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Information For Attorneys

Introduction

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 Section 34A-2-420(4):

  1. Notwithstanding Subsection (1) and Section 34A-2-108 , an administrative law judge shall review and may approve the agreement of the parties to enter into a full and final settlement by means of a:

    (a) compromise settlement of disputed medical, disability, or death benefit entitlements under this chapter or Chapter 3, Utah Occupational Disease Act;  or

    (b) commutation and settlement of reasonable future medical, disability, or death benefit entitlements under this chapter or Chapter 3, Utah Occupational Disease Act, by means of a lump sum payment, structured settlement, or other appropriate payout.

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.

What's Next?

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 Labor 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.”