Oceanic Butler, Inc. v. Nordahl

• Citation: 842 F.2d 773
• Decision Date: 19 April 1988
• Docket Number: No. 87-4488,87-4488
• Parties: OCEANIC BUTLER, INC., and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Petitioners, v. Stig B. NORDAHL and Director, Office of Workers' Compensation Programs, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 773

842 F.2d 773

OCEANIC BUTLER, INC., and National Union Fire Insurance

Company of Pittsburgh, Pennsylvania, Petitioners, v. Stig B. NORDAHL and Director, Office of Workers'

Compensation Programs, Respondents.

No. 87-4488.

United States Court of Appeals, Fifth Circuit.

April 19, 1988.

Thomas C. Fitzhugh, III, Fitzhugh & Filteau, Houston, Tex., for petitioners.

Gilbert T. Adams, Jr., Richard J. Clarkson, Beaumont, Tex., Joshua T. Gillelan, II, William C. Jacobs, Director, Office of Workers Compensation Programs, Donald Shire, Assoc., Sol., Washington, D.C., for Nordahl.

Petition for Review of an Order of the Benefits Review Board.

Before GARZA, HIGGINBOTHAM and SMITH, Circuit Judges.

JERRY EDWIN SMITH, Circuit Judge:

Petitioners Oceanic Butler, Inc., and National Union Fire Insurance Company, its workers' compensation insurer under the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. Sec. 1333(b) (1982), and the Longshore and Harbor Workers' Compensation Act (LHWCA), seek review under LHWCA Sec. 21(c), 44 Stat. 1439, 33 U.S.C. Sec. 921(c), of the Benefits Review Board's decision, 20 B.R.B.S. 19 (1987), upholding a compromise-and-release settlement of lifetime disability claims entered into by them with Stig B. Nordahl, now deceased. They claim an employers'/insurers' right of withdrawal from "proposed" settlements prior to the administrative approval required by LHWCA Secs. 8(i) and 16. The Labor Department's Director of the Office of Workers' Compensation Programs has taken over defense of this appeal for Nordahl's estate and contends that National Union's submission of the settlement did not reserve a right of withdrawal before administrative approval and that administrative authority to approve the settlement was unaffected by the disabled employee's death before approval. Agreeing with the agency in this case of first impression, we AFFIRM.

I. THE DISPUTE.

In 1985, longshoreman Nordahl settled a disputed claim of permanent (the insurer says temporary) total disability for $75,000 and died exactly a week later. For temporary disability he had been receiving, and would have been entitled (for life, if necessary) to, $308.51 per week. If the administrator had found the total disability to be a permanent one (a claim waived in the settlement), the payments would have been above $360; at that rate, the $75,000 settlement compensated him for the equivalent of only three and one-half years' longevity. ¹

While the written agreement and release were properly submitted for approval, the administrative authority of course did not have time to act before Nordahl's death. The claims examiner first granted National Union's requests for postponements of consideration of the submitted compromise and release and then passed the file up to the Deputy Commissioner after the carrier made known its intent to withdraw from the agreement.

During this time, there was no suggestion that death removed administrative jurisdiction to approve the settlement. Even now, the companies assert in the alternative that it was not jurisdiction to disapprove or approve that was wrongful, but that administrative competence rested with the administrative law judge (ALJ), not with the Deputy Commissioner.

The fallaciousness of this jurisdictional challenge is betrayed by statutory text, but the specific question was also clearly adjudicated by the Benefits Review Board in Maher v. Bunge Corp., 18 B.R.B.S. 203 (1986). In that case, death of the claimant was held not to bar subsequent approval of a submitted settlement, and an attempted withdrawal by the insurer was disallowed. The Deputy Commissioner recognized that she was bound by this recent Review Board decision, denied consent to withdrawal, and approved the pre-submitted settlement. The Board affirmed the Deputy Commissioner's order. National Union has not paid the $75,000 plus interest, despite administrative notice to do so.

The widow has filed a separate claim for death benefits, which National Union asserts cannot be awarded because death was not injury-related. National Union also contends, however, that such a death claim forecloses approval of the disability settlement because it would threaten double recovery if both claims were not placed before the same ALJ. The carrier asserts further that consideration of the disability and death claims in one proceeding would be more efficient and expeditious.

