Carter v. Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor
| Decision Date | 11 January 1985 |
| Docket Number | No. 83-2056,83-2056 |
| Citation | 751 F.2d 1398,243 U.S.App.D.C. 179 |
| Parties | , 243 U.S.App.D.C. 179, 53 USLW 2374 Gorman CARTER, Petitioner, v. DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Respondent. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Kevin B. Byrd, Washington, D.C., with whom Mark L. Schaffer, Washington, D.C., was on the brief, for petitioner.
Steven J. Mandel, Atty. Dept. of Labor, Washington, D.C., with whom Karen I. Ward, Associate Sol. and Mary-Helen Mautner, Counsel, Dept. of Justice, Washington, D.C., were on the brief, for respondent.
Before BORK, SCALIA and STARR, Circuit Judges.
Opinion for the Court filed by Circuit Judge SCALIA.
This is a petition for review under 33 U.S.C. Sec. 921(c) (1982) of a decision of the Benefits Review Board affirming a decision of the Office of Workers' Compensation Programs denying reinstatement of suspended benefits for a work-related injury that increased a preexisting permanent partial disability to a permanent total disability. The issue is whether the Special Fund established by the Longshoremen's and Harbor Workers' Compensation Act is entitled to offset, against the amounts due from it with respect to such an injury, recovery that the covered employee has obtained from the third-party tortfeasor responsible for the injury.
On December 9, 1975, petitioner Gorman Carter, an employee of the Wood, Wire & Metal Lathers' International Union, Local No. 9, sustained employment related injuries in an accident, for which he filed a compensation claim under the Longshoremen's and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. Secs. 901-950 (1982). 1 The Administrative Law Judge found that he was permanently totally disabled as the combined consequence of the accident and a pre-existing permanent partial disability.
Under the LHWCA, an employee who becomes permanently disabled as a combined result of a pre-existing condition and new work-related injuries recovers compensation from two sources: his employer, and a "Special Fund" established by Section 44 of the Act, 33 U.S.C. Sec. 944. The Special Fund is funded by a combination of assessments upon employers or their insurers, compensation owed by an employer for which there is no surviving statutorily authorized beneficiary, fines, and a loan from the Treasury. 33 U.S.C. Sec. 944(c). The general method for dividing liability between the employer and the Special Fund is that the employer provides compensation for that portion of the employee's disability due to the new injury, and the Special Fund for the rest. 33 U.S.C. Sec. 908(f). But where, as here, the employee had previously been permanently partially disabled and the new injury renders him permanently totally disabled, the statutory formula is that the employer makes payments for 104 weeks, after which the Special Fund takes over the responsibility. Id. Applying this formula to petitioner's claim, the ALJ directed that Local No. 9 pay Carter compensation for 104 weeks beginning December 9, 1975, and that the Special Fund assume liability for the remainder of the compensation payments due after December 6, 1977.
The LHWCA permits the compensated employee to seek damages from any person (other than his coworkers and the employer) who was wholly or partially responsible for the work related injury, 33 U.S.C. Sec. 933(a). Petitioner did so with regard to the December 9, 1975 accident, and settled his suit in May 1979 for $35,000. The manner in which the benefits of that settlement should be apportioned is the subject of this litigation.
The LHWCA provides that if an employee recovers damages from a third party, the employer's (or his insurer's) obligation to pay compensation is diminished by that amount. 33 U.S.C. Sec. 933(f), (h). The employee will therefore retain only the excess, if any, of what he recovers over what his employer would be obligated to pay him. The statute contains no similar provision with regard to the Special Fund's ability to subtract tort recovery from its obligation. The settlement into which petitioner entered accordingly provided for $17,500 to be paid to Local No. 9's insurance carrier in settlement for its past compensation payments, $1,192.97 for expenses, $8,153.51 for attorney's fees, and $8,153.52 to be paid to petitioner. On July 13, 1979, the Director of the Special Fund notified petitioner by letter that he was suspending payments to petitioner effective after the most recent payment of June 20, 1979, until he had retained an amount equal to petitioner's net recovery of $8,153.52. Special Fund payments resumed in November 1979, after that amount had been withheld.
