Mallott & Peterson v. Director, Office of Workers' Compensation Programs

Section 933 of the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. §§ 901-950 (1988) (LHWCA or Act), establishes a claimant’s right to pursue claims for his or her injuries against third parties without forgoing compensation under the Act. Subsection (g), the provision at issue in this ease, protects employers against claimants entering into inordinately low settlements that would deprive the employer of a proper setoff available under subsection (f).

Subsection (g) provides that “[i]f the person entitled to compensation (or the 'person’s representative)” under the Act enters into a settlement of a claim against a third party without approval of the employer, the person forfeits his or her rights to the LHWCA compensation. 33 U.S.C. § 933 (g) (emphasis added). The Benefits Review Board of the Department of Labor (Board) interpreted “representative” as used in § 933(g) to exclude legal counsel acting within the attorney-client relationship. It therefore held that Mallott & Peterson and its LHWCA insurer, Industrial Indemnity Co. (Employ *1172 er), which owed LHWCA benefits to Beatrice Stadtmiller, were liable to Stadtmiller despite certain actions by her attorney Harry…