Temp. Employment Serv. v. Director Office Of Worker's Comp. Programs

Citation261 F.3d 456
Decision Date07 August 2001
Docket NumberNo. 00-60064,00-60064
Parties(5th Cir. 2001) TEMPORARY EMPLOYMENT SERVICES; MARYLAND CASUALTY CO, Petitioners and DIRECTOR, OFFICE OF WORKER'S COMPENSATION PROGRAMS, US DEPARTMENT OF LABOR, Respondent v. TRINITY MARINE GROUP, INC, Respondent
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

B. Ralph Bailey (argued), Law Office of B. Ralph Bailey, Mandeville, LA, for Petitioners.

Peter L. Hilbert, Jr., Darnell S. Bludworth (argued), Sher Garner Cahill Richter Klein McAlister & Hilbert, New Orleans, LA, for Trinity Marine Group, Inc.

Carol A. De Deo, U.S. Dept. of Labor, Thomas O. Shepherd, Jr., Clerk, Benefits Review Board, Joshua T. Gillelan, II (argued), Office of the Solicitor of Labor, Washington, DC, Michael O. Brewer, U.S. Dept. of Labor, Employment Standards Administration, New Orleans, LA, for Director, Office of Worker's Compensation Programs.

Petition for Review of a Final Order of the Benefits Review Board

Before KING, Chief Judge, and ALDISERT* and BENAVIDES, Circuit Judges.

KING, Chief Judge:

Petitioners Temporary Employment Services, Inc. and Maryland Casualty Company appeal from the final order of the Benefits Review Board holding them liable for compensation owed to Leroy Ricks under the Longshore and Harbor Workers' Compensation Act and advocate a reversal of the Benefits Review Board's decision on the merits. Respondent Director, Office of Workers' Compensation Programs, United States Department of Labor, urges reversal on the ground that the administrative tribunal lacked jurisdiction to resolve the contractual dispute in this case. Respondent Trinity Marine Group, Inc. requests affirmance of the Benefits Review Board's decision on the merits.

For the following reasons, we GRANT the petition for review, VACATE the Benefits Review Board's decision, and REMAND with instructions to reinstate the original decision of the Administrative Law Judge holding Respondent Trinity Marine Group, Inc. alone liable under the Longshore and Harbor Workers' Compensation Act and to dismiss without prejudice the claims regarding the contractual indemnification provisions for lack of jurisdiction.

I. FACTUAL AND PROCEDURAL BACKGROUND

Petitioner Temporary Employment Services, Inc. ("TESI") provides temporary employees and payroll services to various businesses, including shipyards. TESI and Respondent Trinity Marine Group, Inc. ("Trinity") entered into a contract in which TESI agreed to provide temporary workers to Trinity. Pursuant to this agreement, Leroy Ricks, a TESI employee, was assigned to work for Trinity.

While working for Trinity, Ricks was injured at Trinity's shipyard on January 11, 1993. From January 15, 1993 through April 24, 1994, Petitioner Maryland Casualty Company ("Maryland"),1 TESI's workers' compensation insurance carrier under the Longshore and Harbor Workers' Compensation Act (the "LHWCA"), 33 U.S.C. §§a901-950, voluntarily paid Ricks's temporary total disability compensation and medical benefits. Thereafter, Maryland controverted the claim on the basis of a doctor's medical opinion that Ricks could return to work. Ricks then filed a claim for workers' compensation benefits under the LHWCA against TESI and Maryland. Subsequently, at the request of TESI and Maryland, Trinity was added as an additional alleged employer to the action.

A formal hearing was held before an Administrative Law Judge ("ALJ") on January 10, 1996. The ALJ issued a decision on November 26, 1996, awarding Ricks certain benefits; holding Trinity, as Ricks's "borrowing employer," solely responsible for those benefits; and ordering Trinity to reimburse Maryland for benefits that Maryland had previously paid to Ricks.

Trinity appealed the ALJ's decision to the Benefits Review Board (the "Board"), and on December 26, 1997, the Board issued a decision remanding the matter to the ALJ and directing him to consider whether a valid contractual obligation between TESI and Trinity obligated TESI rather than Trinity, to pay the benefits owed to Ricks. On remand, the ALJ held that TESI had agreed to indemnify Trinity and that Maryland's insurance policy contained a waiver of subrogation in favor of Trinity. Accordingly, Maryland reimbursed Trinity for the amounts Trinity had paid to Ricks and to Maryland. TESI and Maryland then appealed the merits of this ALJ decision to the Board. The Respondent Director, Office of Workers' Compensation Programs, United States Department of Labor (the "Director") challenged the jurisdiction of the administrative tribunal to decide these contractual issues. Rejecting the Director's jurisdictional challenge, the Board affirmed the merits of the ALJ's decision on June 8, 1999. Subsequently, the Board denied a motion by TESI and Maryland for reconsideration.

