Gibson v. Meadow Gold Dairy - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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[Cite as Gibson v. Meadow Gold Dairy, 88 Ohio St.3d 201, 2000-Ohio-301.]

GIBSON, APPELLEE, v. MEADOW GOLD DAIRY, APPELLANT; ADMINISTRATOR OF
WORKERS' COMPENSATION ET AL., APPELLEES.
[Cite as Gibson v. Meadow Gold Dairy (2000), 88 Ohio St.3d 201.]
Workers' compensation -- R.C. 4123.65 requirement that settlements of workers'
compensation claims against self-insured employers be in writing and not
be effective for thirty days after signing applies to claims on appeal to a
common pleas court under R.C. 4123.512 as well as to claims still at the
administrative level.
The requirement of R.C. 4123.65 that settlements of workers' compensation claims
against self-insured employers be in writing and not be effective for thirty
days after signing applies to claims on appeal to a common pleas court under
R.C. 4123.512 as well as to claims still at the administrative level.
(Nos. 99-122 and 99-429 -- Submitted November 3, 1999 -- Decided March 15,
2000.)
APPEAL from and CERTIFIED by the Court of Appeals for Franklin County, No.
98AP-282.

This case presents the question whether a common pleas court may enforce
an oral settlement of an appeal under R.C. 4123.512 between a workers'
compensation claimant and a self-insured employer. The dispute arose in 1995

during the pendency of such an appeal filed by claimant Don Gibson in the
Franklin County Court of Common Pleas, seeking allowance of additional
conditions. During the discovery phase of the case, Gibson reached an oral
agreement with his former employer, appellant Meadow Gold Dairy, a self-insured
employer, to settle the case for $5,000. Approximately three weeks later, after
Meadow Gold had sent Gibson a stipulation of settlement and release for him to
execute, Meadow Gold learned that Gibson refused to sign the paperwork, thereby
withdrawing his consent to the settlement agreement.

Meadow Gold moved for an order directing Gibson to sign the settlement
agreement, arguing that Gibson had agreed to its terms on the record and,
therefore, the court could enforce the agreement under the authority of Mack v.
Poulson Rubber Co. (1984), 14 Ohio St.3d 34, 14 OBR 335, 470 N.E.2d 902.
Gibson countered that R.C. 4123.65(C) required a signed agreement followed by a
thirty-day waiting period before the settlement could become binding. The trial
court granted the motion and ordered Gibson to execute the agreement and carry
out its terms. When Gibson failed to comply with the order, the trial court
dismissed the case. Gibson appealed the dismissal, arguing that there had not been
a binding, enforceable settlement agreement between himself and Meadow Gold.

The Franklin County Court of Appeals reversed the trial court's decision. In
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its opinion, it stated that R.C. 4123.65 controls settlement of claims even when the
common pleas court has jurisdiction of a pending claim pursuant to R.C. 4123.512.
Meadow Gold appealed to this court, and the court of appeals certified a conflict
between its decision and a decision by the Wayne County Court of Appeals in
Johnson v. A.R.E., Inc. (Jan. 21, 1998), Wayne App. Nos. 97CA0005 and
97CA0006, unreported, 1998 WL 46801. The cause is now before this court upon
the allowance of a discretionary appeal and upon our determination that a conflict
exists.
__________________

Hochman & Roach Co., L.P.A., Gary D. Plunkett and Cinamon S. Houston,
for appellee Don Gibson.

Earl, Warburton, Adams & Davis, Andrew S. Adams, Grier D. Schaffer and
Christopher R. Walsh, for appellant.

Betty D. Montgomery, Attorney General, and Gerald H. Waterman,
Assistant Attorney General, for appellee Administrator of Workers' Compensation.

Lee M. Smith & Assoc., Co., L.P.A., Elizabeth P. Weeden and Lee M. Smith,
for appellee Industrial Commission of Ohio.
__________________

COOK, J. R.C. 4123.651 regulates the settlement of workers' compensation
3

claims by providing for administrative review to protect parties against settlements
that are "clearly unfair" or that constitute "gross miscarriage[s] of justice." R.C.
4123.65(D). The statute provides that "[n]o settlement agreed to * * * by a self-
insuring employer and the self-insuring employer's employee shall take effect until
thirty days after * * * the self-insuring employer and employee sign the final
settlement agreement," and further provides that "[d]uring the thirty-day period, *
* * the employer or employee, for self-insuring settlements, may withdraw consent
to the settlement." R.C. 4123.65(C).

