Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor v. Detroit Harbor Terminals, Inc.

• Decision Date: 21 September 1988
• Docket Number: No. 86-3606,86-3606
• Parties: DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v. DETROIT HARBOR TERMINALS, INC.; Utica Mutual Insurance Company; and General Reinsurance Company, Respondents.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 283

850 F.2d 283

1989 A.M.C. 912

DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v. DETROIT HARBOR TERMINALS, INC.; Utica Mutual Insurance Company; and General Reinsurance Company, Respondents.

No. 86-3606.

United States Court of Appeals Sixth Circuit.

Argued Aug. 3, 1987.

Decided June 24, 1988.

Rehearing and Rehearing En Banc Denied Sept. 21, 1988.

Joshua T. Gillelan, II (argued), George R. Salem, Donald S. Shire, U.S. Dept. of Labor, Linda Meekins, Benefits Review Bd., Washington, D.C., for petitioner.

Robert H. Fortunate (argued), Foster, Meadows, & Ballard, Robert Howes, Detroit, Mich., for respondents.

Before ENGEL, Chief Judge, ^* and KRUPANSKY and NELSON, Circuit Judges.

ENGEL, Chief Judge.

This appeal presents the question whether the special fund created by the Longshoremen's and Harbor Workers' Compensation Act (LHWCA) or the employer and insurer of an injured worker should pay the increased death benefits to that worker's family that are due under the LHWCA Amendments of 1972, Pub.L. No. 92-576, 86 Stat. 1251 (codified at 33 U.S.C. Secs. 901-950, 1982), when the worker was totally, permanently disabled before the effective date of the amendments, but did not die as a result of that disability until September 1, 1980, well after the effective date. We conclude that congressional intent supports the view that the special fund is to bear responsibility for the increased death benefits.

I.

The first version of the Longshoremen's Act was adopted in 1927, Ch. 509, 44 Stat. 1424. While the Act has been modified several times since, the most sweeping changes occurred by adoption of the 1972 amendments, Pub.L. No. 92-576, 86 Stat. 1251. ¹ The amendments both broadened the scope of the Act's coverage and increased the amount of benefits available to injured workers.

The amended version of 33 U.S.C. Sec. 906 sets out the maximum benefits that may be paid for total disability. Under pre-1972 law, compensation was not to exceed $70/week, Pub.L. No. 87-87, 75 Stat. 203 (1961). However, the amendments replaced this rigid ceiling with a sliding scale of maximum benefits, tied to the national average weekly wage. ²

While section 906 fixes a maximum possible compensation, section 908, providing the method for calculating the benefits to be paid in a specific case, remained basically unchanged by the 1972 amendments: "[i]n case of total disability adjudged to be permanent 66 2/3 per centum of the average weekly wages shall be paid to the employee during the continuance of such total disability." The wages referred to in section 908 are the wages the employee was earning at the time of his accident.

Section 909, which discusses death benefits, was also changed by the 1972 amendments. While the previous section 909 only covered injuries which caused death, the new provision also extends benefits to cover permanently, totally disabled workers, even if the cause of death is unrelated to the disability. The amendments also increase the death benefit from 35% to 50% of average weekly wages. Further, while the pre-1972 section 909 had limited death benefits to a maximum of $36.75/week, ³ the new section only limits benefits to the average weekly wages of the deceased. 33 U.S.C. Sec. 909(e).

The most relevant change in the Longshoremen's Act, for our purposes, was the addition of 33 U.S.C. Sec. 910(f)-(h). Section 910(f) is essentially a cost-of-living increase provision. It states that all death or disability awards made after the effective date of the 1972 amendments shall be adjusted annually, to increase in proportion to any increase in the national weekly wage. Section 910(g) merely states that award changes should be rounded off to the nearest dollar and that the annual adjustments cannot be used to cause benefits to decline.

