Krause v. Bethlehem Steel Corp.

• Decision Date: 30 December 1992
• Docket Number: 89-3165,BRB 90-2004
• Parties: ESTHER KRAUSE (Widow of HERBERT KRAUSE), Claimant-Respondent v. BETHLEHEM STEEL CORPORATION CORPORATION, Self-Insured Employer-Petitioner
• Court: Longshore Complaints Court of Appeals

ESTHER KRAUSE (Widow of HERBERT KRAUSE) Claimant-Respondent v. BETHLEHEM STEEL CORPORATION CORPORATION, Self-Insured Employer-Petitioner

BRB Nos. 90-2004, 89-3165

December 30, 1992

Appeal of the Decision and Order Awarding Benefits of R. S. Heyer Administrative Law Judge, and the Attorney Fee Award of John Sharp, District Director, United States Department of Labor.

Victoria Edises (Kazan & McClain), Oakland, California for claimant.

Bill Parrish, San Francisco, California, for self-insured employer.

Before: SMITH, DOLDER and McGRANERY, Administrative Appeals Judges.

DECISION AND ORDER

PER CURIAM:

Employer appeals the Decision and Order Awarding Benefits (88-LHC-3232) of Administrative Law Judge R. H. Heyer and of the attorney fee award of District Director John Sharp 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 findings of fact and conclusions of law of the administrative law judge if they are rational, supported by substantial evidence, and in accordance with law. O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965); 33 U.S.C. §921(b)(3).

While working for employer as a sheet metal worker, decedent was exposed to asbestos, and developed work-related mesothelioma which resulted in his death on February 21, 1987. Decedent filed a claim for compensation on August 21, 1986, and claimant filed a claim for death benefits on April 1, 1987. Employer paid decedent permanent partial disability compensation from January 7, 1987 through February 25, 1987, and paid claimant death benefits from May 15, 1987 through June 24, 1987. The administrative law judge found that decedent and claimant entered into a settlement on February 2, 1987 with Asbestos Claims Facility for $300, 000 based on correspondence dated February 10, 1987 from employer's counsel to claimant's counsel at the time, Mark Wasacz, stating that the case "was settled" with Asbestos Claims Facility on February 2, 1987.^[1] The administrative law judge, in addition, found that decedent and claimant entered into settlements with Garlock Corporation, Uniroyal, and Nicolet Corporation prior to his death but these settlements did not need to be considered separately from the Asbestos Claims Facility settlement because they introduced no additional considerations and, in any event, one settlement suffices under Section 33(g)(1), 33 U.S.C. §933(g)(1).

The administrative law judge found that decedent's claim was barred by Section 33(g)(1) because decedent had settled for an amount greater than he was entitled to receive under the Act but was not barred by Section 33(g)(2), 33 U.S.C. §933(g)(2), because employer received adequate notice of the third party settlements on February 19, 1987.

The administrative law judge found that claimant entered into additional settlements with Raymark, W.R. Grace, Babcock and Wilcox and apparently Combustion Engineering, after decedent's death but prior to April 1987, the date she filed her death benefits claim, yielding a net third party recovery of $212, 156.23 after reduction of attorney's fees and costs. Claimant also received a net recovery of $29, 750 in a California state workers' compensation settlement. With regard to the death benefit claim, the administrative law judge further determined that although claimant did not obtain employer's prior written approval before entering into the third party settlements, her right to benefits under the Act was not barred by Section 33(g)(1) as she did not become a person entitled to compensation until May 15, 1987, when employer initiated payment of death benefits after the settlements had been completed. The administrative law judge further determined that claimant's right to compensation was not barred pursuant to Section 33(g)(2) because employer received adequate notice of the settlements on February 19, 1987, ^[2] although the full details of the settlement agreements were not provided until June 1987. An "Addendum" was attached to each settlement which stated that 75 percent of the settlement proceeds are to go to decedent, 10 percent to claimant, and 15 percent to their three adult children. Although the administrative law judge accepted the addendum apportionment statements as generally credible, he modified the amount to be distributed to claimant to 15 percent, and the amount to the children to 10 percent, finding it more plausible that the settlement values would equate the children with the widow in the aggregate rather than individually. The administrative law judge concluded that although claimant was theoretically entitled to decedent's disability compensation and medical care pursuant to 33 U.S.C. §§907, 908, the 75 percent offset under Section 33(f), 33 U.S.C. §933(f), of decedent's interest in the net third party recovery and the offset for his disability and medical benefit interest in the state settlement under Section 33(f) exceeded and extinguished those entitlements. The administrative law judge, however, awarded claimant death benefits pursuant to Section 9, 33 U.S.C. §909, subject to a Section 33(f) offset for her 15 percent interest in the net third party recovery and a Section 3(e) offset for her $29, 750 interest in the state compensation claim settlement.^[3]

