BRB No. 96-314
JERRY M. POOL )
)
Claimant-Petitioner )
)
v. )
)
GENERAL AMERICAN OIL )
COMPANY ) DATE ISSUED: 11/08/1996
)
and )
)
TRAVELERS INSURANCE )
COMPANY )
)
Employer/Carrier- )
Respondents ) DECISION and ORDER
Appeal of the Decision and Order Denying Compensation of Quentin P.
McColgin, Administrative Law Judge, United States Department of Labor.
Stephen M. Vaughan (Mandell & Wright, P.C.), Houston, Texas, for
claimant.
Daniel B. Shilliday (Vinson & Elkins, L.L.P.), Houston, Texas, for
employer/carrier.
Before: SMITH, BROWN and DOLDER, Administrative Appeals Judges.
DOLDER, Administrative Appeals Judge:
Claimant appeals the Decision and Order Denying Compensation (93-LHC-2556) of
Administrative Law Judge Quentin P. McColgin 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
administrative law judge's findings of fact and conclusions of law if they are
supported by substantial evidence, are rational, and are in accordance with law.
33 U.S.C. §921(b)(3); O'Keeffe v. Smith, Hinchman & Grylls Associates,
Inc., 380 U.S. 359 (1965).
Claimant was injured when he fell from a crane on July 14, 1977. He was
diagnosed with a shoulder sprain and, pursuant to the Act, received temporary total
disability and medical benefits from July 15 through July 18, 1977, January 27
through April 4, 1978, and August 16, 1979, through January 24, 1980. Cl. Ex. 4;
Tr. at 11-12. On July 13, 1978, claimant filed a third-party suit in the United States District Court for the
Western District of Louisiana against Link-Belt Corporation, FMC Corporation (FMC),
and RECO Crane Company (RECO) (No. 78-0869).[1]
On July 13-21, 1981, claimant's case came before a jury, and the jury, by special
verdict, found in favor of claimant and awarded him $215,000 in damages, less
$15,068.60.[2] Cl. Ex. 6.
On August 28, 1981, Judge Hunter issued a "JUDGMENT" which documented the
jury's verdict, stating:
IT IS ORDERED, ADJUDGED AND DECREED that there be judgment
in favor of the plaintiff, Jerry M. Pool, and against the defendants,
[RECO and its carrier, United States Fidelity and Guaranty Corporation
(USF & G)], jointly, severally and in solido, in the full sum of
[$215,000 less $15,068.60 (plus interest)].
Cl. Ex. 6. The order also specifically set forth:
Litigants are entitled to a clear statement of what is intended with
reference to the finality of this judgment. We expressly refuse to
grant a 54B certificate because claims for monetary relief against FMC
Corporation remain to be tried.
This judgment remains subject to revision in accordance with the express
provisions of Rule 54B of the Federal Rules of Civil Procedure.
Id. The court also noted that if claimant's case against FMC is dismissed,
it would enter an appropriate final judgment against RECO. Id. at n.1.
On October 14, 1981, Judge Hunter filed an "ORDER OF DISMISSAL" indicating
that the parties had settled the claims. He dismissed the case without prejudice
with an option to reopen if the settlement was not consummated within 90 days. Cl.
Ex. 7. On November 12, 1981, claimant and counsel for Travelers appeared before
a notary to execute a "RELEASE" which provides:
NOW, THEREFORE, appearers realizing the risk of continued litigation,
accept the offer, and in consideration of the payment to appearer, Jerry
M. Pool, of the sum of $200,000 paid in the proportion of $160,000 for
and on behalf of [RECO] and $40,000 for and on behalf of FMC
Corporation, receipt of this amount acknowledged, do hereby release and
discharge [RECO and FMC] from all claims, causes of action and liability
in connection with the Judgment rendered on the jury's verdict.
* * *
Appearers agree that this release includes all claims asserted in the
suit; that this document constitutes a compromise of disputed claims,
and that the payment is not to be construed as an admission of liability
. . . .
Emp. Ex. 11.[3]
On December 1, 1981, the parties filed a "RELEASE AND SATISFACTION OF
JUDGMENT" with the court. This release acknowledged receipt by claimant of
$160,000 from USF&G, accepting "that amount in compromise and satisfaction of the
Judgment entered on the jury's verdict," and discharged RECO and USF&G from further
liability. Cl. Ex. 13. Again, Travelers' counsel did not sign the agreement.
However, he did sign a "SATISFACTION OF JUDGMENT" executed the same day which
acknowledged receipt of $15,242.44 paid by claimant in satisfaction of the judgment
on behalf of intervenor Travelers. Id. at p.3. Thereafter, claimant and
Travelers moved the court to dismiss the claims against the defendants, and the
court did so with prejudice, as "there has been a complete satisfaction of the
Judgment rendered herein August 28, 1981[.]" Cl. Ex. 14.
The only issue presented to the administrative law judge was whether Section
33(g) of the Act, 33 U.S.C. §933(g) (1988), applies to this case.[4] See Decision and Order at 3. Initially,
the administrative law judge found that the 1984 amendments to Section 33(g)
control the disposition of the case. Id. at 5. He also determined that the
"JUDGMENT" issued by Judge Hunter was not final and that any "release" or
"satisfaction" received by claimant after the October 14, 1981 dismissal was a
"settlement" for purposes of Section 33(g) application. Id. at 7-8.
