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                                 BRB No. 99-1056

CLARENCE NELSON                              )
                                             )
          Claimant                           )
                                             )
     v.                                      )
                                             )
STEVEDORING SERVICES OF                      )    DATE ISSUED:   07/11/2000

AMERICA                            )
                                   )         
     and                           )
                         )
EAGLE PACIFIC INSURANCE COMPANY    )
                         )    
          Employer/Carrier-             )    
          Respondents                   )
                         )
DIRECTOR, OFFICE OF WORKERS'       )
COMPENSATION PROGRAMS, UNITED )
STATES DEPARTMENT OF LABOR         )
                                   )
          Petitioner                    )    DECISION and ORDER

     Appeal of the Decision and Order Approving Settlement, Granting Employer Section 8(f) Relief, and
     Awarding Attorney Fee and Costs and Decision and Order on Reconsideration of
     Samuel J. Smith, Administrative Law Judge, United States Department of
     Labor.

     Kathryn A. Slagle (Slagle Morgan & Ellsworth LLP), Seattle, Washington,
     for employer/carrier.

     Laura Stomski (Henry L. Solano, Solicitor of Labor; Carol A. DeDeo, Associate Solicitor; Samuel J.
     Oshinsky, Counsel for Longshore), Washington, D.C., for the Director, Office of Workers' Compensation
     Programs, United States Department of Labor.

     Before: HALL, Chief Administrative Appeals Judge, SMITH, Administrative
     Appeals Judge, and NELSON, Acting Administrative Appeals Judge.

     PER CURIAM:

     The Director, Office of Workers' Compensation Programs (the Director), appeals
the Decision and Order Approving Settlement, Granting Employer Section 8(f) Relief, and Awarding Attorney Fee and
Costs, and the Decision and Order on Reconsideration (91-LHC-1947, 93-LHC-2046, 97-LHC-288) of Administrative Law Judge Samuel J. Smith rendered on claims filed
pursuant to the provisions of the Longshore and Harbor Workers' Compensation Act,
as amended, 33 U.S.C. §901 et seq. (the Act).  We must affirm the
findings of fact and conclusions of law of the administrative law judge if they are
rational, supported by substantial evidence, and in accordance with law.
O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965);
33 U.S.C. §921(b)(3).

     Claimant, while working for employer,  sustained injuries to his left knee on
July 6, 1989, and his back and left leg on May 29, 1991.  While the case was
pending before the administrative law judge, claimant and employer reached an agreement whereby employer
agreed to pay claimant a lump sum of $25,000 in full and complete settlement of all future medical expenses except those
pertaining to his left knee injury,[1]  as well as a lump sum payment for a scheduled
left knee award based on a 20 percent impairment of the left lower extremity, and a continuing award of permanent partial
disability benefits, commencing on November 3, 1995, for claimant's low back injury. 

     In his decision, the administrative law judge set forth the agreement reached as to claimant's entitlement and
awarded benefits based on this agreement.  He also granted employer's request for Section 8(f) relief for the payment of
permanent partial disability benefits under Section 8(c)(21) due to claimant's 1991 low back injury after review of the
parties' agreement, pertinent exhibits, and the Director's Statement of Position agreeing that  Section 8(f) relief would be
appropriate for any permanent disability due to this injury.  Lastly, the administrative law judge  awarded claimant's counsel
an attorney's fee totaling $28,852.12.[2]   The administrative law judge subsequently
denied the Director's motion for reconsideration.[3]      

