Taylor v. Director of Workers Compensation

• Decision Date: 28 January 2000
• Docket Number: No. 98-71004,98-71004
• Parties: (9th Cir. 2000) LOIS TAYLOR, widow of Glen Taylor, Petitioner, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, Plant Shipyard Corporation and its Insurer, Industrial Indemnity, Respondent
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1234

201 F.3d 1234 (9th Cir. 2000)

LOIS TAYLOR, widow of Glen Taylor, Petitioner, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS, Plant Shipyard Corporation and its Insurer, Industrial Indemnity, Respondent.

No. 98-71004

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted December 7, 1999

Filed January 28, 2000

[Copyrighted Material Omitted] COUNSEL: Anne M. Burr, Kazan, McClain, Edises, Simon & Abrams, Oakland, California, for the petitioner.

Samuel Oshinsky (argued) & Laura J. Stomski (on the briefs), United States Department of Labor, Washington, D.C., for the federal respondent.

Roger A. Levy, Laughlin, Falbo, Levy & Moresi, San Francisco, California, for the private respondent. OPINION

On Petition for Review of an Order of the Benefits Review Board. BRB No. 94-363

Before: Ruggero J. Aldisert,^* Diarmuid F. O'Scannlain and Michael Daly Hawkins, Circuit Judges.

ALDISERT, Circuit Judge:

Section 33(f) of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. S 933(f) ("Act" or "LHWCA"), describes the rights and responsibilities of a "person entitled to compensation" who enters into a settlement with a third party. Lois Taylor, widow of Glenn Taylor, the covered worker under the Act, petitions this court for review of a final order of the Benefits Review Board, which credited her late husband's employer for amounts she received from thirdparty settlements entered into prior to her husband's death. The issue that we must decide in this petition for review is whether Petitioner was a "person entitled to compensation" under S 33(f) of the Act when she entered into these thirdparty settlements. If she was such a person, her late husband's employer, Plant Shipyard Corporation,¹ would be entitled to offset against its death benefit liability the net amount of Petitioner's recovery from the third parties under S 33(f).² The Board determined that she was such a person and ruled that Plant was entitled to the offset. We disagree and grant the petition for review.

Section 33 of the Act governs the interplay between an employer's LHWCA liability and any tort liability apportioned to third parties responsible for the employment-related condition. Distilled to its essence, S 33 of the Act describes the rights and responsibilities of the "person" and the employer when the person receives compensation for injuries from "some person other than the employer . . .[who] is liable in damages." 33 U.S.C. S 933(a). As we noted in Cretan v. Bethlehem Steel Corp., "[s]ection 33 of the LHWCA establishes a claimant's right to seek recovery from third parties without fear of being categorically denied compensation or benefits under the Act." 1 F.3d 843, 846 (9th Cir. 1993).

If a person entitled to compensation enters into a thirdparty settlement for an amount less than the compensation due under LHWCA, then he or she is required to seek the employer's written approval of the settlement or risk forfeiture of the right to benefits. See Section 33(g) of the Act, 33 U.S.C. S 933(g).³ The purpose ofS 33(g) is "to protect the employer against the employee's entering an inordinately low settlement, which would deprive the employer of a proper set-off under section 33(f)." Cretan, 1 F.3d at 846.

It therefore becomes important to understand the interrelationship between subsections (f) and (g) of 33 U.S.C. S 933. Both subsections (f) and (g) begin with identical language-namely, "[i]f the person entitled to compensation"--which attaches a condition precedent to the operation of each subsection. If the person is not a statutory "person entitled to compensation" under S 33 of the Act, then subsections (f) and (g) do not apply. However, if the person is a "person entitled to compensation" under the Act, then subsections (f) and (g) operate to protect the employer from the person entering into an inordinately low settlement with a third party, see 33 U.S.C. S 933(g), and require the employer to pay only the excess of statutory compensation over the net amount recovered against such third parties, see 33 U.S.C. S 933(f).

The key question for decision here is whether we should give the same interpretation to the phrase "person entitled to compensation" in S 33(f) as did the Supreme Court when it interpreted the same language in S 33(g) in Ingalls Shipbuilding, Inc. v. Director, OWCP [Yates], 519 U.S. 248 (1997). In Yates, the Court held that "before an injured worker's death, the worker's spouse is not a `person entitled to compensation' for death benefits within the meaning of LHWCA S 33(g), and does not forfeit the night to collect death benefits under the Act for failure to obtain the worker's employer's approval of settlements entered into before the worker's death." 519 U.S. at 261-262.

