Carillo v. Louisiana Insurance Guaranty Ass'n , 559 F.3d 377 ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 17, 2009
No. 08-30359 Charles R. Fulbruge III
Clerk
CESAR CARILLO
Plaintiff-Appellee
v.
LOUISIANA INSURANCE GUARANTY ASSOCIATION
Defendant-Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
Before SMITH and SOUTHWICK, Circuit Judges, and ENGELHARDT, District
Judge.*
LESLIE H. SOUTHWICK, Circuit Judge:
The Louisiana Insurance Guaranty Association (“LIGA”) appeals the
district court’s judgment enforcing a twenty percent additional sum for late
payment of an award to an injured worker. It argues that it should not be
assessed the additional amount because it paid promptly after getting delayed
notice of the award. We find no reversible error and AFFIRM.
Cesar Carillo was injured in the course of his employment. His injuries
were covered under the Longshore and Harbor Workers’ Compensation Act
*
District Judge of the Eastern District of Louisiana, sitting by designation.
No. 08-30359
(“LHWCA”). LIGA is a guaranty fund created by state law that pays statutorily
permitted claims when a private insurer becomes insolvent, as occurred here.
See La. Rev. Stat. Ann. § 22:2056. LIGA settled Carillo’s claim. The parties
submitted the settlement to the Office of Workers Compensation Programs
(“OWCP”), a division of the U.S. Department of Labor. The District Director of
the New Orleans OWCP approved the settlement on February 27, 2006.
According to LIGA, it received no notice of the approved claim until March 16.
The day after LIGA alleges it received notice, it paid the claim.
By that time, Carillo already had filed a request with the District Director
for twenty percent additional compensation that becomes due when more than
a ten-day delay occurs in payment of a compensation order. LIGA disputed that
the payment was late. The District Director submitted the dispute to an
administrative law judge for hearing, which was held on August 29, 2006. On
April 24, 2007, that judge entered an order requiring LIGA to pay the additional
amount. On June 19, 2007, rehearing was denied and the matter was returned
to the District Director. On July 27, 2007, the District Director issued a
supplemental order of default enforcing the decision.
In its brief, LIGA asserts that it timely appealed the last-named order to
the Department of Labor’s Benefits Review Board. There is some record
evidence that an appeal was taken on July 19, 2007, but we are not aware of
whether it was pursued, and if so, its disposition.
Carillo filed for enforcement in district court on August 10, 2007.
Enforcement was ordered. LIGA appeals to this court.
DISCUSSION
We are presented with two arguments. First is that “filing” a
compensation order with the District Director, which starts the ten-day time
period for payment, must include receipt of the order by the parties. Second,
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No. 08-30359
LIGA argues that a state statute exempts it from paying the twenty percent
additional amount. We separately examine each issue.
1. Meaning of “Filing” of Compensation Order
The LHWCA has a detailed set of rules for the processing of claims by
injured workers. The reason for today’s dispute is a provision stating that if
compensation that has been ordered is not paid within ten days from when it is
due, a twenty percent additional amount must be paid:
If any compensation, payable under the terms of an award, is not
paid within ten days after it becomes due, there shall be added to
such unpaid compensation an amount equal to 20 per centum
thereof, which shall be paid at the same time as, but in addition to,
such compensation, unless review of the compensation order making
such award is had as provided in section 921 of this title and an
order staying payment has been issued by the Board or court.
33 U.S.C. § 914(f). The obvious question is when does compensation become due.
Both parties have agreed that the following provision, which makes a
compensation order “effective” upon its filing with the OWCP District Director,1
establishes the date that begins the ten-day period:
A compensation order shall become effective when filed in the office
of the [District Director] as provided in section 919 of this title, and,
unless proceedings for the suspension or setting aside of such order
are instituted as provided in subsection (b) of this section, shall
become final at the expiration of the thirtieth day thereafter.
Id. § 921(a).
There are still the loose ends of an order’s becoming “effective” in Section
921(a) and its becoming “due” for purposes of Section 914(f). Tying them
1
Some of the statutes we will quote refer to “deputy commissioner,” which is an out-of-
date title. The District Director has replaced that official; some duties have been assumed by
administrative law judges. See 20 C.F.R. § 725.101(a)(16); Betty B Coal Co. v. Dir., OWCP, 194
F.3d 491, 497 n.1 (4th Cir. 1999).
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No. 08-30359
together was done long ago when we determined that the terms are equivalent.
Tidelands Marine Serv. v. Patterson, 719 F.2d 126, 127 n.1 (5th Cir. 1983).
