BRB Nos. 93-0296
and 93-0296A
LUCILLE FORCE )
(Widow of GEORGE FORCE) )
)
Claimant-Petitioner )
Cross-Respondent )
)
v. )
)
)
)
KAISER ALUMINUM AND CHEMICAL ) DATE ISSUED: 08/19/1996
CORPORATION )
)
and )
)
FIREMEN'S FUND INSURANCE )
COMPANY )
)
Employer/Carrier- )
Respondents )
Cross-Petitioners )
)
DIRECTOR, OFFICE OF WORKERS' )
COMPENSATION PROGRAMS, )
UNITED STATES DEPARTMENT )
OF LABOR )
)
Respondent ) DECISION and ORDER
Appeals of the Decision and Order on Remand and Decision Denying
Petition for Reconsideration of Alfred Lindeman, Administrative Law
Judge, United States Department of Labor.
Victoria Edises and Anne Landwehr (Kazan, McClain, Edises & Simon),
Oakland, California, for claimant.
Herman Ng (Hanna, Brophy, MacLean, McAleer & Jensen), San Francisco, for
employer/carrier.
Joshua T. Gillelan II (J. Davitt McAteer, Acting Solicitor of Labor;
Carol DeDeo, Associate Solicitor, Janet R. Dunlop, Counsel for
Longshore), Washington, D.C., for the Director, Office of Workers'
Compensation Programs, United States Department of Labor.
Before: SMITH, DOLDER and McGRANERY, Administrative Appeals Judges.
PER CURIAM:
Claimant appeals the Decision and Order on Remand and Decision Denying
Petition for Reconsideration and employer cross-appeals the Decision and Order on
Remand (86-LHC-1058) of Administrative Law Judge Alfred Lindeman 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 which 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).
This case is before the Board for the second time. To recapitulate the facts,
George Force (decedent) worked for employer in the early 1940's, during which time
he was exposed to asbestos. In 1984, decedent was diagnosed with malignant
mesothelioma; thereafter, in December 1984, decedent filed a claim under the Act.
He died of his condition on March 24, 1985.
Prior to his death, decedent and his spouse Lucille Force (claimant) filed a
third-party action against various asbestos manufacturers. Decedent sought
recovery for his personal injuries and claimant sought recovery for potential
wrongful death and loss of consortium. Before the instant claim for benefits under
the Act proceeded to a formal hearing before the administrative law judge, decedent
and claimant entered into a settlement of their third-party action for a net amount
of $408,360.[1] As part of the settlement,
claimant and the couple's two children waived all of their potential claims for
wrongful death against the settling third-parties.
Claimant filed her claim under the Act on June 14, 1985, seeking death
benefits, decedent's accrued disability benefits, and reimbursement for decedent's
medical treatment. In his initial Decision and Order, the administrative law judge
determined that decedent's malignant mesothelioma arose out of and in the course
of his employment with employer, that decedent was totally disabled by this
condition, and that he died from it. Thus, the administrative law judge awarded
permanent total disability compensation from August 17, 1984 to March 24, 1985, and
death benefits from March 25, 1985 and continuing. Next, the administrative law
judge found the testimony of claimant's civil attorney David McClain speculative,
and rejected any apportionment of the third-party settlement on the ground that the
settlement agreements had not allocated specific amounts for the various covered
claims. The administrative law judge therefore concluded that employer was
entitled to offset its liability to claimant by the entire amount of the third-party settlement pursuant to Section 33(f) of the Act, 33 U.S.C. §933(f).
On appeal, the Board affirmed the administrative law judge's finding that Mr.
McClain's testimony was insufficient to establish apportionment, and held that
employer was entitled to credit its entire liability for disability and death
benefits against the total net amount of the third-party settlement pursuant to
Section 33(f). In rendering this determination, the Board stated that an employer
may always offset its longshore liability by the net third-party settlement amount
even if the settlement compensates claimant for such items as pain and suffering
and punitive damages. The Board further stated that for purposes of a Section
33(f) credit, claimant was the "person entitled to compensation" for the award of
death benefits, and decedent was the "person entitled to compensation" for the
disability award. Thus, had the third-party settlement been apportioned between
the parties, employer would only be entitled to offset its liability to
claimant by those portions of the settlement claimant received for the
surrender of her rights, and to offset its liability to decedent by those
portions decedent received for the surrender of his rights. However, since
apportionment was not established, the Board held that employer was entitled to
offset its entire liability for both disability and death benefits against the
total net settlement amount. See Force v. Kaiser Aluminum and Chemical
Corp., 23 BRBS 1 (1989). Claimant appealed the Board's decision to the United
States Court of Appeals for the Ninth Circuit.
