A Section 8(i) settlement does not cover an injury not specifically enumerated, even if the
agreement includes language designed to encompass future claims. Clark v. Newport News
Shipbuilding and Dry Dock Co., 33 BRBS 121 (1999).
In Dickinson v. ADDSCO, 28 BRBS 84, (1994), however, the Board stated:
Contrary to the Director's contention, the discharge of employer's
potential liability for death benefits contained in the settlement
agreement does not warrant the invalidation of the entire settlement
agreement. The settlement agreement as a whole clearly indicates
the parties' intention to settle the claim for a 15 percent binaural
hearing loss in existence. Under these circumstances, we conclude
that the administrative law judge's approval of the settlement is
limited to the hearing loss claim before him.
In a footnote, the Board went on to explain
that in a response brief the employer had conceded that the reference to
death benefits contained in the settlement agreement was inadvertent
and unintended, and that the parties, in accordance with Section 20 C.F.R. § 702.241(g)
of the regulations, sought only to release claims related to the claimant's
occupational hearing impairment
and did not contemplate releasing a claim not yet in existence. Id.
The settlement of a related non-longshore action will not bar a later claim brought under the
LHWCA, unless the settlement meets the requirements of Section 8(i). Ryan v. Alaska Constructors,
24 BRBS 65 (1990) (claimant's claim under LHWCA was not barred by a previous settlement of a
Jones Act claim entered into with his employer, involving the same injury); see also Harms v.
Stevedoring Servs. of America, 25 BRBS 375 (1992).
The reverse, however, is not true. Where a plaintiff pursued a Jones Act claim after having
reached a settlement under the LHWCA for the same injuries, the Fifth Circuit affirmed the district
court's decision that the entry of an order by the judge constituted a finding that the injuries were
compensable under the LHWCA. Sharp v. Johnson Bros. Corp., 973 F.2d 423, 26 BRBS 59 (CRT)
(5th Cir. 1992), cert. denied, 508 U.S. 907 (1993). The Fifth Circuit found
that where the judge issues a compensation order under the LHWCA ratifying
a settlement agreement, a "formal award" should be deemed to have been made,
and the injured party no longer may bring a Jones Act claim. See Southwest Marine v. Gizoni, 502 U.S. 81, 26 BRBS 44 (CRT) (1991). By seeking and acquiescing
to the findings, the Fifth Circuit found that the plaintiff was collaterally estopped from contesting
LHWCA coverage. The Ninth Circuit position, however, is at variance. See Topic
1.4.6 "Jurisdictional Estoppel."
[ED. NOTE: Query: In light of Sharp and Ryan will the day come when a settlement of a Jones
Act claim will bar a claim under the LHWCA? The answer to this question may well depend on the
specific factual situation as well as the specifics of the settlement language.]
A death benefits claim shall be treated separately from the settlement of a compensation
claim. Even where the claimant dies prior to the approval of the Section 8(i) settlement agreement,
the claims are addressed independently. Nordahl, 842 F.2d at 786 (claimant's widow's death
benefits claim was completely separate from the settlement and resolution of her husband's disability
benefits case, and the settlement of the disability case had no bearing on the outcome of her death
The Fifth Circuit asserted in Nordahl that the amount received in a disability claim
settlement will not be deducted from any death benefits claim that may be awarded later. Id.
Further, as of 1987 (the effective date of the applicable regulations), "no
compromise of death benefits can be included in a settlement of disability
claims unless they too have vested in the spouse
as a result of death of the uncompensated disability claimant." Id.
(citing 20 C.F.R. § 702.241(g)).
Section 702.241(g) of the regulations "explicitly prohibits settlement or compromise
of the right to death benefits before it arises, i.e., before the death of
the injured worker." Id. See 20
C.F.R. § 702.241(g).
In Estate of Moreno v. John Bludworth Marine,
26 BRBS 42 (ALJ) (1992) the judge found that a settlement will be deemed "inadequate" and
procured by misrepresentation of a material fact wherein the fact that
the employee is terminally ill is withheld from the employer/carrier.
The Board has held that a death benefits claim is distinguishable from a disability benefits
claim. Cortner v. Chevron Int'l Oil Co., Inc., 22 BRBS 218, 220 (1989) (claimant's spouse could file
a death benefits claim even though she signed her husband's settlement agreement). The Board
[d]uring the employee's lifetime, [the spouse] has no right to file a
claim for benefits and the statute does not authorize a person who is
not a party to a disability claim to settle any potential or future
survivor's claims. The amendments to Section 8(i) allow for the
settlement of actual claims for benefits brought by survivors
following the death of the employee. It is not until death occurs that
the right to benefits arises and the potential beneficiaries are
Further, 20 C.F.R. § 702.241(g) complements this provision of Section 8(i) in that "it
implicitly states what is implicit in the statute--that settlement of a claim
is limited to the rights of the parties and to claims then in existence." Id. (quotation omitted). Since a dependent does not
possess a vested right until death occurs, the settlement of a disability benefits claim by the claimant
will not bar a subsequent death benefits claim.
Similarly, a Section 8(i) settlement cannot
release the employer/carrier from potential liability for claims not yet
in existence. Language completely releasing and discharging the
employer/carrier from "all demands, actions, claims or rights to compensation which the claimant
now has, or which may hereafter accrue" is impermissible and will not be approved. Lloyd
v. Eller & Co., BRB No. 91-1370 (unpublished) (July 27, 1992) (emphasis added).
8.10.2(a) Jurisdiction over Settlement proceedings
Settlements are properly under the jurisdiction
of both the district directors and the Office of Administrative Law Judges.
Their jurisdictional grant flows from the Administrative Procedure
Act which provides that "The agency shall give interested parties opportunity
for...the submission and consideration of facts, argument, offers of settlement..." Clefstad v. Perini North River
Associates, 9 BRBS 217,221 (1978); 5 U.S.C. §554(c)(1); 5 U.S.C. §556(c)(6).
The jurisdiction to hear and approve settlement
offers in not concurrent in both offices. It initially rests with the district
directors during the informal, pre-hearing, period. During this period
the district director is wearing an administrative "hat" under which the district
director's job includes approval or disapproval of settlements. Clefstad, 9 BRBS at 221. Once the case has been
transferred to the Office of the Administrative Law Judges (OALJ) the district director's jurisdiction
ends and sole jurisdiction resides with the OALJ. Id.