The doubt LIGA finds remaining despite the settled questions concerns
just when the 2006 order that approved Carillo’s claim was effectively “filed”
with the District Director. The relevant statutory section provides for receipt by
the District Director and a mailing to the claimant and employer:
The order rejecting the claim or making the award (referred to in
this chapter as a compensation order) shall be filed in the office of
the [District Director], and a copy thereof shall be sent by registered
mail or by certified mail to the claimant and to the employer at the
last known address of each.
33 U.S.C. § 919(e). LIGA argues that the entirety of these statutory duties must
be satisfied before a filing has occurred. Specifically, it argues that some form
of service on the parties must occur before filing is complete. Thus, the ten-day
deadline for paying an approved claim would not begin until LIGA received
notice. Once it received notice, LIGA asserts that it paid immediately.
The district court rejected this argument when, on October 22, 2007, it
denied LIGA’s Federal Rule of Civil Procedure 12(b)(6) motion to dismiss for
failure to state a claim. The court found that mailing the compensation order to
the parties was not part of the requirement of filing. On February 29, 2008, the
district court granted summary judgment and ordered enforcement. The court
stated that LIGA did not claim that it had filed an appeal to the Benefits Review
Board. The court in that statement was responding to LIGA’s argument that it
should never have accepted Carillo’s original claim. Certainly, though, the
initial settlement of the claim for compensation was no longer a live issue. The
district court appears to have been holding that it “does not have jurisdiction to
hear such an appeal,” meaning of the initial compensation order, not of the
supplemental one. The court in its October 2007 order had considered the merits
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No. 08-30359
of the argument about how to compute the ten days, and thus LIGA’s principal
merits argument had earlier been analyzed and rejected by the district court.
It is agreed that no appeal to the Benefits Review Board was taken of the
initial compensation order. As to the supplemental order, we have already noted
that LIGA alleges that it did appeal. There is scant, but not totally absent,
record evidence of that. The one document we found was a July 25, 2007 notice
by a Department of Labor claims examiner that a conference was cancelled
because the “Employer/Carrier” had on July 19 appealed to the Benefits Review
Board. As we will discuss, this factual question is of no importance to our
resolution of the issues before us.
In beginning our review, we categorize the order that assessed a penalty
on April 24, 2007, which the district court enforced. Such an order is labeled a
“supplemental order of default.” See In re Comp. under the LHWCA (Abbott v.
La. Ins. Gty. Ass’n), 889 F.2d 626, 630 (5th Cir. 1989). In Abbott, the underlying
compensation order was still the subject of an appeal to the Benefits Review
Board; its validity was not before the court for review. Id. at 628. Once the
internal Labor Department appeal of the underlying order was concluded, there
would have been a right to judicial review. 21 U.S.C. § 921(c). That stage had
not yet been reached. While the administrative appeal of that order continued,
a supplemental order of default was entered by an administrative law judge and
enforced by the district court. Our then-Chief Judge, Charles Clark, wrote that
supplemental orders of default were part of a “quick and inexpensive mechanism
for the prompt enforcement of unpaid compensation awards,” and no
administrative appeal from those orders was permitted. Id. at 629.
We had in an earlier case similarly held that suits for “payment of
compensation due under either § 914(f) or any other substantive section of the
LHWCA are to be brought in the district court and, only subsequent thereto, by
appeal to the appropriate court of appeals.” Tidelands, 719 F.2d at 129. It is not
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No. 08-30359
proper to appeal final orders under Section 914(f) to the Benefits Review Board.
Id. A district court is the initial venue for review of the supplemental orders.
We acknowledge that because the underlying compensation order had
already been paid, the need for prompt enforcement of what was only twenty
percent of the compensation was not as acute as in Abbott. Yet this additional
amount is part of the overall compensation. Therefore, we find no basis to bar
immediate enforcement of even this supplemental order.
The next question is the extent of the judicial review to be given the
supplemental order. The statute authorizing enforcement provides that the
supplemental order is “final.” Upon the order’s filing in district court, it will be
enforced if it is “in accordance with law.” 33 U.S.C. § 918(a). In Abbott, we
reviewed the procedural requirements of the statute governing the orders. We
found that Section 918 required such steps as an investigation of the claimant’s
application, notice to all interested parties, an opportunity for a hearing, and a
determination of the amount of the default. 889 F.2d at 629. We then found
that the order of default will be “in accordance with law” if the procedural
requirements are met. Id. There is no complaint here that any of those
procedures were bypassed. The relevant portion of the procedure for us is that
an order be entered “declaring the amount of the default,” which is then filed as
was the original compensation order. 33 U.S.C. § 918(a). LIGA argues that the
declaring of a default was erroneous.