Further, he held that Travelers' participation as an intervenor did not remove the
case from the realm of Section 33(g), as the United States Court of Appeals for the
Fifth Circuit recognizes no exceptions to the formal approval requirements of
Section 33(g). Finally, the administrative law judge denied claimant's claim for
disability benefits under the Act, relying on the Fifth Circuit's statement in
Villanueva v. CNA Ins. Companies, 868 F.2d 684 (5th Cir. 1989), that the
combined effect of Section 33(f), 33 U.S.C. §933(f), and Section 33(g)
extinguishes employer's liability without having to ascertain whether a settlement
is for an amount more or less than the entitlement under the Act. Decision and
Order at 8-9. He found, however, that claimant's claim for medical benefits is not
barred by Section 33(g)(2), 33 U.S.C. §933(g)(2) (1988), as employer received
proper notice of the settlement. Nevertheless, he noted that claimant is entitled
only to those medical expenses which exceed his $82,593.49 net settlement recovery.
Id. at 10. Claimant appeals the administrative law judge's decision, and
employer responds, urging affirmance.
Claimant first contends the administrative law judge erred in applying the
1984 amended version of Section 33(g) to this claim. Claimant is incorrect.
Although the injury occurred in 1977, and the jury verdict was rendered in 1981,
this case did not come before an administrative law judge until 1993. The
effective date of the 1984 Amendments was September 28, 1984. The Board has stated
that the standard for retroactivity of legislation depends on whether the statute
in question has "prescribed the statute's reach." Monette v. Chevron USA,
Inc., 29 BRBS 112, 115 (1995), aff'g on recon. en banc, 25 BRBS 267
(1992) (citing Landgraf v. USI Film Products, ___ U.S. ___, 114 S.Ct. 1483,
1501 (1994)). The Board held that Section 33(g) as amended must be applied to a
case pending on or filed after the effective date of the amendments, as Congress
specifically provided for the changes to be applicable to such claims.
Monette, 29 BRBS at 115; see also Longshore and Harbor Workers'
Compensation Act Amendments of 1984, Pub. L. No. 98-426, §28(a), 98 Stat.
1639, 1655 (1984). As claimant's claim under the Act was pending either on
September 28, 1984, or thereafter, the 1984 Amendments to Section 33(g) control the
outcome of this case. Id.; Pinell v. Patterson Service, 22 BRBS 61
(1989), aff'd on other grounds mem., 20 F.3d 465 (5th Cir. 1994); see
also Petroleum Helicopters, Inc. v. Barger, 910 F.2d 276, 23 BRBS 143 (CRT)
aff'd en banc sub nom. Nicklos Drilling Co. v. Cowart, 927 F.2d 828,
24 BRBS 93 (CRT) (5th Cir. 1991), cert. denied, 505 U.S. 1218 (1992) (court
applied 1984 amendments in Barger even though third-party settlement
occurred prior to 1982). Consequently, we reject claimant's argument, and we
affirm the administrative law judge's determination on this matter.
Next, claimant avers that the administrative law judge erred in holding that
the satisfaction of judgment is a "settlement," thereby invoking the Section
33(g)(1), 33 U.S.C. §933(g)(1) (1988), bar. Specifically, claimant contends
the value of his case was set by a jury; therefore, as he obtained a judgment, his
situation falls within the provisions of subsection (g)(2) and not (g)(1), and he
need not have sought employer's prior written approval to accept less than the
jury's award, as any deficit is to his own detriment and not employer's. To
support his arguments, claimant relies on decisions rendered by the Supreme Court
of the United States in Banks v. Chicago Grain Trimmers' Assn., 390 U.S.
459, reh'g denied, 391 U.S. 929 (1968), and by the United States Court of
Appeals for the Fourth Circuit in Bell v. O'Hearne, 284 F.2d 777 (4th Cir.
1960). Employer responds, arguing that Judge Hunter's "JUDGMENT" was not final;
therefore, claimant's acceptance of less than the jury's award without employer's
approval constitutes a compromise which invokes the Section 33(g) bar.
Under Section 33(g)(1), an employee must obtain his 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. He need only notify his employer under
Section 33(g)(2) if he obtains a judgment against the third parties or if he
settles the third-party claim for an amount greater than that to which he is
entitled under the Act. 33 U.S.C. §933(g)(1), (2); Estate of Cowart v.
Nicklos Drilling Co., 505 U.S. 469, 26 BRBS 49 (CRT) (1992). We agree with
employer that the administrative law judge properly found claimant's post-verdict
activities resulted in a settlement within the meaning of Section 33(g), rather
than a judgment, and we conclude that claimant's reliance on Banks and
Bell is misplaced.
In Banks, 390 U.S. at 459, the widow and minor children of a
longshoreman obtained a $30,000 jury verdict in their third-party claim. The judge
informed the parties he would grant the defendant's motion for a new trial unless
the plaintiffs accepted a remittitur of $11,000. Without consulting the employer,
the plaintiffs accepted the remittitur, and the court entered judgment for $19,000.
Banks, 390 U.S. at 460-461. When the plaintiffs sought benefits under the
Act, the employer disputed their entitlement based on their failure to get written
approval prior to accepting an amount less than the judgment. The Supreme Court
noted that a remittitur is not the equivalent of a mutual agreement among the
parties but is "a judicial determination of recoverable damages[.]" Id., 390
U.S. at 467. The Court declared that the protection supplied by Section 33(g) of
the Act to an employer is not required when a fact-finder independently evaluates
the situation in a third-party claim and awards damages; therefore, it reversed the
denial of benefits.
