Vilanova v. U.S., 87-1993

Decision Date30 June 1988
Docket NumberNo. 87-1993,87-1993
Citation851 F.2d 1
PartiesRamiro VILANOVA, et al., Plaintiffs, Appellants, v. UNITED STATES of America, et al., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Robert J. Walser, San Juan, P.R., for plaintiffs-appellants.

Fidel A. Sevillano Del Rio with whom Daniel F. Lopez-Romo, U.S. Atty., Hato Rey, P.R., was on brief, for defendants-appellees.

Before CAMPBELL, Chief Judge, WISDOM, * Senior Circuit Judge, and BOWNES, Circuit Judge.

WISDOM, Senior Circuit Judge:

This is a malpractice case. The plaintiff, Ramiro Vilanova, contends that doctors at the United States Naval Station Hospital in Roosevelt Roads, Puerto Rico mistreated his minor injuries and caused him to be severely and permanently disabled. He brings suit for damages under the Federal Tort Claims Act ["FTCA"], 28 U.S.C. Sec. 1346(b). The district court held that his complaint is barred by the Nonappropriated Fund Instrumentalities Act ["NFIA"], 5 U.S.C. Secs. 8171-73. 1 We affirm.

I.

In January 1982, Vilanova was treated at the United States Naval Station Hospital at Roosevelt Roads for injuries sustained when, on his way to work as a custodian, he was struck by a hit-and-run driver. The accident occurred on naval station property.

The accident produced a subdural hematoma, a blood clot in Vilanova's brain. Vilanova contends that the rapid progression of this condition would have been avoided if discovered in time, and that the Naval Station doctors negligently failed to discover the clot. The blood clot went undetected for several months and caused a severe deterioration of Vilanova's mental capacity resulting in his being completely disabled.

Vilanova was employed by the Sea Breeze Club, a non-appropriated fund facility at the naval station. The NFIA provides that he is covered by the workers' compensation scheme of the Longshoremen and Harbor Workers' Compensation Act ["LHWCA"], 33 U.S.C. Sec. 901 et seq. 2 The NFIA also provides that LHWCA compensation is the exclusive remedy against both the United States and the nonappropriated fund employer for injuries "arising out of and in the course of" Vilanova's employment. 5 U.S.C. Sec. 8173; 33 U.S.C. Sec. 902(2).

Vilanova has already been paid LHWCA compensation for his injuries. Shortly after the accident, Vilanova's supervisor filed reports of Vilanova's injury with the Department of Labor and with the Employers' Self-Insurance Services ["ESIS"], the private insurance carrier for Vilanova's employer. These reports are required by the LHWCA, 33 U.S.C. Secs. 929-30, and automatically trigger LHWCA compensation unless the employer contraverts liability. Id. Sec. 914(a). Vilanova's employer did not contravert liability and, in September 1982, ESIS began sending Vilanova bi-weekly compensation payments. 3

Vilanova accepted these payments while proceeding with this FTCA suit. In November 1986, after more than four years of LHWCA payments, Vilanova, ESIS, and the Department of the Navy negotiated a lump-sum settlement of $15,000 in lieu of continued bi-weekly payments. In January 1987, as required by the LHWCA, the Deputy Commissioner in the Department of Labor in charge of nonappropriated fund instrumentalities reviewed and approved this settlement. Id. Sec. 908(i). The settlement specifically discharges the liability of Vilanova's employer (the Sea Breeze Club) and its insurance carrier (ESIS) for compensation, but preserves the claim against the carrier for future medical expenses related to the injuries.

Vilanova has urged his case once before in this court. In Vilanova v. United States [Vilanova I ], 4 this court reversed the district court's holding that Vilanova was estopped from bringing this FTCA suit because he had accepted LHWCA compensation. In an unpublished opinion, Vilanova I held that acceptance of LHWCA compensation paid voluntarily by an employer or a private insurance carrier does not bar an injured employee from bringing suit under the FTCA. 5 Instead, only a finding that Vilanova's injuries arose out of and in the course of his employment governs whether the injuries are compensable under the LHWCA and thus also governs whether his FTCA suit is barred by the NFIA. 6 Accordingly, this court then remanded the case to the district court to determine whether Vilanova's injuries arose out of and in the course of his employment.

