Stein v. Thorpe Insulation Co.
| Decision Date | 15 December 2020 |
| Docket Number | BRB 20-0061 |
| Court | Longshore Complaints Court of Appeals |
| Parties | JAMIE LYNN STEIN (successor in interest to MARTHA MIHALKO) Claimant-Petitioner v. THORPE INSULATION COMPANY and CALIFORNIA INSURANCE GUARANTEE ASSOCIATION Employer/Carrier-Respondents DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR Respondent |
UNPUBLISHED OPINION
Appeal of the Decision and Order Granting Director's Motion for Summary Decision of Susan Hoffman, Administrative Law Judge United States Department of Labor, and the Order Dismissing California Guarantee Association of William Dorsey Administrative Law Judge, United States Department of Labor.
Alan R. Brayton and John R. Wallace (Brayton Purcell LLP), Novato California, for Claimant.
John T. Marin (Laughlin, Falbo, Levy & Moresi, LLP) Sacramento, California, for California Insurance Guarantee Association.
Cynthia Liao (Kate S. O'Scannlain, Solicitor of Labor; Barry H. Joyner, 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: BOGGS, Chief Administrative Appeals Judge, BUZZARD and GRESH, Administrative Appeals Judges.
JUDITH S. BOGGS, Chief Administrative Appeals Judge.
Claimant appeals Administrative Law Judge Susan Hoffman's Decision and Order Granting Director's Motion for Summary Decision and Administrative Law Judge William Dorsey's Order Dismissing California Guarantee Association (2016-LHC-01154) rendered on a claim filed pursuant to the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq. (Act). We must affirm the administrative law judges' findings of fact and conclusions of law if they are rational, supported by substantial evidence, and in accordance with applicable law. 33 U.S.C. §921(b)(3); O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965).
Martha Mihalko filed a claim for death benefits under the Act on November 20, 2012, alleging the death of her husband, James F. Mihalko (Decedent), [1] occurred as a result of his exposure to airborne toxins while working as an asbestos insulator at various California shipyards from 1963 until 1994. 33 U.S.C. §909. In 2013, Jamie Lynn Stein, Mrs. Mihalko's daughter, and heir and successor-in-interest to Decedent, filed two wrongful death suits in San Francisco Superior Court against numerous third-party manufacturers, distributors, and purchasers of asbestos products.
Ms. Stein executed, on behalf of herself, as well as the Decedent's heirs and estate, three third-party settlement agreements in the wrongful death lawsuits for a total of $20, 996.39. She settled with: (1) Pfizer, Incorporated, on May 22, 2014 for $996.39 (MSD Ex. G); (2) Quintec Industries, Incorporated, on April 27, 2015, for $10, 000 (MSD Ex. H); and (3) Stauffer Chemical Company, on December 15, 2015, for $10, 000 (MSD Ex. I). Mrs. Mihalko, who died intestate on February 1, 2015, did not sign the first settlement agreement and there is no evidence Ms. Stein notified any putative longshore employer and/or carrier or the Director, Office of Workers' Compensation Programs (the Director), of the third-party settlements.
As for the death benefits claim, in 2016 the California Insurance Guarantee Association (CIGA) filed a notice of controversion on behalf of Employer's insolvent carriers, Mission Insurance Company and Western Employers' Insurance Company, but thereafter sought to be dismissed from the case based upon California Insurance Code §1063.1.[2] On November 15, 2016, Judge Dorsey granted CIGA's motion. Following an appeal of Judge Dorsey's Order to the Benefits Review Board, [3] which was dismissed as interlocutory, the case was returned to the Office of Administrative Law Judges for resolution on the merits.
The case on the merits was assigned to Judge Hoffman (the administrative law judge) who, through a series of orders, substituted Ms. Stein (Claimant) as successor-in-interest to Mrs. Mihalko, granted CIGA's motion to be removed from the case caption based on Judge Dorsey's 2016 Order, and added the Director as a party-in-interest. The Director thereafter filed a Motion for Summary Decision, asserting 33 U.S.C. §933(g) bars recovery under the Act because Mrs. Mihalko entered into a third-party settlement relating to Decedent's death for an amount less than Employer's liability for compensation under the Act. Claimant, in response, asserted a genuine issue of material fact exists regarding whether Mrs. Mihalko "entered into" the settlement agreement within the meaning of Section 33 of the Act and thus requested a hearing on the merits. MSD Ex. E.
