270 F.3d 1259 (9th Cir. 2001), 00-70585, Gilliland v. E.J. Bartells Co.

Docket Nº:00-70585
Citation:270 F.3d 1259
Party Name:DORELDA GILLILAND, PETITIONER, v. E.J. BARTELLS CO., INC.; WAUSAU INSURANCE CO.; DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, RESPONDENTS.
Case Date:October 16, 2001
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 1259

270 F.3d 1259 (9th Cir. 2001)

DORELDA GILLILAND, PETITIONER,

v.

E.J. BARTELLS CO., INC.; WAUSAU INSURANCE CO.; DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, RESPONDENTS.

No. 00-70585

United States Court of Appeals, Ninth Circuit

October 16, 2001

Argued and Submitted September 13, 2001

Page 1260

Meagan A. Flynn, Preston, Bunnell & Stone, LLP, Portland, Oregon, for the petitioner.

Dennis R. VavRosky, VavRosky, MacColl, Olson & Pfeifer, P.C., Portland, Oregon; Samuel J. Oshinsky and Andrew D. Auerbauch, United States Department of Labor, Washingon, D.C., for the respondents.

On Petition for Review of an Order of the Benefits Review Board. OWCP No. 14-67397 BRB Nos. 99-698, 99-698A.

Before: Thompson, Tashima and Graber, Circuit Judges.

Graber, Circuit Judge:

This appeal requires us to decide how to compute the offset to which an employer owing benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA) is entitled under 33 U.S.C. &#167 933(f) when a claimant receives a third-party tort recovery that includes ongoing, periodic payments funded by an annuity contract. The Director of the Office of Workers' Compensation Programs (Director) allowed the employer to offset the amount of each periodic payment against benefits owed at the time the payment was made. Because that method of computing the offset reasonably interprets 33 U.S.C. &#167 933(f), we defer to the Director and, accordingly, affirm the decision of the Benefits Review Board.

FACTUAL AND PROCEDURAL BACKGROUND

In March 1982, Claimant Dorelda Gilliland filed a claim for death benefits under the LHWCA on behalf of herself and her two dependent children. Claimant's husband, Darol Gilliland, had died on December 22, 1981, of work-related asbestosis. Mr. Gilliland had been employed as an asbestos worker by Defendant E.J. Bartells Co., Inc. (Employer). Claimant was awarded funeral expenses, death benefits, and her husband's total disability benefits for the period from October 15 through December 22, 1981. "Death benefits" under the LHWCA are ongoing in nature, continuing "during widowhood." 33 U.S.C. &#167 909(b).

Page 1261

Claimant also prosecuted a wrongful death action against several third-party defendants (manufacturers and suppliers of asbestos). In February 1985, Claimant entered into a "Release and Settlement Agreement" with some of the third-party defendants. As part of the settlement, the third-party defendants agreed to pay to Claimant "$750 per month beginning February 21, 1985 and ending January 21, 2005. Monthly payments to increase by 3% each year with the increase to occur on the February 21 payment." By the terms of the agreement, the third-party defendants were permitted, but not required, to purchase one or more annuity contracts in order to fund their settlement obligation. The third-party defendants opted to purchase an annuity.

On July 2, 1996, Employer filed a notice of controversion, asserting that it had overpaid compensation to Claimant in view of the amounts that Claimant had recovered from the third-party defendants. The parties disagreed about how to compute the credit to which Employer was entitled under 33 U.S.C. &#167 933(f), and they sought a formal hearing before an administrative law judge (ALJ). Claimant argued that Employer was entitled to a one-time credit for the purchase price, or the present value, of the annuity that the third-party defendants purchased to fund their obligation to make the monthly payments. By contrast, Employer contended that it was entitled to a dollar-for-dollar credit against death benefits payable by it under the LHWCA for each monthly payment made pursuant to the third-party settlement, and it was entitled to such credit at the time Claimant received each payment.

The ALJ determined that the phrase "net income " in § 933(f)...

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