The U.S. Fifth Circuit Court of Appeals recently reaffirmed that a claimant must give the employer notice of a settlement or judgment of a third party lawsuit arising from the work-related injury, or risk losing entitlement to benefits. In Parfait v. Dir., OWCP, 16-60662 (5th Cir. Sep. 11, 2018), 2018 U.S. App. LEXIS 25736, the claimant maintained that the employer had notice of the settlement because the claimant invited the employer to attend a mediation. The claimant further maintained that the employer had notice of the judgment he obtained against a third party through the filing of the judgment in the public record.
The Fifth Circuit decided this case under Section 33(g) of the Act, and found that the claimant had not provided adequate notice as required by this section. As the Fifth Circuit explained, “Section 33(g) … requires the employee to obtain written approval of certain third-party settlements and to give notice of all third-party settlements and judgments, [and] is designed to ensure that the employer’s rights are protected in the settlement and to prevent the claimant from unilaterally bargaining away funds to which the employer or its carrier might be entitled …. [T]he notice requirement enables an employer to protect its right to set off the settlement amount against its future obligations and its right to reimbursement of its previous payments from the settlement proceeds. Further, it ensures against fraudulent double recovery by the employee.”
The Fifth Circuit upheld the application of Section 33(g) to bar the Claimant from benefits. The court relied upon the U.S. Supreme Court’s decision in Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992), which had emphasized the importance of the Section 33(g) scheme of notice and approval of settlement.
© 2018 Ira J. Rosenzweig