However, "[w]here a case is pending before
the ALJ but not set for a hearing, the parties may request the case be remanded to the district
director for consideration of the settlement." 20 C.F.R. §702.241(c). The Fifth Circuit has made
it clear in the dicta to Boone II that the authority to act pursuant to a claim transfers to the
administrative law judge once there is a request for a hearing submitted to the district director.
Ingalls Shipbuilding, Inc. v. Director, OWCP [Boone], 102 F.3d 1385, 1389 (5th Cir. 1996),
withdrawing 81 F.3d 561 (5th Cir. 1996), vacating and remanding, 28 BRBS 119 (1994) (Decision
and Order on Recons.) (en banc) (Brown,J., concurring); Clefstad, 9 BRBS at 222. The District
Director's authority to act will not be revived until such time as the claim is remanded back to his
8.10.3 Structure of Settlement
According to 20 C.F.R. §§ 702.242(a) and 702.242(b)(1), the settlement application must
be a "self-sufficient" document that can be evaluated without reference to
the administrative file, should be in the form of a stipulation signed by the
parties, and must contain a full description of
the settlement agreement. As a matter of law, an oral settlement agreement
of a longshore claim made prior to the death of an employee is not binding
on the parties. Estate of Moreno v. John
Bludworth Marine, 26 BRBS 42 (ALJ) (1992).
Specifically, the settlement application must contain:
(1) a full description of the terms of the settlement, which shall
include the amounts to be paid to the claimant and itemized
attorney fees (if appropriate; See Topic 8.10.7, infra);
(2) the reason for the settlement and any disputed issues;
(3) the claimant's date of birth (and any dependents' dates of
birth if appropriate);
(4) information on the claimant's ability to work, including his
(5) a current medical report that fully describes an injury-related
impairment, as well as any unrelated conditions, and a
statement regarding maximum medical improvement;
(6) a statement explaining why the settlement amount is
(7) a statement itemizing past medical expenses (e.g., past 3
years), along with the need for, and forecasted cost of, future
medical expenses (if applicable) (these requirements may be
waived by the district director or judge); and
(8) information on any collateral source available for the
payment of medical expenses.
v. National Steel & Shipbuilding Co., 25 BRBS 79, 85-86 (1991); McPherson
v. National Steel & Shipbuilding Co., 24 BRBS 224, 226 (1991), rehearing en banc, 26 BRBS 71 (1992);
Lawrence v. Toledo Lake Front Docks, 21 BRBS 282, 284 (1988).
the Board held that the district director's award of a lump sum payment
could not be considered a settlement because the order did "not provide
for the complete discharge of the employer's liability for payment of compensation,
but rather state[d] that the file will be closed
'subject to the limitations of the Act or until further Order of the [district
21 BRBS at 284. The parties' intent was irrelevant in this instance. In McPherson,
24 BRBS at 227, the Board stated that "[T]he provision that an application contain a statement justifying its
adequacy requires specific information justifying the amount agreed to by the parties...." Failure
to submit a complete application will toll the 30-day time period for the automatic
approval of the settlement. Norton, 25 BRBS at 85-86; McPherson, 24 BRBS at 228 (a proposed settlement was not
automatically approved where the district director found it deficient 94 days after having received
the proposed settlement).
The Board has held that there is no requirement under the LHWCA that a specific statement
be made within a settlement agreement that it is made pursuant to Section 8(i). Diggles v.
Bethlehem Steel Corp., 32 BRBS 79 (1998).
Evidence submitted for the purpose of proving different and/or additional terms to the
written settlement agreement is inadmissible. For instance, a party may not proffer evidence
regarding the binding effect of an alleged verbal agreement. Thus, the combination of the
regulations and the LHWCA make application of the parole evidence rule unnecessary. Norfolk
Shipbuilding & Drydock Corp. v. Nance, 858 F.2d 182, 186, 21 BRBS 166 (CRT) (4th Cir. 1988),
cert. denied, 492 U.S. 911 (1989). In Nance, the employer attempted to proffer evidence to prove
that, as part of the settlement, the claimant's employment would be terminated. (See also Topic
48(a), infra, for this case's discussion of retaliation under Section 48(a) of the LHWCA.)
The parties may submit a settlement agreement
covering solely compensation, solely medical benefits, or both compensation
and medical benefits combined. 20 C.F.R. § 702.243(d). Where the
parties desire to combine compensatory and medical benefits in a single settlement
agreement, disapproval of one of the provisions will nullify the entire agreement. The parties may avoid this
result by inserting a provision in the agreement which indicates that they agree to settle each portion
24 BRBS at 226-27 (claimant's representative signed the disability provision
of the claim but not the medical benefits provision, thus subjecting the entire
to disapproval by the district director); 20 C.F.R. § 702.243(e). However,
the separation clause should be used in conjunction with a clear delineation
of what amounts apply to each category.
Lump sum payments are not required. Poole v. Ingalls Shipbuilding, Inc., 27 BRBS 230
For there to be an enforceable Section 8(i)
settlement, there must be a submission and approval of formal documents.
When the parties reach a "settlement" via facsimile, and the
claimant dies before the parties could prepare a formal Section 8(i) application,
there is no enforceable settlement. See Estate of Henry v. Coordinated Caribbean Transport, 32 BRBS 29
8.10.4 Time Frame
The district director or judge has 30 days
to approve or disapprove the proposed settlement agreement. This period
is calculated from the day after receipt, unless the parties are otherwise
notified. If the last day falls on a weekend or holiday, the next regular
business day will be counted.
20 C.F.R. § 702.241(f); 20 C.F.R. § 702.243(b). If the parties are represented by counsel, however,
the settlement shall be deemed approved unless specifically disapproved within 30 days after receipt
of a complete application. 20 C.F.R. § 702.243(b).
The parties may request that the case be
remanded to a district director or a judge while it is pending at any level
(e.g., administrative law judge, Benefits Review Board, circuit court)
review of a proposed settlement. The 30-day time period begins when the case
is received by the district director or judge. 20 C.F.R. § 702.241(c).
The 30-day time period for automatic approval of a Section 8(i) settlement agreement only
applies where both parties are represented by "counsel" as
defined in 20 C.F.R. § 702.241(h), i.e.,
"any attorney admitted to the bar of any state, territory or the District of Columbia." Thus,
a claims adjuster in a legal department, whose job duties include negotiating
settlements of disputed
liability, does not qualify as "counsel" for purposes of this
provision. McPherson, 24 BRBS at 227-28.
