release-from the claimant for the January 15, 1969 injury which was the most recent injury that bore a causal relation to the disability.

John Deere Insurance Company, employer’s present insurer, declined to pay because their coverage did not begin until July 1, 1971.

We have been unable to find where South Dakota has passed on the question of the liability of successive insurance companies in Workmen’s Compensation cases. 3 Larson’s Workmen’s Compensation Law, § 95.00 sets out two rules used in various jurisdictions:

“When a disability develops gradually, or when it comes as the result of a succession of accidents, the insurance carrier covering the risk at the time of the most recent injury or exposure bearing a causal relation to the disability is usually liable for the entire compensation. In some jurisdictions apportionment has been worked out by judicial decision, or provided for by express statute, when events within the coverage periods of successive insurers contribute causally to the final disability.”

The majority rule (Massachusetts-Michigan rule) provides that in successive injury cases full liability is placed upon the insurance carrier covering the risk at the time of the most recent injury that bears a causal relation to the disability. Rock’s Case, 1948, 323 Mass. 428, 82 N.E.2d 616, and Brinkert v. Kalamazoo Vegetable Parchment Co., 1941, 297 Mich. 611, 298 N.W. 301.

In view of the difficulties that are inherent in apportionment and the inequity involved in holding a carrier partially liable when it was not on the risk, this majority rule seems to be the most logical and practical method of handling this type of case and we would adopt it in South Dakota.

Assuming for the moment that it was the January 15, 1969 accident that caused all of the successive injuries and present disability of the claimant, Federated would bear full liability under this rule. There was never a clear finding by the Commissioner that the present disability was caused by the 1969 accident, although there is testimony, and especially medical testimony from Dr. Jackson, that the 1969 accident and resulting surgery caused the disability in 1972. The Commissioner did not make a finding either way on this point, presumably because his decision turned on the finality of the December 11, 1969 release.

We now turn to what seems to be the major issue in this case, and that is the validity of the final receipt and release of Federated and of Grossenburg, which was executed by the claimant on December 11, 1969, as it applies to the present disability. Actually, this release, if valid, would bar recovery from any carrier as it extends to the employer Grossenburg and his heirs and assigns.

Even though the Commissioner relied almost entirely on the release in his decision, and made the statement that the validity of the release was for the circuit court to decide, the court did not pass on this question. This may have been because the claimant did not challenge the validity of the release as is indicated by his brief and argument in this court.

The question of whether a later discovered disability for a compensable injury could reopen the claim in spite of a full release given on the basis of known injuries at the time of the signing of the release has not been clearly decided in this state. Does the release cover only the injuries and disabilities discoverable on December 11, 1969, when claimant signed the release, or does it extend to disability which is later discovered that is causally connected to the January 15, 1969 accident?

There is South Dakota authority on both sides of the question of the validity of a release in Workmen’s Compensation cases. SDCL 62-3-18 provides as follows:

“Obligation created by title not waived by contract. —No contract or agreement, express or implied, no rule, regulation, or other device, shall in any manner operate to relieve any employer in whole or in part of any obligation created by this title except as herein provided.”

This statute was interpreted in the case of Vodopich v. Trojan Mining Co., 1921, 43 S.D. 540, 180 N.W. 965. ' There the claimant sprained an ankle while working for his employer. He received compensation under the Act from his employer and subsequently signed a complete release from further claims as a result of such injury. Later, however, complications developed as a result of the sprain and further medical attention was needed. Claimant moved to have the release set aside. This court ruled that the release should be set aside, even though the claimant could show no fraud or misrepresentation in the procurement of the release. The court quoted the above statute from the Code of 1919 and then stated:

“We are of the opinion that it is the plain intent of the Workmen’s Compensation law that, while fraud or misrepresentation in obtaining the release would be a ground for setting it aside, yet an injured employee is not required to establish the fact that an agreement for release of further liability was entered into by reason of the fraud or misrepresentation of the employer before he can have the cause reopened. Where such an agreement is signed and approved by the Industrial Commissioner under the provisions of section 9467, Rev.Code 1919, equitable grounds for setting aside the release must be established before the cause can be reopened. Foley v. Detroit United Ry., 190 Mich. 507, 157 N.W. 45. If in this case the employee believed the results of the sprain were ended at the time he signed' the release, but it afterwards developed that further pain and suffering were attributable to the sprain, that would justify the reopening of the case. Bradbury, Workmen’s Compensation (3d Ed.) pp. 1137-1149.” 43 S.D. at 545-546, 180 N.W, at 966.

In the present case, claimant Novak not only had further pain and suffering, but there is evidence that he suffered from a degeneration of the vertebrae in his back as a result 'of his accident. This resulted in the 1972 operation which fused his vertebrae and caused at least a partial disability. On the strength of Vodopich v. Trojan Mining Co., supra, the present case should be reopened since the total consequences of the 1969 accident were not discoverable at the time the release was signed on December 11, 1969.

This court distinguished Vodopich, however, in the case of Chittenden v. Jarvis, 1941, 68 S.D. 5, 297 N.W. 787. There the claimant was injured and an agreement was signed and approved by the Industrial Commissioner entitling the claimant to $12.69 per week. The claimant then signed a final receipt and release. Claimant later sought to have the Commissioner reopen the case on the grounds that the employer had made oral promises of additional compensation at the time the written agreement was signed which he had not carried out. The court distinguished the case from Vodopich. It said that the release in this case had been filed with the Commissioner while the release in Vodopich had not been filed. The court refused to allow the Commissioner to review the case. The court relied heavily upon SDC 64.0509 which is the same as the present SDCL 62-7-5 which reads as follows:

“Agreement as to compensation — Approval by commissioner. — If the employer and employee reach an agreement in regard to the compensation under this title, a memorandum thereof shall be filed with the commissioner by the employer or employee, and unless the commissioner shall, within twenty days, notify the employer and employee of his disapproval of the agreement by registered or certified letter sent to their addresses as given in the memorandum filed, the agreement shall stand as approved and be enforceable for all purposes under the provisions of this title.”