In Bell, 284 F.2d at 777, the Fourth Circuit addressed the legal effect
of the acceptance, as full payment, of less than the amount of a judgment for
damages recovered by the beneficiaries of a longshoreman whose death was caused by
a third-party tortfeasor. In the third-party claim, the decedent's parents were
awarded $6,500, and before the appeal was heard, the plaintiffs accepted $5,000 as
satisfaction of the judgment without obtaining written approval from the employer.
Bell, 284 F.2d at 778. Although the plaintiffs agreed to credit the
employer the amount of the judgment and not just the $5,000 in their claim for
deficiency compensation, the deputy commissioner denied benefits. The Fourth
Circuit reversed the denial of benefits, stating "there has been a judicial
determination of the damages, [and] there is no possibility whatever of prejudice
to the employer from the judgment creditor's subsequent consent to a diminution in
payment." Bell, 284 F.2d at 780.
Contrary to claimant's argument, the cases cited are not dispositive of the
issue at hand. In this case, claimant obtained a special jury verdict against RECO
and USF&G. Judge Hunter documented the jury's verdict in his "JUDGMENT"; however,
he specifically refused to grant "54B certification" because the claim against FMC
was still pending.[5] See American
Interinsurance Exchange v. Occidental Fire & Casualty Co. of N.C., 835 F.2d 157
(7th Cir. 1987) (judgment which fails to terminate case as to all parties and
issues is not subject to appeal); Farmer v. Powers, 204 F.2d 509 (5th Cir.
1953) (judgment which did not apply to all tortfeasors lacked finality). Contrary
to claimant's arguments, Judge Hunter's "JUDGMENT" was not, nor did he consider it,
a final judgment. The administrative law judge noted, and the words of the
document clearly elucidate, Judge Hunter's intent to enter an interlocutory
judgment, subject to revision. Decision and Order at 7 n.3. This significant fact
distinguishes claimant's case from the order of remittitur in Banks and the
final judgment in Bell, both of which were non-negotiable. Because
claimant's judgment was not final, his post-verdict negotiations with the third-party defendants compromised both his and employer's rights in the third-party
claim.[6]
Rather, the facts before us are similar to the situation in Broussard v.
Houma Land & Offshore, 30 BRBS 53 (1996). In that case, the Board held that
a Rule 68 Offer of Judgment[7] is "tantamount to
a formal settlement agreement" and is "a `compromise' for purposes of Section
33(g)(1)." Broussard, 30 BRBS at 58. In Broussard, the claimant
filed a claim under the Act and a third-party suit in a district court in
Louisiana. Prior to trial, he accepted the defendants' $20,000 offer of judgment
in the tort suit, and the district court rendered judgment in the case. The
administrative law judge granted the employer's motion for summary judgment,
finding that the claimant failed to obtain the employer's prior written approval
of the third-party settlement which was stipulated to be less than the amount to
which he was entitled under the Act. Broussard, 30 BRBS at 54. On appeal,
the claimant argued that the Rule 68 Offer of Judgment was a judgment under Section
33(g)(2) and not a compromise under Section 33(g)(1). The Board rejected this
argument, finding that mutual assent was required for the offer and acceptance and
that the Rule 68 sanctions are not the equivalent of a penalty which forces the
claimant to accept the offer. Id. at 57-58. As the claimant did not obtain
prior written approval, the Board affirmed the administrative law judge's denial
of benefits based on the applicability of the Section 33(g)(1) bar. Id. at
58; see also Morauer & Hartzell, Inc. v. Woodworth, 439 F.2d 550 (D.C. Cir.
1970), appeal dismissed, 404 U.S. 16 (1971) (consent judgment was based on
pre-trial negotiations with the aid of the district court judge).
It is the substance of the parties' actions rather than the title of the
document ending the litigation that controls the applicability of Section 33(g)(1).
Here, the administrative law judge properly found that the jury's verdict in the
instant case, while documented by Judge Hunter in a "JUDGMENT," does not signify
that a "judgment" within the meaning of Section 33(g)(2) occurred. Because the
"judgment" herein was not final, and because claimant thereafter negotiated an
agreement with the third parties, we affirm the administrative law judge's
determination that the "satisfaction of judgment" in this case is actually a
"compromise" or "settlement" within the meaning of Section 33(g).
Claimant next contends that if a settlement occurred, then carrier's
participation in the case as intervenor brought the case outside the realm of
Section 33(g)(1). Alternatively, claimant argues that carrier's participation
satisfied the requirements of Section 33(g)(1). Employer responds, arguing that
the Fifth Circuit recognizes no exceptions to the formal approval requirements of
Section 33(g); thus, carrier's participation in the suit as intervenor did not
negate claimant's duty to seek approval of the settlement.
Prior to the Supreme Court's decision in Cowart, the Fifth Circuit
stated in its decision in that case that there are no exceptions to the prior
approval requirement of Section 33(g)(1). See Nicklos Drilling Co. v.
Cowart, 927 F.2d 828, 24 BRBS 93 (CRT) (5th Cir. 1991) (en banc),
aff'd on other grounds, 505 U.S. 469, 26 BRBS 49 (CRT) (1992). In reliance
on the Fifth Circuit's statements in Cowart, the Board held that
participation by an employer or carrier in the third-party settlement negotiations
does not nullify the claimant's Section 33(g)(1) responsibility of requesting and
obtaining the employer's prior written approval of the settlement. Monette,
25 BRBS at 272; Lewis v. Chevron USA, Inc., 25 BRBS 10 (1991). The
administrative law judge followed this precedent in deciding this case. The
Supreme Court, however, specifically declined to address the issue of the effect
of employer participation in the settlement process as it was not included in the
question on which certiorari was granted, see Cowart, 505 U.S. at
483, 26 BRBS at 53 (CRT), and the Board subsequently held, in a case arising in the
Fifth Circuit, that an employer's participation in third-party proceedings was
sufficient to preclude the applicability of the Section 33(g)(1) bar. See
Deville v. Oilfield Industries, 26 BRBS 123 (1992), discussed infra.