As part of the 1984 Amendments to Section 8(i), Congress expressly empowered
administrative law judges, in addition to district directors, to approve settlement agreements. The
jurisdiction to approve a settlement is not concurrent. Prior to the assignment of the case to the
OALJ the district director has the authority, following the assignment of the case the sole authority
rests with the administrative law judge until such time as it is remanded to the district director.
Ingalls Shipbuilding, Inc. v. Director, OWCP [Boone], 102 F.3d 1385, 1389 (5th Cir. 1996),
withdrawing 81 F.3d 561 (5th Cir. 1996), vacating and remanding 28 BRBS 119 (1994) (Decision
and Order on Recons.) (en banc) (Brown, J., concurring). This amendment was in direct response
to the Fifth Circuit's interpretation of the pre-1984 LHWCA, which held that administrative law
judges lacked authority to approve Section 8(i) settlements.
The amendment granting this authority was made retroactive, i.e., it applied to cases
pending on the date of enactment. Downs v. Director, OWCP, 803 F.2d 193, 198 n.10, 19 BRBS 36
(CRT) (5th Cir. 1986) (court acknowledged that Section 8(i) "clearly overrules" its
decision in Ingalls Shipbuilding Division, Litton Systems v. White, 681 F.2d 275 (5th Cir. 1982), overruled in
part on other grounds, Newpark
Shipbuilding & Repair v. Roundtree, 723 F.2d 399 (5th Cir. 1984)
(en banc), cert. denied, 469 U.S. 818 (1985)); Ziemer v. Stone Boat Yard, 21 BRBS 74 (1988);
Georges v. Todd Shipyards Corp., 20 BRBS 32 (1987); Blake v. Hurlburt Field Billeting Fund, 17
BRBS 14 (1985).
Claims examiners do not possess authority to approve settlement agreements. Norton,
25 BRBS at 84-85 (claims examiner's approval of "Withdrawal of Claim" agreement
deemed complete legal nullity and without effect).
Under the 1984 Amendments to the LHWCA, the standard by which a district director or
ALJ shall judge a settlement is whether it is "adequate" and "not
procured by duress." Although
the guarantee of protection of a claimant's interests were not extinguished
entirely by the 1984 modification of standards, i.e., the court no longer considers
the "best interests" of a claimant, the
"paternalistic limits [were] lessened." Nordahl, 824 F.2d at 777. So long as the settlement is
adequate and not procured through duress must be approved. Luna v. Army and Air Force
Exchange Service, BRB Nos. 91-762 and 91-762A (May 30, 1996) (unpublished) (the district director
does not have the authority to refuse acceptance because he does not agree with the wording or
conditions ). If this standard is met, the claimant will be precluded from seeking further benefits
under the LHWCA for that injury. Olsen
v. General Eng'g & Mach. Works, 25 BRBS 169, 171-72
(1991) (claimant was precluded from seeking rehabilitation services following an order approving
his Section 8(i) settlement).
The Fifth Circuit explained
that "any fair reading of the changes reveals that the policy was
to strengthen worker protection against unwise settlement, while making approval
mandatory, absent clear prejudice to future support for the worker and
his or her dependents." Nordahl,
824 F.2d at 777. Thus, the protection afforded by the LHWCA is provided
in the form of a change from
a subjective evaluation of the claimant's "best interest" to one of "actuarial adequacy," i.e.,
an objective standard. Id. at 778.
In reviewing the settlement agreement, the district director or judge shall determine whether
the amount is adequate. In doing so, he or she should consider all of the circumstances, including
the probability of success if the case were litigated. The following criteria, although not an
exhaustive list, should be considered:
(1) the claimant's age, education and work history;
(2) the degree of the claimant's disability or impairment;
(3) the availability of the type of work the claimant can do; and
(4) the cost and necessity of future
medical treatment (where appropriate). 20 C.F.R. § 702.243(f).
Thus, although Congress specifically eliminated
the term "best interests" as the standard to
be employed, the district director or administrative law judge could probably accomplish the same
result "objectively" through use of the above criteria. Note, however, that any discussion of
"adequacy" must be tied to the actual settlement terms and facts. For example, the judge must
decide whether a specific sum is "adequate" for future surgeries indicated
in submitted medical reports.
In cases being paid pursuant to a final
compensation order, where no substantive issues are in dispute, a settlement
amount not equaling the present value of future compensation payments
commuted, computed at the specified discount rate, must be considered inadequate.
The parties have the opportunity, however, to show that the amount is,
in fact, adequate. 20 C.F.R. § 702.243(g).
[ED. NOTE: 20 C.F.R. 702.243(g) references the auctions of 52-week Treasury Bills. However,
the Treasury Department ceased the one-year auction as of February 2001. An alternative
computation method has been suggested by OWCP. OWCP currently uses the weekly average one
year constant maturity Treasury yield as published by the Federal Reserve System for the week
proceeding the date of judgment. The current rate, in this regard, can be found at
www.federalreserve.gov/releases/h15/current. Rates for past periods can be found at:
If a district director or judge disapproves
a proposed settlement agreement, he or she shall serve on all parties a
written statement or order containing the reasons for the disapproval.
C.F.R. § 702.243(c). If a district director disapproves a proposed settlement agreement, any party
to the agreement may request a hearing before a judge or submit an amended application to the
district director. 20 C.F.R. § 702.243(c).
If a district director disapproves the settlement,
any party may request a hearing before a judge. The ALJ shall then issue
an order approving or rejecting the settlement. When one district
director disapproves a Section 8(i) settlement, a second district director
is without authority to rule on the same settlement agreement, pursuant
to 20 C.F.R.. § 702.242. Towe v. Ingalls Shipbuilding,
Inc., 34 BRBS 102 (2000).
If the matter is referred to an ALJ, the issue becomes whether the application does, in fact,
contain the requisite information for approval. The 30-day time period for automatic approval is
tolled during this review. McPherson,
24 BRBS at 226 (after 94-day delay, district director found proposed settlement
agreement to be deficient). If the judge disapproves the settlement agreement
following a hearing, the parties may submit a new application, appeal to the
Benefits Review Board,
or proceed with a hearing on the merits of the claim. 20 C.F.R. § 702.243(c).
