Carrier must pay lump-sum benefits despite missing signature

In North Carolina, a settlement agreement that is drafted by an insurance carrier's attorney will be binding on the carrier where the evidence indicates the carrier negotiated with the claimant and instructed the attorney to draft the agreement.

Case name: Chaisson v. Red Simpson and Liberty Mutual Ins. Co., No. COA08-704 (N.C. Ct. App. 03/03/09).

Ruling: The North Carolina Court of Appeals upheld the Industrial Commission's finding that a settlement agreement was enforceable even though it was not signed by the carrier.

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What it means: In North Carolina, a settlement agreement that is drafted by an insurance carrier's attorney will be binding on the carrier where the evidence indicates the carrier negotiated with the claimant and instructed the attorney to draft the agreement.

Summary: A utility lineman sustained a compensable knee injury and reached an agreement with the insurance adjuster for a lump-sum settlement of $97,500. The carrier's attorney drafted the "clincher" settlement agreement at the carrier's direction. The plaintiff signed it and mailed it back. Upon receipt, however, the carrier alleged that the settlement amount was incorrect and refused to honor the agreement. The North Carolina Court of Appeals found that the parties had reached a binding settlement agreement.

The carrier alleged there was no contract because there was no meeting of the minds on the amount and argued that since it had not signed the agreement, it was not bound by the terms.

The Court of Appeals rejected this argument, finding that the carrier's attorney acted as the carrier's agent when she signed the settlement papers and submitted them to the lineman, specifying the settlement amount to be $97,500.

The court affirmed the commission's finding that the insurance adjuster's testimony that she agreed to "around $25,000" was incredible. The court found sufficient evidence that the carrier and the adjuster had signed a letter memorializing their offer to settle the lineman's workers' compensation claim for the definite sum of $97,500, pending the execution of a "clincher" agreement to be drafted by the carrier's attorney upon receipt of the lineman's medical records.

The court further rejected the carrier's argument that the agreement violated the state legal requirements because it was filed with the commission by the lineman himself, rather than by his employer. The court found the carrier's public policy arguments unpersuasive, noting that none of the statute's requirements showed that the agreement had to be filed by the employer, rather than by the lineman. The court ruled that the parties were bound by the agreement to settle the claim for $97,500.

May 4, 2009

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