Hitt v. Newport News Shipbuilding and Dry Dock Co.
| Decision Date | 07 July 2004 |
| Docket Number | BRB 03-0711 |
| Parties | JESSE F. HITT Claimant-Respondent v. NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY Self-Insured Employer-Petitioner DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR Respondent |
| Court | Longshore Complaints Court of Appeals |
UNPUBLISHED OPINION
Appeal of the Decision and Order-Awarding Benefits and the Supplemental Decision and Order Awarding Attorney's Fees of Stephen L. Purcell, Administrative Law Judge, United States Department of Labor.
Benjamin M. Mason (Mason, Mason, Walker & Hedrick, P.C.) Newport News, Virginia, for self-insured employer.
Joshua T. Gillelan II (Howard M. Radzely, Solicitor of Labor; Donald S. Shire, Associate Solicitor; Mark A. Reinhalter, Counsel for Longshore), Washington, D.C., for the Director, Office of Workers' Compensation Programs, United States Department of Labor.
Before: DOLDER, Chief Administrative Appeals Judge, SMITH and HALL, Administrative Appeals Judges.
DECISION and ORDER
Employer appeals the Decision and Order-Awarding Benefits and the Supplemental Decision and Order Awarding Attorney's Fees (2002-LHC-1935) of Administrative Law Judge Stephen L Purcell rendered on a claim filed pursuant to the provisions of the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq. (the Act). We must affirm the administrative law judge's findings of fact and conclusions of law if they are supported by substantial evidence, are rational, and are in accordance with law. 33 U.S.C. §921(b)(3); O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965). The amount of an attorney's fee award is discretionary and will not be set aside unless shown by the challenging party to be arbitrary, capricious, an abuse of discretion or not in accordance with law. See Muscella v. Sun Shipbuilding & Dry Dock Co., 12 BRBS 272 (1980).
Claimant sustained a work-related right knee injury on March 12, 1999. Claimant underwent surgery on April 14, 1999, for a medial meniscus tear. Employer paid claimant temporary total disability benefits from April 1, 1999, to April 18, 2000. JX 1. On April 19, 2000, Dr. Nevins assessed that claimant has a 24 percent leg impairment. CX 1. On April 26, 2000, employer filed a notice of controversion. CX 3. On this date, employer also "unconditionally tendered" to claimant benefits for the 24 percent impairment and enclosed stipulations for claimant's signature. CX 2. Claimant's counsel responded that he would not agree to the stipulations and wanted employer to pay benefits voluntarily. CX 4. Employer renewed its offer to pay compensation on February 20, 2001, subject to claimant's signing the stipulations. CX 6. Claimant would not agree to the stipulations, and the case was forwarded to the administrative law judge. CX 7. In addition to seeking disability compensation, claimant sought the imposition of a Section 14(e) assessment, 33 U.S.C. §914(e), on benefits due and unpaid.
The administrative law judge rejected employer's contention that the district director erred in not issuing a compensation order and in forwarding the case to the administrative law judge. The administrative law judge found that the district director was without authority to issue a compensation order absent agreement of the parties. The administrative law judge awarded claimant temporary total disability benefits from April 1, 1999 through April 18, 2000, with a credit to employer for benefits paid, and scheduled permanent partial disability benefits for a 24 percent leg impairment with a credit to employer for payments it made on an earlier injury to the same body part. See 33 U.S.C. §914(j); Strachan Shipping Co. v. Nash, 782 F.2d 513, 18 BRBS 45(CRT) (5th Cir. 1986) (en banc).
The administrative law judge found that employer is liable for a 10 percent assessment pursuant to Section 14(e) on the benefits due under the schedule. The administrative law judge adopted the position of the Director, Office of Workers' Compensation Programs (the Director), that the mere filing of a notice of controversion "regardless of the circumstances or of the contents of the form" does not prevent imposition of the Section 14(e) assessment. Decision and Order at 7. The administrative law judge found that employer purported to controvert the claim on two grounds: (1) "Extent of permanent disability is controverted," and (2) "Currently in contact with employee regarding agreement of permanent partial disability rating per Dr. Nevins' medical report dated 4/19/00." CX 3. The administrative law judge found that although the notice of controversion appears to be contesting the degree of disability, this was not actually the case because on the same day it controverted the claim, employer offered to pay claimant partial disability benefits pursuant to Dr. Nevins's opinion, so long as claimant agreed to the stipulations. See CX 2, 3. The administrative law judge thus found that employer obviously did not dispute the extent of claimant's impairment and controverted the claim only as a pretext to avoid claimant's right to seek modification absent the issuance of an order. [1] The administrative law judge concluded that employer is liable for a Section 14(e) assessment unless it controverts the claim based on a "reasonable belief" that compensation is not due. Decision and Order at 8. In a subsequent decision, the administrative law judge awarded claimant's counsel an attorney's fee of $3,885.50, payable by employer. The administrative law judge found that employer's offer to pay claimant compensation was not a "tender" within the meaning of Section 28(b) of the Act, 33 U.S.C. §928(b), because it was not unconditional. The administrative law judge also addressed employer's specific objections to the fee requested.
