Louisiana: $5,000 Penalty Provision in Settlement Agreement May Not Be Enforced Against Claimant

A Louisiana appellate court recently held that while the terms of a compromise settlement agreement executed by a workers’ compensation claimant and an employer are generally recognized and fully binding on the parties, where the agreement calls for the payment, by the claimant, of stipulated damages in the event of a subsequent violation of the agreement’s terms, that penalty provision is unenforceable; there is no provision within the state’s Workers’ Compensation Act allowing its imposition.  The appellate court observed that the worker initially alleged he had sustained a work-related injury 2006.  In 2011, the matter proceeded to trial and a WCJ found in favor of the employer and dismissed the claim.  A few months later, the worker filed another claim in connection with the same 2006 alleged accident.  The WCJ, on her own motion, caused an IME to be performed to address the worker's medical condition. The IME indicated the worker required no further medical treatment and that the worker was capable of returning to full-duty work. The employer sought to end the matter by offering $3,000 to the worker, who was represented at the time by counsel, in exchange for a full release.  The agreement also contained a clause, specifically acknowledged by the claimant, that the latter would pay $5,000.00 in damages should he initiate or file any additional claim or suit.  The claimant signed the documents, accepted the check, and filed still another claim for benefits a few months later—this one pro se.  Following a hearing, the WCJ entered an order dismissing the claim and ordering claimant to pay the stipulated damages of $5,000.00, as required by the signed agreements.  As indicated by the appellate court, however, the penalty provision was not enforceable.

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is a leading commentator and expert on the law of workers’ compensation.

LexisNexis Online Subscribers: Citations below link to Lexis Advance. Bracketed citations link to lexis.com.

See Ayro v. Willstaff, Inc., 2014 La. App. LEXIS 433 (Feb. 19, 2014) [2014 La. App. LEXIS 433 (Feb. 19, 2014)]

See generally Larson’s Workers’ Compensation Law, § 132.03 [132.03]

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law.

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