A.A. Simpson, Jr.
Associate Chief Judge for Longshore

Thomas M. Burke
Associate Chief Judge for Black Lung

I. Longshore

   A. Court of Appeals

Healy Tibbitts Builders, Inc. v. Cabral, ___ F.3d ___, 2000 WL 121823, 33 BRBS 209(CRT)(9th Cir. Feb.2, 2000); pet. for cert. filed June 26, 2000 (S.Ct. No. 99-2072).

   The Ninth Circuit determined that a party challenging an attorney's fee award made by the district director does not have a right to a formal hearing before the OALJ when there are no factual issues in dispute. According to the Ninth Circuit, Section 919(c) "does not necessarily require an evidentiary hearing before an ALJ on all contested issues" and Section 919(d) "does not ipso facto confer an absolute right to a hearing before an ALJ on all contested issues."

   This determination is "at odds" with the Seventh Circuit's opinion in Pearce v. Director, OWCP, 647 F. 2d 716 (7th Cir. 1981). The Pearce court concluded that the LHWCA and its regulations made no distinction between requests for hearings on claims that are "adjudicatory" in nature and those that are "administrative" in nature. Therefore, the Pearce court held that the district director has a duty to transfer disputes to the OALJ because the Board has "no authority to consider or review the evidence that [has] been gathered by the deputy commissioner" because the Board can only review a "hearing record" and such a record can only be developed in an ALJ proceeding.

[Topics 19.3 Adjudicatory Powers; 19.4 Formal Hearings Comply with APA; 28.7.1 Level of Proceedings; and 28.10.3 Appeals of Fee Awards Direct Appeal]

Flanagan Stevedores, Inc. v. Gallagher and Director, OWCP, ___ F.3d ___ (Fifth Circuit Docket No. 99-60322)(July 14, 2000).

   Here, the Fifth Circuit held that container royalty benefits (CRBs) are wages within the meaning of Section 2(13) of the LHWCA Since a CRB is paid in dollars and cents, its value is apparent on its face and it is not a fringe benefit under Section 2(13). Claimant had to work a certain number of hours to be eligible to receive the CRB payments. Thus Clamant was paid for his services. The court noted that Section 2(13) defines wages, in part, as "the money rate at which the service rendered by an employee is compensated by an employer under the contract of hiring in force at the time of the injury, including the reasonable value of any advantage which is received from the employer and included for purposes of any withholding of tax...."

[Topic 2.13 Wages]

   The Circuit Court further found that in addressing the average weekly wage issue and applying Section 10(c), the ALJ's decision to carve out a four-week period of lost work [divide the previous year's wages by 48 instead of 52] facilitated the goal of "making a fair and accurate assessment" of the amount that Claimant would have the potential and opportunity of earning absent a previous injury.

[Topics 10.4.1 Application of Section 10(c); 10.4.2 Judicial Deferance Regarding Application of § 10(c); 10.4.5 Calculation of Average Weekly Wage Under Section 10(c)]

   B. Benefits Review Board

Zeigler v. Department of the Army/NAF, (BRB No. 99-0122)(En Banc)(June 9, 2000)[ED. NOTE: The Board has not yet indicated whether this Order on Motion For Reconsideration En Banc will be published.].

   When a physician and Claimant, in good faith, believe that medical treatment is necessary even though it is later determined by the ALJ to be for a disease that had resolved, the ALJ may award medical benefits for that treatment. The Board, in upholding the ALJ's award of medical benefits, focused on the particular facts involved in the instant case and reviewed the totality of the ALJ's decision, including the discussion regarding the difficulty in diagnosing and treating Lyme disease, which was further complicated in this case by Claimant's somatic disorder. Moreover, the Board pointed out that the ALJ had noted that Employer had authorized the doctor's treatment.

[Topic 7.3.1 Necessary Treatment]

Lewis v. Sunnen Crane Service, Inc., ___ BRBS ___ (BRB Nos. 99-920 and 99-920A)(June 1, 2000).

   At the hearing in chief in this matter, the Director failed to address Section 8(f)(2)(A) (Special Fund shall not be responsible for benefits pursuant to Section 8(f) if an employer fails to comply with Section 32(a) securing insurance or being designated as a self-insured employer.). The Board held that the applicability of Section 8(f)(A) is an issue which may be raised at any time since its language is mandatory rather than discretionary. Thus, the Director was permitted to raise it for the first time in a motion for reconsideration before the ALJ, even if his doing so was the result of a lack of diligence in presenting his case. The Board noted that its holding "is bolstered by the limited legislative history of Section 8(f)(2), which, states only that an employer is 'precluded from realizing a benefit by avoiding the insurability requirements of the Act.' "

   The Board further held that, as it was uncontested that Employer was not insured as required by Section 32(a) at the time of Claimant's injury, Section 8(f)(2)(A) bars its entitlement to Section 8(f) relief. In so doing , the Board rejected Employer's contention that Section 8(f)(2)(A) is not applicable in the instant case because it was insured after the injury and prior to the time the Special Fund assumed liability.

