Rhode Island Reexamines Settlement Language

Settling workers’ compensation claims is often a method used to resolve difficult cases or those cases where high benefit exposure exists. The parties typically rely on standard and boilerplate settlement documents which have been previously approved by the court. The Appellate Division of the Rhode Island Supreme Court recently considered the use of such boilerplate language, and its decision on the use of certain standard language should cause all parties to consider and review their existing settlement documents more closely.

In Claudia Zanni v. Rhode Island School of Design, R.I. App. Div. 2014-4060, the Appellate Division of the Workers’ Compensation Court considered an employee’s claim for scarring and loss of use to her right hip following the settlement of her claim for left hip, right knee, and right elbow claims. The employee settled her claims in a petition granted before the Workers’ Compensation Court. The petition included standard settlement documents, including a general release. Within the settlement documents, the employee’s right hip injuries were not discussed nor were they listed as specific claims to be included in the settlement. After the settlement approval, the employee pursued a second claim for this right hip injury, which she alleged occurred at the same time as her other injuries. The employer defended based upon the general release and its language, which stated the employee was settling “any and all injuries, known or unknown.” The employee claimed the insurer knew about her right hip injury and, although not specifically mentioned in the settlement documents, alleged that the hip injury was expressly not considered part of the settlement. The insurer, in turn, argued that the general release was a contract, and operated to release any and all claims for workers’ compensation benefits through its specific, albeit standard, language.

The Appellate Court reviewed the settlement documents and issued a decision in favor of the insurer. The court reasoned that the general release was a contract between the parties, and was neither vague nor ambiguous. In its decision, the Appellate Division stated that because the terms of the general release were clear to all parties, the court was bound to give this all-encompassing language its plain and ordinary meaning. The court interpreted this release to exclude any subsequent claims to the right hip, even though not specifically included in the settlement documents. The court held only if the documents were found to be ambiguous would the intent of the parties be considered, as opposed to the plain meaning of the language listed.

The title and wording of the release were also important. The court found that the release termed a “general release,” was by its very nature more encompassing and far-reaching than a simple “release.” The court held by utilizing the term “general release,” the parties intended to release all claims, not simply a release of those claims listed in the settlement documents. As a result of the terms contained in the general release, the employee’s right hip claim was denied and dismissed.

The court’s decision provides a thoughtful reminder to all parties when preparing settlement documents which, in most jurisdictions, need to be approved by the court. The settlement documents represent the codification of the agreement of the parties, and courts look to the “four corners” of the agreement to provide its interpretation. Parties entering into a settlement agreement should consider that the boilerplate language used to represent the written expression of the settlement and the parties may not rely on intentions and other extrinsic evidence to explain or add to what contained in the settlement documents.