A Section 8(i) settlement, when approved, is the equivalent of a final adjudication as to the
nature and extent of the claimant's injuries and the resulting liability assigned to the
employer/carrier. Once the settlement is approved, the claimant is collaterally estopped from
attacking the settlement. Vilanova v. United States, 851 F.2d 1, 6, 21 BRBS 144 (CRT) (1st Cir.
1988), cert. denied, 488 U.S. 1016 (1989) (settlement reached between claimant and employer was
an administrative finding that claimant's injuries were compensable under LHWCA; by entering into
settlement agreement, claimant chose not to contest coverage under LHWCA- because claimant
did not choose to raise issue before DOL, he could not do so at subsequent hearing before the
courts); Hoey v. Owens-Corning Fiberglass Corp., 23 BRBS 71, 73-74 (1989) (claimant's previous
settlement, which included finding that he was permanently totally disabled, barred subsequent
claim for permanent total disability filed due to further medical development related to asbestos
exposure). See Sharp, 973 F.2d 423, 26 BRBS 59 (CRT).
An employer/carrier's liability is not discharged
until the settlement is approved or disapproved by a decision and order
issued by a district director or an ALJ. The one exception to
this rule is in the case of the automatic approval provision noted above.
20 C.F.R. § 702.243(b).
The district director or judge must immediately serve by certified mail on
all parties notice of any deficiency within the proposed settlement agreement. Id. The 30-day time period will be tolled until
the deficiency is corrected.
8.10.6 Withdrawal of Claim/Settlement Agreement
A withdrawal of a claim may only be obtained for a proper purpose and when the
withdrawal is in the claimant's best interests. Henson v. Arcwell Corp.,
27 BRBS 212 (1993). The Board has determined that the withdrawal of a claim
in exchange for a sum of money is not a "proper purpose." "Where [a] claimant
seeks to terminate his compensation claim for a sum of money, Section 8(i)
settlement procedures must be followed." Norton,
25 BRBS at 83-84 (citations omitted) (claimant's subsequent claim was not barred
by earlier "Withdrawal of Claim" agreement
that was approved by claims examiner). (See Topic 8.11, infra, for a complete discussion of
Withdrawal of Claim.)
The employer/carrier does not have the right to unilaterally withdraw from a settlement
agreement that has been submitted to a district director or judge for approval. Nordahl, 842 F.2d
at 773 (claimant died approximately one week after his settlement agreement was submitted to
district director and employer attempted to unilaterally withdraw the settlement agreement prior
to its approval); Maher v. Bunge Corp.,
18 BRBS 203, 204-05 (1986) (An "employee's death does
not terminate the [district director's] authority to approve the settlement agreement.").
The Fifth Circuit noted
that each of the parties has different rights under the settlement agreement. "The
claimant's obligation under the contract--to accept the sum agreed upon
and to waive the lifetime compensation otherwise payable under the terms
of the LHWCA--is invalid when
made and cannot become binding until and unless the contract is administratively
Nordahl, 842 F.2d at 779.
This analysis is contrasted to that applied to the employer/carrier's rights: "The
[employer/carrier's] obligation under the agreement--to pay the designated
sum in exchange for a release of the liability that would otherwise result
under the LHWCA's terms-is not
rendered invalid by anything in the [LHWCA]." Id. The court acknowledged, however, that the
employer/carrier's obligation is contingent upon the settlement being approved by a district director
or judge. Id. at 780.
The consideration for the claimant's promise, as described above, is judged at the time the
promise is made. The Fifth Circuit has explained that:
Though governing legal standards (such as
administrative disapproval) may make a promise (to release future benefits
receipt of an approved lump-sum payment) void or voidable, there is
nothing that makes that promise invalid consideration at the time it
is made. Restatement (Second) of Contracts § 78. And as long as
there is valid consideration, there is nothing requiring mutuality of
bargain even in unregulated contracts. Id. § 79.
Nordahl, 842 F.2d at 780. Thus, the LHWCA does not permit recission by the employer/carrier after
they offer the claimant the promise to pay if approval is granted. Id. In contractual terms, the
settlement agreement reached between the parties is subject to a condition precedent, the condition
being administrative approval.
Finally, the Fifth Circuit acknowledged
the asymmetry of treatment afforded the parties in a Section 8(i) settlement
agreement. Specifically, the claimant may rescind the agreement at any
time prior to administrative approval, so long as either the district director
or the judge agrees that the request is within conformance with §702.225(a). Downs v. Ingalls Shipbuilding, Inc., 30 BRBS
99,100 (1996); Ingalls Shipbuilding, Inc. v. Director, OWCP [Boone],102 F.3d 1385, 1398 (5th Cir.
1996), withdrawing 81 F.3d 561 (5th Cir. 1996), vacating and remanding 28 BRBS 119 (1994)
(Decision and Order on Recons.) (en banc) (Brown, J., concurring); Porter v. Kwajalein Services,
Inc., 31 BRBS 112 (1997) aff'd on recon., 32 BRBS 56 (1998) (claimant can not unilaterally rescind
the settlement after it was approved by the administrative
law judge. Only "possible" option for
reconsideration is within 10 days of the settlement's approval.).
[ED. NOTE: But see Topics 126.96.36.199 and 188.8.131.52, infra]
The general practice is to have the request for dismissal filed with the district director;
however, if the case has been assigned to an ALJ then the judge must rule on the motion as the
district director retains no authority to act on the claim once an application for a hearing before an
ALJ has been filed. This is contrasted with the employer/carrier which is bound by the agreement
after it is submitted for approval. Nordahl,
842 F.2d at 781 ("The unambiguous purpose of
allowing Claimants to withdraw from submitted, but unapproved, settlements and of the approval
requirement itself ... clearly is protection of the claimant's, and the public's, interest in preserving
them and their families from destitution and consequent reliance on the taxpaying public.").
The only exception to this rule is that the employer/carrier may bargain for a provision in
the agreement that expressly allows the employer/carrier to rescind the agreement prior to approval.
Id. at 782. The asymmetry of treatment existed prior to 1984 and was carried through by the 1984
Amendments. Id. at 781.
