California: Rescission of Compromise and Release Not Duly Executed

Noteworthy panel decision illustrates the Board's powers to set aside a settlement both before and after the settlement becomes final

An Appeals Board panel has rescinded a WCJ’s 8/8/2013 Order Approving Compromise and Release purporting to settle an applicant’s claim for cumulative industrial psychiatric injury, when the applicant, proceeding in pro per, wrote a letter dated 8/23/2013 to a different WCJ seeking rescission of the Order Approving Compromise and Release, which was treated by the Appeals Board as a timely filed petition for reconsideration. The Appeals Board found that its power to set aside a compromise and release agreement before an agreement becomes final (i.e., before the time for reconsideration has expired) is broad and does not require a showing of “good cause,” such as fraud, duress, undue influence, or mutual mistake of fact, as is required after an order approving agreement is final.

Here, the applicant intended to make a settlement offer when she signed the compromise and release form and sent it to the defendant’s claims adjuster, but she subsequently revoked her offer to settle before the offer was accepted by communicating its revocation in a message to the claims adjuster and by making multiple attempts to speak directly to the claims adjuster about the proposed settlement before it was presented to the WCJ. The defendant’s failure to respond to any of the applicant’s messages for several months, along with its failure to inform the WCJ that the applicant had revoked her offer to settle at the time the compromise and release was presented for approval, supported the conclusion that the compromise and release was not “duly executed” in accordance with Labor Code § 5003, that there was good cause to set aside the compromise and release, and that rescission of the Order Approving Compromise and Release was in the interest of substantial justice. See Chott panel decision.

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