E.P. Paup Co. v. Director, Office of Workers Compensation Programs, U.S. Dept. of Labor

• Decision Date: 02 July 1993
• Docket Number: Nos. 91-70325,91-70350,s. 91-70325
• Citation: 999 F.2d 1341
• Parties: E.P. PAUP COMPANY; Insurance Company of North America, Petitioners, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR; Arthur McDougall, Respondents, State of Washington, Department of Labor and Industries, Respondent-Intervenor. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, Petitioner, v. E.P. PAUP COMPANY; Insurance Company of North America, Inc.; Arthur McDougall, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1341

999 F.2d 1341

1994 A.M.C. 1809

E.P. PAUP COMPANY; Insurance Company of North America, Petitioners, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, UNITED

STATES DEPARTMENT OF LABOR; Arthur McDougall, Respondents,

State of Washington, Department of Labor and Industries,

Respondent-Intervenor.

DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, Petitioner, v. E.P. PAUP COMPANY; Insurance Company of North America, Inc.; Arthur McDougall, Respondents.

Nos. 91-70325, 91-70350.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 10, 1992.

Decided July 2, 1993.

Thomas Owen McElmeel, McElmeel & Schultz, Seattle, WA, for petitioners.

David S. Fortney, Deputy Sol. of Labor, Carol A. DeDeo, Associate Sol., Janet R. Dunlop, Counsel for Longshore, Michael S. Hertzig, U.S. Dept. of Labor, Washington, DC, for respondent Director.

Kenneth Hobbs, Stafford, Frey, Cooper & Stewart, Seattle, WA, for respondent Arthur L. McDougall.

John R. Wasberg, Asst. Atty. Gen., State of Washington, Dept. of Labor and Industries, Seattle, WA, for respondent-intervenor.

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

Before: WALLACE, Chief Judge, SKOPIL, and LEAVY, Circuit Judges.

SKOPIL, Circuit Judge:

This is an appeal from a final decision of the Benefits Review Board ("Board") awarding disability benefits to an injured employee, Arthur McDougall ("McDougall"), and directing that his employer, E.P. Paup Company ("employer"), reimburse the State of Washington ("state") for benefits previously paid under state workers' compensation law. The employer and its federal workers' compensation carrier, Insurance Company of North America ("INA"), contend on appeal that 33 U.S.C. § 903 of the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901-950 (1988), preempts state law and prohibits reimbursement to the state. They also appeal the Board's determination that they are not entitled to special fund relief pursuant to 33 U.S.C. § 908(f) which provides that when a preexisting condition contributes to an employee's permanent disability, liability after 104 weeks is shifted from employer and carrier to a special fund administered by the Director, Office of Workers' Compensation Programs, United States Department of Labor ("Director"). We reject these contentions and we affirm the Board's decision with a minor modification to its reimbursement order.

FACTS AND PRIOR PROCEEDINGS

McDougall injured his left hand in a non-work-related car accident in 1978 and did not work for approximately 18 months. In 1979, he injured his lower back while working for employer as a pile buck and he has not worked since that injury. He sought workers' compensation benefits for his back injury under state law and later under the LHWCA. The state paid $53,548.08 in compensation and $16,244.95 in medical expenses before it stopped paying benefits upon learning that LHWCA benefits had been awarded.

The parties stipulated at the LHWCA hearing that McDougall was permanently and totally disabled. The Administrative Law Judge ("ALJ") awarded McDougall temporary total disability benefits for two years and permanent total disability benefits thereafter. He determined that Director's special fund would be liable for payments after the expiration of 104 weeks pursuant to 33 U.S.C. § 908(f) because McDougall's permanent total disability was the result of his previous hand injury and his work-related back injury. The ALJ also allowed offsets to INA and Director's special fund pursuant to 33 U.S.C. § 903(e) for compensation McDougall had received from the state. Thus, the ALJ awarded McDougall the difference between state and LHWCA benefits.

Director appealed the section 908(f) ruling to the Board. While that appeal was pending, McDougall petitioned the ALJ for a modification of his award after the state ordered McDougall to reimburse the payments it made before he was determined to be covered under the LHWCA. The state was allowed to intervene in the proceedings. The ALJ granted the modification, finding that he had mistakenly determined the source of McDougall's state benefit payments.

On reconsideration of the modification, the ALJ vacated the section 903(e) credit and ordered INA and the special fund to reimburse the state for McDougall's state benefits.