In I.T.O. Corp. of Baltimore v. Sellman, 954 F.2d 239, 25 BRBS 101
(CRT) (4th Cir.), vacated in part on other grounds on reh'g, 967 F.2d 971,
26 BRBS 7 (CRT) (1992), aff'g and rev'g 24 BRBS 11 (1990)(Brown, J.,
dissenting on other grounds), cert. denied, 507 U.S. 984 (1993), the
employer initiated its own third-party suit and thus was a co-plaintiff with
claimant. It participated in the settlement negotiations and recovered directly
from the defendants, but refused to give claimant written approval of his
settlement with the third party. The Fourth Circuit, affirming the Board on this
issue, held that Section 33(g) is not applicable where employer also reaches a
settlement with the third-party. If employer participates in the settlement
process and assents to its terms, it has assured, by its own actions, the
protection of its offset rights. Id., 954 F.2d at 243, 25 BRBS at 106 (CRT).
In Deville, 26 BRBS at 123, the Board, citing Sellman, held that
Section 33(g) is inapplicable because the employer intervened in the third-party
suit on the side of the claimant, appeared at the hearing, and contributed to the
settlement agreement which provided for its offset. Further, the Board held that
even if Section 33(g)(1) did apply, the employer gave written approval prior to the
execution of the settlement by being an actual signatory to the agreement.
Id. at 131-132; see also Pinell v. Patterson Service, 22 BRBS 61
(1989), aff'd on other grounds mem., 20 F.3d 465 (5th Cir. 1994).
We hold that Sellman and Deville are distinguishable from the
instant case, and that employer's participation in the third-party claim is
insufficient to render Section 33(g)(1) inapplicable or to constitute constructive
approval of the settlement. Employer, through its carrier, intervened in the
third-party case and participated, to some degree, in the settlement process.
Although the record indicates the presence of carrier's counsel at the executions
of the two "satisfactions of judgment," he did not sign either document. In fact,
counsel for carrier took steps to distance himself from the settlement
negotiations, specifically refusing to agree to any settlement, and to establish
that his only motivation for being present was to protect carrier's lien against
claimant's award. See Emp. Exs. 2, 3; see generally Peters v. North River
Insurance Co., 764 F.2d 306, 17 BRBS 114 (CRT)(5th Cir. 1985). As carrier did
not appear on the side of the claimant, did not sign the actual settlement and in
fact specifically declined to do so, we affirm the administrative law judge's
finding that employer's participation in the settlement process in this case, via
carrier's actions, is insufficient to preclude application of Section 33(g)(1).
Because we conclude that the administrative law judge properly found
employer's participation in the settlement process was not sufficient to render
Section 33(g) inapplicable, we must address the effect of the application of that
section to this case, i.e., whether claimant settled his claim for less than
he is entitled to receive under the Act and whether prior written approval was
necessary under Section 33(g)(1). The Board addressed this issue in Gladney v.
Ingalls Shipbuilding, Inc., 30 BRBS 25 (1996) (McGranery, J., concurring), and
Harris v. Todd Pacific Shipyards Corp., 28 BRBS 254 (1994), aff'd and
modified on recon. en banc, 30 BRBS 5 (1996) (Brown and McGranery, JJ.,
concurring and dissenting). The Board held that before it can be determined
whether a claim is barred by Section 33(g)(1), a comparison must be made between
the gross amount of a claimant's aggregate third-party settlement recoveries and
the amount of compensation, exclusive of medical benefits, to which he would be
entitled under the Act. Gladney, 30 BRBS at 27; Harris, 30 BRBS at
11, 16; see also Cowart, 505 U.S. at 469, 26 BRBS at 49 (CRT); Bundens
v. J.E. Brenneman Co., 46 F.3d 292, 29 BRBS 52 (CRT) (3d Cir. 1995); Linton
v. Container Stevedoring Co., 28 BRBS 282 (1994). The Board also determined
that Section 33(f) does not necessarily extinguish an employer's total liability
for benefits in every case, but rather provides the employer with a credit in the
amount of the claimant's net third-party recovery against its liability for
compensation and medical benefits. Harris, 28 BRBS at 269; see also
Bundens, 46 F.3d at 292, 29 BRBS at 52 (CRT). Thus, the Board determined that
Villanueva, 868 F.2d at 684, in which the court stated that on the facts of
that case it was not necessary to compare claimant's entitlement under the Act with
his third-party recovery because claimant's entitlement to benefits was either
barred by Section 33(g) or offset under Section 33(f), does not stand for the
proposition that such a comparison should never be made.[8] Gladney, 30 BRBS at 27-28.
