The Industrial Commission and Court of Appeals decided a case recently that reiterates the potential exposures employers face when they clincher a claim with a current employee. While this practice is necessary in certain cases, there can be future exposures to the employer despite their best intentions to resolve any and all aspects of the injury in question.

In Collins v. Wieland Copper Prods., LLC, 2024 N.C. App. LEXIS 958, *18, 910 S.E.2d 373, 2024 WL 4941594 (Sampson, J.) (December 3, 2024), the North Carolina Court of Appeals found that the plaintiff was not barred from compensation despite a prior settlement reached between the parties.

FACTS:

On June 15, 2009, Plaintiff suffered an injury to his right shoulder. After multiple surgeries, PPI ratings, and permanent work restrictions to the shoulder, the claim was settled via a Compromise Settlement Agreement on April 18, 2014, which was approved by the Commission on May 23, 2014. Plaintiff returned to work for the same employer.

On November 20, 2020, Plaintiff was reassigned from his regular job that was accommodating his permanent work restrictions to a different position. Shortly thereafter, Plaintiff felt a pop in his right shoulder. On March 3, 2021, Plaintiff filed a Form 18 listing injury to the arm and elbow for the 2020 injury. On March 10, 2021, Defendants filed a Form 61 denying the claim on the grounds that the condition “pre-existed the alleged date of injury” and arguing that the prior settlement agreement in 2014 barred the claim.

HOLDINGS:

Both the Deputy Commissioner and the Full Commission ruled that the 2020 injury was a separate distinct injury by accident which materially aggravated Plaintiff’s pre-existing right shoulder condition, and thus, found the November 2020 injury compensable. Additionally, the Commission concluded that N.C. Gen. Stat § 97-6, which provides that “[n]o contract or agreement . .. shall in any manner operate to relieve an employer in whole or in part, of any obligation created by [the Act], except as . . . otherwise expressly provided,” invalidated any language in the 2014 Settlement that “could be construed as relieving Defendants of any obligation they have under the Act for any claims filed by Plaintiff for any future alleged injury[.]” Plaintiff was awarded all medical expenses incurred, or to be incurred for treatment of his shoulder and temporary total disability benefits at the weekly rate of $783.24 beginning March 10, 2021 and continuing until he returned to work or until further order of the Commission. Defendants appealed.

The North Carolina Court of Appeals affirmed the decision by the Commission finding that the November 24, 2020 injury was a separately compensable injury from the April 18, 2014 injury that was settled via clincher. The Court stated that a clincher agreement would not be effective against a claim for a later “material aggravation” of an injury or a separate injury by accident to the same body part. Additionally, the Court noted that to the extent any language in the April 18, 2014 Agreement could be construed as Plaintiff releasing Defendants from liability for his November 24, 2020 injury, such language is unenforceable as a matter of law under N.C. Gen. Stat. § 97-6.

PRACTICAL TAKEAWAYS:

Although there are certainly situations where settling a case with a current employee is advisable, this case is a good reminder of the potential pitfalls when doing so. While we hope that settlements via clincher reached with current employees will protect the employer from future exposures as it relates to the settled body part, this case highlights closing out those exposures with a current employee can be problematic.

In Collins, the fact that the Plaintiff described a “pop” in his shoulder in November 2020 and the fact that Plaintiff was new to the position when the pop occurred are what the Court focused on in its opinion. The description of the incident in November 2020 and the short amount of time the employee was in his position at the time of the accident could be found to meet the definition of an injury by accident, and thus, the prior 2014 settlement was not a bar to the Plaintiff’s newest claim. If Plaintiff had not had a new and distinct injury, the decision might have come out differently. If Plaintiff was unable to point to a new injury by accident and his shoulder symptoms were on-going and not associated to a new incident at work, perhaps the Court would have denied Plaintiff’s claim citing the prior 2014 clincher.

When you have a situation where you have settled a prior claim and an employee files a new claim for the same body part, obtain the Plaintiff’s prior medical records from the date of the prior settlement until the new “injury”. If the Plaintiff has treated for the settled body part since the settlement, the employer may have the argument that the symptoms are simply a continuation of the prior injury and are thus barred by the prior clincher. If there is evidence that the prior settled condition was aggravated by a new injury by accident at work, try to elicit testimony from the physicians that the aggravation was temporary in nature and Plaintiff has since returned to baseline and the Defendant-Employer is no longer responsible for any future indemnity or medical expenses.