It also directs "every" self-insuring employer that enters into a final
settlement agreement with an employee to mail a copy of it within seven days of
execution to the administrator and the employee's representative, and mandates
that the administrator place the copy in the claimant's file. R.C. 4123.65(A). The
thirty-day waiting period in R.C. 4123.65(C) applies to every settlement agreed to
by a self-insuring employer and its employee. And during the thirty-day period,
which runs from the time the agreement is signed, either party may withdraw
consent to the settlement. There is no language in the statute excepting settlements
reached during a .512 appeal.

Though the general rule is that a trial court may enforce a settlement that
was agreed to by the parties in the presence of the court, regardless of whether it
4

has been reduced to writing, Mack, supra, 14 Ohio St.3d 34, 14 OBR 335, 470
N.E.2d 902; Spercel v. Sterling Industries, Inc. (1972), 31 Ohio St.2d 36, 60
O.O.2d 20, 285 N.E.2d 324, that general rule is directed at settlements that affect
only the interests of the parties before the court. But settlement of workers'
compensation cases necessarily affects the interests of the workers' compensation
system itself. Thus, R.C. 4123.65 allows thirty days for administrative review to
protect those interests.

Gibson, therefore, properly exercised his right to withdraw his consent to the
agreement as allowed by R.C. 4123.65. The oral settlement never legally bound
Gibson and thus could not be enforced because Gibson had not signed the
agreement and, moreover, would have had thirty days from signing to withdraw his
written consent. We agree with the court of appeals' conclusion that the trial court
incorrectly sanctioned Gibson with dismissal of his case for his failure to sign and
comply with the oral settlement agreement.

In reaching its decision, the court of appeals stated that R.C. 4123.65 applies
to all settlements of workers' compensation claims. The administrator has asked
us to rule that, as to employers insured by the State Insurance Fund, the statute
applies only to settlements at the administrative level, not to settlements reached
during an appeal under R.C. 4123.512. We do not address this issue because it is
5

not properly before us in this case. Settlements involving state-fund employers are
referred to in the statute with different language. For example, the statute applies
to "every" self-insured settlement, but does not have corresponding language
encompassing "every" state-fund settlement. We will thus not render an advisory
opinion, preferring instead to address the applicability of R.C. 4123.65 to
settlements involving state-fund employers in a case where that issue is presented
and briefed.

The necessary holding of the court of appeals below, excluding dicta, was
that, pursuant to R.C. 4123.65, settlements of claims against self-insured
employers reached during the pendency of a .512 appeal are not binding until a
final settlement agreement is signed by the parties and thirty days have passed
thereafter. Our decision today affirms that limited holding and does not address
the enforceability of oral settlements involving state-fund employers.

Finally, Meadow Gold argues that the statute is unconstitutional if it
postpones the effective date of a settlement agreement reached during a .512
appeal. According to Meadow Gold, it violates the doctrine of separation of
powers by prohibiting a trial court from enforcing a settlement made in a case
pending before the court. Further, it abrogates the freedom to contract by
postponing the date a settlement becomes binding after the parties themselves sign
6

the agreement. Meadow Gold failed to raise these constitutional arguments in the
trial court, so those arguments are waived and we thus do not address them. See,
e.g., State v. Awan (1986), 22 Ohio St.3d 120, 22 OBR 199, 489 N.E.2d 277. Even
if they were not waived, they are without merit. First, the statute does not restrict a
trial court's power to enforce a binding settlement; rather, the statute identifies the
point at which a .512 settlement becomes binding (and, thus, enforceable). Second,
because " ` "existing laws [are] read into contracts in order to fix obligations
between the parties," ' " Middletown v. Ferguson (1986), 25 Ohio St.3d 71, 79, 25
OBR 125, 132, 495 N.E.2d 380, 387, citing El Paso v. Simmons (1965), 379 U.S.
497, 508, 85 S.Ct. 577, 583, 13 L.Ed.2d 446, 454, Gibson and Meadow Gold
implicitly agreed to the conditions of finality set forth in R.C. 4123.65 when they
initially agreed to settle their .512 appeal.

We hold that the requirement of R.C. 4123.65 that settlements of workers'
compensation claims against self-insured employers be in writing and not be
effective for thirty days after signing applies to claims on appeal to a common
pleas court under R.C. 4123.512 as well as to claims still at the administrative
level. The judgment of the court of appeals is affirmed.
Judgment affirmed.
F.E. SWEENEY, J., concurs.
7

DOUGLAS and RESNICK, JJ., concur in the syllabus and judgment.