In its decision, the Ninth Circuit adopted the position of the Director,
Office of Workers' Compensation Programs (the Director), that Section 33(f) does
not distinguish among various types of damages that might be recovered in a third-party action. Thus, the court held that the administrative law judge did not err
in allowing employer to offset claimant's receipt of non-economic damages such as
pain and suffering and punitive damages against its liability under the Act. Next,
the court rejected claimant's argument that she was not a "person entitled to
compensation" at the time she entered into the settlement, and held that Section
33(f) does apply to her. Specifically, the court stated that Section 33(f) does
not require that the claimant's status as a "person entitled to compensation" be
determined at any particular time. Rather, the court determined that the only
relevant question is whether the claimant is impermissibly recovering twice for the
same injury. The court next held that Section 33(f) allows an employer to offset
against its liability to claimant only that portion of the third-party settlement
attributable to the claimant, which means that there must be an apportionment among
parties to the settlement. The court thus held that the administrative law judge
should have apportioned the third-party settlement among decedent, claimant and the
two children, so that the amounts attributable to the children could have been
factored out and the amounts attributable to decedent and claimant credited against
their respective compensation due under the Act.[2]
Moreover, the court held that it is employer's, and not claimant's, burden to
establish apportionment. The court thus remanded the case to the administrative
law judge for reconsideration of the issue of apportionment of the third-party
settlement among the parties. Force v. Director, OWCP, 938 F.2d 981, 25
BRBS 13 (CRT)(9th Cir. 1991).
A second hearing in this case was held before the administrative law judge on
June 17, 1992, at which time claimant, pursuant to the Ninth Circuit's decision,
submitted additional evidence into the record with regard to the issue of
apportionment. Employer did not submit any evidence at this hearing. In his
Decision and Order on Remand, the administrative law judge rejected claimant's
contention that the United States Supreme Court's decision in Estate of Cowart
v. Nicklos Drilling Co., U.S. , 112 S.Ct. 2589, 26 BRBS 49 (CRT)(1992),
requires a finding that she was not a "person entitled to compensation" at the time
she entered into the third-party settlement. The administrative law judge
therefore found that employer was entitled to an offset under Section 33(f) for the
amount claimant received in settlement of her wrongful death cause of action.
After noting that employer offered no evidence on the issue of apportionment, the
administrative law judge relied on the previously discredited testimony of Mr.
McClain in finding that 15 percent of the settlement was for wrongful death, with
10 percent allocated for claimant and 5 percent for the children. The
administrative law judge then apportioned 5 percent of the net amount of the third-party settlement, $408,360, and found that $20,418 was not includable in employer's
Section 33(f) offset. Next, the administrative law judge found that any
unspecified portion of the third-party settlement attributable to claimant's loss
of consortium is includable in employer's offset. The administrative law judge
therefore found that employer was entitled to offset its longshore liability, for
decedent's and claimant's claims, by the entire net amount of the third-party
settlement, less the $20,418 apportioned to claimant's children. In a Decision
Denying Petition for Reconsideration, the administrative law judge affirmed his
previous finding that, pursuant to the Ninth Circuit's holding in Force,
employer was entitled to credit all amounts paid under the third-party settlement
to both decedent and claimant without further apportionment between their
respective causes of action.
On appeal, claimant contends that Section 33(f) should not apply to her at
all, since she was not a "person entitled to compensation" at the time of the
third-party settlement. Alternatively, claimant contends that the administrative
law judge erred in allowing employer to credit, pursuant to Section 33(f), its
liability for both disability and death benefits under the Act by the net amount
of the third-party settlement received by both decedent and claimant.
Additionally, claimant contends that the administrative law judge erred by holding
that damages for claimant's loss of consortium were includable in employer's
Section 33(f) credit against its longshore liability. Lastly, claimant asserts
that the administrative law judge failed to follow the Ninth Circuit's requirement
that employer establish apportionment, and failed to consider the evidence claimant
submitted to supplement Mr. McClain's testimony regarding apportionment. Employer
responds, asserting that the administrative law judge properly awarded it a credit
consisting of the net amount of the third-party settlement received by both
decedent and claimant, including any unspecified amount claimant may have received
for loss of consortium.
In its cross-appeal, employer contends that the evidence does not support any
apportionment of the amount claimant's children received in the third-party
settlement. Claimant responds, urging affirmance.
