Valdez v. Crosby & Overton
| Decision Date | 09 June 2000 |
| Docket Number | 99-0960A,BRB 99-0960 |
| Court | Longshore Complaints Court of Appeals |
| Parties | BRAD VALDEZ JOSHUA VALDEZ (Children of MANUEL VALDEZ, JR.), Claimants-Petitioners Cross-Respondents v. CROSBY & OVERTON and CIGNA COMPANIES, Employer/Carrier-Respondents Cross-Petitioners |
Appeals of the Decision and Order Denying Benefits of Clement J Kennington, Administrative Law Judge, United States Department of Labor.
Phil Watkins (Law Offices of Phil Watkins, P.C.), Corpus Christi Texas, for claimants.
Thomas Owen McElmeel, Seattle, Washington, for employer/carrier.
Before: HALL, Chief Administrative Appeals Judge, SMITH and BROWN, Administrative Appeals Judges.
DECISION AND ORDER
Claimants appeal, and employer cross-appeals, the Decision and Order Denying Benefits (98-LCH-1016) of Administrative Law Judge Clement J. Kennington rendered on a claim filed pursuant to the provisions of the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq. (the Act). We must affirm the findings of fact and conclusions of law of the administrative law judge if they are rational, supported by substantial evidence, and in accordance with law. O'Keeffe v. Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965); 33 U.S.C. §921(b)(3).
Manuel Valdez, Jr. died in an explosion on June 5, 1979, while working for employer as a painter aboard the vessel S.S Newark which was docked in navigable waters at the Sea-Land terminal facility in the Port of Seattle. He was survived by his wife, Margaret Valdez, and two dependent children, Brad and Josh. Brad was born on July 8, 1972, and Josh was born on January 15, 1975.
Margaret Valdez subsequently filed a claim for death benefits under the Act on behalf of herself and her two sons. On August 14, 1980, the district director issued a Compensation Order awarding death benefits to Mrs. Valdez, at the rate of $182.69 per week, and to Brad and Josh, each at the rate of $30.46 per week.[1] She thereafter filed a third-party suit against Sea-Land Service, Incorporated (Sea-Land) and the vessel, which settled on February 17, 1983. In exchange for the payment of $140, 000, Mrs. Valdez released Sea-Land and the S.S. Newark of all liability. The settlement agreement guaranteed employer's lien. The carrier's representative, Carolyn Miller, approved the settlement agreement prior to the time it was approved by the judge. Employer's Exhibits (EXS) 6, 7. Thereafter, the Stipulation and Agreed Order of Dismissal, together with the Order Approving Settlements, Apportionments, Fees and Costs, was approved by United States District Court Judge Coughenour on February 17, 1983. Id. This judge apportioned the net proceeds as follows: 83 1/3 percent to Margaret Valdez, 8 1/3 percent to Brad, and 8 1/3 percent to Josh.
As of March 1, 1983, employer/carrier had paid death benefits to Mrs. Valdez and her sons totaling $56, 200.03. On that date, carrier filed an LS-208 form suspending payment of compensation under Section 33 of the Act, 33 U.S.C. §933. The Form LS-33, concerning the settlement and carrier's approval thereof, was not signed by claimant's attorney until March 30, 1983, after which it was signed by carrier's attorney on April 1, 1983, and filed with the district director on April 5, 1983.
Employer waived its lien on the $56, 200.03 and allowed Mrs. Valdez to retain the entire amount of the net third-party settlement ($91, 352.54). Employer took a credit for the net settlement proceeds by withholding payment of additional benefits from March 1, 1983, through November 4, 1986, at which time the entire third-party settlement was offset. The records reflect that when Mrs. Valdez remarried on July 29, 1983, she was credited with a two-year lump sum payment of $25, 168, 33 U.S.C. §909(b), and the remaining portion of the settlement of $59, 284.54 was offset against payments due to Brad and Josh.[2] When payments resumed in November 1986, Brad and Josh received $740 bi-weekly, reflecting increases for cost of living and the fact that following the remarriage of their mother, they became entitled to 2/3 of the decedent's average weekly wage. 33 U.S.C. §909(b).