Rather than make this determination, the district court once again found that Vilanova was estopped from bringing this FTCA action. The district court gave two reasons for its decision. First, Vilanova had filed an application for LHWCA benefits in June 1984, a fact the district court discovered for the first time upon remand. Second, Vilanova had in the interim agreed to the lump-sum settlement. The district court therefore concluded that Vilanova was no longer a "passive" recipient of LHWCA benefits paid "voluntarily" by his employer's insurance carrier.

In the light of Vilanova I, the June 1984 application was insufficient to bar his FTCA suit. The settlement, however, is based upon an administrative finding that Vilanova's injuries are compensable under the LHWCA, a finding that those injuries arose out of and in the course of Vilanova's employment. This finding is due great deference by this court. Further, because Vilanova sought and acquiesed in this finding, he is estopped from contesting it here. Accordingly, his FTCA suit is barred.

II.

That Vilanova might better his recovery in an FTCA suit is irrelevant to whether he may bring such a suit. 7 Like other worker compensation programs, Congress intended the NFIA to simplify and expedite the process of compensating employees for on-the-job injuries. To do so, the NFIA adopted the administrative scheme already established by the LHWCA. That scheme forces employers to compensate injured employees promptly for work-related injuries. It is a crucial part of this scheme that neither injured employees nor their employers have any choice in the matter of compensation for work-related injuries. 8

Any "accidental injury ... arising out of and in the course of employment" is compensable under the LHWCA. 33 U.S.C. Sec. 902(2). The employer is liable for compensation "irrespective of fault as a cause for the injury". Id. Sec. 904(b). Compensation payments are determined by the degree of disability and the employee's earnings according to a standard scale. Id. Secs. 906(b), 908, 909, 910. Employers are required to maintain sufficient security for adequate compensation payments. Id. Sec. 932. The employer initiates the compensation process by filing a report with the Department of Labor whenever it knows that an employee has been injured. Id. Secs. 914(a), 929-30. To trigger compensation, an employee needs only to ensure that his employer knows about his injury; the injured employee need not formally apply for benefits. 9

In exchange for this system of standard and automatic compensation, injured workers are barred from pursuing any other claims against the United States or their employers for injuries compensable under the LHWCA. 5 U.S.C. Sec. 8173. 10 Further, compensation of injured workers is limited to the amounts provided in the standard scale. This makes the cost to the employer of employee injuries more predictable. It also saves all parties the expense and delay associated with litigation over liability and damages. 11

A.

For an injured employee to agree to compensation while proceeding against the government under the FTCA is plainly at odds with the scheme of federal worker compensation. 12 Worker compensation acts as a substitute rather than a supplement for FTCA actions. 13 The NFIA was not intended to give injured employees a choice between LHWCA compensation and an FTCA suit. Neither was it intended to give injured workers two chances to maximize their compensation award. 14 Injured employees allowed to receive compensation while filing an FTCA suit could only gain by filing those suits, even when there was little doubt that their injuries were covered by the NFIA. Such a rule would encourage, not reduce, litigation.

Nonetheless, injured employees retain the right to contest NFIA coverage. LHWCA compensation may be paid erroneously. The NFIA was not intended to give private carriers like ESIS or nonappropriated fund employers like the Sea Breeze Club the power to bar FTCA suits by injured employees. Because the LHWCA scheme requires employers and their insurance carriers to "pay first and litigate later", 15 it follows a fortiori that payment of compensation should not, without more, bar suit under the FTCA.

To ensure injured employees a meaningful opportunity to contest coverage and argue that they should be allowed to sue under the FTCA, we reaffirm our holding in Vilanova I: until coverage has been determined by judicial or administrative decision, acceptance of LHWCA compensation paid voluntarily by the employer or the employer's insurance carrier is not a bar to suit under the FTCA. 16 Accordingly, Vilanova's June 1984 application for LHWCA benefits does not bar this FTCA suit.

B.

Vilanova's settlement, however, has a different effect from his application for benefits. As is required by the LHWCA, 33 U.S.C. Sec. 908(i), the Deputy Commissioner of Labor for LHWCA compensation reviewed Vilanova's settlement and, finding that Vilanova's injuries were compensable under the LHWCA, approved it. Vilanova was advised by counsel during the settlement negotiations. Thus, in the settlement negotiations, Vilanova had an opportunity to contest LHWCA compensation before the Department of Labor. He chose not to do so.

Because the Department of Labor has special expertise in evaluating workplace injuries and more efficient procedures for doing so than the courts, injured employees should contest NFIA coverage first before the appropriate Deputy Commissioner in Department of Labor rather than in the courts. 17 This...

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