H B Zachry Co. v. Quinones

• Decision Date: 08 March 2000
• Docket Number: No. 99-20278,99-20278
• Citation: 206 F.3d 474
• Parties: (5th Cir. 2000) H B ZACHRY COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA Plaintiffs - Appellants v. JOSE B QUINONES; DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, US DEPARTMENT OF LABOR Defendants - Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 474

206 F.3d 474 (5th Cir. 2000)

H B ZACHRY COMPANY; INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA Plaintiffs - Appellants v. JOSE B QUINONES; DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, US DEPARTMENT OF LABOR Defendants - Appellees

No. 99-20278

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

March 8, 2000

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Southern District of Texas

Before KING, Chief Judge, and DUHE and DeMOSS, Circuit Judges.

KING, Chief Judge:

Plaintiffs-Appellants appeal from the judgment of the district court adopting and affirming a Decision and Order of the Benefits Review Board and denying their petition for review. For the following reasons, we reverse the district court's denial of the petition and remand for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

Defendant-Appellee Jose Quinones was employed by Plaintiff-Appellant H.B. Zachry Company ("Zachry") on and off from 1980 until 1984. In 1993, he accepted a one-year position with Zachry as a construction foreman on the Kwajalein Army base in the Marshall Islands. He began experiencing back troubles while in the Marshall Islands and made several visits to doctors there.

Upon returning to the United States, Quinones sought further medical treatment. Because of some debate regarding the cause of his symptoms, Zachry and its insurance carrier, Plaintiff-Appellant Insurance Company of the State of Pennsylvania (together with Zachry, "Appellants"), refused to pay any more of Quinones's medical bills. Quinones brought a claim for compensation benefits under the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. ' 901 et seq., as amended and extended by the Defense Base Act ("DBA"), 42 U.S.C. ' 1651 et seq.

The Administrative Law Judge ("ALJ") awarded Quinones ongoing temporary total disability benefits, basing his calculation of Quinones's average weekly wages in part on the value of meals and lodging that Zachry provided Quinones while he was working in the Marshall Islands. Appellants appealed to the Benefits Review Board ("BRB"), which affirmed the ALJ's decision. See Quinones v. H. B. Zachry, Inc., 32 BRBS 6 (1998). Appellants then petitioned the district court for review of the BRB's decision, which petition the district court denied. Appellants timely appeal to this court raising three issues. First, they argue that the value of meals and lodging provided to Quinones should not be included in his wages for the purpose of calculating disability benefits. Second, they argue that the ALJ failed to detail his reasons for rejecting certain evidence, and, finally, they contest the rate at which the BRB calculated attorney's fees for Quinones's counsel.

II. STANDARD OF REVIEW

Generally, disability compensation claims brought by persons employed at United States military bases abroad are governed by the DBA. The DBA provides that the LHWCA applies to such claims, unless the DBA modifies the provisions of the LHWCA. See 42 U.S.C. ' 1651(a) (1994). One such modification is the process for seeking review of a decision of the BRB. Under the LHWCA, a claimant petitions directly to this court for such review. See 33 U.S.C. ' 921(c) (1994). Under the DBA, 42 U.S.C. ' 1653(b) (1994), review is sought first in the district court, and an appeal of the district court's judgment can then be brought in this court. See AFIA/CIGNA Worldwide v. Felkner, 930 F.2d 1111, 1114, 1116 (5th Cir. 1991).

Felkner did not address the deference this court pays to the judgment of the district court in such a situation. Our review of the case law in sister circuits has likewise yielded no guidance on this question. In reviewing a district court's decision on agency action in a different context however, we have explained that "since an appellate court reviews the administrative decision on the identical basis as did the district court, appellate court review need accord no particular deference to the district court's conclusion as to whether the identical administrative record does or does not support the administrative determination . . . ." Louisiana Envtl. Soc'y, Inc. v. Dole, 707 F.2d 116, 119 (5th Cir. 1983). This reasoning applies equally in the case at hand, and we therefore accord no deference to the decision of the district court and proceed as though reviewing the decision of the BRB in the first instance.

"Our review of Review Board decisions is limited to considering errors of law and ensuring that the Review Board adhered to its statutory standard of review, that is, whether the ALJ's findings of fact are supported by substantial evidence and are consistent with the law." Sisson v. Davis & Sons, Inc., 131 F.3d 555, 557 (5th Cir. 1998); see also Shell Offshore, Inc. v. Director, OWCP, 122 F.3d 312, 315 (5th Cir. 1997); Boland Marine & Mfg. Co. v. Rihner, 41 F.3d 997, 1002 (5th Cir. 1995). We review the BRB's interpretation of the LHWCA de novo. See Equitable Equip. Co. v. Director, OWCP, 191 F.3d 630, 631 (5th Cir. 1999).