The Director has filed a response brief in the instant case, arguing that the
administrative law judge should not have awarded employer any credit against
claimant's right to death benefits since, pursuant to Cowart, she was not
a "person entitled to compensation" at the time she entered into the third-party
settlement. In the alternative, the Director contends that if any credit is due
against claimant's death benefits, it is only for the net amount of the settlement
attributable to her cause of action for wrongful death.
I. Claimant's Death Benefits
We first address claimant's contention that, since she was not a "person
entitled to compensation" at the time she entered into the third-party settlement,
Section 33(f) may not be applied to provide employer any offset against her death
benefits.[3] While the Ninth Circuit in
Force specifically rejected this argument, claimant presently argues that
the Supreme Court's subsequent holding in Cowart redefined the meaning of
the term "person entitled to compensation" such that a potential widow who enters
into a third-party settlement would not be included in that definition. The
Director, in response, has filed with the Board the brief he sent to the Ninth
Circuit in Cretan v. Bethlehem Steel Corp., 1 F.3d 843, 27 BRBS 93 (CRT)(9th
Cir. 1993), cert. denied, 114 S.Ct. 2705 (1994), which is supportive of
claimant's position.
Subsequent to the issuance of the Supreme Court's decision in Cowart
and the administrative law judge's Decision and Order on Remand in this case, the
United States Court of Appeals for the Ninth Circuit held that an injured
employee's spouse and daughter were persons "entitled to compensation" under both
Sections 33(g)(1) and 33(f) of the Act, 33 U.S.C. §933(g)(1), (f), at the time
they settled their potential wrongful death actions prior to the death of the
employee. See Cretan, 1 F.3d at 843, 27 BRBS at 93 (CRT); cf. Ingalls
Shipbuilding, Inc. v. Director, OWCP [Yates], 65 F.3d 460, 29 BRBS 113
(CRT)(5th Cir.), pet. for reh'g en banc denied, 71 F.3d 880 (5th Cir. 1995),
pet. for cert. granted, 64 U.S.L.W. 3762 (U.S. May 13, 1996)(No. 95-1081).[4] In Cretan, the Ninth Circuit specifically
stated that the holding in Cowart did not dictate the outcome of the case
before it. Cretan, 1 F.3d at 847, 27 BRBS at 97 (CRT). Accordingly,
pursuant to the Ninth Circuit's decisions in both Cretan and Force,
we reject claimant's contention in this regard.
II. Apportionment Among the Parties
We next address claimant's contention that the administrative law judge erred
by failing to apportion the third-party settlement between decedent and claimant.
Specifically, claimant asserts that, pursuant to the Ninth Circuit's holding in
Force, employer is not entitled to offset its entire liability for both
disability and death benefits by the net amount decedent and claimant received in
the third-party settlement; rather, claimant contends that Section 33(f) mandates
that employer's liability for decedent's disability benefits should be offset by
the net amount decedent received in the settlement, and employer's liability
for claimant's death benefits should be offset by the net amount claimant
received in the settlement for her wrongful death action. We agree.
In his Decision and Order on Remand, the administrative law judge apportioned
the net amounts which he determined that claimant's children received in the third-party settlement, $20,418, and deducted that amount from the total net amount
received in the settlement ($408,360 - $20,418 = $387,942). The administrative law
judge then found that claimant's longshore awards, for both her death benefits and
decedent's accrued disability benefits, are subject to offset under Section 33(f)
by the net amounts received by both decedent and claimant in the third-party
settlement, $387,942. In his Decision Denying Petition for Reconsideration, the
administrative law judge specifically stated that the Ninth Circuit's holding in
Force entitled employer to credit all amounts paid under the settlements to
both decedent and claimant without further apportionment between their respective
longshore claims. However, a reading of the Ninth Circuit's decision in Force
clearly indicates that the court came to the opposite conclusion.
Specifically, the court stated that Section 33(f) allows an employer to offset only
that portion of a third-party settlement attributable to the claimant. The court
held that, in the instant case, the administrative law judge "should have
apportioned the third party settlement among Mr. Force, Mrs. Force and the two
children so that the amounts attributable to the children could have been factored
out and the amounts attributable to Mr. and Mrs. Force credited against their
respective LHWCA benefits." See Force, 938 F.2d at 985, 25 BRBS at
19 (CRT)(emphasis added).
Thus, the Ninth Circuit's decision in Force requires that, after
factoring out the amounts the children received in the third-party settlement, the
remaining net amount should have been apportioned between decedent and claimant,
thereby entitling employer to a credit for each amount against decedent's and
claimant's respective claims. Indeed, the Ninth Circuit affirmed the Board's prior
holding on this issue. The Board previously concluded the following:
Thus, if the settlement recovery in the third party action had been
apportioned between the parties, employer would only be entitled to
offset its liability to claimant for death benefits against those
portions of the third-party recovery received in exchange for the
surrender of her rights and to offset its liability to
decedent for accrued disability benefits against those portions
of the third-party recovery received in exchange for the surrender of
his rights.