II. THE LEGISLATION.

The provision directly at issue involves the necessity of administrative approval for compromise agreements; the question is whether each party to a compromise agreement has the right to withdraw unilaterally from that agreement if it does so prior to the requisite administrative approval. Section 8(i)(1) of the Act states:

Whenever the parties to any claim for compensation under this Act, including survivors benefits, agree to a settlement, the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress. Such settlement may include future medical benefits if the parties so agree. No liability of any employer, carrier, or both for medical, disability, or death benefits shall be discharged unless the application for settlement is approved by the deputy commissioner or administrative law judge. If the parties to the settlement are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval. ²

The Petitioners here assert that Maher involved an application of the old version of section 8(i) and that "the requirements for approval under the 1984 amendments are significantly different from those employed to review pre-1984 settlements." While it is true that the old "best interests" standard was changed to a test of adequacy and lack of duress, the Board below noted that Maher found its result "consistent" with either version of the provision. ³

This is a conservative reading of Maher, which did decline to apply the amendments retroactively but also noted "that the amendments effect a policy encouraging a view that settlement agreements have a binding effect." 18 B.R.B.S. 203, 204-05 n. 3. Additionally, any fair reading of the changes reveals that the policy was to strengthen worker protection against unwise settlements, while making approval mandatory, absent clear prejudice to future support for the worker and his or her dependents. ⁴

The extensive interpretation of the statutory provision by the agency charged with its enforcement and execution merits considerable weight. United States v. American Trucking Association, 310 U.S. 534, 550, 60 S.Ct. 1059, 1067, 84 L.Ed. 1345 (1940). The carrier's main assertion seems to be that the amendments, while making approval mandatory absent clear inadequacy, did not display any preference to bind one side only, whereas the earlier versions were more heavily biased in favor of protecting the claimant.

III. CAN THE CARRIER WITHDRAW?

Thus the question under section 8(i) is whether either party may withdraw from a compromise-and-release settlement prior to the necessary administrative approval, or whether the employer and insurer are bound and the approval requirement permits only the worker a period for reconsideration. Some support for the former reading is provided by the 1984 amendments to the section that changed the standard of approval to mere "adequacy" from the more stringent "best interests of [the] injured employee."

The language of the provision was previously asymmetrical in its protection of the beneficiaries of the Act. The language now is less clearly so.

National Union contends that inadequacy of compensation for claimants or inadequacy of consideration for insurers equally demands administrative disapproval of proposed settlements. However, the legislative history of the 1984 amendments does not evince any intention to alter the former biased protection so drastically, for examination of the LHWCA as a whole clearly shows that the basic asymmetry against employers and insurers was unaffected by the change from subjective evaluations of the claimant's best interest to actuarial adequacy.

Section 8(i) is not the only provision restricting the contractual rights of the parties to workers' compensation claims. There are, scattered throughout the Act, several prohibitions on the release of insurers' liability, the cumulative effect of which is to limit to claimants only the right to rescind unapproved settlements. The statutory terms, structure, and purpose of the LHWCA establish a clear paternalism required of the agency and of reviewing courts toward employees willing to waive lifetime claims for an immediate payment.

For instance, LHWCA Sec. 15(b) invalidates any release by a disabled worker of future compensation entitlements unless there is Sec. 8(i) approval. Section 16, as originally enacted and never changed, provides: No assignment, release, or commutation of compensation or benefits due or payable under this Act, except as provided by this Act, shall be valid....

44 Stat. 1434, 33 U.S.C. Sec. 916 (emphasis added).

Unlike many of the state statutes at issue in the cases detailed by National Union, the LHWCA contains no general provision invalidating insurers' agreements for payment until and unless approved. Rather, sections 15(b) and 16 render "invalid" only the claimant's agreement to waive or compromise accrued or future benefit rights. Similarly, section 8(i) precludes an agreement from "discharg[ing]" liability of the employer or insurer unless approval is obtained as provided in section 8(i).

Setting aside for the moment the problem exemplified by the present case (the claimant's death after execution of the settlement agreement but before approval), the LHWCA's provisions thus require different analyses of the parties' rights under a settlement agreement. The claimant's obligation under the...