At the conclusion of his recitation of the facts, the administrative law judge
stated: "Claimant netted a payment of $82,593.49, which was in excess of
his entitlement under the Act at that time." Decision and Order at 5 (emphasis
added). Later, in relying on and applying Villanueva, the administrative
law judge stated: "there is no way to determine what future compensation amounts
Claimant might be entitled to under the Act for this claim. . . ." Decision and
Order at 8. Consequently, and on the facts of this case, the administrative law
judge's reliance on Villanueva to avoid the amount comparison required by
Cowart is improper. Gladney, 30 BRBS at 27-28. Additionally, the
administrative law judge is incorrect in stating it is impossible to calculate
claimant's future benefits. Pursuant to Linton, an administrative law judge
"may use any reasonable method to calculate" a claimant's lifetime compensation
under the Act. Linton, 28 BRBS at 287-288; see also Glenn v. Todd Pacific
Shipyards Corp., 26 BRBS 186, aff'd on recon., 27 BRBS 112 (1993)
(Smith, J., concurring). Because the administrative law judge did not calculate
the amount of benefits to which claimant would be entitled or make the necessary
comparison with claimant's settlement recovery, we vacate the decision and remand
the case for further consideration and for a proper amount comparison. Only after
the comparison has been made can the administrative law judge ascertain whether the Section 33(g) bar
should be invoked.[9] See Gladney, 30 BRBS
at 28.
Accordingly, the administrative law judge's Decision and Order is vacated, and
the case is remanded for further consideration consistent with this opinion. The
decision is affirmed with respect to the finding that a settlement rather than a
judgment occurred, that the 1984 Amendments apply to this case and that employer's
participation does not render the Section 33(g) bar inapplicable.
SO ORDERED.
_______________________________
NANCY S. DOLDER
Administrative Appeals Judge
SMITH, Administrative Appeals Judge, concurring and dissenting:
I concur with my colleagues' conclusions that the 1984 amendments to the Act
apply to this case and that claimant entered into a settlement with the third-party
defendants. I also agree with Judge Dolder that, at a minimum, the case must be
remanded for a comparison between the gross amount of claimant's settlement and his
lifetime compensation entitlement. This result is compelled by the Supreme Court's
decision in Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 26 BRBS
49 (CRT) (1992), and the Board's en banc decision on reconsideration in
Harris v. Todd Pacific Shipyards Corp., 28 BRBS 254 (1994), aff'd and
modified on recon. en banc, 30 BRBS 5 (1996) (Brown and McGranery, JJ.,
concurring and dissenting), which is controlling precedent for this Board.
However, I disagree with that part of the opinion regarding carrier's
participation in the settlement process. I believe carrier's participation in the
settlement process was sufficient to constitute a constructive approval of the
settlement, thereby rendering the Section 33(g) bar inapplicable. In a similar
case which arose in the Fourth Circuit, the court held that when an employer
directly participates in the third-party settlement process and then withholds its
approval of the settlement terms, the Section 33(g) bar is inapplicable. I.T.O.
Corp. of Baltimore v. Sellman, 954 F.2d 239, 25 BRBS 101 (CRT) (4th Cir.),
vacated in part on other grounds on reh'g, 967 F.2d 971, 26 BRBS 7 (CRT)
(1992), cert. denied, 507 U.S. 984 (1993). The Fourth Circuit reasoned:
"the purposes of section 33(g) would be ill served by permitting the termination
of benefits where employer has directly ensured, by its own action, the protection
of its offset rights." Sellman, 954 F.2d at 242, 25 BRBS at 106 (CRT).
Initially, the administrative law judge erred in summarily rejecting
claimant's Sellman argument based on the "no exceptions" language in the
Fifth Circuit's Cowart opinion. The Fourth Circuit's opinion in
Sellman issued thereafter, and a Sellman argument was not raised
before the Fifth Circuit. Most importantly, the Supreme Court stated, when
claimant attempted to raise Sellman in the proceedings at that level, that
without expressing any opinion on the merits of the argument, the court would not
address it as it was not properly raised. Cowart, 505 U.S. at 483, 26 BRBS
at 53 (CRT).
The Board recognized that this argument remained viable when it followed the
Fourth Circuit's decision in Sellman in a post-Cowart case which
arose in the Fifth Circuit. In Deville v. Oilfield Industries, 26 BRBS 123
(1992), the Board held that Section 33(g) is inapplicable because the employer
intervened in the third-party suit and contributed to the settlement agreement.
Further, the Board held that even if Section 33(g)(1) did apply, the employer gave
written approval prior to the execution of the settlement by being an actual
signatory to the agreement. Id. at 131-132. Thus, the approval requirement
was satisfied. In either event, the Board held that benefits were not barred by
Section 33(g)(1). Id. at 132.
In an earlier Fifth Circuit case, an employer intervened in a claimant's
third-party suit, participated in the settlement negotiations, and waived part of
its lien. Nevertheless, it maintained its blanket policy of withholding written
approval of third-party settlement. Pinell v. Patterson Service, 22 BRBS 61
(1989), aff'd on other grounds mem., 20 F.3d 465 (5th Cir. 1994). The Board
concluded that the employer provided constructive approval of the claimant's third-party settlement agreement by its actions, and it held that Section 33(g) did not
bar the claimant's recovery of benefits under the Act, as the employer's interests,
see Petroleum Helicopters, Inc. v. Collier, 784 F.2d 644, 18 BRBS 67 (CRT)
(5th Cir. 1986), are protected.[10]
Pinell, 22 BRBS at 65.
