This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
A worker sustained a back injury while employed in a warehouse. After returning to work, the worker entered into a lump sum settlement agreement with the employer/insurer under the Workers’ Compensation Act, which precluded future disability payments. The worker later experienced worsening back pain and learned that an alternative lump sum option would not have foreclosed future benefits. The worker sought to set aside the agreement, arguing that the employer/insurer and the workers’ compensation judge (WCJ) failed to inform him of his options under the Act (paras 1-3).
Procedural History
- Workers’ Compensation Judge (WCJ): Approved the lump sum settlement without a hearing. Later granted partial summary judgment in favor of the employer/insurer, finding no duty to inform the worker of his options under the Act (paras 3-4).
- Court of Appeals: Affirmed the WCJ’s decision, holding that the employer/insurer did not have a fiduciary duty to the worker when entering into the settlement agreement (para 4).
Parties' Submissions
- Worker: Argued that both the employer/insurer and the WCJ had a duty to inform him of his options under the Workers’ Compensation Act when entering into the lump sum settlement agreement (para 4).
- Employer/Insurer: Contended that they had no duty to advise the worker of his options and that the settlement agreement was valid and enforceable (para 3).
Legal Issues
- Did the workers’ compensation judge (WCJ) have an affirmative duty under the Workers’ Compensation Act to ensure that the worker understood the terms and consequences of the lump sum settlement agreement?
- Is the lump sum settlement agreement enforceable if the WCJ failed to fulfill this duty?
Disposition
- The Supreme Court of New Mexico reversed the decisions of the Court of Appeals and the Workers’ Compensation Administration, holding that the lump sum settlement agreement was unenforceable due to the WCJ’s failure to fulfill their statutory duty (para 14).
Reasons
Per Chávez CJ (Serna, Maes, Bosson, and Daniels JJ. concurring):
The Workers’ Compensation Act prioritizes periodic payments over lump sum settlements to protect workers from financial risks (paras 6-7). The Act imposes an affirmative duty on the WCJ to ensure that workers understand the terms and consequences of lump sum agreements, particularly when workers are unrepresented (paras 8-11). In this case, the WCJ failed to fulfill this duty, as there was no evidence that the worker was adequately informed about the settlement’s implications (paras 10-11). The Court emphasized that this duty is essential to uphold the Act’s policy of protecting workers’ best interests (para 11). Consequently, the lump sum settlement agreement was deemed unenforceable (para 14).