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In a case of first impression, a federal court in Washington, D.C. deferred to an agency interpretation of a worker’s compensation statute whereby an agreement to arbitrate constituted “compromise” of a claim under a statutory provision requiring employer’s consent to “compromise” of claims against a third-party.
In Colbert v. District of Columbia Dept. of Employment Services, No. 06-AA-323, 2007 WL 2947224 (D.C. Oct. 11, 2007), Sonya Colbert was injured in an automobile accident. She received worker’s compensation benefits and also filed suit against the driver of the other car involved. That dispute was submitted to arbitration and she received an award.
Subsequently, an administrative judge held that she was barred from receiving worker’s compensation benefits because she had “compromised her third party claim without her employer’s authorization” under D.C. Code § 32-1535(g). The Compensation Review Board (CRB) affirmed the administrative court’s decision. Colbert appealed to this Court.
In its review, this Court deferred to the agency’s “reasonable” interpretation of the statute in accordance with Chevron U.S.A., Inc. v. Natural Resources Defense Council, 81 L.Ed.2d 694 (1984).
The D.C. Code does not offer a definition of “compromise.” However, upon review of discussion regarding the definition, the court determined that the “crucial factor” is “determination of damages by mutual agreement or negotiation between the parties, rather than by the independent evaluation of a trial judge.” See Travelers Insurance Co. v. Haden, 418 A.2d 1078, 1083 n. 9 (D.C. 1980). A dictionary definition lent further support to the agency’s interpretation. Though an exception exists in that approval is not necessary where a trial judge has made an independent evaluation, the Court held that the retired judge acting as the arbitrator was not “acting in his judicial capacity.”
The purpose behind the statutory requirement is to prevent an employer from unfairly having to pay the remainder of damages after the conclusion of a third party claim. The employer deserved to be heard in the proceeding.
Importantly, the Court noted that the statutory requirement does not prevent parties from seeking arbitration, “[t]hey simply must notify ‘the employer and his insurance carrier’ and obtain their ‘written’ approval in advance.” (internal citations omitted). Accordingly, the CRB’s order was affirmed.
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