The situation described above is contrasted to the scenario where the Section 8(i) settlement
agreement has been signed by the parties but is not yet submitted for approval. In that instance,
the employer/carrier may unilaterally rescind the agreement. Fuller v. Matson Terminals, 24 BRBS
252, 255 (1991) (valid settlement agreement did not exist because employer rescinded settlement
after claimant died, but prior to agreement being submitted to district director or ALJ).
In Hargrove v. Strachan Shipping Co., 32 BRBS 11, aff'd on recon.
32 BRBS 224 (1998), Claimant sought withdrawal of his claim for benefits "after the parties seemingly reached an
agreement as to the amount of compensation." The ALJ denied the request upon concluding that
"no settlement agreement was submitted for approval, and no compensation order was issued
approving the settlement or adjudicating claimant's claim." Fourteen years later, Claimant sought
additional compensation and medical benefits for disability arising out of the 1971 injury. The
Board held that a "withdrawal request ... based on the exchange of a sum of money is not a valid
purpose for withdrawal." As a result, because the original claim had never been finally adjudicated,
i.e., no settlement approved or withdrawal request granted, the Board held that the ALJ erred in
"finding that he could not 'reopen' the claim ... ."
8.10.7 Attorney Fees (see also Topic 28, infra)
If the parties desire to settle attorney's
fees as part of the complete settlement agreement, either a petition for
attorney's fees or a fully itemized table of hours must be included with
proposed settlement as required by 20 C.F.R. § 702.132. 20 C.F.R. § 702.242(b)(1); Carswell v.
Wills Trucking, 13 BRBS 340, 343 (1981). If the settlement agreement
is automatically approved due to inaction after 30 days, as provided in 20
C.F.R. § 702.241(d), it shall also be considered
approved within the meaning of Section 28(e). 20 C.F.R. § 702.241(e).
8.10.8 Finality of Settlement
184.108.40.206 Section 22 Modification
In addition to the 1984 Amendments affecting
Section 8(i), Congress also modified Section 22. A new final sentence was
added to that section which provides: "This section does not
authorize the modification of settlements." Unlike the amendments to Section
8(i), the Section 22 amendment was not made retroactive, i.e., it did not apply
to claims pending on the date of
enactment. The Fifth Circuit has reasoned that:
To allow reopening of final settlements through [Section 22] actions
could create uncertainty as to an employer's release from liability and
thereby promote reluctance to settle claims. Such a result would
frustrate the very purpose of [Section 8(i)], i.e., the fair and just
settlement of claims in the employee's best interest.
Downs v. Director, OWCP, 803 F.2d 193, 200 (5th Cir. 1986).
Following the acceptance of payments associated with an approved pre-1984 settlement,
the claimant in Downs unsuccessfully
moved for reconsideration on two occasions and then filed a Section 22 modification
request. Although the court acknowledged that this case did not involve
a post-amendment settlement, its reasoning applies to post-amendment cases.
The court went on to state that "the approval safeguards of [Section 8(i)]
adequately protect the injured employee from overreaching and ignorance during
settlement negotiations so that [Section 22] modifications
are not necessary." Id.
Following the Fifth Circuit, the District of Columbia Circuit noted
that the amendment to Section 22 did not alter the pre-1984 meaning of
Section 22. Rather, "the amendment merely
made express ... the meaning of [Section 22], as enacted and reenacted since
1927." Bonilla v.
Director, OWCP, 859 F.2d 1484, 1485-86, 21 BRBS 185 (CRT) (D.C. Cir. 1988) (claimant sought
to modify approved pre-1984 settlement via Section 22 modification). See also Olsen, 25 BRBS at
171; Lambert v. Atlantic & Gulf
Stevedores, 17 BRBS 68 (1985). (See also Topic 22, infra,
Modification of Awards.) The Board has held that Section 8(i) settlement agreements are final under
the LHWCA and may not be reopened pursuant to Section 22, even in its pre-1984 form or for
equity. Rochester v. George Washington University, 30 BRBS 233, 235 (1997); see also Bonilla v.
Director, OWCP, 859 F.3d 1484, 1486, 21 BRBS 185, 188 (CRT) (D.C. Cir. 1988), amended, 866
F.2d 451 (D.C. Cir. 1989); Downs v. Director , OWCP, 803 F.2d 193, 201, 19 BRBS 36, 45 (CRT).
while addressing whether or not the Board had the "equitable power" to
reopen a settlement the Board noted that it is not a "court." Kalaris v. Donovan, 697 F.2d 376, 381
(D.C. Cir.), cert. denied, 462 U.S. 1119 (1983); see also Metropolitan Stevedore Co. v. Brickner,
11 F.3d 887, 27 BRBS 132 (CRT) (9th Cir. 1993). The Board stated:
The "subject matter jurisdiction of the [administrative law judge] and the Benefits
Review Board is confined to a right created by Congress" and the Board does not
"possess all ordinary powers of the district court." Schmit v. ITT Federal Electric
Int'l, 986 F.2d 1103, 1109, 26 BRBS 166, 173 (CRT) (7th Cir. 1993); see generally
Washington Legal Foundation v. U.S. Sentencing Commission, 17 F.3d 1446, 1448-49 (D.C. Cir. 1994).
Thus, the Board does not have the "equitable" power to
overturn the settlement agreement of the parties or the compensation order
approving same, as the Board's authority is statutory.
Rochester, 30 BRBS at 235.
While there is no definite holding that Section 8(i) settlements are final when approved and
filed, one can readily reach such a conclusion. This naturally excludes settlements set aside
because of fraud or duress, or arguably, because of lack of mental capacity. See generally Topic
The language of Section 8(i) itself supports
such a conclusion: "No liability of any
employer, carrier, or both for medical disability, or death benefits shall be discharged unless the
application for settlement is approved by the [district director] or administrative law judge." 33
U.S.C. 908(i). Thus, approval is equivalent to discharge of liability.
Also, Section 8(i)(3) is noteworthy: "A settlement approved under this section shall
discharge the liability of the employer or carrier, or both. Settlements may be agreed upon at any
stage of the proceeding including after entry of a final compensation order." Again,
implicit in this language is the fact that a settlement is equivalent to discharge.
The Regulations also support this view: "The liability of an employer/insurance carrier is
not discharged until the settlement is specifically approved by a compensation order issued by the
adjudicator." 20 C.F.R. §702.243(b). Settlement is defined as fixing or resolving
conclusively, to make or arrange for final disposition. Black's Law Dictionary 1231 (5th ed. 1979).
