ArvinMeritor, Inc. v. Clifton Johnson

ArvinMeritor, Inc. v. Clifton Johnson
CV 2090822, 2011 WL 751925
(Ala. Civ. App., Feb 25, 2011)

This case involved an Alabama workers’ compensation claim filed in 1999.  In February 2003, the trial court found the claimant 100% permanently disabled as a result of an occupational disease and issued a judgment requiring the employer to pay indemnity benefits and the claimant’s future medical expenses related to his occupational disease. (The claimant also filed a separate third party action in relation to this claim).

In November 2008, the parties reached a settlement of the workers’ compensation claim for an undisclosed amount.  The settlement agreement, in part, contained provisions indicating that a proposed MSA of $83,936.17 had been calculated but NOT yet approved by CMS and that the employer was to contribute “up to $65,000” to fund the MSA, “with the balance of the amount necessary to fund the MSA to be paid by [the claimant].”  The court then approved the settlement prior to CMS’ review of the proposed MSA as contemplated by the parties.

About five months after the settlement, the claimant filed a petition with the court claiming that the MSA account had not been established and that he was ready and willing to pay $18,936.17 toward the MSA per the MSA amount calculated by the MSA vendor.  At that point, it was learned that CMS came back requiring a MSA in an amount “substantially higher” than the proposed figure of $83,936.17 (the court’s opinion did not disclose CMS’ exact figure).  The claimant then requested to interplead the monies he was holding to fund the MSA into the court registry pending the trial court’s determination regarding how the matter should be resolved.

The trial court ruled, in part, that the employer should be responsible for the overage and that the employer should continue to pay for the claimant’s medicals until the MSA account was fully funded.  In reaching its decision, the trial court found that the employer “induced” the claimant to believe that that he would have to pay $18,936.17 as his portion to fund the cost of the MSA. Furthermore, it found that the prepared allocation was not presented as an “estimate.” The employer appealed.

On appeal, the Alabama Court of Civil Appeals reversed that part of the trial court’s ruling holding the employer liable for the overage essentially finding that the issue regarding which party should be responsible for the overage was a matter that fell outside the court’s purview. 

The appellate court stated as follows:

This court realizes that its holding leaves the parties at an impasse. Both parties are fully complying with their obligations under the judgment approving the settlement. The employee, on the one hand, has tendered payment of the $18,936.17 as required, and the employer, on the other hand, remains committed to paying the $65,000 it promised to pay. Each party requested the trial court to resolve that impasse by imposing the additional obligation on the other.

The parties, however, simply failed to provide in their settlement agreement for the contingency that the cost of funding the MSAT could exceed $83,936.17, and, accordingly, the trial court could not grant either party’s request.

Based on the issues raised in this appeal, it is not the province of this court to advise the parties on the appropriate manner to settle their dispute; we may only hold the trial court in error for imposing a legally incorrect remedy.

As part of its ruling, the appellate court also ruled that the employer should continue to provide medical treatment for the claimant’s work related conditions (although it recognized that the employer may potentially be entitled to a set off in relation to the claimant’s third party recovery which was a separate matter to be addressed by the trial court per governing Alabama law).

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