Section 910(h) merits setting out in full:

(1) Not later than ninety days after October 27, 1972, the compensation to which an employee or his survivor is entitled due to total permanent disability or death which commenced or occurred prior to October 27, 1972, shall be adjusted. The amount of such adjustment shall be determined in accordance with regulations of the Secretary by designating as the employee's average weekly wage the applicable national average weekly wage determined under section 906(b) of this title and (A) computing the compensation to which such employee or survivor would be entitled if the disabling injury or death had occurred on the day following October 27, 1972 and (B) subtracting therefrom the compensation to which such employee or survivor was entitled on October 27, 1972; except that no such employee or survivor shall receive total compensation amounting to less than that to which he was entitled on October 27, 1972. Notwithstanding the foregoing sentence, where such an employee or his survivor was awarded compensation as the result of death or permanent total disability at less than the maximum rate that was provided in this chapter at the time of the injury which resulted in the death or disability, then his average weekly wage shall be determined by increasing his average weekly wage at the time of such injury by the percentage which the applicable national average weekly wage has increased between the year in which the injury occurred and the first day of the first month following October 27, 1972. Where such injury occurred prior to 1947, the Secretary shall determine, on the basis of such economic data as he deems relevant, the amount by which the employee's average weekly wage shall be increased by the pre-1947 period.

(2) Fifty per centum of any additional compensation or death benefit paid as a result of the adjustment required by paragraphs (1) and (3) of this subsection shall be paid out of the special fund established under section 944 of this title, and 50 per centum shall be paid from appropriations.

(3) For purposes of subsections (f) and (g) of this section an injury which resulted in permanent total disability or death which occurred prior to October 27, 1972 shall be considered to have occurred on the day following such date.

In brief, section 910(h)(1) provides that recipients of disability or death benefits arising from accidents that occurred prior to the effective date of the 1972 amendments shall have their compensation brought into line with post-1972 recipients by adding to their existing benefits the difference between their present benefits and the benefits they would have received had the accidents been post-1972. ⁴ Section 910(h)(2) states that the adjustments to benefits are to be funded one half from appropriations and one half from the "special fund." Finally, section 910(h)(3) provides that benefit adjustments under 910(h)(1) shall be subject to section 910(f) annual adjustment in the same way that all post-1972 benefits are.

33 U.S.C. Sec. 944(c) provides the means for replenishment of the fund. These consist of death benefits payable when there is no beneficiary, ⁵ fines and penalties collected under the Act, and proportionate levies upon insurance carriers and self-insured companies, based upon their previous use of the special fund.

II.

The facts here are not in dispute. On October 23, 1969 Charles Dennis was injured during the course of his employment with Detroit Harbor Terminals. This accident, which caused him to have frequent and serious seizures, was found to be totally disabling. At the time of his accident he had been earning $138/week. Thus, under the pre-1972 Act he was entitled to and received $70/week disability benefits.

Following the 1972 amendments, Dennis was able to increase his benefits pursuant to 33 U.S.C. Sec. 910(h)(1). He also received annual increases through application of sections 910(h)(3) and 910(f). His employer and insurance carrier were reimbursed by the special fund for all payments that they made following the effective date of the amendments that were in excess of $70/week.

Following Dennis' death on September 1, 1980, the Deputy Commissioner for the Tenth Compensation District issued a compensation order on November 4, 1980, changing Dennis' award from Permanent Total Disability Benefits to Death Benefits. Applying 33 U.S.C. Sec. 909, the Commissioner found that Dennis' beneficiaries were entitled to 50% of the national average weekly wage at the time of his death ($213.13) plus a 7.03% annual adjustment effective October 1, 1980. This brought Dennis' beneficiaries' benefits to $114/week. The deputy commissioner found that Detroit Harbor Terminals and its insurance carrier were fully liable for the death benefits. However, he held that Detroit Harbor Terminals should be reimbursed for the annual adjustments made to the award under 910(h)(3) and 910(f).

Detroit Harbor Terminals appealed, claiming that since Dennis' death arose out of his pre-1972 injury, the death benefits paid in excess of $70/week should be reimbursed by the special fund. This matter was considered by Administrative Law Judge Rhea M. Burrow on June 9, 1982. He denied the appeal, stating:

the award to the Claimant/Widow based on liability for death benefits which came into existence only upon death of the decedent Dennis, pursuant to Section 9 of the amended Act (33 U.S.C. 909) is not shown as being applied retroactively and is independent of the liability for disability benefits occasioned by the earlier (1969) injury.

Detroit Harbor Terminals then appealed to the Benefits Review Board. In a per curiam opinion issued on May 5, 1986, the Board reversed the decision of the ALJ. The Board pointed to two of its previous opinions, Hernandez v. Base Billeting Fund, Laughlin Air Force Base, 13 BRBS 214 (1980), on recon. 13 BRBS 220 (1981); and Silberstein v. Service Printing Co., 2 BRBS 143 (1975), for the proposition that section 910(h) applies when injury occurs prior to the amendments but only becomes disabling after the amendments. The Board went on to...