Employer appeals the administrative law judge's imposition of a Section 14(e) assessment and the finding that it is liable for claimant's attorney's fee. The Director responds that the administrative law judge properly analyzed the Section 14(e) issue and held employer liable for an additional 10 percent assessment. The Director also urges affirmance of the fee award payable by employer. Claimant has not responded to employer's appeal.
Employer first contends that the district director erred in not entering a compensation order based on the parties' stipulations and in forwarding the case to the administrative law judge. While employer is correct in asserting that the district director may issue a compensation order based on the parties' stipulations where the parties are in agreement, 20 C.F.R. §702.315, in this case claimant did not agree to the stipulations proposed by employer, resisted the issuance of a compensation order, and raised issues requiring adjudication by an administrative law judge. Therefore, the case was correctly forwarded to the administrative law judge. See 20 C.F.R. §702.316; Ingalls Shipbuilding, Inc. v. Director, OWCP [Boone], 102 F.3d 1385, 31 BRBS 1(CRT) (5th Cir. 1996); see also Healy Tibbitts Builders, Inc. v. Cabral, 201 F.3d 1090, 33 BRBS 209(CRT) (9th Cir.), cert. denied, 531 U.S. 956 (2000).
We next address employer's contention that the administrative law judge erred in finding that its notice of controversion was insufficient to prevent the imposition of a Section 14(e) assessment. Employer contends that the administrative law judge erred in finding that employer may file a notice of controversion only when it reasonably believes that compensation is not due claimant. The Director responds that the administrative law judge properly looked to the circumstances surrounding the filing of the notice of controversion in order to ascertain whether the notice was validly filed and served to prevent the imposition of a Section 14(e) assessment.
If employer does not pay benefits when they are "due," see 33 U.S.C. §914(b), it is liable for a Section 14(e) penalty, unless it has timely controverted the claim, 33 U.S.C. §914(d), or the district director excuses the failure to pay due to conditions beyond employer's control. [2] Fairley v. Ingalls Shipbuilding, Inc., 22 BRBS 184 (1989), aff'd sub nom. Ingalls Shipbuilding, Inc. v. Director, OWCP, 898 F.2d 1088, 23 BRBS 61(CRT) (5th Cir. 1990). Section 14(d) requires that a notice of controversion state "the grounds upon which the right to compensation is controverted." 33 U.S.C. §914(d). Employer's liability for a Section 14(e) penalty ends when employer controverts the claim or when the Department of Labor knows of the facts that a proper notice of controversion would have revealed. National Steel & Shipbuilding Co. v. Bonner, 600 F.2d 1288 (9th Cir. 1979); see also Matulic v. Director, OWCP, 154 F.3d1052, 32 BRBS 148(CRT) (9th Cir. 1998); Scott v. Tug Mate, Inc., 22 BRBS 154 (1989). Employer contends that it filed a notice of controversion form stating the grounds upon which it controverted the claim, and that the administrative law judge erred in finding that the reasons employer gave were invalid and therefore insufficient to prevent the imposition of a Section 14(e) assessment. The Director urges the Board to affirm the administrative law judge's inquiry into the external circumstances surrounding the filing of the notice of controversion in order to ascertain its validity. For the reasons that follow, we reject the Director's argument, and we hold the administrative law judge erred in finding employer's notice of controversion was not sufficient.
The Director first cites Fairley v. Ingalls Shipbuilding Inc., 22 BRBS 184 (1989), aff'd sub nom. Ingalls Shipbuilding, Inc. v. Director, OWCP [Fairley], 898 F.2d 1088, 23 BRBS 61(CRT) (5th Cir. 1990), in support of his position that employer's notice of controversion is invalid on its face. In Fairley, employer...
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