[Topic 8.7.1 Applicability and Purpose of Section 8(f)]

Valdez v. Crosby & Overton, ___ BRBS ___, (BRB Nos. 99-0960 and 99-0960A)(June 9, 2000).

   The failure to timely file the Form LS-33 does not bar additional recovery in the instant case since Employer actually approved the settlement agreement prior to the third-party suit's dismissal by the district judge, agreed to waive its lien, and acknowledged its approval on the proper form. The filing of the Form LS-33 is a ministerial act, as no further action is required of the district director thereafter.

[Topic 33.7.3 Involvement of Employer in Third-Party Settlement]

   In resolving a Section 33(f) apportionment issue, however, the Board concluded that the ALJ improperly placed the burden of establishing the proper apportionment of the settlement agreement in this case on Claimants (widow and two children), particularly since the agreement itself already contained the requisite apportionment. However, after looking at the evidence and fact- finding, the Board concluded that the ALJ correctly found that the apportionment of the settlement was 1/3 each since it was rationally based on the testimony that the funds were never segregated and as the ALJ is permitted by law to establish an apportionment other than that contained in documentary evidence.

[Topic 33.6 Apportionment of Settlement Proceeds]

   In the instant case, the ALJ noted an understanding between the Employer and Claimants that in exchange for not asserting its lien rights, Employer would deduct the entire net amount of the third-party settlement from future benefit payments. Furthermore, the ALJ found it highly unlikely that Employer, being aware of its lien rights on the $55,000 already paid to the widow would voluntarily waive that right without guaranteeing its ability to recoup that amount from future payments due all the claimants, especially since Employer was aware of the definite possibility that the widow could remarry thereby limiting her rights to a two year lump sum payment. Additionally, the ALJ found that the absence of something in writing to spell out the repayment agreement between Employer and Claimants' attorney is not unusual given the considerable passage of time and the inability of either the attorney or the carrier to recreate the entire tort or insurance file more than 16 years post settlement.

[Topic 33.6 Employer Credit for Net Recovery]

   In the instant case, the ALJ found that one dependent child was overpaid in light of Section 2(18) (defines "child" and "student") and the other was underpaid. In approving the ALJ's findings, the Board reiterated that there is no provision in the LHWCA allowing an employer to obtain reimbursement of overpayments of compensation from a claimant even when the claimant committed fraud. (Here Claimant would repeatedly register for school, send the paper work to the carrier, then withdraw shortly after registration). The sole remedy against filing a false claim is Section 31(a). Furthermore, the Board agreed with the ALJ that neither the district director, ALJ nor Board has the authority to impose costs and fees under Section 26. "Moreover, Section 26 implicitly precludes a sanction for bad faith claims under Rule 11 of the Federal Rules of Civil Procedure."

   Significantly, however, via footnote, the Board did indicate that Employer may be entitled to a credit for the overpayment it made to one child against the additional compensation owed to the other. (N. 15).

[Topic 33.6 Employer Credit for Net Recovery]

Ferrari v. San Francisco Stevedoring Co., ___ BRBS ___, (BRB No. 99-1032)(June 29, 2000).

   Appealing the Decision on Claimant's Motion for Reconsideration, Claimant asserted that the ALJ erred in ruling on the issue concerning Section 7(d), which requires that an employee request authorization from his employer for medical treatment, because the issue was not raised at the hearing. Claimant argued that he was not provided notice or opportunity to submit evidence on the "new issue." The ALJ had rejected Claimant's assertion that the issue was not properly raised. The Board found that a Section 7(d) issue is not raised automatically when a claimant files for medical benefits, thus, the issue may only be considered according to regulatory procedural standards. ("We hold that Section 7(d) concerns issues of fact and law that are separate and distinct for the request for medical benefits itself, and thus, the issue of compliance with Section 7(d) is not raised automatically by a claim for medical benefits.")

   According to Section 702.336(b), 20 C.F.R. § 702.336(b), although an ALJ may "expand the hearing to include new issues," parties must be given at least 10 days notice of the hearing on the issue. In the instant case, the Board found that because the issue was not raised at the hearing or in Employer's post-hearing brief and was only considered after the 1999 Decision and Order, Claimant was not provided an opportunity to submit evidence on the issue. The case was remanded for consideration of the Section 7(d) issue, with the ALJ instructed to re-open the record.

[Topics 7.6 Reimbursement and 19.3.6.1 Issues at Hearing]

Doucet v. Avondale Industries, Inc., ___ BRBS ___, (BRB No. 99-0929)(June 2, 2000).