Force, 23 BRBS at 6. By stating that the amounts attributable to decedent
and claimant should be credited against their respective claims, the Ninth
Circuit directed the administrative law judge to do exactly what the Board had
previously suggested.[5] On remand, however, the
administrative law judge failed to follow the express instructions of the court.[6]
Accordingly, the administrative law judge's finding that employer is entitled
to credit its entire longshore liability for both decedent's and claimant's claims
by the net amount received by both decedent and claimant in the third-party
settlement is vacated, and the case is remanded for the administrative law judge
to reconsider this issue in accordance with the decision of the Ninth Circuit in
Force.
III. Loss of Consortium
Claimant next contends that employer's liability for death benefits should not
be offset by claimant's recovery for her separate injury of loss of consortium, as
that injury does not arise from decedent's death. In support of her contention,
claimant cites to the Ninth Circuit's decision in Force, wherein the court
stated that under Section 33(f), an employer may offset the net amount of a third-party settlement "for the occupational injury or death that is compensable under
the Act." Force, 938 F.2d at 984, 25 BRBS at 17 (CRT); see 33 U.S.C.
§933(f). Claimant therefore argues that as her loss of consortium does not
pertain to decedent's death, her recovery for loss of consortium should not be
included in employer's Section 33(f) offset.
It is true that the Act does not provide spouses with a claim for loss of
consortium. Further, it is axiomatic that in death benefits cases, compensation
law refuses to recognize loss of consortium as a compensable claim. See
generally 1 A. Larson, Workmen's Compensation Law §2.40 at 1-11
(1995). With regard to an offset under the Act, however, the Ninth Circuit stated
in Force that Section 33(f) does not distinguish among the various types of
damages that might be recovered in a third-party action for a particular injury or
death. Rather, Section 33(f) provides that an employer may offset "the net amount
recovered against such third person" for the injury or death compensable under the
Act. 33 U.S.C. §933(f). The "net amount" is defined as the actual amount of
recovery less litigation expenses. Section 33(f) sets forth no other deduction
from the "net amount." Thus, the Ninth Circuit held that the administrative law
judge did not err in allowing employer to offset non-economic damages such as pain
and suffering and punitive damages. While loss of consortium was not mentioned
specifically, the court further stated that the Act "allows employers to offset the
entire amount of a claimant's third party recovery." Force, 938 F.2d
at 984, 25 BRBS at 18 (CRT)(emphasis added).
Thereby, in accordance with the Ninth Circuit's decision in Force, we
reject claimant's contention that employer is not entitled to offset her recovery
for loss of consortium.
IV. Burden of Proof of Apportionment
Lastly, claimant contends that at the hearing held on June 17, 1992, employer
failed to submit any evidence with regard to the issue of the apportionment of the
third-party settlement between decedent and claimant. Thus, claimant argues,
employer is not entitled to any offset for the net amounts decedent and claimant
received as a result of the third-party settlement. At the June 17, 1992 hearing,
claimant submitted three exhibits regarding the apportionment of the third-party
settlement; specifically, the complaint in the third-party action, copies of the
settlement checks, and copies of excerpts from Jury Verdicts Weekly.
See Cl. Exs. 26-28; June 17, 1992 Hearing Transcript at 8-9, 11. Although,
as claimant asserts, employer bears the burden of establishing apportionment
pursuant to the court's decision in Force, the Act does not prohibit an
employer from relying on evidence submitted by claimant in pursuit of establishing
apportionment. Accordingly, claimant's contention is rejected.
Claimant argues alternatively that the administrative law judge erred in
relying solely on the testimony of Mr. McClain without addressing or considering
the supplemental documentation which she submitted into evidence. The Ninth
Circuit in Force stated that the administrative law judge, in determining
the apportionment of the third-party settlement, should look to such objective
factors as "how the settlement sum was actually distributed among the family
members, and the going rate for settlements or judgments for the same types of
injuries." See Force, 938 F.2d at 986, 25 BRBS at 20 (CRT). Herein,
claimant submitted such evidence into the record. In addressing this issue,
however, the administrative law judge relied solely on Mr. McClain's testimony,
which he had previously rejected, without addressing the new evidence submitted by
claimant. As the administrative law judge failed to consider all of the evidence
presented before him, we vacate the administrative law judge's findings regarding
the amounts decedent and claimant received as a result of the third-party
settlement; on remand, the administrative law judge pursuant to Force must
reconsider this issue, addressing all of the exhibits submitted into evidence, as
well as the testimonial evidence.