The major distinction the court made then is that a release is valid if filed with the Industrial Commissioner (now the Department of Labor and Management Relations), but may be set aside if it is not filed. This seems to be a specious distinction. Agreements and releases for Workmen’s Compensation which did’ not contemplate subsequent treatment for a disability caused by' an injury should not be treated differently because in one case the\ release was filed and in the second case it was not. The important fact in both cases was that there were consequences directly,, resulting from the initial injury which were not contemplated by the parties when the agreement and release was signed and were not discoverable until sometime later.

Moreover, SDCL 62-7-5 on its face does not preclude setting aside a release if later consequences are discovered. It speaks in terms of “an agreement in regard to the compensation under this title.” This .may or may not include a final receipt and release signed by the employee. Further, it says that the agreement is enforceable if approved, but is not binding for all time on the parties. This has to be true by the very fact that SDCL 62-7-33 states:

“Review of payment by commissioner. — Any payment to be made under this title may be reviewed by the commissioner at the request of the employer or of the employee and on such review it may 'be ended, diminished, or increased subject to the maximum or minimum amounts provided for in this title, if the commissioner finds the condition of the employee warrants such action.” (emphasis supplied)

In Chittenden, the court in discussing the above act stated:

“This statute does not confer a jurisdiction on the Commissioner to reopen and review an award on the same or substantially the same facts as those appearing on the original hearing or to correct errors made in fixing the amount of the original award. It has reference to conditions different from that when the award was made; the modification is dependent upon a change in the condition of the employee since the last award. Estate of Beckwith v. Spooner, 183 Mich. 323, 149 N.W. 971, Ann.Cas.1916E, 886; Bell v. State Compensation Commissioner, 113 W.Va. 571; 169 S.E. 162 (additional citations omitted).” 68 S.D. at 9, 297 N.W. at 789.

However, after this language, which is based on sound logic and precedent, the court concluded that the statute

“contemplates the existence of continuing payments. An award based either on an adjudication or an agreement, which has been satisfied by payment, cannot thereafter be reopened and reviewed because of change of condition.” 68 S.D. at 9, 297 N.W. at 789.

This language does not apply to the facts in the Chittenden case as the claim there was not a change in condition, but rather for a mistake of law in figuring the original compensation to the claimant for which he signed a final release. This dicta in the Chittenden case, which would seem to also bar recovery for a later discovered disability from an injury for which a claimant had signed a final release and receipt duly filed with the Commissioner, is overruled. We would hold that since there is no statutory mandate against setting aside a release where consequences of an injury were not discoverable until sometime in the future there can be a review by the Commissioner of the award in view of the newly discovered disability. Vodopich v. Trojan Mining Co., 1921, 43 S.D. 540, 180 N.W. 965.

This holding is also in accord with the public policy exhibited by the Workmen’s Compensation Act. The disability discovered in 1972 by the claimant is a permanent, partial disability. The settlement and release made no mention of or provision for compensation for a permanent, partial disability. 101 C.J.S. Workmen’s Compensation § 899 states:

“The generally accepted rule is that where compensation has been paid and the award approved and the case closed, it may still be reopened on the grounds of a change in the employee’s condition, where the question of the permanency of the injuries was not considered in the settlement; and a final receipt or a release will not preclude a review on such grounds; not even, it has been held, where the receipt recites that the disability has ceased.”

Once the problem of the final receipt and release in this case is dealt with, the next question is whether claimant’s recovery would be barred by the. statute of limitations. At that time SDCL 62-7-35 had a one-year .statute of limitations for claims under the Act. The' record shows that claimant Novak made a timely claim for his immediate injuries as a result of the January 15, 1969 accident. This being the case, this claim tolled the statute of limitations for this injury. The claimant’s most recent claim was simply a review of his original claim seeking more compensation for the disability caused by the 1969 accident. The accident had already been reported to the employer, the insurance company and the Department of Labor and Management Relations in 1969. Therefore, the statute of limitations did not expire. This court has previously stated the reason for the statute of limitations in Workmen’s Compensation cases: “The purpose of requiring a claim for compensation to be filed by an injured employee, like notice of injury, is to protect employers against stale claims which cannot be promptly investigated.” Tegels v. Western Chevrolet Co., 1965, 81 S.D. 592, 596, 139 N.W.2d 281, 283. Neither the employer nor the insurance company in this case suffered from the disability of a stale claim. Novak’s claim was reported in 1969 and an investigation must have been conducted because the employer and its insurance company assumed liability.

As indicated above, this release and the statute of limitations were not considered by the trial court in its decision and the cause must be remanded to the circuit court for a decision on these questions in accordance with the guidelines set out herein. Also, the Commissioner did not make a finding on whether the present disability resulted from the January 15, 1969 injúry. Federated has had no clear opportunity to brief and argue either of these questions on the present record. Therefore, this case is reversed and remanded to the circuit court for appropriate proceedings not inconsistent with this opinion.

WINANS and DOYLE, JJ., concur. WOLLMAN and COLER, JJ., dissent.