The majority of the Board refused to extend the Court's interpretation of the language "person entitled to compensation" to identical language in S 33(f); one Board member dissented, concluding that Mrs. Taylor was not a "person entitled to compensation" under S 33(f) when she joined the settlement agreements with third parties because her husband was still alive. Petitioner contends that the majority's decision was error, and she urges us to accept the dissenting Board member's rationale and, therefore, to extend the Court's interpretation of the phrase "person entitled to compensation" in S 33(g) to the credit provision in S 33(f). The issue is squarely joined and we must meet this question of statutory construction.

The administrative law judge had subject-matter jurisdiction pursuant to 33 U.S.C. S 919(d). The Benefits Review Board had jurisdiction under 33 U.S.C. S 921(b)(3). We have Jurisdiction over final Benefits Review Board orders pursuant to 33 U.S.C. S 921(c). Petitioner timely filed her petition for review of the Board's decision. 33 U.S.C. S 921(c).

The Board's decisions in LHWCA cases are reviewed for errors of law and adherence to the substantial evidence standard. Duhagon v. Metropolitan Stevedore Co., 169 F.3d 615, 618 (9th Cir. 1999). No special deference is owed to the Board's interpretation of the Act. Port of Portland v. Director, OWCP, 932 F.2d 836, 838 (9th Cir. 1991). Nevertheless, we give considerable weight to the construction of the Act urged by the OWCP Director, who is charged with its administration. Sproull v. Director, OWCP, 86 F.3d 895, 898 (9th Cir. 1996).

I.

Mrs. Taylor, the Petitioner, filed claims for death benefits under California state workers' compensation law and LHWCA after her husband died of lung cancer, a condition that resulted from Mr. Taylor's exposure to asbestos while he worked as a shipfitter at two shipyards in the 1950s. The Benefits Review Board concluded that Plant Shipyards, the last responsible employer, was liable to Mrs. Taylor for death benefits, but that Plant was entitled to offset its liability under S 33(f) of the Act for amounts Mrs. Taylor recovered in thirdparty tort settlements entered into prior to her husband's death. Mrs. Taylor petitions this court for review and contends that Plant is not entitled to an offset against its death benefit liability, because she was not a "person entitled to compensation" under S 33(f) of the Act when she entered into the third-party settlements.

II.

Glenn Taylor worked as a shipfitter in the 1950s at the shipyards of both Bethlehem Steel Corporation and Plant Shipyard Corporation, where he was exposed to asbestos. After retiring in 1980 because of poor health, Mr. Taylor filed a state workers' compensation claim in 1981 and a third-party action against several asbestos manufacturers in October 1984. On December 28, 1984, he filed his initial claim for benefits under LHWCA, which he later amended to name Bethlehem Steel and Plant Shipyard as possible responsible employers.

On October 21, 1987, Mr. Taylor entered into three separate third-party settlements totaling $266,500.⁴ On April 11, 1988, Mr. Taylor also entered into a third-party settlement with Combustion Engineering, Inc. for $17,500. Petitioner Lois Taylor, decedent's wife, co-signed each of the settlements as a co-releasor, thereby settling her loss of consortium and potential wrongful death actions against these third parties.

In February 1989, an administrative law judge determined that Plant was the last responsible employer, awarded Mr. Taylor permanent partial disability benefits and found Plant entitled to receive a credit pursuant to S 3(e) of the Act, 33 U.S.C. S 903(e), for the amount decedent received from his state workers' compensation claim, as well as a credit under S 33(f) of the Act, 33 U.S.C. S 933(f), for the entire amount of the net proceeds from the third-party settlements.

After the ALJ's decision, Mr. and Mrs. Taylor entered into another third-party settlement on November 17, 1990, with Manville Corporation for $150,000. Mr. Taylor died of lung cancer on February 13 1991, and thereafter his widow filed a claim for death benefits pursuant to S 9 of the Act, 33 U.S.C. S 909.

In a September 3, 1993 Decision and Order, another ALJ awarded Mrs. Taylor death benefits, but concluded that Plant was entitled to offset its death benefit liability by the net amount apportioned to Mrs. Taylor for her wrongful death action in the third-party settlements. Both parties appealed to the Benefits Review Board. Plant appealed the ALJ's refusal to apply the forfeiture provision in S 33(g), and Mrs. Taylor appealed the ALJ's determination that Plant was entitled to S 33(f) credit in the amount of her third-party recoveries.

The Board determined that the ALJ abused his discretion by failing to consider the S 33(g) forfeiture provision in light of our decision in Cretan v. Bethlehem Steel Corp., 1 F.3d 843 (9th Cir. 1993), and consequently vacated the ALJ's decision and remanded the case. Shortly after the Board's decision, the Supreme Court issued its opinion in Ingalls Shipbuilding, Inc. v. Director, OWCP [Yates], 519 U.S. 248 (1997),...