The Benefits Review Board issued a pair of unpublished attorney fee decisions that are interesting when read in tandem. The decisions address attorneys fees paid pursuant to a settlement agreement after the employer/carrier negotiated a fee amount with the claimant’s attorney.
The parties to Longshore and Defense Base Act claims may voluntarily settle their disputes, provided that the settlement is adequate and was not procured by duress. See 33 U.S.C. 908(i). The parties can include a fee for the claimant’s attorney in their settlement agreement. Once an agreement is reached, the parties submit their settlement to an adjudicator. For this post, assume that the adjudicator is an administrative law judge (“ALJ”).
After receipt of the settlement application, the ALJ must take one of the following four actions within 30 days:
- Issue a deficiency notice if the application is incomplete;
- Approve the settlement if it is adequate and not procured by duress;
- Disapprove the settlement if it is inadequate or was procured under duress; or
- Do nothing, in which case, if the parties are represented by counsel, the settlement will be deemed approved after 30 days.
See 33 U.S.C. 908(i)(1); 20 C.F.R. 702.242, 702.243(b)-(c); Loscano v. Electric Boat Corp., 48 BRBS 49, 53-54 (2014).
The first new unpublished Benefits Review Board decision is DeCruise-Williams v. Army and Air Force Exchange Serv., BRB No. 15-0109 (Aug. 31, 2015). In DeCruise-Williams, the parties settled the underlying Nonappropriated Fund Instrumentalities Act claim for $30,000 plus $8,000 in attorneys fees. The ALJ approved the settlement but unilaterally reduced fees and costs from $8,000 to $3,149.90 because inter alia he “found the evidence submitted with the fee petition did not support the requested hourly rate . . . .” The Benefits Review Board reversed, finding that the ALJ exceeded his authority in denying the fee petition as written and as agreed upon by the parties. The Board specifically noted that the settlement application identified a specific dollar amount for attorney’s fees as apposed to a dollar amount “not to exceed $8,000.” The reduction in the agreed-upon attorney fee amount exceeded the four available options available to adjudicators and, as such, the reduction in the fees was a reversible error.
The second new unpublished Benefits Review Board decision is Santiago v. Global Integrated Security USA, Inc., BRB No. 15-0108 (Sept. 21, 2015). In Santiago, the parties submitted a Defense Base Act settlement for $460,000 plus attorney’s fees “up to $20,000.” The ALJ awarded a total fee of $14,357.13. The “up to” language provided the ALJ with the opportunity to review the claimant’s attorney’s fee petition and scrutinize the fee petition and attorney’s hourly rate. The Benefits Review Board approved the ALJ’s approach, saying:
The facts in this case are materially distinct from those in Loscano. Whereas in Loscano the parties stipulated to a precise fee amount, here, employer agreed to pay “up to $20,000 for attorney’s fees and costs.” Contrary to counsel’s assertion, this language did not reflect employer’s agreement to pay a fee of $20,000; rather, it is an agreement to pay an attorney’s fee of $20,000 or less. Thus, the administrative law judge did not err in reviewing the fee petition in order to ascertain the amount of employer’s liability.
My initial take on these decisions is that if the employer/carrier and claimant’s attorney agree on a sum certain for attorney’s fees, then ALJ review of the fee portion of a settlement is limited; but if the employer and claimant’s attorney agree on an uncertain sum–a sum that requires review for an ALJ to make a determination about the amount of fees–then the ALJ may investigate all aspects of a fee petition.
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