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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                                )
                                        )    DECISION and ORDER
          Petitioner                    )    on RECONSIDERATION

     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 (Judith E. Kramer, Acting Solicitor of Labor; Carol A.
     DeDeo, Associate Solicitor), 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), has
filed a timely motion for reconsideration of the Board's decision in the captioned
case wherein the Board affirmed the administrative law judge's findings that
employer is entitled to Section 8(f), 33 U.S.C. §908(f), relief, and that
Section 8(i)(4), 33 U.S.C. §908(i)(4), does not preclude said entitlement.
Nelson v. Stevedoring Services of America, 34 BRBS 91 (2000).  Employer
responds, urging the rejection of this motion.  For the reasons which follow, the
Director's motion for reconsideration is denied.  

     To recapitulate, claimant initially sustained an injury to his left knee while
working for employer on July 6, 1989.  He subsequently injured his back and left
leg on May 29, 1991, during the course of his employment with employer.  The
parties  reached an agreement whereby employer would 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, as well as a lump sum payment for a 20 percent
impairment of the left lower extremity and continuing benefits for a loss of wage-earning capacity, commencing on November 3, 1995, for claimant's low back injury. 
The agreement did not address the issue of employer's entitlement to Section 8(f)
relief.    

     In his decision, the administrative law judge initially ordered employer to
pay benefits pursuant to the terms of the parties' agreement.  He then granted
employer's request for Section 8(f) relief for the payment of the continuing
permanent partial disability benefits under Section 8(c)(21), 33 U.S.C.
§908(c)(21), based on claimant's low back injury due to the Director's
"agreement" that Section 8(f) would apply if the parties reach agreement as to the
extent of permanent disability and/or the level of claimant's loss of wage-earning
capacity.   The administrative law judge subsequently denied the Director's motion
for reconsideration.

     On appeal, the Director argued that the administrative law judge's grant of
Section 8(f) relief, following his approval of the parties' settlement is contrary
to Section 8(i)(4) of the Act.  In its decision, the Board, observing that the
facts of the instant case are similar to those in Director, OWCP v. Coos Head
Lumber & Plywood Co., 194 F.3d 1032, 33 BRBS 131(CRT) (9th Cir. 1998), and
distinguishable from those in Cochran v. Matson Terminals, Inc., 33 BRBS 187
(1999), and 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), affirmed the administrative law judge's finding that employer's
entitlement to Section 8(f) relief is not precluded by Section 8(i)(4). 
Specifically, the Board held that the purpose of Section 8(i)(4) was satisfied as,
 prior to the time that the settlement agreement was entered into by the
parties, the Director was provided with the opportunity to defend, and in fact
conceded, the liability of the Special Fund for permanent partial disability
benefits based on an appropriate order, whether entered after a hearing or upon
agreement of the parties.   Nelson, 34 BRBS at 96.

     In his motion for reconsideration, the Director argues that employer's
settlement of its liability extinguished, as a matter of law, the Special Fund's
derivative liability pursuant to Section 8(i)(4).[1]   The Director contends that contrary to the Board's decision, Coos
Head Lumber is factually distinguishable from the instant case, as the employer
therein agreed to the principle part of its liability by stipulations rather than
a Section 8(i) settlement, and thus left open the issue of whether it could receive
partial relief from its liability under Section 8(f).  In contrast, the Director
argues that there was no partial resolution of employer's liability herein pursuant
to stipulations; rather, employer's liability was completely discharged pursuant
to Section 8(i), as a matter of law, once it settled the case.  In this regard, the
Director once again urges the Board to accept the holdings in Strike and
Cochran as dispositive of the issue in this case.  The Director further
contends that since claimant's claim was disposed of pursuant to Section 8(i), the
Director's limited concession to the applicability of Section 8(f) is not
controlling.  

