Unlike most legal proceedings, the parties in a workers' compensation case are statutorily required to have an Administrative Law Judge (ALJ) review and approve their agreement before the agreement is valid and operational.
The Administrative Law Judge (ALJ) will use two main points of analysis. The first is the following directive from U.C.A. 34A-2-420(4):
Accordingly, whenever the parties seek to settle the case on a full and final basis, the ALJ will first determine into which category the claim falls. The analysis is simple: If a valid dispute is outlined and supported, the Petitioner’s claims may be settled for compromised amounts. If no valid dispute is shown, the claim will be categorized as an entitlement or commutation, and must be paid out as such in full. A commutation agreement therefore seeks to provide a lump sum payment to Petitioner for ALL future workers compensation costs and benefits Petitioner may incur as a result of treating his subject industrial injuries. As a result, reasonably anticipated benefits must be addressed in the parties’ agreement.
The second important point of analysis is in Utah Administrative Code R602-2-6:
"Settlement agreements may be appropriate in claims of disputed validity or when the parties' interests are served by payment of benefits in a manner different than otherwise prescribed by the workers' compensation laws. However, settlement agreements must also fulfill the underlying purposes of the workers' compensation laws . . . . The Commission will not approve any proposed settlement that is manifestly unjust."
The underlying purposes of the workers' compensation laws are discussed in Reteuna v. Industrial Commission, 185 P. 535, 537 (Utah 1919), written shortly after the Utah Workers’ Compensation Act was passed: "The Workers' Compensation Act embodies a public policy and legislative intent to ‘secure compensation to an injured employee… to relieve society of the care and support of the unfortunate victim of the industrial accident."
The most common reason that settlement agreements are rejected is that the parties have not provided sufficient information to the ALJ to evaluate the agreement. The attached form is meant to provide an outline of information needed by the ALJ. Parties should complete all sections or risk rejection of their agreement. However please note that completion of the form does not guarantee approval, as the ALJ will continue to review for overall substantive content.
Additionally, the following points are relevant to the ALJ's consideration of the proposed agreement:
The ALJ will not approve agreements containing global releases of claims other than workers' compensation claims; nor will the ALJ approve broad releases seeking to include industrial claims not identified and described with some certainty that is not the subject of the claim brought.
With regard to disputed validity agreements: The ALJ will first look at whether a valid dispute is outlined. The parties should describe the dispute clearly and provide support for assertions as necessary. If the dispute is medical in nature, copies of relevant medical documents should be provided with the proposed agreement that outline the dispute.
With regard to commutation agreements: the ALJ will consider many factors. Included are: