Nicklos Drilling Co. v. Cowart, s. 89-4944

• Decision Date: 29 March 1991
• Docket Number: 90-4022,Nos. 89-4944,s. 89-4944
• Citation: 927 F.2d 828
• Parties: , 59 USLW 2613 NICKLOS DRILLING COMPANY and Compass Insurance Company, Petitioners, v. Floyd COWART and Director, Office of Workers' Compensation Programs, U.S. Department of Labor, Respondents. PETROLEUM HELICOPTERS, INC. and American Home Assurance Company, Petitioners, v. Mary E. BARGER and Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 828

927 F.2d 828

1991 A.M.C. 2627, 59 USLW 2613

NICKLOS DRILLING COMPANY and Compass Insurance Company, Petitioners, v. Floyd COWART and Director, Office of Workers' Compensation

Programs, U.S. Department of Labor, Respondents.

PETROLEUM HELICOPTERS, INC. and American Home Assurance

Company, Petitioners, v. Mary E. BARGER and Director, Office of Workers' Compensation

Programs, United States Department of Labor, Respondents.

Nos. 89-4944, 90-4022.

United States Court of Appeals, Fifth Circuit.

March 29, 1991.

H. Lee Lewis, Jr., Griggs & Harrison, Houston, Tex., for Nicklos Drilling Co. and Compass Ins. Co.

Lloyd N. Frischhertz, Seelig, Cosse', Fischhertz & Poulliard, New Orleans, La., for Floyd Cowart.

Donald Shire, Joshua T. Gillelan, II, Samuel J. Oshinsky, Sol., U.S. Dept. of Labor, Washington, D.C., for Director.

Linda Meekins, Clerk, Benefit Review Bd., U.S. Dept. of Labor, Washington, D.C., for other interested parties.

Vance E. Ellefson, C. Theodore Alpaugh, III, Metairie, La., for Petroleum Helicopters, Inc. and American Home Assur. Co.

Mary Ellen Blade, Beckenstein, Oxford, Radford & Johnson, Beaumont, Tex., for Mary E. Barger.

On Petition for Review of a Decision and Order of The Benefits Review Board, U.S. Department of Labor.

Before CLARK, Chief Judge, GEE, ^* POLITZ, KING, JOHNSON, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHE, WIENER and BARKSDALE, Circuit Judges.

PER CURIAM:

Today we sit en banc to resolve a conflict in the law of our Circuit. In the cases consolidated on this appeal, two panels of our Court held that section 33 of the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. Sec. 933 (1988), conditions eligibility for continuing LHWCA benefits on the employer's and the employer's insurance carrier's prior written approval of any settlement between an injured employee and a third person for less than his LHWCA compensation entitlement; ¹ and we further held that this approval requirement applies regardless of whether the employer or the employer's insurer was paying LHWCA benefits at the time of settlement. See also Petroleum Helicopters, Inc. v. Collier, 784 F.2d 644, 647 (5th Cir.1986). In an unpublished opinion, Kahny v. Director, Office of Workers' Compensation Programs, 729 F.2d 777 (5th Cir.1984), a panel of our Court held the contrary: that section 33's approval requirement applies only if the employer or its carrier is paying LHWCA benefits at the time of the settlement. Resolving this conflict, we now hold that the plain language of section 33 shows Congress's unambiguous intent to require prior approval whether or not the employer or its carrier was actually paying LHWCA benefits at the time of settlement. In the face of this manifest congressional intent, no administrative reinterpretation can be countenanced.

