Green v. U.S. Dept. of Labor

• Decision Date: 18 October 1985
• Docket Number: Nos. 84-5217,84-5230,s. 84-5217
• Citation: 775 F.2d 964
• Parties: Stanley GREEN, Appellant, v. UNITED STATES DEPARTMENT OF LABOR, Appellee. UNITED STATES DEPARTMENT OF LABOR, Appellee, v. Stanley GREEN, Appellant, and Stacker, Ravich and Simon, Appellee. Stanley GREEN v. UNITED STATES DEPARTMENT OF LABOR. UNITED STATES DEPARTMENT OF LABOR, Appellee, v. Stanley GREEN, Appellee, and Stacker, Ravich & Simon, Appellant. STACKER, RAVICH & SIMON, Appellant, v. GENERAL ELECTRIC COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 964

775 F.2d 964

Stanley GREEN, Appellant, v. UNITED STATES DEPARTMENT OF LABOR, Appellee.

UNITED STATES DEPARTMENT OF LABOR, Appellee, v. Stanley GREEN, Appellant, and Stacker, Ravich and Simon, Appellee.

Stanley GREEN v. UNITED STATES DEPARTMENT OF LABOR.

UNITED STATES DEPARTMENT OF LABOR, Appellee, v. Stanley GREEN, Appellee, and Stacker, Ravich & Simon, Appellant.

STACKER, RAVICH & SIMON, Appellant, v. GENERAL ELECTRIC COMPANY, Appellee.

Nos. 84-5217, 84-5230.

United States Court of Appeals,

Eighth Circuit.

Submitted June 13, 1985.

Decided Oct. 18, 1985.

W. Scott Herzog, Minneapolis, Minn., for Green.

Eric Magnuson, Minneapolis, Minn., for Stacker.

John S. Koppel, Dept. of Justice, Washington, D.C., for U.S.

Howard J. Bergman, Minneapolis, Minn., for General Elec.

Before LAY, Chief Judge, JOHN R. GIBSON, Circuit Judge, and PHILLIPS, ^* Senior Circuit Judge.

LAY, Chief Judge.

This appeal involves a case under the Federal Employees' Compensation Act (FECA), 5 U.S.C. Secs. 8101-8193 (1982), in which the district court entered summary judgment in favor of the United States on its claim for reimbursement out of the proceeds of a federal postal employee's state court damage award against a third party tortfeasor. The district court also granted summary judgments on the various cross-claims of the other parties to the action. For the reasons discussed below, we affirm the judgment in favor of the government, but reverse in part the dismissal of the cross-claims between the employee and his attorney, and remand to the district court for further proceedings in accord with this opinion.

Background

On April 27, 1977, Stanley Green was severely injured during the course of his employment with the United States Postal Service. While Green was assisting employees of General Electric Company with maintenance and repair of a high voltage electric system, Green received an electrical shock, resulting in a heart attack and second and third degree burns over one-third of his body. Green received $94,631.41 in FECA payments, representing hospital and medical expenses, lost wages, and permanent partial disability.

In August 1977, Green, represented by the law firm of Stacker, Ravich and Simon (Stacker), commenced a negligence action against General Electric in Minnesota state district court. During trial, Stacker attempted to introduce evidence of medical expenses incurred by Green, but the trial court sustained General Electric's objection to this evidence. Stacker apparently made no attempt to introduce evidence of Green's lost wages. Accordingly, no evidence of medical expenses or lost wages was submitted to the jury and the jury was instructed only on pain and suffering and loss of future wages. The jury returned a special verdict finding Green 9% negligent, General Electric 21% negligent, and the United States government 70% negligent; it determined Green's damages to be $475,000. Under Minnesota law, Green's damages were reduced by the 9% causal fault attributed to him by the jury, and Green was awarded $432,250. General Electric appealed the decision to the Minnesota Supreme Court, which affirmed without opinion.

On February 11, 1980, the United States Department of Labor notified Green that he was obligated to reimburse the government out of his state court damage award pursuant to 5 U.S.C. Sec. 8132. ¹ Green declined to comply based on Stacker's advice that the government had no right to reimbursement. On February 12, 1982, the government notified Green that because he had failed to reimburse the government, his scheduled permanent partial disability payments would be suspended.

In September 1982, Green commenced an action in federal district court seeking a declaratory judgment that he had no obligation to reimburse the government for the FECA payments and that he was entitled to the remaining permanent partial disability payments withheld by the government. The government counterclaimed against Green and his attorney, Stacker, seeking reimbursement of $63,765.56 pursuant to the formula in 5 U.S.C. Sec. 8132. ² Green and Stacker then cross-claimed against each other. Green alleged that Stacker was negligent in handling his state court tort action against General Electric and sought reimbursement in the event he was found liable for the $63,765.56 claimed by the government. Stacker denied that it was negligent and sought indemnity or contribution from Green in the event that it was found jointly and severally liable to reimburse the government. Stacker also impleaded General Electric, seeking indemnity or contribution in the event that Stacker could not recover from Green.

