IN THE MATTER OF THE CLAIM OF: JASON TETI, Claimant,
v.
COLORADO GOLD WHOLESALE, Employer,
and
COLORADO INSURANCE GUARANTY ASSOCIATION, Insurer, Respondents.
W.C. No. 3-948-315-003
Colorado Workers Compensation
Industrial Claim Appeals Office
November 20, 2020
KEATING WAGNER POLIDORI FREE PC, Attn: MELISSA A HAILEY ESQ,
C/O: LAURENCE J FREE ESQ, (For Claimant)
RITSEMA & LYON PC, Attn: DOUGLAS L STRATTON ESQ, C/O:
KRISTIN A CARUSO ESQ, (For Respondents)
FINAL
ORDER
The
respondent, Colorado Insurance Guaranty Association (CIGA)
seeks review of an order of Administrative Law Judge Michelle
Jones (ALJ) dated March 5, 2020, that determined CIGA has an
obligation to continue paying workers’ compensation
benefits to the claimant without an offset from money
received from a third party settlement. We affirm the
ALJ’s order.
This
matter went to hearing on the issue of whether the claimant
established that he had a pre-insolvency right to receive
workers’ compensation benefits from an insolvent
insurer without an offset for money he received and continues
to receive from Ford Motor Company (Ford) and Ford assignees.
The ALJ was also asked to address whether the claimant has
established that CIGA has a post-insolvency obligation to pay
workers’ compensation benefits to or on behalf of the
claimant without an offset for money the claimant received
and continues to receive from Ford and Ford assignees.
Finally, the ALJ was asked to resolve whether the money the
claimant received and continues to receive form Ford and Ford
assignees are claims against an insurer under any provision,
in any insurance policy, and whether the claimant is required
to exhaust his rights under such insurance policy thus
reducing the amount payable from CIGA by the amount the
claimant has recovered under such insurance policies
consistent with the non-duplication of recovery statute at
§10-4-512, C.R.S.
After
hearing the ALJ entered factual findings that for purposes of
review can be summarized as follows. On June 16, 1989, the 18
year-old claimant sustained an admitted work-related injury
when he was involved in a motor vehicle rollover accident
while driving down a frontage road in Adams County. The
claimant was executing a curve when he lost control of the
vehicle and the vehicle rolled. The claimant sustained
multiple serious injuries, including severe head trauma,
rupture of the liver and spleen and pelvic fracture. The
claimant was hospitalized at St. Anthony’s hospital for
two months, at Craig hospital for an additional six months
and then spent several years in a supported living program.
The claimant reached maximum medical improvement (MMI) on
June 24, 1992, and is permanently and totally disabled.
The
claimant’s employer was a wholesale floral business
owned by the claimant’s family. The employer’s
workers’ compensation insurer at the time of the
accident was Millers First Insurance. The employer and
Millers admitted liability by filing a general admission on
July 13, 1989, and began paying benefits to the claimant.
On June
12, 1991, the claimant, through his parents, filed a civil
tort action against Ford Motor Company in the United Stated
District Court for the District of Colorado. The complaint
alleged the following against Ford: negligence and willful
and wanton negligence; breach of warranties; strict
liability; fraudulent misrepresentation and fraudulent
concealment. The complaints all related to the Bronco II that
the claimant was driving at the time of the work-related
motor vehicle accident. The complaint also noted damages
requested including economic and non-economic damages due to
the accident, injuries and losses the claimant sustained and
would sustain in the future.
The
attorney representing the employer and Millers in the
claimant’s workers’ compensation claim was Thomas
Schrant, Esq. Mr. Schrant was aware of the civil action
against Ford Motor Company. On November 18, 1992, Mr. Schrant
signed an affidavit noting that he was Millers’
attorney representing its interests involving the
workers’ compensation claim of the claimant and that he
believed payment of benefits by his client operated as an
assignment of the cause of action against the third-party
tortfeasor to his client. He indicated that he had retained a
consultant to look into the rollover accident.
On
December 9, 1992, the claimant’s mother, Kaye Teti, was
appointed by court order as the claimant’s guardian and
was deemed the claimant’s personal representative with
full authority to act on the claimant’s behalf with
limited restrictions. She was also appointed as the
claimant’s conservator.
I. The
Global Settlement Agreements
Starting
in June of 1993, the claimant, Millers and Ford entered into
a global settlement of the workers’ compensation claim
and the third party tort claim as summarized in the separate
agreements below:
A.
Workers’ Compensation Agreement: Millers and the
claimant
The
Division of Workers’ Compensation received a Motion for
Approval of Settlement, and attached Stipulation and a
proposed Order from W. Randolph Barnhart, the attorney for
the claimant in his workers’ compensation claim against
the employer and Millers. Mr. Barnhart indicated in the
motion that the parties moved the Director for an Order
approving settlement in the case and that the Stipulation for
Settlement was submitted concurrently with the motion. Mr.
Barnhart and Mr. Schrant signed a document named in the
hearing, “Stipulation” on June 2, 1993.
In the
body of the agreement, the two attorneys noted they were
submitting the following stipulation for an order approving a
partial compromise and settlement of these claims. The
agreement notes the claimant was injured in a work-related
accident, that the employer was insured by Millers and that a
civil lawsuit was brought against a third-party tortfeasor
(Ford) and had been resolved by a separate settlement. The
agreement states that the parties were cognizant that
pursuant to the provisions of the Workers’ Compensation
Act, the employer and Millers had certain rights against Ford
and, therefore, has entitlement to certain credits to offset
any further liability they may have to the claimant for any
amount received in the civil action. The agreement further
provided that the parties wished to compromise and resolve
the potential credit that the employer and Millers may have
against any future benefits owed to the claimant under the
Workers’ Compensation Act and submitted the following
agreement for compromise and settlement of this potential
offset, commonly known as the right of “use up.”
The
parties agreed that Millers had received a sum certain in the
civil action from Ford which amount was subject to a
confidentiality agreement. The parties agreed that in
exchange for receipt of that amount of money, Millers agreed
to continue to pay benefits under the Workers’
Compensation Act that may become due to the claimant in the
future without any assertion of offset for the amount the
claimant received as a result of a settlement of the third
party action.
The
parties asked that an order be entered approving the
agreement of the parties of the partial compromise
settlement. The parties certified that the proposed
settlement had been personally reviewed with the claimant and
the claimant and the respondents waived any personal
appearance of the claimant before the Director or
Administrative Officer and they requested the settlement be
approved. The attorney for the claimant and the attorney for
the employer and Miller signed the agreement. The stipulation
for a partial compromise was approved by ALJ Janski on
September 29, 1993.
B.
Settlement: Ford and Millers
On June
22, 1993, Ford entered into a settlement agreement with
Millers. In the agreement, Ford paid Millers a confidential
sum in exchange for any interest Millers would have in the
settlement of the civil suit by the claimant against Ford.
Millers agreed they were forever releasing, acquitting and
discharging Ford and acknowledged that Ford paid certain
amount to the claimant and would in the future make certain
payments to or for the benefits of the claimant in settlement
of the civil product liability lawsuit...