   When a claimant enters into third-party settlements wherein he agrees to release the third party "on my behalf and also on behalf of my administrators, assigns, executors, heirs and representative" from any and all claims including, ...,"after he passes away, his widow in not barred by Section 33(g) for failure to obtain the Longshore Employer's approval despite the fact that the third-party settlement money is paid to her by her now deceased husband's attorney out of an escrow fund. Her receipt of proceeds from the escrow account was the result only of the distribution of her husband's estate, not the receipt of the proceeds of any of her rights. Claimant was not a signatory to the third-party settlement, nor had she read its contents before her husband signed it. The Board rejected Employer's argument that the settlement was not fully executed until the third party paid the settlement amount to Claimant at which point Employer argues she was a "person entitled to compensation." Similarly, Employer is not entitled to a credit for any of the money which she received pursuant to Section 33(f) since she was not a "person entitled to compensation."

[Topics 33.6.1 "Person Entitled to Compensation" Pursuant to Section 33(f); 33.7 Ensuring Employer's Rights Written Approval of Settlement]

Nelson v. Stevedoring Services of America, ___ BRBS ____ (BRB No. 99-1056)(July 11, 2000).

   When the Director is provided with the opportunity to defend, and in fact, conceded the liability of the Special Fund prior to the time that a settlement agreement was entered into by the parties, the purpose of Section 8(i)(4) has been satisfied and the employer will be entitled to Section 8(f) relief..

   In the instant case, the parties were prepared to present their case before the ALJ at formal hearing seeking resolution of issues related to compensation and Employer additionally sought Section 8(f) relief. In a pre-hearing statement, the Director stated that he had reviewed the application for Section 8(f) relief and "determined that the relief would be appropriate for any permanent disability arising from that injury, and that an appropriate order, whether after hearing or upon agreement of the parties as to the extent of permanent disability and/or the level of the claimant's loss of wage-earning capacity, may be entered, subject to the normal standards of proof." Additionally the Director indicated that he did not intend to present any witnesses, or evidence, and that in light of the filing of this statement he "waives his right to appear at and to participate through counsel at the hearing..." Shortly after a hearing was convened, the proceedings turned into a settlement conference with the parties in attendance ultimately reaching agreement on all issues, except attorney's fees and employer's entitlement to Section 8(f) relief.

    After reviewing and approving the agreement of the parties, the Director's Statement of Position, as well as the pertinent exhibits of record, the ALJ determined that employer is entitled to have its liability for the payment of permanent partial disability benefits to Claimant for his lower back injury limited to 104 weeks pursuant to Section 8(f) of the LHWCA. The Director moved for reconsideration alleging that granting Section 8(f) relief following approval of the agreement is contrary to Section 8(i)(4).

   The Board first noted that the private parties' settlement agreement did not seek to subject the Special Fund to liability. It did, however, affect the liability of the Special Fund in that it set out the extent of the permanent disability and the level of Claimant's loss of wage-earning capacity. But, as the Board noted, the Director had conceded those issues and Employer's entitlement to Section 8(f) relief. The Board went on to state, "While the Director properly notes that settlements are not subject to normal standards of proof, as they are compromise agreements between parties, his statement that his acquiescence on the Section 8(f) relief issue was contingent upon a finding by the [ALJ] that claimant was permanently partially disabled flies in the face of the language of his Statement of Position wherein he conceded that an agreement between the parties on that issue would suffice for purposes of establishing Section 8(f) relief." The Board also opined (at footnote 12) that an order based on stipulations accepted into the record are subject to "normal standards of proof."

   The Director was provided with the opportunity to defend the Special Fund in the instant case and, in fact, participated, affirmatively stating that upon review of the case, Section 8(f) relief was appropriate for any permanent disability arising from Claimant's back injury. As the Board noted, "The Director's statement clearly accepts Fund liability for benefits awarded in an appropriate order by the [ALJ] based on 'agreement of the parties as to the extent of permanent disability and/or the level of the claimant's loss of wage-earning capacity.' As such, the Director herein made a conscious decision regarding the liability of the Special Fund and articulated his position to the [ALJ] and the parties well before the time the agreement was reached. The conditions precedent for conceding employer's entitlement to Section 8(f) relief stated by the Director were met during the ensuing adjudication of this case. The [ALJ] entered an appropriate order based on a stipulated loss of wage earning capacity. Thus, the Director is bound by his concession in this case and is therefore precluded, at the very least by the doctrine of equitable estoppel, from altering his position on Section 8(f) after the fact."

[Topics 8.7.9.6 The Effect of Settlements and Stipulations; 8.10.9 Settlements Section 8(f) Relief; 85.1 Res Judicata, Collateral Estoppel, Full Faith and Credit, Election of Remedies Introduction and General Concepts]