Texas Employers' Ins. Ass'n v. Jackson, s. 85-2583

• Decision Date: 15 July 1987
• Docket Number: 85-2690,Nos. 85-2583,s. 85-2583
• Citation: 820 F.2d 1406
• Parties: , 56 USLW 2063 TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Plaintiff-Appellee, v. Leroy JACKSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1406

820 F.2d 1406

1988 A.M.C. 1202, 56 USLW 2063

TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Plaintiff-Appellee, v.Leroy JACKSON, Defendant-Appellant.

Nos. 85-2583, 85-2690.

United States Court of Appeals Fifth Circuit.

July 15, 1987.

Opinion on Granting Rehearing En Banc Sept. 8, 1987.

Richard Schechter, Schechter, Eiseman & Solar, Houston, Tex., for defendant-appellant.

Reagan Wm. Simpson, Houston, Tex., Arthur R. Miller, Cambridge, Mass., Steven Lynn Roberts, Stephen Pate, Fulbright & Jaworski, Houston, Tex., for plaintiff-appellee.

Appeals from the United States District Court for the Eastern District of Texas.

Before BROWN, REAVLEY and JONES, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

This case lies at the point where federalism and the Anti-Injunction Act intersect with preemption and the Declaratory Judgment Act.The question is whether the Longshore and Harbor Workers Compensation Act(LHWCA) preempts a state law cause of action for the bad faith withholding of compensation benefits.We affirm the District Court's declaratory judgment that the LHWCA is preemptive, but reverse the injunction staying the state court proceedings.

A Tale of Two Lawsuits

AppellantLeroy Jackson, an employee covered by the LHWCA, 33 U.S.C. Secs. 901-950, injured his back and right ankle on July 12, 1978 while in the employ of Gulfport Shipbuilding Company in Port Arthur, Texas.Jackson received medical treatment and returned to work on October 30 of that year.During the following three and one-half years, Jackson continued at his shipfitting duties but occasional recurring bouts of back pain related to his July 1978 accident forced him periodically to seek additional medical treatment.Four times between October 1978 and May 1982, Jackson received medical treatment for his back condition and was absent from work for periods ranging from about six to about fifteen weeks.

At the time of Jackson's injury, Gulfport Shipbuilding was an employer subject to the LHWCA.As Gulfport's LHWCA carrier, Texas Employers' Insurance Association(TEIA) paid for Jackson's medical treatment and paid him temporary total disability benefits during those periods when Jackson was unable to work.

On May 3, 1982, Jackson seriously reinjured his back while at work and has not returned to work since.On July 6, 1982, Jackson filed a formal claim for permanent disability benefits.See33 U.S.C. Sec. 908.Shortly thereafter, on July 23, TEIA filed the first of several formal controversions, ¹ this one on the basis that Jackson had not yet reached maximum medical improvement, and thus it was unknown whether his disability would indeed be permanent.Despite its filing of the controversion, TEIA did not suspend payment of Jackson's benefits until April 4, 1983.

On July 6, 1983, in an informal conference before the Deputy Commissioner, TEIA agreed to, and did, resume Jackson's payments.Jackson was re-examined by a physician in mid-August 1983, and on September 14, TEIA again filed a controversion and suspended Jackson's benefits, this time on the stated basis that Jackson's disability was due to a continuing arthritic condition and not the result of his 1978 back injury.On September 28, 1983, a second informal conference was held, this time before a Claims Examiner.The next day, September 29, TEIA filed a third controversion, here challenging the Claims Examiner's recommendation for payment of compensation.As provided under the Act, 33 U.S.C. Sec. 919, Jackson's claim went to a formal hearing before an ALJ on May 3, 1984.

Jackson Goes to the State Court

On June 5, 1984, while the decision of the ALJ was pending, Jackson filed a lawsuit against TEIA ² in Texas state court.Jackson's original petition contained seven causes of action generally alleging bad faith insurance practices on the part of TEIA, and it requested $1.5 million in actual damages and $15 million in punitive damages.TEIA answered the lawsuit, and extensive discovery ensued.

On September 14, 1984, the ALJ who heard Jackson's claim issued a final decision and order declaring Jackson to be totally and permanently disabled and ordered payment of compensation benefits, attorney's fees, and interest on all past unpaid amounts.Neither party appealed the ALJ's decision and the order became final.See33 U.S.C. Sec. 921.

Even though the ALJ had decided his claim favorably, Jackson nevertheless pressed on with the state court case.In January 1985, the state trial court denied TEIA's plea in bar, which had asserted that Jackson's state claims were barred by the exclusivity provisions of the LHWCA.