Although my colleagues believe employer, through carrier's actions in the
third-party claim related to this case, cannot be considered to have given
constructive approval of the settlement, I consider employer's participation
sufficient to justify the conclusion that it constructively approved the
settlement. Counsel for carrier intervened in the third-party suit and was present
throughout the negotiations, appearing with claimant before a notary to execute a
release. Counsel declined to sign the documents executed by claimant, but did sign
a "Satisfaction of Judgment" acknowledging full satisfaction of the judgment
rendered in the case. EX 13. Travelers also joined claimant in moving for
dismissal of the third- party case with prejudice, and counsel signed this
document. EX 14. Employer should not now be permitted to reap the benefits of the
Section 33(g) bar, having known fully the terms of the settlement and been
represented at the executions thereof and having secured protection of its lien.
Therefore, I would hold that Section 33(g) does not bar claimant's benefits in
light of employer's constructive approval of the settlement terms. Sellman,
954 F.2d at 242-243, 25 BRBS at 106 (CRT); Deville, 26 BRBS at 131-132.
Consequently, I would vacate the administrative law judge's finding on this issue
and remand the case for consideration and application of Section 33(f), 33 U.S.C.
§933(f). See Bundens v. J.E. Brenneman Co., 46 F.3d 292, 29 BRBS 52
(CRT) (3d Cir. 1995); Harris, 30 BRBS at 5.
As I noted, initially, however, at the very least, the case must be remanded
for a comparison between the gross amount of claimant's aggregate third-party
settlement recovery and the compensation to which claimant would been entitled
under the Act during the course of his life before the claim case can be held
barred by Section 33(g), as is required by Cowart and the en banc
decision of the Board in Harris, 30 BRBS at 11, 16. See also Gladney v.
Ingalls Shipbuilding, Inc., 30 BRBS 25 (1996) (McGranery, J., concurring).
_______________________________
ROY P. SMITH
Administrative Appeals Judge
BROWN, Administrative Appeals Judge, concurring and dissenting:
For the reasons stated in the main opinion, I concur with my colleagues'
conclusions that the 1984 amendments to the Act apply to this case and that the
third-party cases brought by claimant against the various third-party defendants
were disposed of by settlement, rather than a judgment, for the purposes of Section
33(g)(1). The details of the suits, the results, the entries of "judgments," the
execution of the various documents and the final dispositions are set forth in the
main opinion. In a nutshell, claimant filed a suit in the United States District
Court for the Western District of Louisiana against Link-Belt Corporation, FMC
Corporation and RECO Crane Company and their insurance companies. The jury found
in favor of claimant and against RECO Crane and its carrier for $215,000, less the
sum of $15,068.60 to be paid to Travelers Insurance Company as the workers'
compensation intervenor. A special judgment was entered by the court, noting that
it was subject to revision in accordance with the provisions of Rule 54B of the
Federal Rules of Civil Procedure. Cl. Ex. 6. As noted above, the judgment was
solely against RECO Crane and its carrier. Apparently there was a mistrial as to
the other defendants. Er. brief at 2. The court explained in footnote 1 of its
"Judgment" that if the case against FMC is dismissed a final order would be entered
against RECO. Otherwise the case against FMC would proceed to trial on December
7, 1981, on the issues of liability and quantum.
Subsequently, the court ordered a dismissal of the third-party action, having
been advised by counsel for the parties that the action "had been settled." A
document called a release was executed indicating that a consideration of $200,000
was paid to claimant, of which $160,000 was from RECO Crane and $40,000 from FMC.
It thus appears that the $215,000 verdict against RECO Crane, upon which judgment
was entered, was settled for $160,000. It further appears that the pending case
against FMC, which was listed to go to trial, was settled for $40,000. It thus is
obvious that the actions against RECO Crane and FMC were disposed of by settlements
for the purpose of Section 33(g)(1).
I further concur in Judge Dolder's position and holding that the participation
of this workers' compensation carrier as an intervenor in the third-party suit did
not negate claimant's duty under Section 33(g)(1) to obtain approval of the
settlement. I cannot agree with Judge Smith's position that the carrier's
participation in the settlement process was sufficient to constitute constructive
approval thereby rendering the Section 33(g)(1) bar inapplicable. He relies
heavily upon the cases of I.T.O. Corp. of Baltimore v. Sellman, 954 F.2d
239, 25 BRBS 101 (CRT) (4th Cir.), vacated in part on other grounds on
reh'g, 967 F.2d 971, 26 BRBS 7 (CRT) (1992), aff'g and rev'g 24 BRBS 11
(1990)(Brown, J., dissenting on other grounds), cert. denied, 507 U.S. 984
(1993), and Deville v. Oilfield Industries, 26 BRBS 123 (1992). Both cases,
however, are distinguishable.
In Sellman, both the employee and the employer initiated a third-party
suit. Both were named plaintiffs, both participated in all phases of the
litigation, participated in the settlement negotiations and entered into
settlements that were so interrelated that they could be considered a joint
settlement. In fact, the employer's settlement agreement with the third-party
stipulated that it was contingent upon the approval of the companion employee's
settlement by the Circuit Court of Baltimore. This agreement was signed by
employer's attorney, third-party's attorney, employee's attorney and employee's
wife and representative. The record contained a statement by employer's workers
compensation claims manager that, "we were consenting to the settlement, but we
would be entitled to an offset . . . ." 24 BRBS at 22. The Court of Appeals held
that employer's conduct in the case rendered Section 33(g) inapplicable.
The Deville case is also distinguishable. In that case the Board,
citing Sellman, held that Section 33(g) is inapplicable because employer
intervened in the third-party suit on the side of claimant, appeared at the hearing
and contributed to the settlement agreement which provided for its offset. The
Board further held that even if Section 33(g)(1) applied, the employer gave written
approval prior to the execution. It was an actual signatory to the agreement
stating "[Employer] by signing this release specifically approves of this
settlement and it is understood that plaintiff does not waive any future rights to
Longshoreman Compensation to which he may be entitled." 26 BRBS at 132.
