Meddlin’ With Settlin’

By Paul B. Howell, Franke & Salloum, PLLC, Gulfport, Mississippi

“Discourage litigation. Persuade your neighbors to compromise whenever you can. . . . As a peacemaker, the lawyer has a superior opportunity of being a good man. There will still be business enough.” Abraham Lincoln

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It is axiomatic that compromise and settlement are cornerstones of American democracy. Accordingly, the Longshore and Harbor Workers’ Compensation Act (LHWCA, 33 U.S.C.S. § 901 et seq.) has long expanded and encouraged the use of compromise settlements to avoid litigation. See Clefstad v. Pernini North River Associates, 9 BRBS 217 (1978); 20 C.F.R. § 702.315; LHWCA Amendments of 1984, Pub. L. No. 98-426 § 8(f), 98 Stat. 1639, 1646 (Sept. 28, 1984). Therefore, in 1984, the settlement statute was broadened to allow settlement of all claims before both the District Director, OWCP, and the administrative law judge unless the settlement is found to be inadequate or procured by duress. 33 U.S.C.S. § 908(i)(1).[fn1] A settlement is an expeditious method for the parties to agree between themselves, subject to approval, on a format for avoiding costly and time-consuming litigation which may result in an unfavorable outcome. It is not an agreement that claimant is entitled to all of the benefits sought in his or her claim. Clefstad, 9 BRBS at 219.

The regulations provide that a settlement application shall contain the following:

1. A full description of the terms of settlement with a breakdown of the amount paid for settlement of each type of benefit;

2. The reason for the settlement based upon the issues in dispute;

3. The claimant’s and/or the dependents’ dates of birth;

4. Information on claimant’s employability, including information such as age, education, vocational background, and work limitations;

5. A current medical report outlining claimant’s impairments;

6. A statement explaining how the settlement is adequate;

7. For settlements of medical, a breakdown of amounts paid for medical expenses for each of the three preceding years along with a statement of future anticipated medicals; and

8. Information on any collateral source for payment of medical expenses.

20 C.F.R. § 702.242(b)

Notwithstanding the favorability of settlements and the relatively straightforward requirements for settlement, it appears that there is always someone meddling with settling. You have unscrupulous claimants trying to get the money without giving up their rights. You have penny-pinching insurance companies trying to settle cases for less than they are worth. Finally, you have overzealous representatives of the Department of Labor who demand that a claimant be paid the full value of his or her inflated claim. Different issues arise depending upon who is doing the meddling.

Meddling by the Claimant

Initially, the claimant can set aside a settlement on the basis of fraud, but this is a very rare occurrence. Claimants may also withdraw from settlements at any time prior to the approval of the settlement. Simpson v. Seatrain Terminal of California, 15 BRBS 187 (1982). Claimants are more likely to assert (after they get their money) that the settlement agreement was, in actuality, only a consent order, which is modifiable. 20 C.F.R. § 702.315; 29 C.F.R. § 18.9; Finch v. Newport News Shipbuilding & Dry Dock Co., 22 BRBS 196 (1989); Madrid v. Coast Marine Constr. Co., 22 BRBS 148 (1989).[fn2] A claimant may also assert that a settlement is not automatically effective after 30 days in a case where the parties are represented since the settlement papers did not include all of the regulatory requirements for an 8(i) settlement (33 U.S.C.S. § 908(i)). McPherson v. National Steel & Shipbuilding Co., 26 BRBS 71 (1992), aff’d on recon., en banc, 24 BRBS 224 (1991); Norton v. National Steel & Shipbuilding Co., 25 BRBS 79 (1991), aff’d on recon., en banc, 27 BRBS 33 (1993).[fn3] Finally, a claimant may seek reconsideration of a settlement within 10 days or appeal a settlement within 30 days. 20 C.F.R. § 802.206; 33 U.S.C.S. § 921. However, a claimant who fails to timely file will have no further recourse. Porter v. Kwajalein Services, Inc., 31 BRBS 112 (1997), aff’d on recon., 32 BRBS 56 (1998), aff’d, sub nom., Porter v. Director, OWCP, 176 F.3d 484 (9th Cir. 1999), cert. denied, 528 U.S. 1052, 145 L. Ed. 2d 493, 120 S. Ct. 593; Diggles v. Bethlehem Steel Corp., 32 BRBS 79 (1998).