Green, Stacker, and the government filed motions for summary judgment, and General Electric filed a motion to dismiss Stacker's third-party complaint. The district court ³ granted Green and Stacker summary judgment on their request for declaratory relief, holding that they were not required to reimburse the government for Green's FECA payments to the extent those payments represented medical expenses and lost wages not recovered by Green in state court. The district court also ruled that the government was entitled to summary judgment on its claim for reimbursement from Green's damage award for amounts representing lost future wages and that Green and Stacker were jointly and severally liable to the government for those payments. The court further determined, however, that Stacker was entitled to indemnity or contribution from Green for any amounts Stacker was required to pay. Finally, the district court granted General Electric's motion to dismiss Stacker's third party complaint.

In May 1984, the United States Supreme Court decided United States v. Lorenzetti, 467 U.S. 167, 104 S.Ct. 2284, 81 L.Ed.2d 134 (1984), reversing the decision of the Third Circuit ⁴ on which the district court relied in determining that Green and Stacker were not required to reimburse the government. The government moved for reconsideration of the district court's order in light of the Supreme Court decision. On September 20, 1984, the district court vacated its prior order and granted summary judgment in favor of the government, holding that according to Lorenzetti section 8132 requires a FECA beneficiary to reimburse the government out of any damages award or settlement made in satisfaction of third party liability for the personal injury or death of a federal employee. Consequently, the government was entitled to reimbursement for Green's FECA payments representing lost wages and medical expenses even though Green's award against General Electric did not include compensation for these losses. The remaining holdings of the district court's order were unaffected by the Lorenzetti decision. ⁵ Green and Stacker appeal the district court's decision. We affirm in part, reverse in part, and remand Green's cross-claim against Stacker to the district court for plenary trial.

Discussion:

I. The government's claim against Green and Stacker.

Three major issues are raised on appeal. First, both Green and Stacker argue that the district court erred in ruling that the government is entitled to reimbursement for FECA payments to Green representing medical expenses and lost wages because Green's recovery against General Electric compensated him solely for pain and suffering and future lost wages. We disagree.

In United States v. Lorenzetti, 467 U.S. 167, 104 S.Ct. 2284, 81 L.Ed.2d 134 (1984), the Supreme Court held that section 8132 on its face creates a general right of reimbursement, not conditioned on the nature of the loss for which the beneficiary received payment in the third party tort action. Id. 104 S.Ct. at 2289. Thus, the federal employee in Lorenzetti was required to reimburse the federal government for FECA payments representing lost wages and medical expenses even though his third-party recovery represented only compensation for pain and suffering. The Supreme Court emphasized that the primary purpose of section 8132 was to minimize the cost of the FECA program to the federal government and that this policy was furthered by construing section 8132 to create a general right of reimbursement, however harsh that result might be in a particular case. Id. at 2291. Based on Lorenzetti, the district court allowed the Government reimbursement from Green's award against General Electric, even though that award did not include compensation for lost wages or medical expenses. We agree with the district court that Lorenzetti controls the case and that the government is thus entitled to reimbursement out of Green's state court damage award.

Green and Stacker make several arguments for the inapplicability of Lorenzetti to the facts of this case. First, Green argues that Lorenzetti is inapplicable where, as here, the federal government is itself partially responsible for its employee's injuries. The Ninth Circuit has recently held, however, that the government's negligence does not affect its right to reimbursement under 5 U.S.C. Sec. 8132. See Ward v. United States Department of Labor, 726 F.2d 516, 517 (9th Cir.1984); see also Randall v. United States, 282 F.2d 287, 288 (D.C.Cir.1960), cert. denied, 365 U.S. 813, 81 S.Ct. 693, 5 L.Ed.2d 692 (1961) (government is entitled to reimbursement under section 8132 even though the employee's death was caused in part by the negligence of a government co-employee). Furthermore, Green's argument requires a strained reading of section 8132. Although the policy arguments for denying the federal government reimbursement when it is partially responsible for an employee's injuries or death are compelling, Green's interpretation of section 8132 seems clearly to offend the Supreme Court's "plain meaning" approach in Lorenzetti. See United States v. Lorenzetti, 104 S.Ct. at 2289.

Stacker's argument that Lorenzetti should not apply where the government can proceed directly against the third party tortfeasor for reimbursement...