Agreeing to settle your Defense Base Act claim is not the end of the DBA process. Over the past couple of years, we have noticed new trends that delay the settlement process. With so many claimants questioning the delays, I thought it best to address this issue with an article.
Negotiating a Settlement Does Not End the Claim:
Defense Base Act claims do not end when the parties negotiate a settlement. Unfortunately, there is a long wait time after negotiations. And that wait time has grown exceedingly long over the past few years. Whereas the delay used to be weeks, now it is months–sometimes four to eight months.
After the parties negotiate a settlement number, the insurance carrier’s attorneys prepare the settlement paperwork. A settlement application is approximately 10 to 15 pages long. It details the claimant’s medical history, the disputes between the parties, and why the parties believe the settlement number is reasonable. Still, most defense firms write settlements based on a template, meaning most of the settlement is boilerplate for each case.
Insurance carriers will not let the claimant’s attorneys prepare the settlement paperwork. (Personally, that’s a rub. When I was a defense attorney, I wrote DBA settlements often. The task took one day at most.)
Once the initial defense attorney writes the settlement, that attorney sends it to a second attorney at a second law firm. The second attorney reviews and edits the document. Further, the second attorney makes sure that the language used will help the insurance carrier’s future War Hazard Compensation Act reimbursement request. Eventually, the second attorney returns the settlement to the initial attorney.
Next, the initial attorney sends the settlement to a claims adjuster. When dealing with hundreds of thousands of dollars, the claims adjuster must get management approval before the initial attorney is authorized to send the settlement to the claimant’s attorneys.
Once the claimant’s lawyers receive the settlement paperwork, they must review the document to make sure that it is not harmful to the claimant in any way. If objectionable language exists—perhaps the language is overly broad—then the claimant’s lawyers must request a settlement revision. On the other hand, if the settlement paperwork is appropriate, the claimant’s attorney will send the paperwork to the claimant for signature. Once the claimant signs and returns the settlement, the claimant’s attorney will execute the document and return the settlement to the insurance carrier’s initial attorney.
But still, the process is not over.
After the initial attorney receives the signed document, she will inform the claims adjuster. The claims adjuster will then, for the first time, request your checks from the insurance carrier. That request will filter to the insurance carrier’s accounting office. It will write a check and either mail it to the initial attorney or send the funds to a third party vendor for electronic transfer (typically only for foreign nationals).
The initial attorney may only submit your signed settlement to the Office of Workers’ Compensation Programs after the funds are in place. When all funding is secured, she will upload the settlement to a website called SEAPortal. By statute and regulation, OWCP is allowed 30 days to approve the settlement. That never really happens, though. OWCP very quickly approves settlements where all parties are represented by attorneys. Still, Congress gave OWCP 30 days to consider all settlements. Claimants should always factor statutory time frames into account.
Additional Delay Issues:
As if this process was not long enough, there are additional issues that can cause further delay. Those issues include:
- Broadly-worded settlement applications that include non-claimed injuries–even though 20 C.F.R. 702.241(g) limits settlements to “claims then in existence” at the time of settlement.
- Requests for “War Hazards” depositions. Notably, depositions are not required for WHCA reimbursement under 20 C.F.R. 61.101(c).
- Waiting on funds to clear escrow–which is a newer delay that only applies to foreign nationals.
- Requests for treating doctors to sign questionnaires linking the injury to war-risk hazards–which is sort of funny considering the complaints lodged during the litigation about medical provider questionnaires.
- Requests for claimant to sign a “War Hazards Declaration,” which is essentially an affidavit or unsworn declaration under penalty of perjury that lists the dates and locations of attacks that the claimant experienced while overseas. Typically, the declaration includes a copy of the corresponding attack list. When it applies for reimbursement, the insurance carrier will voluntarily disclose this attack information to OWCP.
Conclusion:
So, what can you do to speed up the process if you have already negotiated a settlement? Perhaps you would rather pursue litigation. You are allowed to withdraw from the settlement prior to approval of the settlement by a judge or the district director. But beyond litigation, there is little you can do. Your settlement will not be submitted to the OALJ or OWCP for approval until after the insurance carrier gets its finances squared away. Only the entry of an order awarding benefits requires the insurance carrier to pay immediately.
It is worth noting that some defense attorneys quickly prepare and submit settlement documents to us. One particular attorney in New York is exceptionally fast, and we very much appreciate her diligence. And the defense firm I worked at years ago is quick to turn around settlements. Moreover, people are prone to human error–myself included. As one administrative law judge aptly noted in a recent decision and order: attorneys in our practice area maintain civility in part because they “recognize they may well be just as imperfect or even more imperfect than opposing counsel.”
The delays mentioned in this post, however, go beyond the normal and expected holdups. They are adversarial or self-serving in nature. Some delays extend the written agreement well beyond the scope of the bargain–doing so months after negotiations concluded. Those broad agreements want you to settle the claim that you have plus any unknown claim stemming from your employment that could possibly arise in the future. Other delays focus on the insurance carrier’s claim for WHCA reimbursement of DBA benefits paid. WHCA reimbursement requests are always made by carriers, not by claimants.
But still, there is one thing the delays have not changed. Carriers still tout settlements by claiming the wait time for a settlement is shorter than the wait time for a judge’s decision and order. Years ago, I would have agreed. Now, maybe not.
