Sullivan v. Industrial Claim Appeals Office

Opinion by Judge DAVIDSON. William E. Sullivan (claimant) contests a final order of the Industrial Claim Appeals Office (Panel) which affirmed the order of the Administrative Law Judge (ALJ) terminating the claimant’s workmen’s compensation benefits. We affirm. The claimant’s self-insured employer, City Market, Inc. (employer), filed a petition to terminate benefits based on the claimant’s settlement of a third-party claim without the employer’s consent pursuant to § 8-52-108(2), C.R.S. (1986 Repl.Vol. 3B). Section 8-52-108(2), in pertinent part, provides: “A compromise of any [cause of action] by the [employee] at an amount less than the compensation provided for by [statute] shall be made only with the written approval of [the person, association, corporation, or insurance carrier liable to pay the same].” Following a hearing, the AU found that the claimant had not sought or obtained the employer’s written consent to the settlement. The ALJ further found that insofar as the equitable defenses of waiver, estoppel, and laches may be available to bar termination of the benefits pursuant to the forfeiture rule established in In re Death of Peterkin, 729 P.2d 977 (Colo.1986), they were not applicable in this case. The Panel affirmed the AU’s order. The claimant contends that the Peterkin forfeiture rule should not apply here. Claimant argues that, unlike the claimant in Peterkin, he promptly notified the employer of his intent to pursue the third-party claim. He further argues that the employer, although aware of the suit, failed to advise him regarding its position on the suit and failed to assert timely its right to accept or reject the settlement. We disagree. Our supreme court in Peterkin interpreted § 8-52-108(2) to require termination of benefits in instances in which an employee has failed to obtain an insurer’s written .approval to the settlement of a third-party claim for less than the amount necessary to discharge the insurer’s liability under the Act. Claimant’s argument is based on a footnote in Peterkin, in which the supreme court, with citation to foreign authority, notes that: “[S]ome courts avoid the harsh rule of forfeiture if the insurer participated in or encouraged the employee’s settlement.” The phraseology of the footnote, first of all, makes it uncertain as to whether such rule has been adopted in Colorado. However, assuming that such a bar exists, we agree with the Panel that the ALJ’s factual determination that the claimant has failed to establish equitable grounds justifying relief from forfeiture is supported by substantial evidence in the record. The claimant’s attorney in the third-party action testified that he recommended to the employer’s insurance adjuster that the case be settled, and was told by the adjuster, “Do the best you can.” The adjuster, however, denied that he ever expressly or impliedly agreed to a specific settlement, or that he waived the employer’s right to approve a specific settlement. Although the evidence was conflicting concerning this and other communications between claimant’s attorney and the employer’s insurance adjusters and attorneys, the ALJ could reasonably infer that claimant’s counsel presented the settlement to the employer as a fait accompli in June 1986, and that the only matter left open to further discussion by claimant’s counsel was the division of proceeds. The resolution of conflicting evidence is binding on review, see Gelco Courier v. Industrial Commission, 702 P.2d 295 (Colo.App.1985), regardless of the ex [33] istence of evidence which may have supported a contrary result. See May D & F v. Industrial Claim Appeals Office, 752 P.2d 589 (Colo.App.1988). As the Panel noted, the adjuster’s subsequent discussion concerning distribution of proceeds with claimant’s counsel does not compel the conclusion that the employer consented to the settlement itself, or relinquished its right of approval under § 8-52-108(2). In accordance with the reasoning in Peterlcin, supra, an insurer’s general knowledge of, and consent to, third-party negotiations does not constitute participation in, or encouragement of, a specific settlement agreement. Finally, the claimant’s argument regarding the doctrines of apparent authority and agency by estoppel is misplaced. We assume, as did the Panel, that the independent insurance adjusters, as agents of the employer, had the authority to bind the employer. However, we agree with the Panel that there is substantial evidence to support the ALJ’s determination that the adjusters neither consented to the settlement, nor waived the employer’s right to approve the settlement. The evidence was uncontroverted that claimant’s counsel did not seek nor obtain written approval of the settlement, and that neither the employer nor its agents ever told claimant’s counsel that written consent was unnecessary. Since there is substantial evidence to support the disposi-tive findings of fact, and the findings support the conclusion to terminate claimant’s benefits pursuant to § 8-52-108(2), we are bound by the Panel’s order on review. The order is affirmed. NEY, J., concurs. RULAND, J., dissents.