Solicitor’s Arguments Rejected in Settlement Approval Order

This post addresses a really interesting settlement order.  Two represented parties attempted to enter into a settlement.  The District Director disapproved the settlement on the grounds that the amount was not reasonable.  The parties then referred the case to the Office of Administrative Law Judges.  Through their attorneys, they agreed to increase the settlement amount by $500.  A dispute arose between the parties and the Solicitor as to whether this increase was appropriate.

To help resolve the dispute, the administrative law judge scheduled a conference call where each party could explain their positions.  The claimant and the employer wanted the settlement approved.  The Solicitor took a different position, arguing that “neither the District Director nor the ALJ was allowed to consider litigation risk or the claimant’s personal circumstances in assessing adequacy.”  The Solicitor also “insisted that the District Director or ALJ must . . . simply apply the acturarial tables and discount rate to find a minimum adequate amount.”

The ALJ allowed the parties to file briefs.  The Solicitor backtracked from her earlier arguments, but still argued that the settlement was not adequate, not even with an 8% discount rate.  Unfortunately, the Solicitor also floated new unappealing arguments:

The Solicitor also dismissed the reasons Claimant offered in support of the discounted settlement amount.  She observed that although Claimant might not reach the expected actuarial date of demise, it was equally possible that Claimant could pass it and neither party had offered anything to justify Claimant’s fear of an early death.  The Solicitor noted that if such facts existed, but were of a “sensitive nature,” Claimant could communicate them by telephone to the District Director and shield them from unnecessary disclosure.  The Solicitor expressed similar concerns about the debts and obligations that Claimant cited as being of sufficient weight to justify taking a discount from periodic payments. . . .  Finally, the Solicitor observed that Claimant’s suggestion that her post-injury earning might increase was entirely hypothetical and unlikely to actually happen.

The Solicitor concluded by discussing the possibility that neither counsel understands the mandated obligation to carefully review settlement applications and explaining that the Director is required by statute to question the parties and the terms of the application so as to ensure adequacy and absence of duress.  The Solicitor emphasized that, by definition, the District Director must second guess attorneys who are advising claimants.

The ALJ did not agree with the Solicitor’s position.  On the one hand, the Department of Labor has a statutory role to play in approving settlements.  On the other hand, there is “tension between the paternalistic role taken by the Department and the normal assumption that counsel advising claimants are competent and ethical.”  In this case, the injured worker made a “grown-up” decision to “take the money and run,” but the Solicitor’s argument presupposed that the injured worker was not justified in her decision…or maybe that her lawyer was not qualified to offer an adequate explanation of the costs and benefits of continuing with litigation or taking a settlement.

All told, the ALJ approved the settlement submitted by the parties.  Rightfully so.  The Solicitor’s arguments favored ex parte communications, an imagined implicit privilege with a government agent, a “quasi-in loco parentis role” over injured workers, and indifference towards “a fair assessment of the litigation risk and expected value” of an injured worker’s claim.  Those arguments were  (and are) untenable.

Richardson v. Huntington Ingalls, Inc., 2013-LHC-01317 (OALJ 2013)

Request: If anyone has copies of the Richardson briefs, I would like to see them.