Petitioner filed a claim with the Office of Workers' Compensation Programs ("OWCP") seeking to recover the withheld payments. The OWCP denied the claim, and the Benefits Review Board affirmed. Petitioner challenges this disposition, on the grounds that there is no statutory provision for the Special Fund to share in employee recoveries from third-party tortfeasors, and that the manner in which his payments were suspended violates the procedural guarantees of the Fifth Amendment's due process clause.
The LHWCA provides that the Special Fund shall pay "the remainder of the compensation that would be due" after the employer has satisfied his obligation to compensate a claimant for 104 weeks. 33 U.S.C. Sec. 908(f)(2). Respondent argues that this language permits the Special Fund to offset, because "the remainder of the compensation that would be due" means the amount the employer would owe, if he were paying compensation for the full period, rather than only 104 weeks. As the employer is permitted to offset third-party recoveries, the compensation "due" would be reduced by any amount recovered from third parties.
There is, however, an alternative interpretation. Petitioner suggests that "the remainder of the compensation that would be due" is simply the total compensation to which the employee is entitled under the statute, minus that paid by the employer. The employer's right to offset would then be exercised only over that portion of the compensation he actually owed.
The latter interpretation seems to us less strained, but the former is not textually precluded. We therefore turn to the other indications of statutory intent which the parties suggest are relevant. Petitioner points to those sections of the statute that provide very explicitly for offsetting by the employer and subrogation of his insurer to this right. 2 He argues, plausibly enough, that it would be passing strange to achieve an equivalent result elsewhere in the statute through the murky phrase "the remainder of the compensation that would have been due." Respondent, on the other hand, points to legislative history indicating that Congress has consistently tried to prevent the Act from having the effect of enabling double recovery by employees. Since that history is so central to the case, we set it forth in some detail.
When the LHWCA was originally enacted in 1927, it required employees to elect between accepting compensation under the statute or seeking damages from a responsible third party. If the employee accepted compensation, his right to damages was assigned to the employer. Longshoremen's & Harbor Workers' Compensation Act, ch. 509, Sec. 33(a), (b), 44 Stat. 1424 (1927) (current version at 33 U.S.C. Sec. 933(a), (b) (1982)). The statute thus expressly precluded double recovery by the employee. It did not, however, contain an express provision assigning the employee's cause of action to the employer's insurer, as opposed to the employer himself, if the insurer has paid the benefits to the employee--thus creating the possibility of double (or, more accurately, windfall) recovery by the employer. Nonetheless, in order to prevent "the consequence [of] ... double recovery ... which the statute is careful to avoid," the Supreme Court held that the insurer could sue the tortfeasor to obtain reimbursement for any payments it had made. Aetna Life Insurance Co. v. Moses, 287 U.S. 530, 542, 53 S.Ct. 231, 233, 77 L.Ed. 477 (1933). "Subrogation," it said, "is a normal incident of indemnity insurance," and "nothing in [the statute] indicates that the insurer is to be denied an indemnator's rights." Id. Congress codified this result five years later by adding a provision to the LHWCA subrogating an insurer who had assumed the payment of compensation to the rights of the employer. Act to Amend the Longshoremen's & Harbor Workers' Compensation Act, ch. 685, Sec. 13, 52 Stat. 1164, 1168 (1938) (codified at 33 U.S.C. Sec. 933(h) (1982)).
In the same year, Congress modified the LHWCA to limit provision for automatic assignment of the employee's right of action to cases in which the employee accepted compensation pursuant to a formal award rendered by the agency. Act to Amend the Longshoremen's & Harbor Workers' Compensation Act, ch. 685, Sec. 12, 52 Stat. 1164, 1168 (1938) (current version at 33 U.S.C. Sec. 933(b), (c) (1982)). (Formal award is the exception rather than the rule, applicable only to situations in which liability is contested, see 33 U.S.C. Sec. 914(a) (1982)). This protected the employee against improvident acceptance of inadequate compensation, but it created a new double recovery problem, because the statute contained no provision entitling the employer to reimbursement for compensation he had paid when the employee had accepted it without a formal award and then recovered from a third party. Nonetheless, the courts uniformly construed the statutory scheme, in light of equitable principles of subrogation and the purpose of avoiding double recovery they saw in the Act, to require that the employer be reimbursed for his compensation payments out of the employee's recovery in a third-party action. E.g., The Etna, 138 F.2d 37, 39-41 (3d Cir.1943); Fontana v....
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