     On appeal, the Director argues that the administrative law judge's grant of Section 8(f) relief, following approval
of the agreement in this case, is contrary to Section 8(i)(4) of the Act, 33 U.S.C.  §908(i)(4).  Relying on the Board's
decision in Strike v. S.J. Groves & Sons, 31 BRBS 183 (1997), aff'd mem. sub nom.  S.J.
Groves & Sons v.  Director, OWCP, 166 F.3d 1206 (3d Cir.  1998)(table),  the
Director asserts that the Special Fund cannot be liable under Section 8(f) for amounts the employer agreed to pay pursuant
to a Section 8(i) settlement with claimant.  The Director maintains that as the award of permanent partial disability benefits
in this case is based upon the parties' settlement agreement and not, as the Director agreed to before the administrative law
judge, an appropriate compensation order,[4]  employer's entitlement to Section 8(f)
relief is barred.  Moreover, contrary to the administrative law judge's finding, the Director avers that his statement of
position did not endorse the private parties' settlement nor did it serve as an agreement, which is nevertheless precluded
by Section 8(i)(4), to settle the issue of employer's entitlement to Section 8(f) relief.  Employer responds, urging
affirmance.[5]   

     Section 8(i) of the Act permits the parties in a case to dispose of the claim via a settlement agreement.  33 U.S.C.
§908(i).  Section 8(i)(4) of the Act was added by the 1984 Amendments, and it provides:

     The special fund shall not be liable for reimbursement of any sums paid or payable to an employee or any
     beneficiary under such settlement, or otherwise voluntarily paid prior to such settlement by the employer
     or carrier, or both.

33 U.S.C. §908(i)(4) (1994).  Prior to the enactment of the 1984 Amendments, the Board held that an employer could
seek Section 8(f) relief after entering into a Section 8(i) settlement with a claimant, but that a settlement between an
employer and a claimant which affects the liability of the Special Fund is not binding on the Fund absent the participation
of the Director. Brady v. J. Young & Co., 17 BRBS 46, aff'd on recon., 18 BRBS 167 (1985);Younger
v. Washington Metropolitan Area Transit Authority, 16 BRBS 360 (1984).  In Brady, the Board specifically
stated that "Section 8(i)(4) will preclude post-settlement Section 8(f) relief in the future. . . ." Brady, 17 BRBS at
52.[6]   Additionally, the Board has stated that Section 8(i)(4) was enacted to prevent
employers from seeking relief from the Special Fund after reaching a settlement with a claimant in a case that otherwise
would be assigned to the Special Fund. Dickinson v. Alabama Dry Dock & Shipbuilding Corp., 28 BRBS 84 (1993)
(citing H.R. CONF. REP. No. 1027, 98th Cong., 2d Sess., reprinted in 1984 U.S.C.C.A.N. 2783-2784).  Thus, the
language of Section 8(i)(4) unambiguously protects the Special Fund from liability after an employer enters into a Section
8(i) settlement with a claimant. Strike, 31 BRBS at 185.

     In Strike, 31 BRBS at 183, the employer raised the applicability of Section 8(f) before the district director,
see 33 U.S.C. §908(f)(3), who denied the claim.  The case was transferred to the Office of Administrative
Law Judges for a hearing on the merits of claimant's claim.  Some months after the hearing, claimant and the employer
agreed to settle claimant's claim, and submitted a settlement application to the administrative law judge.   The settlement
included the statement:  


     The parties by agreement have settled all claims for compensation and medical benefits; the employer
     reserving its rights against the Department of Labor pursuant to 8(f) of the Act.  Evidence will be submitted
     to solely decide the issue of 8(f) for decision by [the administrative law judge].

Strike, 31 BRBS at 184.   The administrative law judge remanded the case to the district director for
implementation of the settlement agreement, noting it was  "deemed approved" by virtue of the expiration of 30 days.
See 33 U.S.C. §908(i)(1).  Thereafter, the employer filed with the administrative law judge additional
evidence it obtained in support of its claim for Section 8(f) relief; the Director opposed the claim for Section 8(f) relief,
citing Section 8(i)(4).  The administrative law judge found the Director was estopped from raising Section 8(i)(4) by
virtue of his failure to raise the issue during the 30-day period while the private parties' settlement application was pending. 
Ultimately, the administrative law judge awarded employer Section 8(f) relief, and the Director appealed.