Background

In each case before us today, a person seeking LHWCA compensation for death or injury settled a related claim with a third person; and, in each case, the settlement occurred at a time when the person was not receiving LHWCA benefits, was for less than the employee's compensation entitlement, and was consummated without the approval of the employer or his carrier. In Nicklos Drilling Co. v. Cowart, 907 F.2d 1552 (5th Cir.1990), Floyd Cowart, an employee of Nicklos Drilling Company, sought LHWCA compensation for injuries he had received on Nicklos's drilling rig. At a time when Mr. Cowart was not receiving LHWCA benefits from Nicklos or its insurance carrier, he settled his claim against Transco Exploration Company, which owned the offshore platform that supported Nicklos's rig. In Petroleum Helicopters, Inc. v. Barger, 910 F.2d 276 (5th Cir.1990), Mary Barger, the widow of Walter Barger, sought LHWCA compensation for her husband's death. Mr. Barger died when the helicopter that he was piloting crashed. The helicopter was owned by his employer, Petroleum Helicopters, Inc. (PHI), and manufactured by Bell Helicopter Textron. Ms. Barger settled her claim against Bell at a time when she was not receiving LHWCA benefits from either PHI or its insurance carrier. The panel opinions contain more detailed accounts of the facts.

Review of an Administrative Interpretation

Generally, the question before us is whether section 33 of the LHWCA permits any exception to its requirement that all settlements with third persons that leave the employer liable for further compensation benefits have the prior written approval of the employer and the employer's insurance carrier. Specifically, the Office of Workers' Compensation Programs (OWCP) urges us to accept its in-house administrative interpretation that section 33 requires prior written approval only if the employer or its carrier is actually paying LHWCA benefits at the time of settlement. In Kahny we accepted OWCP's administrative interpretation, but in Collier, Nicklos Drilling, and Barger we rejected this interpretation.

In support of its position, the OWCP points out that section 33's purpose is to allow a person entitled to LHWCA benefits to receive those benefits and still pursue civil remedies against third persons. According to the OWCP, the predecessor to section 33 required an election of remedies and often caused severe financial hardship to individuals who chose to pursue civil action and forego LHWCA benefits. OWCP argues that to alleviate this hardship Congress expressly eliminated election of remedies by enacting section 33(a). Extending this argument, OWCP maintains that financial hardship can be avoided only by paying benefits during the pendency of a civil action; thus, settlements require prior written approval only if the employer or its carrier is actually paying benefits. The actual payment of benefits, according to OWCP, is the price which Congress intended employers to pay for the right of prior approval.

Second, OWCP maintains that section 33(g)(2) can be given complete meaning only if we accept OWCP's administrative interpretation. For convenience, we set out the relevant portions of section 33 here:

(a) Election of remedies

If on account of a disability or death for which compensation is payable under this chapter the person entitled to such compensation determines that some person other than the employer or a person or persons in his employ is liable in damages, he need not elect whether to receive such compensation or to recover damages against such third person.

* * * * * *

(g) Compromise obtained by person entitled to compensation

(1) If the person entitled to compensation (or the person's representative) enters into a settlement with a third person referred to in subsection (a) of this section for an amount less than the compensation to which the person (or the person's representative) would be entitled under this chapter, the employer shall be liable for compensation as determined under subsection (f) of this section 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's representative). The approval shall be made on a form provided by the Secretary and shall be filed in the office of the deputy commissioner within thirty days after the settlement is entered into.

(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 chapter shall be terminated, regardless of whether the employer or the employer's insurer has made payments or acknowledged entitlement to benefits under this chapter.

33 U.S.C. Sec. 933 (1988). OWCP argues that the language following the disjunctive "or" in section 33(g)(2) would be rendered partially meaningless if prior written approval of all settlements were always required, because the alternative of merely notifying the employer of such a settlement would have no function.

We begin our consideration of OWCP's position by noting the Supreme Court's guidance in cases involving administrative interpretations.

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984) (footnotes omitted).

More recent, and more closely in factual point, is the Court's decision in Demarest v. Manspeaker, --- U.S. ----, 111 S.Ct. 599, 112 L.Ed.2d 608 (1991), where the Court unanimously declined to give effect to a "longstanding administrative construction" in the face of clear statutory language granting witness fees to incarcerated state prisoners who testify in federal court proceedings.

The Court of Appeals, while agreeing that the statutory analysis outlined above was "[o]n its face ... an appealing argument," [Demarest v. Manspeaker] 884 F.2d [1343] at 1345 [10th Cir.1989], relied on longstanding administrative construction of the statute denying attendance fees to prisoners, and two Court of Appeals decisions to the same effect, followed by congressional revision of the statute in ...