[Editor's Note: One can argue that without the expectation of finality, parties would not embrace
the settlement process.]
If settlements are not, per se, final when
approved and filed, arguments can be made that the general 10 day rule
for requesting reconsideration (20 C.F.R. §802.206) or the 30 day rule for
appealing (Section 21(a)) would be effective. Section 802.206 refers to having 10 days to file for
reconsideration after the date of the "decision and order" being filed. Section 21(a) speaks in
terms of a "compensation order" becoming effective when filed. The regulations governing
settlements also speak in terms of a settlement being approved by a "compensation order issued
by the adjudicator." 20 C.F.R. §702.243(b).
[ED. NOTE: Though a settlement may not be modified using Section 22, Diggles v. Bethlehem
Steel Corp., 32 BRBS 79 (1998) and Porter v. Kwajalein Services, Inc., 31 BRBS 112 (1997), aff'd
on recon., 32 BRBS 56 (1998); one administrative law judge has held that it may be modified
under a Section 21 motion for reconsideration. Hamilton v. Maersk Container Services,
32 BRBS 579 (ALJ) (1998). There are situations where the Board has found that
a "settlement," approved
by the district director, should be subject to a Section 22 modification for
a change in condition. Narvell v. Bethlehem Steel Corp., (BRB No. 92-731)(Dec. 29, 1994)(Unpublished). The Board
reasoned that there was an incomplete discharge of the employer's liability and no finding of the
award's adequacy so it did not constitute an 8(i) settlement which would be outside of the scope
of a modification order. In Floyd v. Penn Terminals, Inc., (BRB No. 98-1556)(Aug. 4,
1999)(Unpublished), the Board vacated the ALJ's Decision and Order Approving a Section 8(i)
Settlement based on the fact that the application lacked a statement as to why the proposed
settlement was adequate as required by Section 702.242(b)(6). The Board found the application
in Floyd to be deficient as a matter of law and unable to receive approval. McPherson
v. National Steel & Shipbuilding Co., 24 BRBS 224 (1991), aff'd on recon. en banc, 26 BRBS 71 (1992).]
220.127.116.11 Setting Aside Settlements
Settlements can be set aside if procured through fraud or duress. By inference from
Section 11 of the LHWCA, settlements seemingly can also be set aside if the claimant lacks the
mental capacity to comprehend what a settlement entails, unless the claimant has a court
appointed guardian or representative. The language of Section 11 fits with the policy of setting
aside Section 8(i) settlements for fraud or duress. If the claimant lacks the requisite mental
capacity to understand the settlement, then one can reasonably argue that it will have been signed
under pressure and a lack of understanding which amount to the functional equivalent of duress.
[Editor's Note: The personal representative noted above should be distinguished from the
claimant's legal representative or attorney.]
Thus, unless there is a court appointed guardian, if there is an allegation of mental
disability/disorder, or if the claimant's mental condition is noted in the submitted
documentation, the judge should request a psychiatric/psychological report stating that the
claimant does have the requisite mental capacity to comprehend and enter into the Section 8(i)
settlement. Such report should also state that the claimant has the ability to administer a lump
sum settlement, unless, a guardian or trust fund is utilized.
Where a settlement was linked with an LS-33 Section 33(g) waiver, an ALJ has found
the settlement to be a binding agreement which was not subject to disapproval and therefore, had
to be reinstated. Casciani v. St. John's Shipyard, ALJ Case No. 2000-LHC-2595(June 14, 2001).
Here the ALJ found that the employer's execution of the LS-33 Section 33(g) waiver was
inextricably intertwined with a Section 8(i) settlement. Although the waiver itself contained no
contingency, the judge found that the parties mutually intended to enter into a settlement which
embodied the employer's waiver of its lien against the proceeds of the third-party settlement along
with a payment to the claimant. Besides finding that the settlement was binding the ALJ found
that the LS-33 was to also remain in full force and effect with respect to the proceeds fo the third
[ED. NOTE: In Casciani,
there had been temporary procedural problems involving the third-party
settlement. Eventually, not only were these resolved, but there was an
faith" settlement for an additional $750,000 pursuant to a cause of action
arising out of the third party's handling of the claim, not the underlying
basis for the claim.]
8.10.9 Section 8(f) Relief
Where a claimant and employer/carrier enter into a Section 8(i) settlement, and the
claimant suffers a subsequent injury that would provide the employer/carrier with Section 8(f)
relief, the Special Fund receives the credit for the previous settlement, not the employer/carrier.
By granting the credit to the employer/carrier, the employer/carrier would be able to avoid liability
for the additional loss associated with the claimant's subsequent injury.
Allowing the Special Fund to apply the credit against its liability acknowledges that the
settlement was for the first claim, the percent of which the Special Fund is liable. Davis v.
General Dynamics Corp., 25 BRBS 221, 227 (1991) (employer sought credit for a previous
settlement for a hearing loss claim that would have allowed it to escape the liability associated
with claimant's subsequent claim for increased hearing loss).
The Board has addressed the issues of an employer/carrier's ability to seek Section 8(f)
relief after entering into a Section 8(i) settlement with the claimant, and whether the Special Fund
may be held liable under the terms of that Section 8(i) settlement. As the Board noted, the 1984
Amendments added Section 8(i)(4) to the LHWCA, which holds, in part, that:
he special fund shall not be liable for reimbursement of any sums
paid or payable to an employee or any beneficiary under such
v. J. Young & Co., 17 BRBS 46, 49 (1985).
Thus, Section 8(i)(4) will preclude post-settlement Section 8(f) relief after the date of
enactment. See also Brady
v. J. Young & Co., 18 BRBS 167, 170-71 n.5 (1985) (affirming on
reconsideration decision regarding lack of retroactive effect of § 8(i)(4)).
The Board went on to state, however, that the provision does not apply to cases
that were pending on [appeal on] the
date of enactment, i.e., the subsection was not afforded retroactive application. Brady,
17 BRBS at 52. Specifically, the Board stated "[w]e hold that in pending cases
not affected by the provisions of the 1984 Amendments to the Act employer may
seek Section 8(f) relief before an
administrative law judge after entering into a settlement with claimant, but
such a settlement is not controlling on the special fund's liability if Section
8(f) relief is obtained." Id. at 49.