TEIA Goes to the Federal Court

In June 1985, TEIA filed the instant suit in federal district court.TEIA sought two declaratory judgments: (i) the LHWCA preempted Jackson's state bad faith insurance practices action and (ii) the ALJ's decision was res judicata with respect to Jackson's challenge to the manner in which TEIA handled his LHWCA claim.TEIA also sought an injunction prohibiting Jackson from proceeding with his state action.In August 1985, the District Court enjoined Jackson from further proceeding in state court.In September 1985, the District Court entered a subsequent order, permanently enjoining Jackson from prosecuting his state court suit and declaring that the LHWCA preempts the state law causes of action arising from the handling of compensation payments under the Act. 618 F.Supp. 1316(E.D.Tex.1985).The state trial remains stayed.Jackson appeals.

The Preeminence of Preemption

We first consider whether Jackson's state law claims are preempted by the LHWCA.Federal law will be found to preempt state law in three different instances.First, Congress may explicitly express its intent to preempt state law.Shaw v. Delta Air Lines, 463 U.S. 85, 95, 103 S.Ct. 2890, 2899, 77 L.Ed.2d 490, 500(1983).Second, Congress' intent to displace state law may be inferred, generally through the comprehensiveness or pervasiveness of the federal regulatory scheme.Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447, 1459(1947).Finally, even where Congress has not entirely displaced state law, federal law will nevertheless preempt state law when state law conflicts with federal law, Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248, 257(1963), or when state law interferes with the accomplishment and execution of the congressional purpose, Hines v. Davidowitz, 312 U.S. 52, 67-68, 61 S.Ct. 399, 404, 85 L.Ed. 581, 587(1941).SeeMichigan Canners & Freezers Ass'n v. Agricultural Marketing & Bargaining Bd., 467 U.S. 461, 469, 104 S.Ct. 2518, 2523, 81 L.Ed.2d 399, 406(1984)(summarizing three types of preemption).Although any one of these three bases would be sufficient to establish preemption, we agree with the District Court that, on all of these bases, the LHWCA preempts the Texas state law invoked by Jackson.

(i) Congressional Intent to Preempt

With respect to explicit congressional intent to preempt state law, we look to Sec. 5(a) of the Act, 33 U.S.C. Sec. 905(a), which provides that the employer's liability "shall be exclusive and in place of all other liability of such employer."The liability referred to in this section arguably refers only to the employer's liability for medical treatment, compensation benefits for disability, and death, see33 U.S.C. Secs. 904,907,908,909, but in light of the carefully crafted and comprehensive statutory compensation scheme contained in the LHWCA, we read Sec. 5 broadly as an indication of Congress' intent to preempt state law that significantly conflicts with any portion of the Act, including the payment of compensation benefits, the provision of medical care, and the timing of such payments.SeeSample v. Johnson, 771 F.2d 1335, 1346-47(9th Cir.1985)(Sec. 5(a)'s preemptive effect should be construed broadly in light of the traditional interpretation lent to workers compensation statutes), cert. denied, --- U.S. ----, 106 S.Ct. 1206, 89 L.Ed.2d 319(1986);Hall v. C & P Telephone Co., 793 F.2d 1354(D.C.Cir.1986)(LHWCA is preemptive and bars any court from taking jurisdiction of independent civil tort claims), citingGarrett v. Washington Air Compressor Co., 466 A.2d 462(D.C.1983).

(ii)Comprehensiveness of Federal Scheme

Federal law will also preempt state law if the sheer comprehensiveness of the federal regulatory scheme warrants the inference of congressional intent to preempt.The LHWCA, ³ born of much judicial travail and contention among the states, Congress, and the Supreme Court, ⁴ was established as a uniform national program of workers compensation benefits for longshore and harbor workers which could not be constitutionally provided by the States.The program is administered by the Secretary of Labor through the Director of Office of Workers' Compensation Programs.33 U.S.C. Sec. 939.It is routinely handled by regional Deputy Commissioners, who no longer have any adjudicative duties or powers.Controverted cases are now heard by an ALJ.Appeals of compensation orders are handled first by a review board in the Department of Labor, 33 U.S.C. Sec. 921, and then by federal courts of appeals, 33 U.S.C. Sec. 921(c).Unlike their former role as the first step in appellate review, federal district courts now are confined to enforcing compensation orders.33 U.S.C. Secs. 918,921(d).Unlike many workers compensation acts that require repeated court enforcement, the LHWCA is almost self-executing, self-policing.

Thus, of great significance for this case, the LHWCA provides for automatic payment of benefits, and further provides for express penalties for an employer's failure to pay benefits.33 U.S.C. Secs. 914,938.Under the authority of the LHWCA, the Secretary of Labor has promulgated a detailed set of regulations implementing all portions of the Act.See20 C.F.R. Secs. 701-704(1980).Portions of these regulations...