Smith filed a workers’ compensation claim alleging that his injury was compensable under the Workers’ Compensation Act because it arose out of and was in the course of his employment. The employer denied the claim but ultimately agreed to pay Smith $6,000 in exchange for his stipulation that he had not sustained a compensable injury. The “no liability settlement” was approved by the State Board of Worker’s Compensation. Nine months later, Smith sued Ellis for negligence. Ellis moved for summary judgment contending the lawsuit was barred by the Workers’ Compensation Act’s exclusive remedy. Summary judgment was granted to Ellis and Smith appealed, arguing that his tort action against Ellis was not barred by his workers’ compensation settlement because Ellis was acting as a “third-party tort-feasor.” The entire Court of Appeals heard this case and split evenly by a vote of six to six.
An injured employee may not enter into a settlement with his employer to recover compensation under the Workers’ Compensation Act, obtain the Board’s approval of the settlement, and then turn around and sue the employer or “an employee of the same employer” by alleging that his injury was not actually compensable under the Act. The Court of Appeals decided in 2002 that even though the Workers’ Compensation Board had approved a so called “no liability settlement” which by its very terms stipulated that there was no liability under the Workers’ Compensation Act, such a settlement compensates the employee for his injury and has the same effect as a “liability” settlement in barring a later tort claim against the employer. The Supreme Court, in this case, has now reaffirmed that principle.
Half of the Court of Appeals felt that Smith’s lawsuit against Ellis should not have been barred because the claims did not, in their view, arise out of and in the course of Smith’s employment. The Supreme Court disagreed, however, and found that an employee may not file a workers’ compensation claim against his employer alleging that he has suffered a compensable injury; reach a settlement with the employer to obtain compensation; avail himself of the right and remedy granted by the Workers’ Compensation Act to seek and obtain the Board’s approval of the settlement, thereby resolving the case; and then turn around and sue the employer (or an employee of the same employer) now alleging that the injury was not compensable, hoping that the Court will disregard the prior resolution of the case, deem the injury not compensation under the Act, and allow a second recovery.
A fact question still existed, however, according to the Supreme Court, as to whether the claim against Ellis was barred by the exclusive remedy provision because Ellis was arguably not acting in his capacity as a fellow employee when he shot Smith. In other words, Smith claims Ellis should be deemed a “third-party tort-feasor” rather than an “employee of the same employer.” There was no indication in Smith’s workers’ compensation settlement as to whether Ellis was acting in the course of Ellis’ employment when he shot Smith. Ellis was not a party to the workers’ compensation claim and settlement. Therefore, Smith will be allowed to present to a jury the issue of whether Ellis, when he shot Smith, was acting as an employee or as an individual not involved in the scope of his employment.
Therefore, in any case in which a plaintiff has received workers’ compensation benefits, even if he/she has entered into a “no-liability” settlement, the plaintiff cannot sue the employer or any fellow employee acting in the scope of the employment.
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