     In its decision, the Board reversed the administrative law judge's finding that Section 8(i)(4) was inapplicable.  The
Board first rejected the contention that the settlement did not "directly affect" the Special Fund because it did not attempt
to hold the Fund liable for benefits or to stipulate to facts affecting the merits of the application for Section 8(f).  The Board
held that inasmuch as the Fund's liability is derivative of employer's liability, and as issues such as causation, nature and
extent of disability, and average weekly wage were not litigated, the agreement between the private parties on these issues
cannot determine the liability of the Special Fund. Strike, 31 BRBS at 186.  

     The Board further reasoned that Section 8(i)(4) is a self-executing provision, i.e., it does not have to be
raised by the Director in order for it to apply.  Noting that the purpose of the provision is to prevent employers from seeking
post-settlement relief from the Special Fund, the Board held that a "settlement provision purporting to reserve employer's
right to later seek Section 8(f) relief or to set the Fund's liability is void as a matter of law."  Id.

     In Cochran v. Matson Terminals, Inc., 33 BRBS 187 (1999), the employer renewed its application for
Section 8(f) relief at the same time that the private parties submitted their settlement agreement to the administrative law
judge for approval, and requested that the administrative law judge initially consider and resolve the Section 8(f) issue prior
to considering and approving the settlement agreement.   The administrative law judge approved the Section 8(i) settlement
agreement and found that Section 8(i)(4) barred employer's entitlement to Section 8(f) relief.  Employer's request, on
reconsideration, that the administrative law judge issue two separate orders, the first granting its request for Section 8(f)
relief, and the second approving the parties' Section 8(i) settlement agreement, was rejected and its motion for
reconsideration was denied.     

     Before the Board, employer argued that it did not seek Section 8(f) relief subsequent to an approved Section 8(i)
settlement but instead requested a ruling on the Section 8(f) issues prior to obtaining approval of the parties' settlement
agreement.  As such, employer asserted that its request for Section 8(f) relief was not precluded by operation of Section
8(i)(4).  Following a discussion of Section 8(i)(4) and Strike, the Board affirmed the administrative law judge's
determination that employer's claim for Section 8(f) relief is prohibited by Section 8(i)(4).  First, the Board reiterated that
the language of Section 8(i)(4) protects the Special Fund from liability after an employer enters into a Section 8(i)
settlement with a claimant, and further held that an employer enters into a settlement agreement at the time the parties
execute the document, and not at the time it is administratively approved.  In addition, the Board rejected the employer's
assertion that the holding in Strike applies only where Section 8(f) is requested after the settlement is approved,
and therefore held that the simultaneous submission of the settlement agreement and the stipulations and exhibits in support
of employer's claim for Section 8(f) relief foreclosed the administrative law judge's consideration of the request for Section
8(f) relief.  Lastly, the Board recognized that once the settlement is approved, claimant's entitlement is fixed and employer's
liability is discharged; Section 8(i)(4) prevents transfer of liability under the settlement to the Special Fund, and as
employer's liability is discharged, the Fund's derivative liability is also discharged.

     In Director, OWCP v. Coos Head Lumber & Plywood Co., 194 F.3d 1032, 33 BRBS 131 (CRT) (9th Cir.
1998), the United States Court of Appeals for the Ninth Circuit, within whose jurisdiction the instant case arises, rejected
the Director's argument that the administrative law judge should not have awarded Section 8(f) relief based on a stipulation
in which the Director did not concur,[7]  as the administrative law judge did not
award Section 8(f) relief to employer based on the parties' stipulations but rather independently arrived at that
determination.[8]   While Coos Head Lumber pertains to stipulations as
opposed to settlement agreements it nevertheless has relevance to the instant disposition.  In particular, the Ninth Circuit
held that the stipulations did not seek to bind the Special Fund to the elements of Section 8(f), the Director filed a notice
of appearance, exhibits and a statement of position in the case, and that he was free to introduce evidence and defend the
liability of the Special Fund, but elected not to do so.  Moreover, the Ninth Circuit observed that the Director was on notice
that his failure to appear would constitute a waiver.  The court also distinguished the case at hand from its decision in
E.P. Paup v. Director, OWCP, 999 F.2d 1341, 27 BRBS 41 (CRT) (9th Cir. 1993), wherein it held that agreements
between an employer and a claimant that affect the liability of the Special Fund cannot be used against the Director, since
the employer and claimant did not agree to subject the Special Fund to liability.  

