Massachusetts Court Discusses Rescission of Workers’ Compensation Agreements

It is not uncommon for people who are hurt on the job to ultimately resolve their workers’ compensation claims via settlement agreements. Generally, such agreements will not be set aside, with few exceptions, as discussed in a recent Massachusetts ruling. If you were injured at work, you may be owed benefits, and it is smart to meet with a Massachusetts workers’ compensation attorney about your options.

Facts of the Case

Reportedly, the plaintiff, a correction officer, was injured while performing duties at work, which led to them receiving workers’ compensation benefits from their self-insured employer, due to a permanent disability. Additionally, the plaintiff was awarded accidental disability retirement benefits by the State Board of Retirement, although these ADR benefits were offset by the workers’ compensation benefits received by the plaintiff. Before reaching a lump sum settlement, the plaintiff received combined workers’ compensation and ADR benefits amounting to about $4,300 per month.

Allegedly, the plaintiff entered into a lump sum settlement to end their workers’ compensation claim for a $10,000 payment. Following the settlement, they were only eligible to receive ADR benefits, which totaled about $2,500 per month. The discrepancy in these benefit amounts resulted from the distinct calculation methods used by the workers’ compensation and ADR systems. Thus, the plaintiff sought rescission of the lump sum settlement agreement on the basis of mutual mistake of fact.

It is reported that the Superior Court judge noted that the plaintiff’s complaint sought rescission solely on this ground of mutual mistake, but no such mistake was present However, he also noted that “other principles of equity” could support rescission and referred to a case that allowed such principles. The judge stated that both parties in a lump sum settlement should advise the administrative judge of the facts they believe make the settlement in the employee’s best interest, which was not done in this case. Consequently, the judge rescinded the settlement agreement and remanded the matter to the Department of Industrial Accidents. The DOC appealed.

Grounds for Rescinding Settlement Agreements

On appeal, the court noted that the plaintiff did object to the judge’s ruling regarding mutual mistake. As such, the sole issue on appeal was whether the judge erred in allowing the agreement’s rescission based on principles of equity other than fraud or mutual mistake. The DOC contended that only fraud or mutual mistake could justify rescission. Still, the plaintiff argued that the Ferreira case allowed Superior Court judges to set aside such settlements based on “principles of equity.”

The court acknowledged that the Workers’ Compensation Act was significantly amended in 1985 to include the option of vacating or modifying a settlement agreement on grounds of law or equity. In the context of lump sum settlement agreements under G.L. c. 152, § 19(2), any party can file a complaint in Superior Court to vacate or modify the agreement on these grounds. The court concluded that the judge’s reliance on principles of equity was justified under the amended statute, thereby rejecting the DOC’s claim that only fraud or mutual mistake could lead to a lump sum settlement’s rescission. Consequently, the court affirmed the judgment.

Talk to an Experienced Massachusetts Attorney

People hurt while working can often recover significant workers’ compensation benefits. James K. Meehan of the Law Office of James K. Meehan is an experienced Massachusetts workers’ compensation attorney, and if you sustained injuries on the job, he can aid you in pursuing any benefits available. You can contact Mr. Meehan to arrange a consultation via the online contact form by calling him at 508-822-6600.