While the Labor Code does not provide an avenue to set aside a settlement in a workers’ compensation case, there are two avenues that have the same affect as setting aside a settlement: either file a Petition for Reconsideration or file a Petition to Reopen.

Petition for Reconsideration

While the Labor Code does not specifically provide for a petition to set-aside an order or judgment, it is clear from the case law that a petition for reconsideration is the most appropriate avenue for petitioning to set-aside an order or judgment.

Pursuant to Labor Code section 5903 a party may file a petition for reconsideration “at any time within 20 days after the service of any final order, decision, or award made and filed by a workers’ compensation judge granting or denying compensation.” The Court has held that the 20 day statute of limitation begins toll on the date the order becomes effective; not the date that the order was issued or served.

A petition for reconsideration, under Labor Code section 5900, “shall set forth specifically and in full detail the grounds upon which the petitioner considers the final order, decision, or award made and filed by the appeals board or a workers’ compensation judge to be unjust or unlawful and every issue to be considered by the appeals board. Labor Code 5902.

There are five, enumerated grounds upon which the petitioner may file a petition for reconsideration:

1. The appeals board or workers’ compensation judge acted without or in excess of its powers in making the finding, decision, or award;
2. The decision, finding, or award was the result of fraud;
3. The evidence does not justify the findings of fact;
4. The findings of fact do not support the order, decision, or award; and/or
5. The petitioner has discovered new, material evidence that was not previously discoverable with reasonable diligence.

The Court has held that reconsideration must be based on one, or more, of the above-mentioned grounds.

For a party to succeed on a Petition for Reconsideration on the grounds of fraud, a party would need to show that he had been under “severe emotional distress” at the time he executed the Compromise and Release.

However, for a party to succeed on a petition for reconsideration on the grounds of the insufficiency of the evidence, a party must “set out specifically and in detail how the evidence fails to justify the findings.” 8 CCR 10852.

Similarly, for a party to succeed on a petition for reconsideration on the grounds of newly discovered evidence, it “must contain a specific offer of proof…a petition for reconsideration may be denied if it fails to meet the requirements.” 8 CCR 10856.

While Labor Code section 5903 is very specific in the grounds on which a petition for reconsideration may be filed, the Board has heard petitions based on mutual mistake.

For example, in the matter of Carmichael v. Industrial Accident Commission (1965), 234 Cal.App.2d 311, the applicant filed a petition to “rescind the release and compromise” of his claim on the grounds that it was obtained under fraud and/or there was a mutual mistake of fact, that was not due to the applicant’s own neglect. The Board found that there was no evidence of fraud.

Applicant alleged that the mistake of fact was that two doctors furnished by the employer’s insurer told him that he was able to return to work and that he had completely recovered from his injury and that the residual pain he said he had in his legs was in his mind. While applicant knew that he had the right to obtain an independent medical evaluation, he declined to do so and relied on the opinions furnished by these two doctors.

The Court held that “it would have been within the power of the commission to find that petitioner was entitled to rescind the compromise and release on the ground of mutual mistake of fact, if it also found that petitioner’s mistake was not due to his own neglect.”

Ultimately, the Court denied applicant’s petition for writ of review finding that there had not been a mutual mistake of fact. The Court held that the applicant had “consciously released the employer from any further liability that might arise from the injury” because there was evidence that the applicant had read the settlement documents, did not discuss settlement with the doctors who had evaluated him, rejected the right to an independent medical evaluation, and “yet nevertheless signed the release and, after its approval by the commission accepted the money tendered there under.”

Petition to Reopen

Pursuant to Labor Code section 5804, “no award of compensation shall be rescinded, altered, or amended after five years from the date of injury.” This has been interpreted to mean that a petition to reopen must be filed within 5 years of the date of injury. A petition to reopen “shall set forth specifically and in detail the facts relied upon to establish good cause for reopening.” 8 CCR 10455.

However, where the petition to reopen is filed within weeks of the final order, the Board has denied petitions to reopen. For example, in the matter of Harbort v. Calgon/Merck & Co. (1998) 26 CWCR 230, a Board Panel affirmed the decision of WCJ denying a petition to reopen an award of total permanent disability indemnity when the award had been made only 25 days prior. The Panel concluded that there was no evidence of a change in applicant’s condition from the date of the award and that the “principle of reopening for good cause does not permit relitigating the original award.”