Therefore, for cases pending on the date
of enactment, "an [employer/carrier] may enter
into a binding settlement with the claimant resolving all issues regarding
[employer/carrier's] liability to claimant, while retaining the ability
to pursue Section 8(f) relief before an
administrative law judge." Id. at 53.
In Brady, a case pending when the 1984 amendments were enacted, the Board noted that
any settlement reached between the employer/carrier and the claimant binds only those parties
unless the Director participates in the settlement negotiations. Brady, 17 BRBS at 53; Byrd v.
Alabama Dry Dock and Shipbuilding Corp., 27 BRBS 253 (1993) (ALJ can not bind the Special
Fund in an 8(i) settlement unless the Director is made a party to the case).
[ED. NOTE: A careful reading of the ALJ's opinion in Byrd indicates that there was an
adjudication of the compensation issue in Byrd and that only the issue of medical benefits was
intended to be settled. Byrd v. Alabama Dry Dock and Shipbuilding Corp.,
(Docket No. 91-LHC-262)(1991)(Unpublished). The parties (claimant and self-insured
employer) filed a "Joint
Stipulation of Suggested Findings of Fact and Conclusions of Law which was supplemented by
a filing entitled "Joint Submission of Evidence and Joint Waiver of Formal Hearing." Both
filings showed service upon the Regional Solicitor and the District Director.
No formal objections were
filed. The ALJ adopted the stipulations, findings of fact and conclusions
of law. The joint stipulation also contained an agreement to settle the claimant's
claim for future medical benefits.
This agreement was treated as a Section 8(i) settlement agreement. (Medicals
can be settled without settling compensation.)]
"[T]he controversy between [employer/carrier]
and the Director, as guardians of the special fund, is a totally separate
matter in which claimant has no interest.... There is therefore
no legal conflict created in allowing an [employer/carrier] who [has] settled
all disputes with claimant to assert [its] rights against the special fund." Brady, 17 BRBS at 53. The Director,
however, is not bound by the terms of the settlement agreement reached between the claimant and
employer/carrier. As such, the employer/carrier must place all aspects of entitlement, i.e., not only
the Section 8(f) issue, before the judge for resolution. Id. at 54-55. (See also Topic 8.7.0, supra,
Disability: Limitation of Compensation.)
In Strike v. S.J. Groves and Sons, 31 BRBS 183 (1997), aff'd mem. sub nom. S.J.
Groves & Sons v. Director, OWCP, 166 F.3d 1206 (3d Cir. 1998) (Table), a Section 8(i) settlement case,
the Board expanded on the rational in Brady. Liability for the Special Fund is directly tied into
the employer's liability following the outcome of a trial. The basis for this liability revolves
around the issues of nature and extent of liability, average weekly wage, and causation. As a
result these issues must be litigated in order for the Fund to be responsible, as the case law
recognizes that the Fund should only be liable where all ambiguity has been resolved by a fact
finder. The Board went on to state that unlike the absolute defense of Section 8(f)(3), the Director
is not required to take direct action to oppose the settlement under Section 8(i)(4). As a matter
of law, Section 8(i)(4) voids settlement provisions either reserving or setting liability on the Fund.
In Cochran v. Matson Terminals, Inc.,
33 BRBS 187 (1999), the Board found that where a Section 8(i) settlement
is entered into, no Section 8(f) relief is allowed. "An employer enters into
a settlement agreement at the time the parties execute the document, and not at the time it is
administratively approved." In Cochran the Board rejected the employer's argument that Strike
applies only where Section 8(f) is requested after the settlement is approved. In Cochran, the
simultaneous submission of a settlement agreement and the stipulations and exhibits in support
of the employer's claim for Section 8(f) relief foreclosed the ALJ's consideration of the request for
Section 8(f) relief. There is no mechanism in the LHWCA to permit the tolling of the 30 day
automatic approval period while the ALJ adjudicates a claim for Section 8(f) relief. Cochran at
In Nelson v. Stevedoring Services of America, (BRB No. 99-1056)(May 10,
2001)(Unpublished), re-affirm'g, 34 BRBS 91 (2000), the Director was provided the opportunity
to defend, and in fact, conceded the liability of the Special Fund prior to the time that a settlement
agreement was entered into by the parties. The Board originally held that the purpose of Section
8(i)(4) had been satisfied and the employer was entitled to Section 8(f) relief. In Nelson the
Director made his pre-hearing concession when he thought the case in chief
was going to be decided at hearing. Soon after the hearing began, the proceedings
turned into a settlement
conference. Subsequently the ALJ approved the settlement agreement and awarded
Section 8(f) relief. The Board had found that the Director was now precluded
by equitable estoppel from
altering his position which he had consciously made and articulated to the
ALJ well before the time the Section 8(i) agreement was made. (The conditions
precedent for conceding the employer's
entitlement to Section 8(f) relief stated by the Director were met during the
ensuing "adjudication" of this case.)
Reconsideration, the Director argued that the agreement was not a stipulation,
but rather was a settlement and therefore, the employer's settlement of its
liability extinguished, as
a matter of law, the Special Fund's derivative liability pursuant to Section
8(i)(4). In re-affirming its original ruling, the Board held that even if
the ALJ's decision was an approval of a settlement
(rather than approval of stipulations), "the peculiar facts of this case nevertheless
support the [ALJ's] finding that Section 8(f) relief is appropriate."
[ED. NOTE: In Nelson,
the Board opined that an order based on stipulations accepted into the record
is subject to "normal standards of proof." See also, Director
v. Coos Head Lumber & Plywood Co. (Ibarra),194 F.3d 1032 (9th Cir. (1999), originally unpublished at 156 F. 1236 (9th
Cir. 1998)(table); E. P. Paup Company v. Director, OWCP (McDougall), 999 F.2d 1341 (9th Cir.
1993) (agreements between an employer and a claimant that affect the liability of the special fund
cannot be used against Director who is the only party with a real interest in protecting the
financial integrity of the special fund).
Section 8(i) settlements are distinguishable from stipulations in another way. In Lawrence v.