Meddling By Employer

An employer will often attempt to withdraw from a settlement agreement where there has been a material change of circumstances outside of its control prior to entry of the Order Approving Settlement. For example, after years of claiming total disability, a claimant may suddenly re-join the work force just before the settlement approval, or may unexpectedly die. Although a claimant may withdraw from a settlement agreement up until the approval, an employer may not withdraw from a settlement agreement after it has been reduced to writing, signed by the parties, and submitted to the adjudicator. Oceanic Butler, Inc. v. Nordahl, 842 F.2d 773, 21 BRBS 33(CRT) (5th Cir. 1988); Maher v. Bunge Corp., 18 BRBS 203 (1986). However, an employer may withdraw from a settlement where the settlement agreement has not been signed by the parties. Henry v. Coordinated Caribbean Transport, 32 BRBS 29 (1998), aff’d, 204 F.3d 609, 34 BRBS 15(CRT) (5th Cir. 2000). Likewise, an employer may withdraw from a settlement where it has not yet been submitted to the deputy commissioner or the administrative law judge for approval. Fuller v. Matson Terminals, 24 BRBS 252 (1991). An employer may still withdraw from a settlement agreement all the way up until the date of approval where the terms of the settlement agreement give the employer the contractual right to withdraw from the settlement prior to approval. Oceanic Butler, Inc., 842 F.2d at 780, n.6. Finally, an employer may withdraw from a settlement agreement after it has been disapproved by the adjudicator. Towe v. Ingalls Shipbuilding, Inc., 34 BRBS 102 (2000).

Meddling by the Director, OWCP

The Director, OWCP, has a long history of interjecting its office into settlements by appealing the settlement orders, despite its questionable standing. Compare Ingalls Shipbuilding Division, Litton Systems, Inc. v. White, 681 F.2d 275, 14 BRBS 988 (5th Cir. 1982), reh’g denied, 690 F.2d 905, and Ingalls Shipbuilding, Inc. v. Director, OWCP (Yates), 519 U.S. 248, 31 BRBS 5(CRT) (1997). The Director, OWCP, seems to construe all cases based upon present value of future compensation payments computed at a discount rate of current U.S. Treasury bills pursuant to 20 C.F. R. § 702.243(g). However, that section is only applicable to cases being paid pursuant to final compensation orders where no substantive issues are in dispute. Id. Instead, the Director should more seriously consider the probability of success if the case were formally litigated under 20 C.F.R. § 702.243(f). In this regard, an administrative law judge should be given special deference in considering the probability of success before him or her since he or she knows that more often than not, new evidence comes to light just before trial, including evidence calling into doubt the veracity of the claimant. It is true that the government should protect claimants from improvident settlements that leave them and their families destitute. Oceanic Butler, Inc., 842 F.2d at 781. However, it is for that reason that the District Director, OWCP or an administrative law judge, must approve the settlement by confirming that it is not inadequate or procured by duress based upon the probability of success if the case were formally litigated. 20 C.F.R. § 702.243(f). Therefore, for the Director to set aside an Order Approving Settlement, it must require far more than a review of actuarial tables. Issues such as the judge involved, the attorneys involved, the claimant’s credibility, the claimant’s effort on functional capacity testing, the employer’s ability to obtain additional medical and vocational proof before trial, and other factors should be weighed in determining the probability of success if the case were to be formally litigated. Accordingly, the Director should not interfere with arms-length settlements which have been negotiated by represented parties and approved by an independent adjudicator.

In conclusion, absent fraud, deficient paperwork, a material change of conditions before settlement, or a timely appeal from one of the represented parties, everyone should stop meddling with my settling.

Footnotes:

1. Where the parties are represented by counsel, then the settlement is deemed approved unless specifically disapproved within thirty (30) days of submission. Id.

2. Settlements, unlike consent Orders, cannot be modified. 33 U.S.C.S. § 922.

3. The 30-day time limit for automatic approval is tolled where a complete application is not submitted. 20 C.F.R. § 702.243(a).

© Copyright 2013 Paul B. Howell. All rights reserved. Reprinted by permission. This article appeared in Benefits Review Board Service Longshore Reporter.

Lexis.com links:

33 U.S.C.S. § 901

33 U.S.C.S. § 908

33 U.S.C.S. § 921

33 U.S.C.S. § 922

29 C.F.R. § 18.9

20 C.F.R. § 702.242

20 C.F.R. § 702.243

20 C.F.R. § 702.315

20 C.F.R. § 802.206

Porter v. Director, OWCP, 176 F.3d 484

Oceanic Butler, Inc. v. Nordahl, 842 F.2d 773

Litton Systems, Inc. v. White, 681 F.2d 275

Ingalls Shipbuilding, Inc. v. Director, OWCP (Yates), 519 U.S. 248

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