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Pacific Western Construction Co. v. Industrial Commission5/17/1990
The employer and its insurance carrier appeal from the June 12, 1989 Industrial Commission award denying a compromise and settlement agreement entered into between a claimant and the carrier in 1980, while at the same time approving the stipulated findings and award of June 1980 which resulted from the settlement agreement.
The issues presented by this appeal are:
1. The scope and criteria of the commission's review of a settlement of lost earning capacity,
2. The applicability of general contract principles to commission awards based on settlements,
3. The survival of a stipulated award independent of the settlement upon which the award is based, and
4. The computation of credits to the carrier for monies paid under a settlement agreement which is later nullified by the commission.
We find that contract principles govern the setting aside of a settlement agreement resulting in a stipulated award, and that the scope and criteria of the commission's review of a settlement is whether at the time of the settlement there was a genuine and bona fide dispute between the parties regarding the issue of lost earning capacity and whether good grounds existed to justify the settlement. We set aside the award because it failed to make findings consistent with contract principles or the findings required by Gray v. Industrial Commission, 24 Ariz. App. 499, 539 P.2d 973 (1975), approved 113 Ariz. 296, 552 P.2d 766
(1976), and Jones v. Industrial Commission, 114 Ariz. 606, 562 P.2d 1104 (App.1977).
In light of our decision, we need not address issues 3 and 4 raised by the parties.
FACTS AND PROCEDURAL BACKGROUND
The claimant suffered a compensable injury to his elbow in 1977. Hearings in 1979 resulted in an award for permanent impairment to the left shoulder in addition to the left elbow to be compensated on an unscheduled basis. On January 17, 1980, the commission issued its findings and award for unscheduled permanent partial disability and awarded benefits of $303 per month. The claimant requested a hearing on the January 17, 1980 award. The claimant's low back problems suffered before 1977 were affecting his ability to obtain employment. The carrier contended that this affected the permanent partial disability award of $303 per month and requested a reduction to approximately $217 per month. Prior to a June 6, 1980 hearing, claimant's attorney requested a settlement with the carrier for $30,000 in advance permanent partial disability benefits in return for lifelong credit to be applied in the amount of the loss of earning capacity award. On June 13, 1980, the commission issued its findings and award incorporating a stipulation submitted by the parties entitling the claimant to permanent partial disability benefits of $340 per month. The carrier paid $30,000 to the claimant upon receipt from him and his attorney of an executed agreement on June 23, 1980. The settlement agreement stated that the stipulated loss of earning capacity award was an integral part of the agreement. The claim remained closed from June 1980 to June 1988. On June 1, 1988, claimant's new attorney notified the carrier that the agreement was invalid and unenforceable and that, if the carrier did not reinstate payments according to the June 1980 stipulated award, a 1061(J) hearing would be requested. On October 20, 1988, the claimant requested a hearing seeking compensation from June 1980 to the date of the hearing and thereafter.
At a pr
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