ALJ Cannot Alter an LHWCA Settlement Agreement

An ALJ cannot vary the terms of an agreed settlement application submitted by the parties, the Benefits Review Board held.  “Section 8(i) of the Act and its implementing regulations do not give an administrative law judge the authority to alter a complete Section 8(i) settlement submitted by the parties.  Rather, the administrative law judge’s options are limited.”  The Board explained that an ALJ has only four options when a settlement application is submitted:  “1) issue a deficiency notice if the application is incomplete, 2) approve the settlement if it is adequate and not procured by duress, 3) disapprove the settlement if it is inadequate or was procured under duress; or 4) do nothing, in which case, if the parties are represented by counsel, the settlement will be deemed approved after 30 days.”

In this case, the parties submitted an 8(i) application which provided that a separate settlement application was also submitted to the state workers’ compensation agency.  The application further stated that the parties agree that the amount agreed to in connection with the settlement would settle both the state and LHWCA claim.  However, the judge conditioned approval of the LHWCA settlement on approval of the state claim.  The Board determined that conditioning approval in this manner impermissibly altered the parties’ agreement.  Also, in issuing his approval of the settlement, albeit with different terms, the ALJ ordered the carrier to pay the settlement, and indicated that this payment would discharge the carrier’s liability.  However, the carrier was not mentioned in the settlement agreement.  The Board found that this portion of the ALJ’s order again changed the parties’ agreement, noting that a settlement may only bind the parties to the agreement.

The Board also held that the ALJ improperly modified the agreed amount of the attorney’s fee.  The Board determined that if the parties agree on a fee, the ALJ may not separately approve or disapprove of the fee portions of the agreement.  Instead, if the ALJ finds that the fee is improper, the ALJ must disapprove the entire settlement.  Notably, the Board added that the parties may agree that certain portions of a settlement agreement are severable, such as the fee or medical and compensation benefits.

Losacano v. Electric Boat Corp., BRB No. 13-0554 (7/28/14)