     In the instant case, the parties were prepared to present their cases before the administrative law judge at the formal
hearing seeking resolution of issues related to compensation for claimant's injuries.[9]
   Additionally, employer sought entitlement  to Section 8(f) relief.  In response, the Director filed with the administrative
law judge a pre-trial Statement of Position.  In that document, the Director stated that he:

     advise[d] the [administrative law judge] and the parties that [employer] has made
     timely application for the limitation of its liability under Section 8(f) of the Act for
     any permanent disability arising from the claimant's May 29, 1991, injury, that
     representatives of the Director have reviewed the application and have determined
     that Section 8(f) relief would be appropriate for any permanent disability arising from
     that injury, and that an appropriate order, whether after hearing or upon
     agreement of the parties as to the extent of permanent disability and/or the
     level of the claimant's loss of wage-earning capacity, may be entered, subject
     to the normal standards of proof.
     
     Statement of the Position of the Director at 1-2 (emphasis added).  Additionally, the Director
indicated that he did not intend to present any witnesses, or evidence, and that in light of the filing
of this statement he "waives his right to appear at and to participate through counsel at the hearing
to be held in this matter."  Id. at 2-3.  The administrative law judge convened the hearing
on August 11, 1998, and the proceeding turned into a settlement conference, with the parties in
attendance ultimately reaching agreement on all issues, except attorney's fees and employer's
entitlement to Section 8(f) relief.  At the hearing, the administrative law judge, for purposes of
clarity, had the parties set out the terms of their agreement.  In addition, he noted that:

     counsel for the Director is not present at this hearing.  However, there was no need
     for counsel for the Director to be present in this hearing because counsel for the
     Director has filed a document in this matter, which was received on June 9, 1997,
     which sets forth the Director's position with respect to Section 8(f) issues, and the
     Director has taken the position that to the extent that permanent disability is found
     to be present in this matter that the employer and the insurance carrier are entitled to
     benefit by the limitation of Section 8(f).
     
     Hearing Transcript at 8.  The administrative law judge then noted for the record the parties'
agreement as to the compensation rate for claimant's unscheduled award of permanent partial
disability for his lower back injury.  

     After reviewing and approving the agreement of the parties, the Director's Statement of
Position, as well as the pertinent exhibits of record, the administrative law judge determined that
employer is entitled to have its liability for the payment of permanent partial disability benefits to
claimant for his lower back injury limited to 104 weeks pursuant to Section 8(f) of the Act.  Upon
reconsideration, the administrative law judge found that the Director failed to raise an affirmative
defense of Section 8(f) such that it is waived[10]  and also,
via its Statement of Position, conceded that such relief is "appropriate" in this case.  Additionally,
the administrative law judge acknowledged that he reviewed the evidence of record and although
he did not state what evidence he relied upon,  thereafter determined that Section 8(f) relief is
warranted.  Moreover, the administrative law judge noted that the Director was cognizant of the
issues presented in this case and that his position statement provided no limiting language to
delineate that Section 8(f) relief was warranted only under certain circumstances.[11]   Based on these findings, and as the parties' settlement
agreement, including the wage loss arising from claimant's permanent partial disability to his lower
back, was reasonable and supported by the underlying documentation, the administrative law judge
denied the Director's motion for reconsideration.    