We compare what we are being asked to review to what in Abbott we said
could not be reviewed. Chief Judge Clark wrote that the compensation award
itself was not reviewable as part of the enforcement of the supplemental order
of default. Abbott, 889 F.2d at 630. LIGA does not here seriously challenge the
underlying compensation order – indeed, it has paid it. Instead, it argues that
there never was a delay in payment. We conclude that LIGA’s issue is properly
before us. We now turn to its merits.
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No. 08-30359
The argument that “filing” of compensation orders is not complete until
there is some notice to the parties is not a novel one. Because of the ten-day
deadline for payment, delay in receiving notice of the obligation to pay is a
justifiable concern for the insurance carrier. Recently, we examined the filing
requirement. Grant v. Dir., OWCP, 502 F.3d 361 (5th Cir. 2007). We noted that
Section 919(e) required the compensation order to “be filed in the office of the
[District Director], and a copy thereof shall be sent . . . to the claimant and to the
employer . . . .” Id. at 364. Under that language, the “affirmative act of filing”
would “occur only after the paper has been received.” Id. at 365.
In addition to the statutory requirement, a regulation requires the District
Director to date and file the order, then to mail it:
Upon receipt thereof, . . . the district director . . . shall formally date
and file the transcript, pleadings, and compensation order (original)
in his office. Such filing shall be accomplished by the close of
business on the next succeeding working day, and the district
director shall, on the same day as the filing was accomplished, send
by certified mail a copy of the compensation order to the parties and
to representatives of the parties, if any.
20 C.F.R. § 702.349. All these provisions mean that “(1) filing a compensation
order requires a ‘formal act’ by the District Director; and (2) the District Director
can only file the order after it is received.” Grant, 502 F.3d at 364.
In Grant, the District Director admitted that he had not dated and filed
the order and that he had not served it on the parties. Id. at 362. Consequently,
the real issue was whether mere receipt in the District Director’s office sufficed.
We concluded that “filing requires, at a minimum, formal action by the District
Director,” but we reserved the question of whether filing “also requires service
of the order upon the parties by the District Director.” Id. at 365. In this case,
the issue cannot again be reserved for another day.
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No. 08-30359
As we analyze the concept, we note the widely accepted definition that a
“paper is filed when it is delivered to the proper official and by him received and
filed.” United States v. Lombardo, 241 U.S. 73, 76 (1916). In Grant, we
described this definition as “somewhat circular.” 502 F.3d at 364. The definition
does at least have the advantage of some clarity: whether a document is filed
does not depend on whether others are informed. The LHWCA is consistent
with this understanding. As noted, Section 919(e) provides that the order is to
“be filed in the office of the [District Director], and a copy thereof shall be sent,”
a phrasing that indicates that filing is completed and then the copy is sent out
to the interested parties. The regulation provides that the order and other
documents are to be dated and filed. It is after the filing that “the District
Director shall, on the same day as the filing was accomplished,” send notice to
parties. 20 C.F.R. § 702.349.
In passing on the issue in Grant, we recognized an apparent circuit split.2
502 F.3d at 365. One of our precedents indicates that we have already taken a
side on this issue. Lauzon v. Strachan Shipping Co., 782 F.2d 1217, 1220 (5th
Cir. 1985). We determined that a three-day grace period provided by then-
Federal Rule of Civil Procedure 6(e) to parties who must “do some act . . . within
a prescribed period after the service of a notice” did not apply to parties in the
position of LIGA. That was because the “award becomes ‘effective’ when ‘filed
in the office of the’” District Director, not when served on the parties. Id.2
Compare Sea-Land Serv., Inc. v. Barry, 41 F.3d 903, 908-09 (3d Cir. 1994) (holding
that filing and mailing are “two distinct procedures”), and Jeffboat, Inc. v. Mann, 875 F.2d
660, 662-63 & n.4 (7th Cir. 1989) (finding the question “arguable” and noting that the statute
“does not explicitly make mailing part of filing”), with Nealon v. Cal. Stevedore & Ballast Co.,
996 F.2d 966, 970-71 (9th Cir. 1993) (holding that filing includes service on the parties). In
Nealon, the Ninth Circuit found the statutory language “highly ambiguous,” and rested its
decision on analogous cases decided under the Black Lung Act and the LHWCA’s purpose of
delivering benefits to injured workers. 996 F.2d at 970. Nealon did not mention this court’s
decision in Lauzon, dismissed Jeffboat as not having decided the question, and was decided
before the Third Circuit issued Barry.
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No. 08-30359
(quoting 33 U.S.C. § 921(a)) (emphasis in Lauzon). Thus, “the time for payment
started running when the award was filed and not when [the employer] was
served.” Lauzon, 782 F.2d at 1220.
We conclude that filing occurs once the initial acts by the District Director
have occurred – such as the formal dating of the order and its filing in the office.