Finding no genuine issue of material fact, the administrative law judge addressed the legal issue of whether Mrs. Mihalko "entered into" any third-party settlement agreements within the meaning of Section 33(g). Based on the undisputed facts in this case and the Board's decision in Hale v. BAE Systems San Francisco Ship Repair, 52 BRBS 57 (2018), she concluded Section 33(g) bars recovery of any benefits under the Act.[4]Accordingly, she granted the Director's Motion for Summary Decision based on the affirmative defense in Section 33(g).
On appeal, Claimant challenges the administrative law judge's finding that Section 33(g) bars the claim for death benefits, as well as Judge Dorsey's 2016 Order dismissing CIGA from the case. CIGA filed a response brief, urging affirmance of Judge Dorsey's 2016 decision dismissing it from the case and arguing, in the alternative, that it cannot be liable for benefits under the Act in light of Sections 1063.1(c)(3)(F) and/or 1063.1(a) of the California Insurance Code. Claimant also filed a Motion for Summary Reversal of the administrative law judge's decision in light of the subsequent conclusion the United States Court of Appeals for the Ninth Circuit reached in Hale v. BAE Systems San Francisco Ship Repair, Inc., et al., 801 Fed.Appx. 600 (9th Cir. 2020), which reversed the Board's decision in Hale. Claimant requests remand for a hearing on the merits. In response, CIGA asserts the Ninth Circuit's decision in Hale does not mandate reversal of the administrative law judge's decision because the material facts dictate Claimant is a "person entitled to compensation," thus requiring Employer's prior written approval of the settlement if it is for less than the amount Claimant could receive under the Act. The Director does not object to the Board's vacating the administrative law judge's summary decision on the Section 33(g) issue and remanding the case for further proceedings. She also maintains the Board should vacate Judge Dorsey's 2016 order dismissing CIGA and remand the case for the administrative law judge to determine pursuant to 1987 Cal. Stat. 2665, ch. 833, Sec. 3 what was the relevant "insured occurrence" and when did it occur. Claimant filed a reply brief to the Director's and CIGA's submissions again arguing Section 33(g) cannot bar the claim for death benefits and Judge Dorsey's dismissal of CIGA cannot stand. For the following reasons, we vacate the administrative law judge's application of the Section 33(g) bar, as well as her resulting grant of summary decision, and remand this case for further proceedings.
Section 33(g) bar
A claimant may proceed with both a compensation claim under the Longshore Act against the employer and a tort suit against potentially liable third parties. 33 U.S.C. §933(a). To protect an employer's right to offset any third-party recovery against its liability for compensation under the Act, 33 U.S.C. §933(f), a claimant, under certain circumstances, either must give the employer notice of a settlement with a third party or a judgment in her favor, or she must obtain the prior written approval of the third-party settlement from the employer and its carrier. 33 U.S.C. §933(g);[5] Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 26 BRBS 49(CRT) (1992); Bethlehem Steel Corp. v. Mobley, 920 F.2d 558, 24 BRBS 49(CRT) (9th Cir. 1990), aff'g 20 BRBS 239 (1988). Pursuant to Section 33(g)(1), prior written approval of the settlement is necessary when the "person entitled to compensation" or "the person's representative" enters into a settlement with a third party for less than the amount to which she is entitled under the Act. 33 U.S.C. §933(g)(1); Cowart, 505 U.S. at 482, 26 BRBS at 53(CRT); Honaker v. Mar Com, Inc., 44 BRBS 5 (2010); Esposito v. Sea-Land Service, Inc., 36 BRBS 10 (2002); 20 C.F.R. §702.281. Failure to obtain prior written approval of a "less than" settlement results in the forfeiture of benefits under the Act. 33 U.S.C. §933(g)(2); Esposito, 36 BRBS 10; 20 C.F.R. §702.281(b). Relevant to a widow's claim for death benefits under the Act, Section 33(g) is potentially applicable to the widow's recovery from third-party settlements entered into after the employee's death. Ingalls Shipbuilding, Inc. v. Director, OWCP [Yates], 519 U.S. 248, 31 BRBS 5(CRT) (1997).
In addressing the Director's motion for summary decision the administrative law judge determined "[t]he sole disputed legal issue, whether Mrs. Mihalko 'entered into' the third-party settlement agreements, is directly controlled by the [Board's] reasoning in Hale," 52 BRBS at 57. Decision and Order at 10. In Hale, the Board held Section 33(g) barred a widow's claim for death benefits where her daughter, acting as successor-in-interest of the deceased employee's estate, executed settlements with several third party defendants on behalf of his heirs without the employer's approval. The administrative law judge found the facts in this case and the "sound legal analysis" the Board set forth in its decision in Hale "compel the...
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