     The facts of the instant case are similar to those presented in Coos Head Lumber and
are distinguishable from those presented in Strike and Cochran.  The private
parties' settlement agreement did not seek to subject the Special Fund to liability.  It did however
affect the liability of the Special Fund in that it set out the extent of the permanent disability and the
level of claimant's loss of wage-earning capacity.  Nevertheless, the Director conceded those issues
and employer's entitlement to Section 8(f) relief by "appropriate order, whether after hearing
or upon agreement of the parties as to the extent of permanent disability and/or the level of the
claimant's loss of wage-earning capacity . . . subject to the normal standards of proof."  While
the Director properly notes that settlements are not subject to normal standards of proof, as they are
compromise agreements between parties, his statement that his acquiescence on the Section 8(f)
relief issue was contingent upon a finding by the administrative law judge that claimant was
permanently partially disabled flies in the face of the language of his Statement of Position wherein
he conceded that an agreement between the parties on that issue would suffice for purposes of
establishing Section 8(f) relief.  Moreover, although the administrative law judge on
reconsideration referred to the agreement as a settlement, it is tantamount to series of stipulations
as was the case in Coos Head Lumber, with the ultimate agreement involving continuing
permanent partial disability benefits for a loss in wage-earning capacity at a specified amount.

     The Director's concession regarding Section 8(f) relief for liability based on agreement of
the parties as to claimant's loss in wage-earning capacity distinguishes this case from Strike
and Cochran.  In those cases, the Director did not approve Section 8(f) relief prior to 
settlement discussions or state that such relief would be available based on the parties' agreement
on the amount of benefits.   In contrast, the Director herein was provided with the opportunity to
defend the Special Fund in the instant case and, in fact, participated, affirmatively stating that upon
review of the case, Section 8(f) relief was appropriate for any permanent disability arising
from claimant's back injury.  The Director's statement clearly accepts Fund liability for benefits
awarded in an appropriate order by the administrative law judge  based on "agreement of the parties
as to the extent of permanent disability and/or the level of the claimant's loss of wage-earning
capacity."  As such, the Director herein made a conscious decision regarding the liability of the
Special Fund and articulated his position to the administrative law judge and the parties well before
the time the agreement was reached.  The conditions precedent for conceding employer's entitlement
to Section 8(f) relief stated by the Director were met during the ensuing adjudication of this case. 
The administrative law judge entered an appropriate order based on a stipulated loss of wage-earning capacity.[12]   Thus, the Director is bound by his
concession in this case and is therefore precluded, at the very least by the doctrine of equitable
estoppel, from altering his position on Section 8(f) after the fact.  Moreover, the purpose of Section
8(i)(4) has been satisfied in this case as the Director was provided with the opportunity to defend,
and in fact, conceded, the liability of the Special Fund prior to the time that the settlement
agreement was entered into by the parties.  Based on the facts of this case, we affirm the
administrative law judge's finding that employer is entitled to Section 8(f) relief and that said
entitlement is not precluded by Section 8(i)(4), as this case is distinguishable from Strike
and Cochran.[13] 

     Accordingly, the administrative law judge's Decision and Order Approving Settlement,
Granting Employer Section 8(f) Relief, and Awarding Attorney Fee and Costs and Decision
and Order on Reconsideration are affirmed.

     SO ORDERED.


                                                   
                         BETTY JEAN HALL, Chief
                         Administrative Appeals Judge


                                                   
                         ROY P. SMITH
                         Administrative Appeals Judge


                                                   
                         MALCOLM D. NELSON, Acting
                         Administrative Appeals Judge

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Footnotes.


