Lump Sum Settlements, Section 908(i)
Dec 7, 2011
- Will Scheffler, The American Equity Underwriters, Inc.
Reminder: What follows are some observations and a summary of general principles based on my reading of the statute, regulations and case law. Obviously, such statements of general principles and summary review in this format do not represent the position of any party in any actual case or controversy.
Section 908(i) (33 U.S.C. 908(i)) is a key provision of the Longshore and Harbor Workers’ Compensation Act. It provides for the closing of a claim, discharging the liability of the employer/carrier.
Section 908(i) states – “(1) Whenever the parties to any claim for compensation under this Act, including survivor’s benefits, agree to a settlement, the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress. Such settlement may include future medical benefits if the parties so agree. 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 deputy commissioner or administrative law judge. If the parties to the settlement are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval.”
All of the information necessary to file a complete section 908(i) settlement application is contained in the Department of Labor’s Regulations governing administration of the Longshore Act at 20 C.F.R. sections 702.242 and 702.243. It will save time and money to get it right the first time.
Basically, a complete application should contain:
- A description of the incident as well as the nature of the injury;
- A description of the medical care rendered to the date of settlement;
- A summary of compensation paid and the compensation rate and average weekly wage (AWW);
- A full description of the settlement indicating, as applicable, the amounts to be paid for compensation, medical benefits, survivor benefits, and attorney’s fees;
- The reason for the settlement and the issues in dispute, if any;
- The claimant’s date of birth and, in death claims, the names and birth dates of all dependents;
- A description of the claimant’s educational background and work history;
- A current medical report;
- A statement explaining why the settlement amount is considered adequate;
- If the settlement covers medical benefits, an itemization of medical expenses for the 3 years prior to the settlement application, an estimate of the claimant’s need for future medical treatment, and information on any collateral source available for the payment of medical expenses (Medicare is not an acceptable collateral source).
There are many considerations to keep in mind when preparing a section 908(i) settlement. Here are some of them:
- Generally, the Department of Labor (DOL) will not let you settle past medical benefits unless they are in dispute;
- The settlement must be deemed adequate by the DOL’s District Director in order to obtain approval;
- The Department of Labor will protect the interests of the unrepresented claimant to ensure that the settlement is adequate;
- Payments pursuant to approved settlements are made directly to the claimant and not to the claimant and his attorney jointly;
- Attorney fees are usually “over and above” the claimant’s portion and are not deducted from the overall settlement amount;
- Even if a settlement is deemed inadequate or deficient, there is an opportunity for the parties to make alterations to gain approval. This may cost the employer/carrier additional money;
- A settlement may be “structured” in that payment may extend over the lifetime of the claimant, but if the party making the payments defaults then the liability to make the payments returns to the original employer/carrier.
These are just some of my thoughts and observations regarding lump sum settlements under the Longshore Act.
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.
The opinions and comments expressed in this article are those of the authors and do not reflect the opinion of ALMA, AEU or AmWINS. None of ALMA, AEU, AmWINS or the authors are responsible for any inaccuracy of content or for any loss or damages incurred by any party as a result of reliance on information contained in this article. Content may not be published or reproduced without the written consent of the authors. Prior articles may not be updated for accuracy as pertinent information changes over time. The Longshore Insider is intended to provide general information about the industry and should not be construed as legal advice.