V. Employer's Appeal
Lastly, we address employer's contention in its cross-appeal that the
administrative law judge erred in factoring out the amounts claimant's children
received as a result of the third-party settlement from its Section 33(f) offset.
Specifically, employer asserts that there is no evidence in the record to show that any amount of the settlement was
apportioned to the children.
Employer's contention is without merit. While the settlement checks were made
to decedent and claimant, not the children, the children were in fact signatories
to the settlement. In Force, the Ninth Circuit specifically directed the
administrative law judge to apportion the settlement amount among decedent,
claimant and claimant's children. Force, 938 F.2d at 985, 25 BRBS at 19
(CRT). On remand, the administrative law judge, after noting that employer
submitted no evidence regarding this issue, relied upon the testimony of Mr.
McClain in factoring out the amount claimant's children received in the settlement
from employer's Section 33(f) offset; thus, the administrative law judge properly
followed the dictate of the Ninth Circuit on this point. We therefore affirm the
administrative law judge's finding regarding the amount of the third-party
settlement allocated for claimant's children.
Accordingly, the administrative law judge's finding that employer is entitled
to offset its entire longshore liability for both decedent's and claimant's claims
by the net amount received by both decedent and claimant in the third-party
settlement, as well as the administrative law judge's apportionment finding, is
vacated, and the case is remanded for reconsideration of the apportionment issue
based on all the evidence of record, pursuant to the Ninth Circuit's decision in
Force. In all other respects, the Decision and Order on Remand and the
Decision Denying Petition for Reconsideration of the administrative law judge are
affirmed.
SO ORDERED.
ROY P. SMITH
Administrative Appeals Judge
NANCY S. DOLDER
Administrative Appeals Judge
REGINA C. McGRANERY
Administrative Appeals Judge
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Footnotes.
1)In his Decision and Order on Remand, the administrative law
judge found that the net sum of the third-party settlement was $408,360, not
$480,360 as he had previously found. Neither party contests this finding.
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2)The court noted that the Force children did not file for
benefits under the Act and are not entitled to them.
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3)Amended Section 33(f) provides:
If the person entitled to compensation institutes proceedings
within the period prescribed in subsection (b) of this section
the employer shall be required to pay as compensation under
this chapter a sum equal to the excess of the amount which the
Secretary determines is payable on account of such injury or
death over the net amount recovered against such third person.
Such net amount shall be equal to the actual amount recovered
less the expenses reasonably incurred by such person in
respect to such proceedings (including reasonable attorney
fees).
33 U.S.C. §933(f)(1988).
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4)The United States Court of Appeals for the Fifth Circuit, in
Yates, 65 F.3d at 460, 29 BRBS at 113 (CRT), rejected the Ninth Circuit's
interpretation of Section 33(g)(1), holding that, pursuant to Cowart,
potential widows cannot be considered persons "entitled to compensation" under that
subsection. The United States Supreme Court has recently granted certiorari
in Yates.
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5) In a footnote, the Ninth Circuit acknowledged that claimant
has succeeded to decedent's disability claim. Hence, the court concluded, claimant
will receive the disability award, offset by the amount decedent recovered from the
third-party settlement. Force, 938 F.2d at 985 n.3, 25 BRBS at 19 n.3 (CRT).
Employer, in its brief, concedes that the Ninth Circuit "contemplates an
offset as to that portion of the civil settlement monies attributable to claimant
and decedent credited against each of their respective LHWCA benefits." See
Employer's Brief at 10. Noting the court's footnote in Force, as set forth
above, employer then asserts that since claimant has succeeded to decedent's claim
for disability, claimant will be the recipient of those disability benefits; based
upon this rationale, employer then asserts that the court recognized employer's
entitlement to offset its liability to a particular claimant by the third-party
damages received by that claimant. Employer's liability for disability benefits,
however, is to decedent; upon decedent's death, his estate is entitled to his
accrued disability benefits.
Thus, employer's "liability" to claimant for disability benefits encompasses only
its responsibility to pay decedent's accrued benefits to decedent's estate.
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6)At the formal hearing on remand, the administrative law judge
indicated his agreement with claimant's interpretation of the Ninth Circuit's
directive in Force. See June 17, 1992 Transcript at 13-14. In his
decision, however, the administrative law judge summarily credited the settlement
amount against both the disability and death benefits awards under the Act.
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NOTE: This is a PUBLISHED LHCA Document.
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