III. MEALS AND LODGING AS WAGES

The first question we must address is whether the value of meals and lodging exempted from federal income taxation by section 119 of the Internal Revenue Code ("' 119 Meals and Lodging") ¹ is included in "wages" under the LHWCA. The LHWCA provides:

The term "wages" means the money rate at which the service rendered by an employee is compensated by an employer under the contract of hiring in force at the time of the injury, including the reasonable value of any advantage which is received from the employer and included for purposes of any withholding of tax under subtitle C of title 26 (relating to employment taxes). The term wages does not include fringe benefits, including (but not limited to) employer payments for or contributions to a retirement, pension, health and welfare, life insurance, training, social security or other employee or dependent benefit plan for the employee's or dependent's benefit, or any other employee's dependent entitlement.

33 U.S.C. ' 902(13) (1994). Subtitle C of title 26, the Internal Revenue Code, deals with employment taxes, three of which are withheld from the pay of employees. See I.R.C. '' 3101(a), 3101(b) & 3201(a) (1994) (old-age, survivors, and disability insurance tax; hospital insurance tax; and railroad retirement tax, respectively). Each of these taxes is calculated based on wages, as defined in I.R.C. ' 3121. See id. Since 1983, I.R.C. ' 3121 has provided that "the term -wages' . . . shall not include . . . the value of any meals or lodging furnished by . . . the employer if at the time of such furnishing it is reasonable to believe that the employee will be able to exclude such items from income under section 119 . . . ." I.R.C. ' 3121(a)(19) (1994).² The value of ' 119 Meals and Lodging is therefore not "included for purposes of any withholding of tax under subtitle C of the Internal Revenue Code." All parties agree that the room and board provided to Quinones in this case qualified as ' 119 Meals and Lodging. The only question before us then is the proper construction of ' 902(13).

Relying on Guthrie v. Holmes & Narver, Inc., 30 BRBS 48 (1996), rev'd sub nom. Wausau Ins. Cos. v. Director, OWCP, 114 F.3d 120 (9th Cir. 1997), on recons. 136 F.3d 586 (9th Cir. 1998), the ALJ determined that, as a matter of law, the value of ' 119 Meals and Lodging is included in the calculation of wages under ' 902(13). See Decision and Order Awarding Compensation Benefits, dated Jan. 7, 1997, at 11 ("ALJ Decision"). The BRB agreed, see Quinones, 32 BRBS at 10, and the district court affirmed. See Memorandum and Order entered Feb. 26, 1999. We now reverse.

In Guthrie, the claimant was provided with ' 119 Meals and Lodging under his employment contract. The BRB concluded that because these services were provided "under the terms of claimant's employment contract, and the value of these services [was] readily ascertainable[,] . . . the room and board provided by the employer [could not] be deemed a fringe benefit as the amount [was] readily calculable. These services satisfy the definition of -wages' under [' 902(13)]." Guthrie, 30 BRBS at 50 (footnote omitted). The employer in Guthrie appealed, and the United States Court of Appeals for the Ninth Circuit reversed. In a brief per curiam opinion, the Ninth Circuit held that the LHWCA defers to the IRS definition of wages. See Wausau Ins. Cos. v. Director, OWCP, 114 F.3d 120, 121-22 (9th Cir. 1997), on recons. 136 F.3d 586 (9th Cir. 1998).

Defendant-Appellee Director, Office of Workers' Compensation Programs, Department of Labor (the "Director"), joins Appellants in arguing that the value of ' 119 Meals and Lodging is not included in wages under the LHWCA. The Director begins by asserting that ' 902(13) is clear on its face. In the alternative, the Director argues that this court owes Chevron deference to the Director's reasonable construction of the statute. ³ "Because the Department of Labor has been entrusted with administering the workers' compensation scheme of the LHWCA, its construction of that scheme should be given considerable weight." Texports Stevedores Co. v. Director, OWCP, 931 F.2d 331, 333 (5th Cir. 1991). The Director's views are entitled to deference. See Boudreaux v. American Workover, Inc., 680 F.2d 1034, 1046 (5th Cir. Unit A 1982). Indeed, deference is owed to the Director's views and not the views of the BRB. See id. at 1046 n.23; Potomac Elec. Power Co. v. Director, OWCP, 449 U.S. 268, 278 n.18 (1980) ("Itshould also be noted that the Benefits Review Board is not a policymaking agency; its interpretation of the LHWCA thus is not entitled to any special deference from the courts.").

Appellants and the Director advance three arguments in support of their position. First, they argue that the phrase "including the reasonable value of any advantage which is received from the...