Lykins v. Anderson Contracting, Inc., et al., No. A24-0548 and A24-0549 (Minn. May. 21, 2025)
This case is addresses an employee’s claims that they were incapacitated and did not have the benefit of a conservator when they settled their workers’ compensation claims. About one year later the parties agreed to an addendum settlement.
In 2015, the Employee, Bobby Lykins, was involved in an explosion at work that resulted in a TBI and related cognitive issues. This was an admitted injury.
In 2017, Lykins, his employer, and his employer’s insurer, agreed to a settlement of $438,000.00 for a full, final, and complete.
The settlement also included a stipulation of $93,000 for fees divided into three categories: $26,000 in contingency fees; $55,000 in excess fees; and $12,000 in non-contingent Roraff fees. The parties agreed that the contingency fees and the excess fees would be subtracted from the $438,000 payment to Lykins, but the Roraff fees would be paid by Anderson.
IN 2018, the settlement was amended to provide for the “purchase one pair of hearing aids for [Lykins]” and to pay an additional $1,000 in Roraff fees”
In 2022, the district court appointed a conservator for Lykins. The conservator then petitioned the WCCA to set aside the settlements because the other parties had in their view failed to abide by certain statutory safeguards designed to protect the interests of incapacitated employees.
First, Conservator alleged that the Settlements are invalid because, when Lykins signed them, he was an incapacitated person and could not settle his claims without a conservator. See Minn. Stat. § 176.521, subd. 1(a) (stating that a settlement is “not valid if a . . . conservator is required under section 176.092 and an employee . . . has no . . . conservator”); Minn. Stat. § 176.092, subd. 1 (requiring a conservator for an injured employee who is an “incapacitated person”).
Second, Conservator alleged that Anderson’s failure to file relevant medical reports with the proposed settlement amounted to fraud by omission, which was cause to set aside the Settlements under Minnesota Statutes section 176.461. See Minn. Stat. § 176.461 (stating that the WCCA may set aside a workers’ compensation award and grant a new hearing “for cause” and defining “for cause” to include “fraud”).
The WCCA directed a district court to determine whether Lykins appeared to be incapacitated at the time of the settlements and, if so, to refer the matter to district court for a determination of incapacity.
Both parties appealed, for different reasons, disputing the WCCA’s directions to the compensation judge.
The Minnesota Supreme Court concluded the following:
- In recognition of the broad language of Minnesota Statutes section 176.521, subdivision 3 (that the WCCA may set aside an award made upon a settlement pursuant to chapter 176) and the plain language of section 176.521, subdivision 1(a) (that “[a]n agreement to settle any claim is not valid if a guardian or conservator is required under section 176.092 and an employee or dependent has no guardian or conservator”), they conclude that the WCCA may set aside an award made upon a settlement under section 176.521, subdivision 3,when the settlement is invalid under section 176.521, subdivision 1(a).
- That the evidence submitted to support the petition to set aside the awards made a sufficient prima facie showing that Lykins was incapacitated when he signed the Settlements.
- That the WCCA did not err when it requested fact-finding, but incorrectly concluded that Minnesota Statutes section 176.092, subdivision 3, requires a compensation judge to refer the issue to the district court under these circumstances. Instead, the WCCA should have referred the matter to a compensation judge for a determination of Lykins’s capacity when he signed the Settlements.
- Finally, compensation judges have SMJ over the issue because to set aside the award requires only interpretation and application of the Workers’ Compensation Act.
Takeaway: That the WCCA may set aside a judgment if the Employee was incapacitated, but such question is for a workers compensation judge, not the district court, because it involved interpretation and application of the workers compensation act.