Toledo Lake Front Docks, 21 BRBS 282 (1988), the Board held that it
was error below to construe the deputy commissioner's order as a Section 8(i)
settlement. Rather than making findings
regarding whether the compensation awarded was in the claimant's best interests
or completely discharging the employer's liability, the order merely stated
that the file would be closed "subject
to the limitations of the Act or until further Order of the deputy commissioner." Thus,
in Lawrence, the Board held
that the order constituted an award based upon the agreements and stipulations
of the parties pursuant to 20 C.F.R. § 702.315. Such awards [stipulations] are
subject to Section 22 modification because they do not provide for the complete discharge of
employer's liability or terminate claimant's right to benefits. See also Ramos
v. Global Terminal & Container Services, Inc., 34 BRBS 83(2000)(compensation
order issued by district director and based on stipulations can subsequently
be modified via a § 22 modification request); Bonilla v.
Director, OWCP, 859 F.2d 1484 (D.C. Cir. 1988); Downs, 803 F.2d 193; House v. Southern
Stevedoring Co., 703 F.2d 87 (4th Cir. 1983), aff'g 14 BRBS 979 (1982); Stock v. Management
Support Assocs., 18 BRBS 50 (1986).]
[ED. NOTE: For more on settlements and stipulations involving Section 8(f), see Topic
18.104.22.168 Section 8(f) Relief--"The Effect of Settlements and Stipulations."]
8.10.10 Checklist for §8(i) Settlement
_____ A stipulation signed by all parties.
_____ Contains a brief summery of the facts.
a) description of the incident yes / no
b) description of the nature of the injury yes / no
c) degree of impairment yes / no
d) degree of disability yes / no
a) summery of compensation paid, and yes / no
b) compensation rate yes / no
c) Where no benefits have been paid the average weekly wage yes / no
_____ Contains a full description of the terms of the settlement.
a) amount for compensation yes / no
b) amount for medical benefits yes / no
c) amount for survivor's benefits yes / no
d) amount for attorney's fees yes / no
- itemized in accordance with §702.132
_____ Contains the reason for the settlement and any issues still in dispute
_____ The Claimant's:
a) date of birth yes / no
b) date of death, and a list of dependents yes / no
( in a death benefits claim )
_____ The Claimant's employment status
a) claimant is working (or is capable of working) yes / no
b) claimant's educational level, work history, other yes / no
factors that could effect future employability
_____ Current medical report:
a) describes injuries relating to impairment yes / no
b) describes any other unrelated conditions yes / no
c) has maximum medical improvement been reached yes / no
d) is there anticipated future disability or needed treatment yes / no
_____ Statement of why settlement is adequate.
_____ Statement that the settlement was not procured under duress.
_____ If mental disability or incompetence alleged:
a) is there medical opinion/report as to claimant's capacity yes / no
to understand the consequences of entering into
b) is there an indication that the claimant can administer a yes / no
lump sum settlement
c) if the answer to a) or b) is negative, is there a court appointed yes / no
guardian or personal representative, separate and distinct
from the claimant's legal counsel
_____ If medical benefits are covered in settlement then:
a) an itemized list of amounts paid for medical expenses in yes / no
the three years prior to the date of the application
b) an estimate of the claimant's need for future medical yes / no
treatment and the cost of the treatment which should
indicate the inflation factor and/or the discount rate
_____ Information on any collateral sources available to pay medical expenses.
8.10.11 AGREEMENTS and CLAUSES RESTRICTING EMPLOYMENT
There has been a recent trend in Section
8(i) settlement agreements to add clauses voiding a claimant's right to
return to previous employment, or other employment with the settling
employer. Several variations have been put forward. For instance, one agreement
has the claimant agreeing that he will resign his employment and not seek
reinstatement or re-employment
with the prior employer or any of its affiliates. Another version contains
a proviso that if the claimant becomes able to perform longshore work in
the future, and in fact performs such work
for the employer, the claimant shall repay to employer a certain percentage
of the lump sum previously given to the claimant in the settlement agreement.
This version generally contains a "sliding scale" percentage to be re-paid,
depending on when the claimant seeks re-employment.
These restrictive employment agreements
generally include language to the affect that the claimant agrees that
the settlement agreement approved in the matter is good and sufficient
for the employer or any of its affiliates to reject any application for employment,
reinstatement or re-employment submitted by the claimant. Similarly, it
might state that "this provision is
deemed fair and reasonable given that the settlement lump sum is based on the
representation by the claimant that he is permanently precluded from performing
longshore work in the future and
that as a result, has suffered a permanent loss of wage earning capacity."
There is limited jurisprudence in this area. In Hanno v. Stevedoring Services of America,
29 BRBS 868(ALJ)(1995), the ALJ held that (1) such an agreement did not conflict
with Section22 of the LHWCA; (2) the settlement was not "inadequate" although
it leaves the total monetary payment indeterminate, because it reduces
the overall level of uncertainty by allowing for future
contingencies concerning other relevant factor;. and (3) such an agreement
does not indirectly authorize discrimination prohibited by the provisions
of Section 48(a) of the LHWCA. Hanno was
There is one published Board decision in which the Board did suggest in dicta that, if
motivated by animus, the termination of a worker's employment can be found to have violated
Section 48(a) even if the worker expressly agreed to the termination as part of a settlement
agreement. Nance v. Norfolk Shipbuilding and Dry Dock Corp., 20 BRBS 109, 113 n.3 (1987),
aff'd sub nom. 858 F.2d 182 (4th Cir. 1988), cert. den. 492 U.S. 911 (1989). In this regard, it is
noted that the majority of the members of the Fourth Circuit panel that upheld the Board's
decision in Nance specifically declined to address this aspect of the decision because there was no
reference in the settlement documents to any agreement concerning termination of the claimant's
employment. 858 F.2d at 185 n.4. Moreover, the one member of the panel who did address the
issue vigorously disagreed with the Board's statement and set forth a detailed discussion which
concluded that Subsection 8(i) agreements can lawfully contain provisions that would otherwise
violate Section 48(a). Nance, 858 F.2d at 187-90.
Upon conclusion by the settlement judge of his/her role, the presiding judge (or the Chief
Judge if no presiding judge is appointed) shall be notified within seven days so that the matter may
proceed (be it approval of the settlement agreement, assignment of the case, or scheduling of a
hearing). See 29 C.F.R. § 18.9(e)(10).
A settlement agreement arrived at with the
help of a settlement judge shall be treated by the presiding judge or Chief
Judge as would be any other settlement agreement. See 29 C.F.R. § 18.9(e)(11).
Accordingly, the proposed agreement shall be submitted to the presiding
judge or the Chief Judge if no presiding judge is assigned. 29 C.F.R. 21