Facts
- Michael LaFleur suffered a work-related injury in January 1975 when a forklift blade fell on his right foot.
- Employer-related physicians advised that the injury was superficial and diagnosed a toe sprain; LaFleur returned to work but continued to have pain.
- After LaFleur filed a claim, he entered a $4,000 lump-sum workers’ compensation settlement in August 1976 stating it was a complete and final redemption of liability for all weekly benefits due now or in the future and that he could not reopen his claim.
- The Industrial Accident Board approved the settlement in November 1976 under Massachusetts workers’ compensation law.
- LaFleur’s condition worsened; in January 1977 he was diagnosed with arterial occlusive (Buerger’s) disease, later resulting in bilateral above-knee amputations and permanent wheelchair confinement.
- LaFleur submitted medical evidence indicating he had a preexisting arterial disease and that the industrial accident injured his arterial system, aggravated the disease, and was causally related to the amputations.
Issues
- Whether a workers’ compensation lump-sum settlement may be rescinded for mutual mistake when both parties were unaware at settlement of an existing, serious condition causally related to the industrial accident.
- Whether broad “final settlement” language, without specific reference to unknown injuries, bars rescission as a matter of law.
- Whether the employee’s evidence created a genuine issue of material fact precluding summary judgment for the employer and insurer.
Decision
- The Supreme Judicial Court reversed summary judgment for the employer and insurer and remanded for further proceedings.
- The court held that a settlement may be set aside for mutual mistake as to a material existing fact, including an unknown existing injury or condition and its causal relationship to the accident.
- The court ruled that the record evidence could support a finding that the parties’ mistake concerned an unknown existing condition, not merely an incorrect prediction about future consequences of a known injury.
- The court concluded that the settlement’s broad finality language did not, by itself, conclusively establish that the parties intended to release liability for unknown injuries.
- Because a fact dispute existed as to mutual mistake and intent, summary judgment was improper.
Legal Principles
- Mutual mistake supports rescission when both parties are mistaken about a material existing fact that formed the basis of the agreement.
- A mistake about the future course or consequences of a known injury generally does not justify setting aside a release; a mistake about an existing but unknown injury or condition may.
- Whether a release covers unknown injuries turns on the parties’ intent; broad general release language may be insufficient absent clearer indication that unknown injuries were contemplated.
- On summary judgment, evidence supporting an unknown existing condition and causal connection to the industrial accident can create a triable issue on mutual mistake and intent.
Conclusion
Massachusetts permits rescission of a workers’ compensation lump-sum settlement when both sides were mutually mistaken about a material, unknown existing injury or condition related to the accident and the agreement does not clearly show an intent to release unknown injuries; the case was remanded for an evidentiary determination on mutual mistake and intent.