     The Director initially contends that the Board's decision "flip-flops" as to
whether the parties' agreement represents a Section 8(i) settlement or a series of
stipulations.[2]   The Director contends that if
the agreement is indeed a Section 8(i) settlement, his agreement that Section 8(f)
would apply is inoperative.  In its decision, the Board noted that on
reconsideration the administrative law judge rejected the Director's argument that
the discharge of employer's liability was not appropriate in an award based on
stipulations, as the judge found that his decision approved a Section 8(i)
settlement which is not subject to modification. Nelson, 34 BRBS at 92 n.
3.  The Board further noted that this determination was not challenged on appeal.
Id.  The Board however subsequently acknowledged that although the
administrative law judge on reconsideration referred to the agreement as a
"settlement," it nonetheless is tantamount to a series of stipulations, and thus
the Board held that the administrative law judge entered an appropriate order based
on a stipulated loss of wage-earning capacity. Nelson, 34 BRBS at 96.  Given
these statements, we will clarify our decision.

     The record reveals that claimant and employer clearly intended to enter into
a settlement agreement.  At the hearing, claimant, employer and the administrative
law judge each repeatedly referred to their agreement as a settlement. Hearing
Transcript (HT) at 6-8, 14.  Additionally, at the hearing the administrative law
judge noted that "this settlement is in the best interests of both parties," HT at
6, and in his decision acknowledged that the agreement of the parties provided for
a complete discharge of employer's liability.  Decision and Order at 9.  Thus, the
administrative law judge's decision reflects an approval of a Section 8(i)
settlement agreement which therefore is not subject to modification.  The Board's
prior decision does not disturb this determination.

     However, we hold that the peculiar facts of this case nevertheless support the
administrative law judge's finding that Section 8(f) relief is appropriate.  First,
as previously discussed in the Board's initial decision, the Director herein
explicitly, in writing, conceded employer's entitlement to Section 8(f) relief for
any permanent partial disability, in his pre-hearing statement, stating that an
appropriate order, whether after a hearing or upon agreement of the parties, could
be entered.  Thus, the Director gave his specific approval to the parties'
resolving this claim by agreement, and nothing in the Director's document restricts
this approval to agreements based on stipulations as opposed to one contained in
a settlement.  In addition, the Director provided this approval prior to the
time that the parties entered into their agreement and sought and received approval
by the administrative law judge.  Section 8(i)(4) prohibits reimbursement from the
Special Fund where employer seeks Section 8(f) relief after the parties
enter into a Section 8(i) settlement.  See Cochran, 33 BRBS at 191. 
Additionally, the administrative law judge noted, on reconsideration, that his
determination regarding Section 8(f) relief was made independently of his approval
of the parties' settlement agreement, and was based on the Director's concession,
although he added that a review of the evidence of record further supported
employer's entitlement to Section 8(f) relief.  Moreover, as the Board held, the
purpose of Section 8(i)(4) was satisfied in this case as the Director was provided
with, and in fact participated in the case, albeit in a cursory manner, prior
to the time the settlement agreement was entered into.  Thus, given the facts
of this case, we hold that the fact that the administrative law judge's decision
is an approval of a settlement agreement does not affect the outcome.  

     As the Board discussed in its decision, 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. Nelson, 34 BRBS
at 95-96.   The private parties' settlement agreement in this case did not seek to subject the Special Fund to liability.  It did,
as the Director argues, 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 before the parties
reached agreement, agreeing to employer's entitlement to Section 8(f) relief  for "any permanent partial disability" and
stating that the administrative law judge could enter 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
. . . subject to the normal standards of proof."  Statement of the Position of the Director at 1-2 (emphasis added).  The Board
recognized, as suggested by the Director, that settlements are not subject to normal standards of proof, as they are
compromise agreements between parties.  However, as the Board observed in its decision, the Director's 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 is negated by the specific 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. 

     In Coos Head Lumber, 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,[3]  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.  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.   Coos Head Lumber, 194 F.3d at 1033, 33 BRBS at 132(CRT).