That filing must occur by the end of the first working day after receipt. By the
end of that same day but after the act of filing has been accomplished, the
District Director is to send the order to the parties.
Even were we to read the statute and regulation as making the sending
of the order to the parties part of the act of filing – and we do not – LIGA does
not dispute that the District Director did in fact formally date, file, and send the
order via certified mail, all on February 27, 2006. We find no manner in which
to make receipt of the order in a timely fashion by a party fit within the statute
and regulation’s description of the act of filing. LIGA makes an equitable point
by speculating that delay in delivery occurred due to Mardi Gras or the
relocation of the OWCP in the aftermath of Hurricane Katrina. Even if that is
so, clearly LIGA was aware of its own settlement. Whether LIGA itself
submitted the settlement to the OWCP on February 22 is not stated, but LIGA
would have known the submission was occurring, of its potential obligation for
a twenty percent surcharge, and of the problems of post-Katrina New Orleans.
LIGA’s awaiting the mail was less than diligent.
2. Louisiana Statutory Bar to Liability for Penalty
LIGA’s other appellate argument is that a Louisiana statute bars liability
for the late payment at issue here. See La. Rev. Stat. Ann. § 22:2067 (2009)
(formerly codified at id. § 22:1391). The statute provides there is no “liability on
the part of and no cause of action” against LIGA or its officers “for any action
taken by them in the performance of their powers and duties.” Id.
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No. 08-30359
In one case, a Louisiana court held this provision exempted LIGA from a
statutory finding that an insurer breaches its duty to an insured by paying more
than thirty days after a settlement agreement was reached. Caulfield v.
Leonard, 676 So. 2d 1117, 1119 (La. App. 5th Cir.), writ denied, 681 So. 2d 1262(1996). Even if Section 22:2067 has some relevance to our issue, we add that
one of our sister circuits has held that a Section 914(f) payment is not fairly seen
as a “penalty or fine”; rather, it is a core part of the “compensation” established
by the statute. Tahara v. Matson Terminals, Inc., 511 F.3d 950, 953 (9th Cir.
2007). An extra charge when a payment is late does not appear to be a cause of
action. Whether it is a liability in the sense barred by Section 22:2067 is a more
difficult question.
We end our consideration of the merits of the argument without giving an
answer because the issue is not properly before us. The statute exempting LIGA
from certain kinds of liability was not presented and argued to the district court.
Instead, in its motion to dismiss filed two weeks after suit was filed, LIGA
argued the twenty-percent extra compensation awarded for late payments was
not a “covered claim” it could pay. LIGA was a “mechanism for the payment of
covered claims . . . to avoid financial loss to claimants or policyholders because
of the insolvency of an insurer . . . .” La. Rev. Stat. Ann. § 22:2052. It argued
that the following statutory definition made it improper to pay this kind of claim:
(d) “Covered claim” shall not include any claim based on or arising
from a pre-insolvency obligation of an insolvent insurer, including
but not limited to contractual attorneys’ fees and expenses,
statutory penalties and attorneys’ fees, court costs, interest and
bond premiums, or any other expenses incurred prior to the
determination of insolvency.
Id. § 22:2055(3). The district judge rather unremarkably found that an extra
charge due to the delay in LIGA’s payment of the compensation was not a pre-
insolvency obligation of another insurance company.
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No. 08-30359
In addition, the statutory definition of “covered claim” does not clearly
exempt paying the twenty percent additional compensation:
(a) “Covered claim” means an unpaid claim . . . which arises out of
and is within the coverage and not in excess of the applicable limits
of an insurance policy to which this Part applies issued by an
insurer, if such insurer becomes an insolvent insurer after
September 1, 1970.
Id. The obligation of an insurer to comply with a federal provision for late
payments would seem to arise out of and be within the coverage of that policy.
The Louisiana statutory argument that was presented in the district court
has been abandoned here. We do not reach the different statutory issue that is
raised on appeal. The usual considerations that justify not reaching an
argument first presented on appeal fully apply. Guillory v. PPG Indus., Inc., 434
F.3d 303, 313 (5th Cir. 2005). In addition to those, it is worth remarking that
should the issue fairly be before us that a Louisiana statute blocks the twenty
percent additional compensation required by the LHWCA, the constitutional
issues surrounding federal preemption would arise. We are loath to use our
intrusive power of reviewing the constitutionality of a state statute unless the
issue is squarely before us. Peltier v. Assumption Parish Police Jury, 638 F.2d
21, 22 (5th Cir. Unit A Feb. 1981). An answer is not necessary here as the
question on which it would be based was not asked below.
The judgment of the district court is AFFIRMED.
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