                The ALJ held that INA was not required to reimburse the state for medical expenses.   The Board affirmed the ALJ's determination that INA was not entitled to an offset under section 903(e).   It ordered INA to reimburse the state for benefits it paid to McDougall.   It held that the state was entitled to reimbursement for medical expenses if on remand the ALJ determined that McDougall was entitled to medical benefits under the LHWCA.   The Board reversed the ALJ's ruling that INA was entitled to special fund relief under section 908(f), holding that the evidence in the record was not sufficient to support the ALJ's determination that McDougall's hand injury contributed to his permanent total disability
                

On remand, the parties stipulated that McDougall's medical expenses for his back injury were covered under the LHWCA and represented reasonable charges. The ALJ ordered INA to reimburse the state for those medical expenses. The ALJ rejected INA's offer of proof of additional evidence regarding the section 908(f) issue. The Board affirmed the ALJ's decision on remand and employer, INA and Director timely petition this court for review.

DISCUSSION

We review Board decisions for errors of law and adherence to the substantial evidence standard. Port of Portland v. Director, OWCP, 932 F.2d 836, 838 (9th Cir.1991). The Board must accept the ALJ's findings unless they are contrary to law, irrational or unsupported by substantial evidence. Id. We accord "considerable weight" to the construction of the statute urged by the Director charged with administering it. Force v. Director, OWCP, 938 F.2d 981, 983 (9th Cir.1991). The Board's interpretation of a statute, however, is not entitled to any special deference because the Board is not a policymaking body. Port of Portland, 932 F.2d at 838.

I.

INA and Director argue that the Board's order directing INA to reimburse the state for benefits paid to McDougall violates section 903(e) of the LHWCA. ¹ That provision gives an employer or its carrier an offset credit when a claimant has received benefits for the same injury under a state workers' compensation law. Section 903(e) provides:

Notwithstanding any other provision of law, any amounts paid to an employee for the same injury, disability, or death for which benefits are claimed under this chapter pursuant to any other workers' compensation law or section 688 of Title 46 (relating to recovery for injury to or death of seamen) shall be credited against any liability imposed by this chapter.

33 U.S.C. § 903(e).

The Board held that section 903(e) does not apply here because state law excludes coverage for workers covered under the federal maritime laws. State law provides in part:

(1) The provisions of this title shall not apply to a master or member of a crew of any vessel, or to employers and workers for whom a right or obligation exists under the maritime laws for personal injuries or death of such workers.

....

(4) In the event payments are made under this title prior to the final determination under the maritime laws, such benefits shall be repaid by the worker or beneficiary if recovery is subsequently made under the maritime laws.

Wash.Rev.Code § 51.12.100 (1990) (amended 1991). INA and Director dispute the Board's holding on several grounds. Director contends that either state law does not apply or its application to these facts is prohibited by federal law. INA argues that the state statute is preempted by the federal legislation.

A.

Our first inquiry is whether section 51.12.100 applies in this case. Director contends that it does not because there has not yet been a state adjudication of the debt owed by McDougall. We reject this contention for two reasons. First, nothing in the state statute or case law construing it requires that an administrative order be issued before reimbursement can take place. Second, the state Department of Labor and Industries has ordered McDougall to repay the state. The State Board of Industrial Insurance Appeals reversed and remanded at the request of the parties with the express understanding that the state would hold its repayment order in abeyance pending the outcome of the LHWCA proceedings. ²

B.

INA argues that section 903(e) preempts the state's reimbursement statute. Preemption may occur when Congress has expressly precluded state legislation, an expression of such intent can be inferred from the structure and purpose of the federal statute, or when state law conflicts with federal law or stands as an obstacle to achieving federal objectives. Chemical Specialties Mfrs. Ass'n, Inc. v. Allenby, 958 F.2d 941, 943 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 80, 121 L.Ed.2d 44 (1992). There is a presumption, however, against concluding that state legislation is preempted by an act of Congress. ³ Id. Our responsibility is to attempt to " 'reconcile the operation of both statutory schemes with one another rather than holding [that one has been] completely ousted.' " Id. at 949 (quoting Ray v. Atlantic Richfield Co., 435 U.S. 151, 183, 98 S.Ct. 988, 1007, 55 L.Ed.2d 179 (1978)).

On first inspection, the plain language of section 903(e) appears to support the argument that state law is preempted. Section 903(e) provides that "[n]otwithstanding any other provision of law" an employer has the right to receive an offset credit for "any amounts paid to an employee ... pursuant to any other workers' compensation law." 33 U.S.C. § 903(e) (emphasis added). A contention could be made that the federal statute covers any and all payments to an employee, even those made erroneously or provisionally.

A closer...