On appeal (BRB No. 89-3165), employer argues that claimant's right to benefits was barred pursuant to Sections 33(g)(1) and 33(g)(2) and that the administrative law judge erred in limiting the Section 33(f) credit to 15 percent of the net third party recovery absent credible evidence of apportionment. Employer also appeals (BRB No. 90-2004) the district director's award of attorney's fee. Claimant responds, urging affirmance. The two claims were consolidated on appeal.^[4]SECTION 33(g)

Section 33(g)(1) and (g)(2) provide in pertinent part: (g)(1) If the person entitled to compen-sation (or the person's representative) enters into a settlement with a third person referred to in subsection (a) for an amount less that the compensation to which the person (or the person's representative) would be entitled under this Act, the employer shall be liable for compensation as determined under subsection (f) only if written approval of the settlement is obtained from the employer and the employer's carrier, before the settlement is executed, and by the person entitled to compensation (or the person' representative).

2) If no written approval of the settlement is obtained and filed as required by paragraph (1), or if the employee fails to notify the employer of any settlement obtained from or judgment rendered against a third person, all rights to compensation and medical benefits under this Act shall be terminated, regardless of whether the employer or the employer's insurer has made payments or acknowledged entitlement to benefits under this Act.

Section 933(g)(Supp. V 1987).

On appeal, employer contends that the administrative law judge erred in determining that all the settlements were obtained on February 2, 1987 prior to decedent's death. Employer contends that the parties merely entered tentative agreements on February 2, 1987, which were later confirmed in writing after decedent's death when claimant signed them. Employer contends that inasmuch as no meeting of the minds occurred until the settlements were actually signed after decedent's death, the administrative law judge erred in finding that claimant was not a person entitled to compensation at the time of the settlements, and that accordingly her death benefit claim was barred pursuant to 33(g)(1). In the alternative, employer contends that the administrative law judge erred in concluding that adequate notice had been provided under Section 33(g)(2) on February 19, 1987, arguing that sufficient notice was not actually provided until June 2, 1987.

Initially, we note that contrary to employer's assertions, the administrative law judge did not find that all of the settlements occurred on February 2, 1987. Rather, the administrative law judge determined that some of the settlements occurred at that time but that others occurred after decedent died, but prior to the filing of claimant's April 1, 1987 death benefits claim. The administrative law judge further determined that in any event, all of the settlements had been executed prior to May 15, 1987, when employer initiated payment of compensation benefits thereby rendering claimant a person entitled to compensation. Employer correctly asserts, however, that none of the settlements were actually executed until after decedent's death inasmuch as all of the settlement agreements were signed between March 4, 1987 and May 13, 1987.

In order to preserve his right to compensation, a claimant must obtain written approval of a third-party settlement if at the time of settlement, the claimant is "entitled to compensation." 33 U.S.C. §933(g)(1). In determining that claimant became a person entitled to compensation on May 15, 1987, when employer had initiated payments to claimant the administrative law judge applied the law in effect at the time which was that a "person entitled to compensation" must either be receiving compensation from employer or entitled to receive it pursuant to an adjudication under the Act. See e.g., Dorsey v. Cooper Stevedoring Co., 18 BRBS 25 (1986), appeal dismissed sub nom. Cooper Stevedoring Co. v. Director, OWCP, 826 F.2d 1011 (11th Cir. 1987). The Supreme Court has since held that a claimant becomes a person entitled to compensation within the meaning of Section 33(g)(1) at the moment his right to recovery under the Act vests. Estate of Cowart v. Nicklos Drilling Co., __ U.S. __, 112 S.Ct. 2509 (1992) aff'g Nicklos Drilling Co. v. Cowart, 927...