MOYER, C.J., PFEIFER and LUNDBERG STRATTON, JJ., dissent.
FOOTNOTE:

1.
See Appendix for the version of R.C. 4123.65 in effect at the time of
the events in this case. See Am.Sub.H.B. No. 107, 145 Ohio Laws, Part II, 3173-
3175. R.C. 4123.65 was subsequently amended, but the amendments do not affect
the continuing validity of this decision. See Sub. H.B. No. 413, 146 Ohio Laws,
Part III, 4656-4658.
__________________

MOYER, C.J., dissenting. The Industrial Commission denied appellee Don
Gibson's claims for allowance of additional conditions allegedly resulting from a
1986 incident. Gibson appealed that denial to the common pleas court pursuant to
R.C. 4123.512.

On November 14, 1995, the parties met for the purpose of taking Gibson's
deposition. Before the deposition began the parties engaged in settlement
negotiations and orally agreed to settle Gibson's workers' compensation claim for
$5,000. Gibson specifically authorized his counsel to settle for that amount.
Thereafter, Gibson's counsel confirmed the terms of the settlement in a letter to
counsel for the employer dated November 27, 1995. The parties made a written
8

stipulation of these facts and made that stipulation a part of the trial court's record
in the R.C. 4123.512 appeal.

This appeal thus presents a single determinative issue: Did the trial court err
in dismissing Gibson's R.C. 4123.512 workers' compensation appeal as a sanction
for failing to comply with its order to execute documents implementing the oral
settlement agreement made by the parties on November 14, 1995? I believe that
the trial court did not violate applicable law in ordering the plaintiff to implement
the settlement and that its judgment should therefore be affirmed.

In answer to the certified question, I would hold that settlements entered into
between a self-insuring employer and an employee during the pendency of an R.C.
4123.512 appeal in a common pleas court are not subject to the provisions of R.C.
4123.65, including the thirty-day cooling-off period set forth in R.C. 4123.65(C).
Accordingly, in my view, R.C. 4123.65 does not provide Gibson with justification
for disregarding the trial court's order.

It is well established that trial courts possess power to enforce settlement
agreements voluntarily entered into by the parties to a lawsuit. Mack v. Polson
Rubber Co. (1984), 14 Ohio St.3d 34, 14 OBR 335, 470 N.E.2d 902. Where
allegations are made of fraud, duress, or undue influence, or of any factual dispute
concerning the existence of the terms of such an agreement, the court may conduct
9

an evidentiary hearing to determine whether the agreement indeed constitutes a
valid contract. Id. Gibson made no allegation of fraud, duress, or undue influence,
or of any factual dispute as to the terms of the settlement to which he had
previously agreed. He simply changed his mind and decided he did not want to
settle.

R.C. 4123.65 is not a model of legislative draftsmanship. Nevertheless,
review of divisions (D) and (F) of R.C. 4123.65, read in pari materia with other
workers' compensation statutes, leads to the conclusion that the General Assembly
did not intend to establish a thirty-day cooling-off period for settlement of claims
made against self-insuring employers that have reached the common pleas court by
a R.C. 4123.512 appeal.

R.C. 4123.65(D) provided: "At the time of agreement to any final
settlement * * * agreement between a self-insuring employer and his employee, * *
* the self-insuring employer, for self-insuring settlements, immediately shall send
a copy of the agreement to the industrial commission who shall assign the matter to
a staff hearing officer. The staff hearing officer shall determine, within the time
limitations specified in division (C) of this section [thirty days], whether the
settlement agreement is or is not a gross miscarriage of justice. If the staff hearing
officer determines within that time period that the settlement agreement is clearly
10

unfair, the settlement agreement is deemed not approved."

R.C. 4123.65(F) provides, "A settlement entered into under this section is
not appealable under section 4123.511 or 4123.512 of the Revised Code."

Gibson argues that R.C. 4123.65 applies even where the workers'
compensation proceedings have concluded at the administrative level and are
pending in the judicial branch. If Gibson's position is correct, and the procedural
protections of R.C. 4123.65 apply to settlements implemented while an R.C.
4123.512 appeal is pending, then a self-insuring employer has an obligation to
"immediately * * * send a copy of the agreement to the industrial commission who
shall assign the matter to a staff hearing officer." R.C. 4123.65(D). Moreover, if
the staff hearing officer thereafter determines that the settlement agreement is
clearly unfair, the settlement agreement is deemed "not approved," and that
decision, not being appealable pursuant to R.C. 4123.65(F), is final. Acceptance of
Gibson's argument would thus allow an administrative staff hearing officer to
conclusively disaffirm a judgment of the common pleas court implementing a
settlement of a workers' compensation claim between a self-insuring employer and
its employee.