I concur with Judge Dolder that the Sellman and Deville cases
are distinguishable and that the extent of participation by employer's carrier in
this case is insufficient to preclude application of Section 33(g)(1). Carrier's
counsel was present at the execution of two "satisfaction of judgments" but did not
sign the documents. He specifically refused to agree to any settlement. It is
clear that his only interest in being present was to protect the carrier's lien.
We now come to the phase of the case with which I must respectfully dissent.
The administrative law judge, in summary, held that the third-party case had been
settled and that approval by the employer was not obtained. Although he held that
it was impossible to discern whether the third-party settlement was for more or
less than the compensation to which claimant was entitled, he relied on
Villanueva v. CNA Ins. Companies, 868 F.2d 684 (5th Cir. 1989), which held
that the employer would have no liability for further compensation.
Villaneuva held that if the settlement was greater than the amount of
compensation benefits due, Section 33(f) extinguishes employer's further liability,
and if it was less, Section 33(g) precludes additional benefits. Although, the
administrative law judge relied on Villaneuva, he opined that it did not cut
off further medical benefits and that employer would have a continuing liability
for further medical treatment and costs that would exceed claimant's net third-party recovery. Judge Dolder would remand this case for a determination of whether
the net third-party recovery was greater or less that the potential compensation
liability. Judge Smith, holding that employer constructively approved the
settlement, would reverse the administrative law judge's determination that further
compensation is barred. He would remand the case for the application of Section
33(f). I would affirm the administrative law judge's finding that further
compensation is barred, and, relying on Estate of Cowart v. Nicklos Drilling
Co., 505 U.S. 469, 26 BRBS 49 (CRT) (1992), and Villaneuva, I would
reverse his holding that further medical benefits are not barred.
This case is controlled by Cowart and Villaneuva. The ultimate
result of Cowart is that if a person is subject to the written-approval
requirements of Section 33(g)(1), and settles a third-party suit for less than the
compensation to which he would be entitled, he forfeits all longshore
benefits. Cowart, 505 U.S. at 475, 26 BRBS at 51 (CRT). As stated
in the first paragraph of the Cowart opinion, under certain circumstances
"all future benefits including medical benefits are forfeited." Id., 505
U.S. at 471, 26 BRBS at 50 (CRT). Towards the end of the opinion, discussing
Section 33(g)(2), the Court noted that written approval is not required in two
circumstances: (1) where the employee obtains a judgment and (2) where the employee
settles for an amount greater or equal to employer's total liability. The
logical deduction, therefore, is that in the remaining circumstances, (3) where the
settlement is for an amount less than employer's total liability, written approval
is required. This brings us back to the significance of Cowart's opening
statement on this subject. Under the "less than" settlement "all future benefits
including medical benefits are forfeited."
The majority's position is that Cowart does not bar future medical
benefits. However, this was clearly in the holding of the Supreme Court which used
such terms as employer's "total liability," forfeiture of all longshore "benefits"
and under certain circumstances, "all future benefits including medical benefits
are forfeited." It should be borne in mind that the Section 33(a) suits against
third-parties are for "damages." Cases have held that the "damages" include
compensation, funeral benefits, punitive damages and pain and suffering.[11] Damages in a third-party personal injury case
would also include medical costs, present and future.[12] It thus would appear that the third-party settlements in these cases
also encompassed the medical benefits and that if claimants were allowed to proceed
against employers for any future medical benefits, this would amount to a double
recovery. As was stated in Force v. Director, OWCP, 938 F.2d 981, 984, 25
BRBS 13, 18 (CRT) (9th Cir. 1991), "[t]he only relevant question is whether the
claimant is impermissibly recovering twice for the same injury, regardless of when
such payments occur." Nobody has raised this issue but it really is not necessary
in view of the Cowart Court's pronouncement on forfeiture of all benefits.
Applying Cowart and Villaneuva together I would hold that all
future compensation and medical benefits are barred. Villaneuva, of course
is an opinion of the Court of Appeals for the Fifth Circuit, which has jurisdiction
over this case. It held that if the settlement was greater than the amount of
compensation benefits due, Section 33(f) extinguishes employer's liability, and if
it was less, Section 33(g) precludes seeking additional benefits. Based on
Cowart this would bar future compensation and further medical benefits.
It is noteworthy that we have a similar situation in the Ninth Circuit.
There, the court, applying Cowart, in its decision in Cretan v. Bethlehem
Steel Corp., 1 F.3d 843, 27 BRBS 93 (CRT) (9th Cir. 1993), cert. denied,
114 S.Ct. 2705 (1994), held that if a tort settlement was less than the statutory
entitlement under the Longshore Act, employer is obligated to pay benefits only if
it gave prior approval to the settlement under Section 33(g) and if the recovery exceeded the statutory entitlement, further benefits are
precluded under Section 33(f). The court stated that the two provisions act as a
complete bar to recovery from employer. Of great significance in the handling of
this case and its Cowart-Villaneuva issue is the fact that the
Supreme Court denied certiorari in Cretan.
