SW Legal studies in Business

Final Settlement of Workers’ Compensation Claim May Not Be Reopened

Montana high court held that when a claim is fully settled to a workers’ compensation claim, the claim cannot be reopened later when the injured worker discovers further problems related to the injury suffered on the job. The settlement is a binding contract.

Topic Employment Law
Key Words

Workers’ Compensation; Settlement; Mutual Mistake; Rescission

C A S E   S U M M A R Y

In 1988, Kruzich suffered a serious head injury at work. His employer’s workers’ compensation insurance was provided by Old Republic Insurance. Kruzich received temporary total disability and medical benefits. In 1994, Kruzich and Old Republic entered into a settlement agreement approved by the workers’ compensation commission. Kruzich was given a lump sum settlement, and the contract stated that it “fully and forever” ended any obligations by Old Republic. In 2004, Kruzich began having physical problems that doctors said were probably caused by the accident. He filed a petition with the commission to rescind the original agreement as a result of mutual mistake, since the parties did not know that injuries related to the accident had not yet all been revealed. The commission agreed with Kruzich. It set aside the agreement and reopened the claim. Old Republic appealed.


Reversed. The injury revealed later was caused by the work injury, but neither party knew at the time of the settlement that this problem would arise later. Ignorance of the problem was not a mutual mistake of fact as it was an event that occurred ten years later. A settlement agreement is a valid and enforceable contract, so is governed by contract law. The contract is valid, so Kruzich has no right to have the contract set aside and his claim reopened. When the settlement was made, it was clearly for all matters related to the accident, so no further compensation is due.

Citation Kruzich v. Old Republic Insurance Co., 188 P.3d 983 (Sup. Ct., Mt., 2008)

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