R.C. 4123.512 confers jurisdiction on courts of common pleas to be the final
arbiters of disputes as to a worker's right to participate in the workers'
11

compensation system, subject to appeal to the courts of appeals. Such an appeal to
a common pleas court divests the Industrial Commission of continuing jurisdiction
of a worker's claim. See State ex rel. Rodriguez v. Indus. Comm. (1993), 67 Ohio
St.3d 210, 213, 616 N.E.2d 929, 931. I cannot accept the proposition that the
General Assembly intended a staff hearing officer of the Industrial Commission to
have power, in effect, to veto a settlement of a workers' compensation dispute
reached while that dispute was subject to judicial supervision. This conclusion is
reinforced where, as here, both parties were represented by counsel at the time the
agreement was reached and the agreement is between a self-insuring employer and
its employee, so that the agreement likely will have little, if any, effect on the
integrity of the state workers' compensation insurance fund.

Because I believe that R.C. 4123.65 contemplates only settlements executed
during proceedings at the administrative level, I respectfully dissent.

PFEIFER and LUNDBERG STRATTON, JJ., concur in the foregoing dissenting
opinion.
APPENDIX

Former R.C. 4123.65 provides in its entirety:

"(A) A state fund employer or the employee of such an employer may file an
application with the administrator of workers' compensation for approval of a final
12

settlement of a claim under this chapter. The application shall include the
settlement agreement, be signed by the claimant and employer, and clearly set
forth the circumstances by reason of which the proposed settlement is deemed
desirable and that the parties agree to the terms of the settlement agreement
provided that the agreement need not be signed by the employer if the employer is
no longer doing business in Ohio. If a state fund employer or an employee of such
an employer has not filed an application for a final settlement under this division,
the administrator may file an application on behalf of the employer or the
employee, provided that the administrator gives notice of the filing to the employer
and the employee and to the representative of record of the employer and of the
employee immediately upon the filing. An application filed by the administrator
shall contain all of the information and signatures required of an employer or an
employee who files an application under this division. Every self-insuring
employer that enters into a final settlement agreement with an employee shall mail,
within seven days of executing the agreement, a copy of the agreement to the
administrator and the employee's representative. The administrator shall place the
agreement into the claimant's file.

"(B) Except as provided in divisions (C) and (D) of this section, a settlement
agreed to under this section is binding upon all parties thereto and as to items,
13

injuries, and occupational diseases to which the settlement applies.

"(C) No settlement agreed to under division (A) of this section or agreed to
by a self-insuring employer and his employee shall take effect until thirty days
after the administrator approves the settlement for state fund employees and
employers, or after the self-insuring employer and employee sign the final
settlement agreement. During the thirty-day period, the employer, employee, or
administrator, for state fund settlements, and the employer or employee, for self-
insuring settlements, may withdraw his consent to the settlement by an employer
providing written notice to his employee and the administrator or by an employee
providing written notice to his employer and the administrator, or by the
administrator providing written notice to the state fund employer and employee.

"(D) At the time of agreement to any final settlement agreement under
division (A) of this section or agreement between a self-insuring employer and his
employee, the administrator, for state fund settlements, and the self-insuring
employer, for self-insuring settlements, immediately shall send a copy of the
agreement to the industrial commission who shall assign the matter to a staff
hearing officer. The staff hearing officer shall determine, within the time
limitations specified in division (C) of this section, whether the settlement
agreement is or is not a gross miscarriage of justice. If the staff hearing officer
14

determines within that time period that the settlement agreement is clearly unfair,
the settlement agreement is deemed not approved. If the staff hearing officer
determines that the settlement agreement is not clearly unfair or fails to act within
those time limits, the settlement agreement is approved.

"(E) A settlement entered into under this section may pertain to one or more
claims of a claimant, or one or more parts of a claim, or the compensation or
benefits pertaining to either, or any combination thereof, provided that nothing in
this section shall be interpreted to require a claimant to enter into a settlement
agreement for every claim that has been filed with the bureau of workers'
compensation by that claimant under Chapter 4121., 4123., 4127., or 4131. of the
Revised Code.

"(F) A settlement entered into under this section is not appealable under
section 4123.511 or 4123.512 of the Revised Code."
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