Accordingly, I would affirm the summary judgment entered by the administrative
law judge holding that claimant is precluded from seeking further compensation but
I would reverse his holding that claimant may seek further medical benefits. I
would hold that claimant is completely barred from seeking any further benefits
under the Longshore Act. I am not inclined to challenge the Supreme Court's
rulings in Cowart and Cretan, or the holding of the Court of Appeals
for the Fifth Circuit in Villaneuva.
_______________________________
JAMES F. BROWN
Administrative Appeals Judge
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Footnotes.
1)Claimant also filed actions in Cameron Parish, Louisiana (No.
6939, Pool v. Kemper Ins. Group, et al.) and in Texas state court (No. 78-8014, Pool v. Link-Belt Corp., et al.).
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2)The jury also found in favor of intervenor Travelers Insurance
Company, which sought recovery of the monies it paid to claimant in disability and
medical benefits under the Act. Consequently, claimant was required to pay carrier
$15,068.60 out of his award. Cl. Ex. 6.
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3)This document was signed by claimant but not by Travelers'
counsel, and it does not appear to have been filed with the court.
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4)The parties and the administrative law judge agreed to
bifurcate the case and resolve this Section 33(g) issue before addressing any other
disputed issues.
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5)Fed. R. Civ. P. 54(b) permits a judge to enter a partial final
judgment against one or more, but fewer than all, of the parties in a multiple
party claim, providing "there is no just reason for delay" and there is an "express
direction for the entry of judgment." The Fifth
Circuit, which has appellate jurisdiction over the case at bar, has held that a
judge need not mechanically recite the words of the Rule to satisfy the
requirements of the Rule -- an unmistakable intent to enter a partial final
judgment is sufficient. Kelly v. Lee's Old Fashioned Hamburgers, Inc., 908
F.2d 1218 (5th Cir. 1990).
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6)Claimant concedes employer would be entitled to offset the full
amount of the judgment, as was the case in Bell and asserts that this fact
will fully protect employer's right to receive the full judicially determined
amount. As the administrative law judge found, however, in this case the jury
verdict was against one defendant, RECO, and the case against FMC remained pending
until settled. Claimant argues that FMC was jointly and severally liable with RECO
and that the administrative law judge erred in finding that the FMC claim was
separate; claimant asserts the verdict thus represented the total value of the
case. Employer contends there is no way to prove whether FMC would have been held
liable for separate and additional damages or whether it would have been held
jointly and severally liable. Therefore, employer argues that it was prejudiced
by claimant's failure to obtain prior written approval. The administrative law
judge's decision on this argument is supported by the evidence, specifically the
"JUDGMENT" entered in court.
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7)Rule 68 of the Fed. R. Civ. P. permits a defendant, until 10
days before trial, to offer to allow a judgment to be taken against it. If the
plaintiff rejects the offer, but does not receive a more favorable judgment after
trial, the plaintiff must pay the costs incurred after the offer was made.
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8)It is noted that Villanueva was not discussed in either
the Fifth Circuit's panel or en banc decisions in Cowart. In
fact the en banc decision references the necessary comparison between the
amount of the settlement and the compensation entitlement, as it states "Congress
intended to require prior written approval in the limited circumstance where a
claimant settles for an amount smaller that his LHWCA compensation entitlement."
Cowart, 927 F.2d at 832, 24 BRBS 96 (CRT).
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9)I must respectfully disagree with the emphasis placed by Judge
Brown on the "controlling nature of Cowart and Villanueva" to the
determination as to present and future medical benefits. It is noted that no party
has challenged on appeal the administrative law judge's award of medical benefits
and therefore the issue is not properly before the Board. Thus, contrary to my
dissenting colleague's statement, this opinion does not take the position that
Cowart does not bar future medical benefits. Moreover, I disagree with his
analysis that a different result is dictated by the fact that the Supreme Court
denied certiorari in Cretan v. Bethlehem Steel Corp., 1 F.3d 843, 27
BRBS 93 (CRT) (9th Cir. 1993), cert. denied, 114 S.Ct. 2705 (1994). It is
well established that the denial of certiorari "simply means that fewer than
four members of the Court deemed it desirable to review a decision of the lower
court" and "such denial carries with it no implication whatever regarding the
Court's views on the merits of case which it has declined to review." Maryland
v. Baltimore Radio Show, 338 U.S. 912, 917-919 (1950)(opinion of Justice
Frankfurter respecting the denial of the petition for writ of certiorari);
see also Singleton v. Commissioner of Internal Revenue, 439 U.S. 940
(opinion of Justice Stevens respecting the denial of the petition for writ of
certiorari).
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10)Collier identifies two employer interests: 1) a right
to directly recover compensation liability from the tortfeasor; and 2) a right to
the statutory setoff against compensation liability for any amount received from
the tortfeasor. See Pinell, 22 BRBS at 65.
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11)See generally Force v. Director, OWCP, 938 F.2d 981,
25 BRBS 13 (CRT) (9th Cir. 1991); Brandt v. Stidham Tire Co., 785 F.2d 329,
18 BRBS 73 (CRT) (D.C. Cir. 1986); 33 U.S.C. §902(12).
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12)The fact that the term "damages" in a third-party suit
includes all medical benefits, past and future, is clear from a reading of Sections
33(a), (b) and (e) of the Act. That includes the situation where the third-party
action is assigned to employer. Subsection (e) designates the amount of the
recovery to be retained by employer, specifying expenses, the cost of benefits
under Section 7 (i.e., the medical benefits), compensation paid, present
value of future compensation and the present value of all future medical benefits
under Section 7 to be estimated by the Director.
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NOTE: This is a PUBLISHED LHCA Document.
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