     The Board further noted that 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.  Thus, when employers sought
Section 8(f) relief after the private parties entered into a Section 8(i) settlement, employers' attempts to claim Section 8(f)
relief are barred by Section 8(i)(4).   In contrast, the Board observed that 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 Board held that 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. Nelson,
34 BRBS at 96.  The Board therefore concluded that as 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 Director is bound by his
concession in this case and is therefore precluded from altering his position on Section 8(f) after the fact. Id.

     The Board's rationale continues to be appropriate given the facts of this case.  Contrary to the Director's contention,
the requirement in  his concession that permanent partial disability could be determined, "subject to normal standards of
proof," was met in this case, as evidenced by the administrative law judge's explicit finding, on reconsideration, that the
settlement proposed by the parties, including the wage loss arising from claimant's permanent, partial disability to his lower
back, was reasonable and supported by the underlying documentation.[4]  

     The Director lastly argues that the Board erred in finding that the Director was precluded from "altering his position"
under principles of equitable estoppel, as he did not, in fact, alter his position, and the requirements for application of the
estoppel doctrine were not discussed or satisfied.  In support of this contention, the Director cites Ingalls Shipbuilding,
Inc. v. Director, OWCP [Rouse], 976 F.2d 934, 26 BRBS 107(CRT) (5th Cir. 1992), for the proposition that the
government should not be estopped merely because of an error by one of its representatives, particularly, in this case, where
there is no basis to show that the Director's legal representative misled the employer into settling its liability knowing that
Section 8(f) was not applicable once the parties settled.

     In the instant case, the Board noted that "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."
Nelson, 34 BRBS at 96.  As such,  the Board's statement regarding the application of the doctrine of equitable
estoppel, when viewed in the context of the entirety of its decision, was merely meant to serve as an additional rationale,
though not the primary one, for affirming the administrative law judge's finding that employer is entitled to Section 8(f)
relief.  Thus, the applicability of this doctrine has no relevance to the Board's disposition in this case.  We therefore decline
to consider the Director's contentions on this issue.[5] 
     Accordingly, the Director's motion for reconsideration is denied.  20 C.F.R. §802.409.

     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) 1Section 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). Back to Text
2) 2The Director notes that in its original decision in Rambo v. Director, OWCP, 81 F.3d 840 (9th Cir. 1994), rev'd on other grounds sub nom. Metropolitan Stevedore Co. v. Rambo, 513 U.S. 291 (1995), the Ninth Circuit recognized that stipulated awards and settlements are distinctly different and that differing legal consequences flow from the characterization of an award. The Director requests that the Board should, at the very least, clarify whether the instant case involves a settlement agreement or a compensation order based on the parties' stipulations as the latter is, in contrast to the former, subject to modification proceedings. Back to Text
3) 3The 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
4) 4Although the administrative law judge did not state which evidence in the record supports this finding, he nevertheless recognized that the instant case involves a voluminous record consisting of 145 exhibits submitted by claimant, and 18 submitted by employer. Included in the record is a plethora of medical records and vocational evidence documenting claimant's condition and loss of wage-earning capacity. This evidence most certainly served as the basis for the parties' agreement as to the extent of claimant's permanent disability. Back to Text
5) 5We do note that the holding of Rouse is distinguishable from the instant case. The law as applied in Rouse involved estopping the government from enforcing its laws because of an official's error. Rouse, 976 F.2d 937, 26 BRBS 109(CRT). The instant case does not involve the enforcement of Federal law or an official's error. The actions of the Director herein represent a tactical litigation position in which the Director decided, after review of employer's application and its accompanying documentation, to concede employer's request for Section 8(f) so long as certain requisites were met. Moreover, the language used in doing so could well have been relied on by the parties in entering their agreement. Thus, the Director is bound by his concession, and once the requisites are met, as in this case, he is no longer entitled to challenge employer's application for Section 8(f) relief. See Coos Head Lumber, 194 F.3d 1032, 33 BRBS 131(CRT). Back to Text

NOTE: This is an UNPUBLISHED LHCA Document.

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