Basin Energy Company v. Howard, No. 2013-CA-001725-WC (KyApp. 2014) (to be published):  Subject matter jurisdiction cannot be waived and an ALJ upon a motion to reopen has subject matter jurisdiction to hear a medical fee dispute, regardless of any prior settlement language relative to a “dismissal with prejudice.” Further, language of  “dismissal with prejudice,” does not forestall a reopening, especially where medicals were clearly left open per the settlement agreement/Form 110.

This appeal originated from a  Kentucky Workers’ Compensation Board (WCB) decision regarding a medical fee dispute.  The dispute and motion to reopen was brought by the employer to contest the reasonableness and necessity of specific medical treatment.  The Chief ALJ allowed the dispute to proceed , and after the taking of proof and a hearing, the ALJ ruled in favor of the employer.  Plaintiff appealed.

Instead of addressing the issues presented on appeal, the WCB focused on boiler plate language in the order approving the original settlement agreement, the specific terms of which left open plaintiff’s right to future medical benefits.  The specific language of the agreement provided:

Settlement is for complete and total dismissal with prejudice of any and all claims, except that Plaintiff preserves and does not waive his right to future medical expenses that are reasonable and necessary and for his physical injuries. The open medical obligation of the Defendant/Employer is defined as a cervical and lumbar strain and right shoulder impingement syndrome.

There is a partial waiver of future medical expenses in connection with the psychological/psychiatric claim. Plaintiff preserves and does not waive his right to future medical expenses for an open medical obligation of the Defendant/Employer which is defined as cervical and lumbar strain and right shoulder impingement syndrome. Medical expenses for any other medical conditions are waived, and $1,000.00 of the settlement proceeds constitutes consideration for this partial waiver of future medical expenses.

Due to the risks and costs of further litigation, Plaintiff and the Defendant/Employer have agreed to compromise and settle this claim for a complete and total dismissal with prejudice of all claims including a waiver of medical expenses, a waiver of vocational rehabilitation and a waiver of the right to reopen; except that Plaintiff preserves and does not waive his right to future medical expenses that are reasonable and necessary and for the following defined open medical obligation; cervical and lumbar strain and right shoulder impingement syndrome. In consideration of the payment of $85,000.00 in a lump sum all claims are waived except that Plaintiff preserves and does not waive his right to future medical expenses covered under the open medical obligation as described above.

The Plaintiff acknowledges the effects of the settlement. The Plaintiff has been advised that a dismissal with prejudice of all claims for indemnity means that he shall have no right to further payment of any income benefits whatsoever as a result of the work accident referenced herein. Plaintiff understands that he shall receive no further income benefits; vocational rehabilitation; or TTD benefits at anytime [sic] in the future. Plaintiff has been warned of the effects of this settlement agreement; Plaintiff desires to go forward with the settlement agreement due to the risk of loss and costs of further litigation.

The language of the order approving the agreement, however, contained broader, boilerplate language:

This matter is before the Administrative Law Judge on motion of the Defendant-Employer to approve a Form 110-I settling the above-captioned claim. The Administrative Law Judge having reviewed the motion and being fully advised; IT IS HEREBY ORDERED that the Plaintiff’s claim will be and the same is hereby ordered DISMISSED, with prejudice, as SETTLED.
Despite the very specific delineation of future medical benefits as not being waiver, the WCB apparently focused on the ALJ’s order approving the agreement and found that the entire claim was dismissed with prejudice (even though the agreement was clear and unambiguous that medicals were to be left open) and held the Chief ALJ was without jurisdiction to rule on the motion to reopen in the first place. Therefore, the board dismissed the appeal and remanded to the Chief ALJ with instructions to deny the motion to reopen.

Basin Energy Company appealed, and the Court of Appeals quite swiftly put the WCB in its place by explaining to it the difference between Subject-Matter Jurisdiction and Particular-Case Jurisdiction.  The Court noted that subject-matter jurisdiction clearly existed and was properly exercised by the ALJ via the motion to reopen after the dismissal.  Thus, the “with prejudice” language in the original order did not divest the ALJ of her statutory authority to decide such matters in general.  The “with prejudice” language only affected her authority  in this particular case.  Thus, the subject matter jurisdiction could not be waived.

The question should have been whether the ALJ had particular case jurisdiction, which could be waived and was, in fact, waived by the parties when the matter proceeded without objection on reopening.

The Court also opined that the right to reopen under KRS 3432.125 is a central part of the Act “that survives irrespective of a dismissal ‘with prejudice,’ particularly a dismissal occurring as a result of a settlement where medicals have been left open.”  The Form 110 in the matter before them was clear and unambiguous that medicals were left open.

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