The employees who file Defense Base Act insurance claims with the Office of Workers Compensation Program, and the Insurance Carrier/Employer may agree to settle the claim at any time. Basically, a settlement agreement will bring closure to the Claimant, but also to the Carrier as well. From a practical point of view, Claimant accepts less money or other benefits he may be entitled to and Insurance Carrier/employer gives up its right to challenge the Claimant’s right to compensation. The foundation for settlement is found in Section 8(i) of the Longshore and Harbor Workers’ Compensation Act (LHWCA), 33 U.S.C. § 908(i).
For employees from Kosovo, Macedonia, Bosnia, Uganda and other countries who worked for government contractors overseas such as AECOM, FLUOR, KBR, Dyncorp, Sallyport, Janus etc., this is pretty much only way in which they can obtain closure. The terms of the settlement are usually negotiated between the Adjuster and the defense attorney on one side and Claimant and his attorney on other. The purpose of settlement from a legal stand point is to avoid litigation. For example, if case goes further in litigation, Carrier/Employer would probably schedule Independent Medical Evaluation (IME) for the Claimant and have expert physician to opine on causation of Claimant’s disability. On the other hand, if the treating doctor’s opinion is that Claimant’s disorder may be related to his employment in a war zone, Carrier may lose the causation issue because it gives the Claimant the benefit of the presumption of causation.
The question thus becomes, how much is fair to offer to settle the claim? Let’s look at it from Claimant’s perspective: he may be someone who spent years of working in war zone, which resulted in a PTSD diagnosis and there is possibility it will be a lifelong disorder. If you ask Claimant, he will probably tell you there is no money in this world than can get his health back. On the other hand, Insurance Carrier will look at Claimant’s Average Weekly Wage (AWW), maybe order Labor Market Survey to get an idea what is the alternative employment Claimant may obtain at home and etc.
The answer is that there is no one size that will fit all; attorneys on both sides will discuss it with their respective clients and most likely base their decision on previous similar claims, Claimant’s earnings, degree of Claimant’s disability, outcome of Claimant’s deposition (possible impeachment) and etc.
It is important to note that the Department of Labor District Director, or an Administrative Law Judge must also approve a Longshore settlement. That said, even if Claimant and Insurance Carrier/Employer agree to the terms of the settlement, the District Director has authority not to approve it. For that reason, failure to prepare a well thought out 8(i) agreement will result in unnecessary delay and waste of time for all parties.
Once settlement is approved and paid, the Carrier/Employer will be discharged for the payment of past and future compensation and medical benefits.
Another important thing attorneys must take care of is to avoid District Director to issues Notice of Deficiency, which occurs when 8(i) agreement lacks an essential ingredient or contains an unacceptable “add-on” provision. For example, there may be a paragraph saying “any and all injuries”, “any and all claims”, which implies, that for example, subsequent Personality Disorder claim would be settled by approval of the underlying PTSD claim. Since only claims that exists can be settled, these types provisions will most likely be rejected and Notice of Deficiency may be issued.
