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ESIS/ACE USA v. Industrial Commission - 11/30/2010

Arizona Court of Appeals Division One Holds That Insurers are not Precluded from Relitigating the Continuing Appropriateness of an Otherwise Final Supportive Care Award When the Parties’ Rights and Obligations Relating to the Supportive Care Benefits are Controlled by a Settlement Agreement That Expressly Permits Periodic Review of the Benefits.


Morris injured her back in 2000 while employed by Bank One.  She subsequently filed a workers’ compensation claim, which Bank One’s insurer, ESIS/ACE USA (“ESIS”), accepted for benefits.  Several years later, after receiving extensive medical treatment, Morris was released to return to work.  ESIS subsequently closed the claim and the Industrial Commission of Arizona (“ICA”) entered an award for no loss of earning capacity.   Morris timely protested ICA’s award, but entered into a settlement agreement with ESIS before litigating the claim.  The settlement agreement expressly provided that Morris’s supportive care benefits would be reviewable on an annual basis for need and/or use.  An ALJ subsequently issued an award approving the settlement agreement.  Four years later, after Morris underwent an independent medical evaluation, ESIS altered Morris’s supportive care benefits.  Morris wrote to the ICA claiming that ESIS was failing to adhere to the terms of the award.  After a lengthy hearing, an ALJ entered an award finding that Morris’s supportive care award should remain unchanged.  The ALJ reasoned that Arizona law required ESIS to show something more than merely a change in medical opinion in order to avoid the preclusive effect of a prior award. 

The Arizona Court of Appeals set aside the award.  In Brown v. Industrial Commission, 199 Ariz. 521, 19 P.3d 1237 (App. 2001), the Arizona Court of Appeals held that once an ALJ’s initial award of supportive care becomes final, the insurer and employer are precluded from relitigating the supportive care issue unless there has been some change in the claimant’s physical condition or medical procedures.  Here, although the ALJ’s initial award had become final, the Arizona Court of Appeals concluded that Brown did not apply because, unlike Brown, the parties’ rights and obligations were controlled by the explicit language of an earlier settlement agreement.  According to the Court, the language in the settlement agreement allowing ESIS to review the supportive care each year demonstrated that the parties intended to provide for periodic review of the supportive care award.  Because Morris did not advance any argument that she did not intend to be bound by the settlement agreement, the Court determined that her supplemental care award was subject to review on an annual basis as stated in the settlement agreement. 

Judge Brown authored the opinion; Judges Irvine and Gemmill concurred.

Posted By: Brandon A Hale 

Posted On: 12/8/2010