1) 1Pursuant to the settlement, claimant retained his right to continuing medical care for his left knee condition. Back to Text
2) 2The attorney's fee represents 88.75 hours at an hourly rate of $200, 15.125 hours at an hourly rate of $135, 10.25 hours at an hourly rate of $50, 7.525 hours at an hourly rate of $75, plus $7,975.86 in expenses. The fee award is not challenged on appeal and thus is affirmed. Back to Text
3) 3The administrative law judge's initial decision does not refer to Section 8(i), 33 U.S.C. §908(i), nor does it purport to approve a settlement under that section, containing no findings regarding whether the agreement was adequate or procured by duress. On its face, it appears to state stipulations, followed by an award based on those agreements. On reconsideration, however, when the Director asserted that the administrative law judge's discharge of employer's liability, Decision and Order at 9 No. 13, was not appropriate in an award based on stipulations, the administrative law judge rejected the argument on the basis that his decision approved a Section 8(i) settlement and thus is not subject to modification, 33 U.S.C. §908(i)(3). This determination is not challenged on appeal. Back to Text
4) 4Specifically, the Director notes his statement before the administrative law judge in this case that he would agree to the award of Section 8(f) relief in "an appropriate order," either "after a hearing or upon agreement of the parties as to the extent of permanent partial disability and/or the level of the claimant's loss of wage-earning capacity . . . subject to the normal standards of proof." The Director adds that settlements are not subject to the normal standards of proof. Back to Text
5) 5Employer's assertion, in its response, that the Director's appeal should be dismissed as untimely is without merit. Contrary to employer's contention, the Certificate of Filing attached to the administrative law judge's decision lists the date of filing as March 18, 1999, and thus, the Director's motion for reconsideration filed on March 29, 1999, was timely. Galle v. Ingalls Shipbuilding, Inc., 33 BRBS 141 (1999). Additionally, the Director's notice of appeal filed on July 12, 1999, is timely, as it falls within the requisite time period for filing an appeal of the administrative law judge's decision on reconsideration filed June 10, 1999. 33 U.S.C. §921(b); 20 C.F.R. §§802.205, 802.221. Back to Text
6) 6In Brady, the Board discussed Section 8(i)(4) but held it inapplicable to settlements entered into prior to September 28, 1984, based on the language of Section 28(e)(1) of the 1984 Amendments and the inequity of a retroactive application. Brady, 17 BRBS at 52, 18 BRBS at 169-170. Back to Text
7) 7The Ninth Circuit indicated in Coos Head Lumber that the Director's quarrel is with whether the second injury fund is liable, and not with the facts stipulated to by the parties, and that the administrative law judge independently decided the liability issue. The same is essentially true in the instant case. Back to Text
8) 8In Coos Head Lumber, the Ninth Circuit also rejected the Director's contentions that the administrative law judge erred in finding that employer met all of the requisite elements for establishing Section 8(f) relief, holding that the administrative law judge's findings on that issue are supported by substantial evidence. Back to Text
9) 9The parties filed several prehearing statements in light of the fact that the date of hearing was rescheduled several times. While some issues were resolved by the agreement of the parties over the course of this time, several issues relating to compensation remained for resolution by the administrative law judge. These issues were the extent and appropriate way to compensate for the left leg permanent partial disability, and reasonable and necessary medical care related to the July 6, 1989, and May 29, 1991, injuries. Back to Text
10) 10As the Director suggests, the administrative law judge erred in finding that the Director's failure to raise an affirmative defense of Section 8(f) resulted in a waiver of said defense. As the Board held in Strike, 31 BRBS at 186, and reiterated in Cochran, 33 BRBS at 190, Section 8(i)(4) is a self-executing provision, i.e., it does not have to be raised by the Director in order for it to apply. The administrative law judge's error is harmless in light of the Board's overall disposition of this case. Back to Text
11) 11Actually the Director's concession was contingent upon the issuance of an order by the administrative law judge, and resolution of the extent of permanent disability and/or loss in wage-earning capacity either by the administrative law judge or an agreement between the parties, "subject to normal standards of proof." Back to Text
12) 12Stipulations are offered in lieu of evidence, and once accepted into the record, may be relied upon to establish an element of a claim. See generally Williams Electronics, Inc. v. Arctic Int'l, 685 F.2d 870 (3d Cir. 1982). Thus, an order based on a stipulated loss of wage-earning capacity is entered subject to "normal standards of proof." Back to Text
13) 13Additionally, the administrative law judge explicitly stated, on reconsideration, that he reviewed the evidence of record and determined that Section 8(f) relief would be warranted. The voluminous medical records in this case support the administrative law judge's finding that the requisite elements for Section 8(f) relief have been met. Back to Text

NOTE: This is an UNPUBLISHED LHCA Document.

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