TESI and Maryland timely appealed to this court, urging reversal on the merits. The Director has also filed in this court urging reversal, but on jurisdictional grounds.2

We have jurisdiction over petitions for review of final orders of the Board pursuant to 33 U.S.C. §a921(c).

II. STANDARD OF REVIEW

"The Supreme Court has instructed us that the preferred starting point in reviewing an administrative order is to satisfy ourselves that the agency whose order we are asked to review 'had jurisdiction over the matter in dispute.'" Harmar Coal Co. v. Dir., Office of Workers' Comp. Programs, U.S. Dep't of Labor, 926 F.2d 302, 307 (3d Cir. 1991) (quoting Cardillo v. Liberty Mut. Ins. Co., 330 U.S. 469, 473 (1947)). "Jurisdiction is a question of law which we review de novo." Groome Res. Ltd., L.L.C. v. Parish of Jefferson, 234 F.3d 192, 198 (5th Cir. 2000).

"This court reviews the [Board's] interpretation of the LHWCA, an issue of law, de novo, affording no special deference to the [Board's] construction because it is not a policymaking agency." Equitable Equip. Co. v. Dir., Office of Worker's Comp. Programs, U.S. Dep't of Labor, 191 F.3d 630, 631 (5th Cir. 1999);see also Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 476 (1992) (stating that "the [Board] is not entitled to any special deference"); H.B. Zachry Co. v. Quinones, 206 F.3d 474, 478 (5th Cir. 2000) ("Indeed, deference is owed to the Director's views and not the views of the [Board]."); Ceres Gulf & ESIS/INA v. Cooper, 957 F.2d 1199, 1204 (5th Cir. 1992) (stating that "[s]ubject matter jurisdiction is a question of law[, and] our review is plenary").

III. JURISDICTION

Due to the maritime character of their employment, longshore workers3 were precluded from participating in state workers' compensation schemes. See S. Rep. No. 973, at 16 (1926); 1 Thomas J. Schoenbaum, Admiralty and Maritime Law §a7-1, at 380 (3d ed. 2001). Therefore, in order to protect longshore workers, Congress enacted a federal no-fault workers' compensation system -- the LHWCA. See 33 U.S.C. §a904; 1 Schoenbaum, Admiralty and Maritime Law §a7-1, at 380-81 ("In return for compelling the employer to pay compensation without proof of negligence, [the LHWCA] provides a statutory scheme of benefits which are substantially less than tort damages, and grants the employer immunity from tort liability, regardless of how serious its fault may have been.").

"A fundamental aspect of [this system] is the expectation that employers will pay compensation promptly and directly, without the necessity of a formal award." 1 Schoenbaum, Admiralty and Maritime Law §a7-1, at 381. However, when a worker's benefits are controverted, a claim for compensation may be filed and heard before an ALJ, see 33 U.S.C. §a919, and appealed to the Board,see id.a§a921.

Under the LHWCA, an ALJ has jurisdiction over a "claim for compensation" and has "full power and authority to hear and determine all questions in respect of such claim." Id. §a919(a)4(emphasis added); see also id. §a919(d) (vesting the powers, duties, and responsibilities of the deputy commissioners with respect to hearings in the ALJ).5 The threshold issue we must decide is whether the parties' claims regarding their indemnification contractual provisions are "questions in respect of" an LHWCA compensation claim and thus questions over which the ALJ has jurisdiction. As we explain below, we find the contractual issues in this case are beyond the scope of the authority granted to the LHWCA administrative tribunals.

A. The Question Presented

Before addressing the jurisdictional question, we make clear precisely what the parties are asking us to decide in this case. A body of law has developed under the LHWCA in response to situations in which multiple employers and carriers possibly played a role in the worker's employment. The "borrowed employee" doctrine deals with one such situation. This doctrine is applicable in cases where one employer "loans" or "lends" employees to another employer.

The instant case required application of this doctrine because, as described supra in Part I, TESI "loaned" Ricks to Trinity. We have determined that the "borrowing employer" is the employer for purposes of the LHWCA and, as such, is responsible for the payment of the worker's compensation benefits. See Total Marine Services, Inc. v. Dir., Office of Worker's Comp. Programs, U.S. Dep't of Labor 87 F.3d 774, 779 (5th Cir. 1996). Therefore, Trinity, as the borrowing employer, is solely liable for Ricks's benefits.

This determination was made in the initial ALJ decision and affirmed by the Board. It is not being contested in this appeal. What is at issue here is Trinity's contention that a contract exists between itself and TESI pursuant to which TESI has agreed to indemnify it from any claims arising from Ricks's employment (i.e., the worker's compensation benefits) and that Maryland's insurance policy contains a waiver of subrogation in favor of Trinity. In essence, Trinity is claiming that, although the LHWCA places liability on its shoulders, it has contracted around that rule via the Maryland-TESI/Trinity agreement. Trinity's claims are...

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