On May 19, 1991, Brad Valdez graduated from Norfolk Catholic High School at the age of 19. During the summer of 1990, he served on active duty in the United States Army Reserve. Following his graduation, Brad spent nine additional weeks in the Army at Fort Lee, Virginia. He later attended Southeast Community College in Lincoln, Nebraska from January through June 1994, where he earned a total of 3 credit hours. In 1995, he registered for classes in the spring and summer sessions at North Lake College in Dallas, Texas but failed to attend or pay any tuition. Josh Valdez graduated from Norfolk Catholic High School in May 1993, and subsequently attended the University of Nebraska at Lincoln for four semesters from 1993 to 1995 completing 40 of the 44 credit hours he attempted. In the summer and fall of 1995, he took and completed 17 additional credit hours at Allan Hancock College in Santa Maria, California, and thereafter attended the University of California at Santa Barbara for the winter, spring and fall quarters in 1996 together with a summer session in 1996 completing 41 credit hours. In 1997, Josh completed the spring and fall quarters, and took an additional four hours in a summer session in 1998 for a total of 58 credit hours. In all, Josh successfully completed 143.5 college credits.
Meanwhile, carrier made repeated written requests to Mrs. Valdez and her sons to verify their attendance in college. Carrier continued to make intermittent payments of compensation first to Mrs. Valdez, on behalf of her sons until September 9, 1991, and then to Brad until July 8, 1995, and to Josh until September 22, 1997. The present proceedings were initiated as a result of a phone call by Mrs. Valdez, on behalf of her children, on October 23, 1997, wherein she indicated that her sons wished to appeal the termination of their benefits. Thereafter, Brad and Josh Valdez (claimants)[3] alleged an improper withholding or underpayment of dependent survivor's benefits by employer between 1983 and 1986. Additionally, Josh Valdez argued that his student benefits should not have ceased on September 22, 1997. Employer countered by asserting that Section 33(g), 33 U.S.C. §933(g), precluded claimants' entitlement to any additional benefits and that they are entitled to an offset or reimbursement for benefits paid to Brad during his stint in the Army, and to Josh for those periods, following his 18th birthday, during which he was not enrolled in college as a full-time student.
In his decision, the administrative law judge initially determined that the proper allocation of the net settlement proceeds was, as contended by employer, 1/3 to each beneficiary based on the commingling of the funds by Mrs. Valdez, and that claimants' failure to timely file the form with carrier's approval of the third-party settlement with the district director, see 33 U.S.C. §933(g)(1), precluded their claims for additional compensation. The administrative law judge, in the alternative, considered claimants' entitlement to benefits following their graduation from high school, concluding that Brad Valdez was overpaid a total of $42, 481.72, and that Josh Valdez was underpaid $12, 193.12 in benefits.[4] In addition, the administrative law judge found that employer is not entitled to recoup its overpayment to Brad Valdez nor is it entitled to fees and costs payable by claimants pursuant to Section 26 of the Act, 33 U.S.C. §926.
On appeal, claimants challenge the administrative law judge's denial of benefits. In its cross-appeal, employer argues that the administrative law judge erred in finding that it is not entitled to reimbursement of the overpayment to Brad Valdez or to costs and fees under Section 26, and that Josh Valdez is entitled to benefits during substantial periods of time when he was enrolled in school for fewer than 12 credit units, and after four years following his 18th birthday.
Claimants assert that the administrative law judge erred in determining that their claims are barred because the LS-33 form with carrier's approval of the third-party settlement was not filed within 30 days of the settlement agreement. Claimants argue that although the LS-33 was filed late, employer was not prejudiced by this late filing since the record clearly shows that it was an active participant in the third-party settlement, and as such its rights were protected and thus the purpose of Section 33(g) was fulfilled.
Section 33(g)(1) requires that a "person entitled to compensation" obtain the employer's written approval prior to entering into a third-party settlement for less than the amount to which he is entitled under the Act.[10] 33 U.S.C. §933(g)(1). Section 33(g) is intended to ensure that employer's rights are protected in a third-party settlement and to prevent claimant from unilaterally bargaining away funds to which employer or its carrier might be entitled under 33 U.S.C §933(b)-(f). I.T.O Corp. of Baltimore v. Sellman, 954 F.2d 239, 25 BRBS 101(CRT) (4th Cir.), modified on reh'g, 967 F.2d 971, 26 BRBS 7 (CRT) (4th Cir. 1992), cert. denied, 507 U.S. 984 (1993). The Board has held that employer's interests, identified by the United States Court of Appeals for the Fifth Circuit in Petroleum Helicopters, Inc. v. Collier, 784 F.2d 644, 646-647, 18 BRBS 67, 71 (CRT)(5th Cir. 1986), as employer's right to recoup its compensation liability from the third-party tortfeasors and employer's right to offset against its compensation liability under 33 U.S.C. §933(f) for any amount received by the employee from the third-party tortfeasors, are preserved in cases where employer is a party to the...
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