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Municipality of Anchorage v. Stenseth

Supreme Court of Alaska

November 25, 2015

LEE O. STENSETH, Appellee.

Appeal from the Alaska Workers' Compensation Appeals Commission, No. 13-008 Laurence Keyes, Commission Chair.

Shelby L. Nuenke-Davison, Anchorage, for Appellant.

Robert A. Rehbock, Rehbock & Rehbock, Anchorage, for Appellee.

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.




The Alaska Workers' Compensation Board dismissed an employer's fraud petition after deciding that the parties had reached an enforceable settlement. The employer appealed the dismissal, arguing that any settlement of its fraud petition was void because the settlement did not meet the requirements set out in the Alaska Workers' Compensation Act and the Board's regulations. The Alaska Workers' Compensation Appeals Commission affirmed the Board's decision. The employer appeals, arguing that the Commission's interpretation of the statute is incorrect and that the Commission incorrectly interpreted our decisions about estoppel. We affirm the Commission's decision.


Lee Stenseth was injured at work many years ago. He and his employer, the Municipality of Anchorage, entered into a compromise and release agreement (C&R) in August 1996 in which Stenseth waived all future benefits except medical benefits in exchange for $37, 000. Stenseth retired from the Municipality in 1996, but he continued to receive medical benefits for his work-related injury, including narcotic pain medication.

In late 2006 Stenseth was charged with multiple felonies related to selling or delivering narcotics that he had acquired, some from forged prescriptions modeled on the prescriptions for his work-related injury. Stenseth pleaded guilty to a number of felonies and served time in jail; he was released in June 2010.

In April 2012 the Municipality filed a petition under AS 23.30.250(b)[1]alleging that Stenseth had obtained workers' compensation benefits by making a false statement or misrepresentation for the purpose of obtaining benefits. It asked for an order reimbursing it for "all benefits, costs and attorney's fees paid as a result of the misrepresentations." Stenseth denied that he had made any misrepresentations for the purpose of obtaining benefits.

The parties agreed to mediate their dispute, with an Alaska Workers' Compensation Board hearing officer, William Soule, acting as the mediator. The mediation occurred in early November 2012. The letter from hearing officer Soule confirming the mediation asked that the parties "come with authority to settle, or a way to obtain adequate authority, during normal[] Alaska business hours." At the time the Municipality was represented by attorney Trena Heikes; Law Henderson, the Municipality's workers' compensation administrator, did not attend the mediation in person but participated by telephone. Henderson later testified that Heikes called him periodically throughout the day to discuss the negotiations. Both Heikes and Henderson thought they had authority to settle the case.

The parties reached some type of agreement at the mediation. The following week Heikes wrote to attorney Robert Rehbock, who was representing Stenseth, to "summarize the settlement reached at mediation last Friday." Heikes summarized the agreement as follows:

MOA has agreed to accept either $30, 000.00 cash to be paid within 90 days from today or a Promissory Note for $40, 000.00 secured by a Confession of Judgment Without Action and a Deed of Trust on the home . . . in Wasilla, Alaska in exchange for its waiver of over $125, 000.00 it claims is due under AS 23.30.250(b). The note will be payable at $500.00 per month and will accrue interest at 3.5%. Mr. Stenseth is to commence these monthly payments immediately with the balance either in cash within 90 days or execute the Note, Confession of Judgment and have his daughter execute the Deed of Trust.

Heikes then memorialized a post-mediation exchange:

I have since discussed the matter with Mr. Henderson today and spoken with you regarding that discussion. As I explained, Mr. Henderson prefers to either wait on the C&R until payment has been made OR make the agreement voidable at MOA's option in the event of default . . . . You claim this changes the terms of the settlement. I am not so sure. Rather, MOA believes this merely is a way of moving forward in the manner in which I initially expressed: to wait to file the C&R until all payment was made.

She gave a deadline for a response.

Rehbock responded, essentially rejecting the Municipality's new proposal; he wrote, "We were and remain prepared to [compromise] on the original terms." He also said that he had been "directed to make a one-time further offer directly to the MOA, your principal[, ] if you will allow your client to receive it." His letter ...

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