Background:
Hoglund was injured while in the employ of Aaskov. The parties reached an agreement at mediation under which Aaskov agreed to pay medical bills and ongoing total incapacity benefits. Over a year later Aaskov filed a Petition for Review of Incapacity seeking a reduction in benefits. The Board determined that the mediation agreement was binding and that it established the compensability of the employee’s injury. As a result, Aaskov was required to demonstrate a change in Hoglund’s economic or medical circumstances since the mediation in order to merit a reduction in benefits. The Board determined that Aaskov failed to meet this burden, and denied the Petition for Review. Aaskov appealed contending that the mediation agreement was not the equivalent of a litigated factual finding on the extent of incapacity.
Court ruling:
The Law Court, citing Bureau v. Staffing Network, Inc., 678 A.2d 538, 590 (Me. 1996), found that the legislative intent behind the Workers’ Compensation Act was to encourage mediation and avoid litigation whenever possible. The Law Court then held that, in order to carry out this legislative purpose, mediation agreements signed by the parties must be binding on factual issues. In this case Aaskov’s agreement at mediation to pay ongoing partial incapacity resulted in a factual finding that the employee was incapacitated, which in turn required Aaskov to prove a change in circumstances since the mediation in order to be entitled to reduce Hoglund’s benefits.
This case affirms the binding effect of mediation agreements and will likely lead to fewer compromises. Diligent employers and insurers will recognize that an agreement reached at mediation may establish the compensability of an injury, relieving the employee of his burden of proof and shifting it to the employer/insurer who must then show changed circumstances since mediation. As a practice tip, this danger can be avoided by careful drafting of the mediation agreement. Reserve all rights and defenses, and include language that makes it clear that any agreement reached did not have a binding effect on any factual issues as outlined in Hoglund.