Barscz v. Director, Office of Workers' Compensation Programs & Electric Boat Corp.

05-6420
Barscz v. Director, OWCP
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
_______________
August Term, 2006
(Argued: February 21, 2007 Decided: May 18, 2007)
Errata Filed: June 12, 2007)
Docket No. 05-6420-ag
_______________
ANNA BARSCZ (WIDOW OF CHARLES BARSCZ),
Petitioner,
—v.—
DIRECTOR, OFFICE OF WORKERS ’ COMPENSATION PROGRAMS AND ELECTRIC BOAT
CORPORATION ,
Respondents.
_______________
B e f o r e : KEARSE , CABRANES, and KATZMANN, Circuit Judges.
_______________
Petition for review of a decision and order of the Benefits Review Board allowing a credit for the
entire amount of a settlement resolving various state law claims to be taken against a death
benefits award pursuant to Section 3(e) of the Longshore and Harbor Workers’ Compensation
Act (“Longshoreman’s Act”). We conclude that only the portion of the settlement related to state
law death benefit claims may be credited against the death benefit award under the
Longshoreman’s Act and that on remand the party seeking to take the credit bears the burden of
proof in establishing the allocation of the settlement. REVERSED AND REMANDED.
_______________
APPEARING FOR PETITIONER: CAROLYN P. KELLY , O’Brien, Shafner, Stuart, Kelly &
Morris, P.C., Groton, CT
APPEARING FOR RESPONDENTS: PETER D. QUAY , Murphy and Beane, New London, CT for
Respondent Electric Boat Corporation
MATTHEW W. BOYLE , (Howard M. Radzely, Solicitor of
Labor, Allen H. Feldman, Associate Solicitor, Mark A.
Reinhalter, Counsel for Longshore on the brief), United
States Department of Labor, Washington, D.C. for
Respondent Director, Office of Workers’ Compensation
Programs
_______________
KATZMANN, Circuit Judge:
This case calls on us in principal part to determine whether the entire amount of a state
law settlement covering both disability and death benefits may be credited against an award of
death benefits under the Longshore and Harbor Workers’ Compensation Act (“Longshoreman’s
Act” or “Act”), 33 U.S.C. § 901 et seq. For the reasons that follow, we hold that it may not and
that only the portion of the settlement funds directed toward state law death benefit claims may
be credited. Accordingly we remand to the Benefits Review Board (“Board”) for fact-finding
regarding the allocation of petitioner’s prior state settlement between death benefits and disability
benefits. Further, we hold that on remand the burden of proof on the allocation of the state
settlement between death and disability benefits lies with the party asserting the credit.
I.
Charles Barscz (“Mr. Barscz”) worked at Electric Boat Corporation (a division of General
2
Dynamics Corporation) (“Electric Boat”) in New London, Connecticut from 1950 through 1978.
During his employment he was regularly exposed to asbestos and in November 1978 he was
diagnosed with asbestosis. Mr. Barscz sought compensation for his injuries sustained while
working for Electric Boat under both the Longshoreman’s Act and under Connecticut workers’
compensation laws.
On June 21, 1984, Mr. Barscz and his wife Anna Barscz (“Mrs. Barscz”) entered into a
settlement agreement (“Settlement”) with Electric Boat and three insurance companies resolving
all “past, present and future” state law claims relating to injuries suffered by Mr. Barscz during
his employment with Electric Boat. The Settlement covered a variety of injuries to Mr. Barscz
including: illness associated with exposure to asbestos; shoulder, back and neck injuries; and
hearing loss. It also covered possible claims that Mrs. Barscz had or may have had “by virtue of
any exposure which [Mr. Barscz] had to harmful irritants including but not limited to asbestos . .
. .”
The insurers agreed to pay “to the claimant” $35,000, of which $5,000 covered the
Barsczs’ “attorney’s fees.” Pursuant to the terms of the Settlement, such payment would be
accepted
as a full and final settlement for all compensation for said injury, and for all
results upon the claimant past, present and future, and for all claims past, present
and future medical, surgical, hospital and incidental expenses and all
compensation which may be due to anyone in case of the death of the claimant, to
the end that the payment of such sum shall constitute a complete satisfaction of all
claims due or to become due at any time in favor of anybody on account of the
claimed injury, or on account of any condition in any way resulting out of the said
injury, or on account of the death of the claimant.
The Settlement was approved by the Compensation Commissioner for the Second Compensation
3
District on June 27, 1984.
Mr. Barscz also sought compensation for his asbestosis under the Longshoreman’s Act.
In a decision dated December 3, 1984, administrative law judge Chester Shatz (“ALJ Shatz”)
determined that Mr. Barscz was permanently disabled as of November 24, 1978 and awarded him
compensation for permanent total disability from that date forward. ALJ Shatz also determined
that Mr. Barscz had suffered from a partial disability since at least 1974, which was when a chest
x-ray first revealed to Electric Boat that Mr. Barscz had lung abnormalities including emphysema
and pulmonary fibrosis. ALJ Shatz concluded that Electric Boat continued to employ Mr. Barscz
despite that partial disability.
Because ALJ Shatz determined that Mr. Barscz had a partial disability when he
contracted asbestosis, Electric Boat was able to obtain the benefit of section 8(f) of the
Longshoreman’s Act. Section 8(f) provides that an employer need only compensate an employee
for two years when an employee with an “existing permanent partial disability” sustains a work-
related injury that results in a permanent, total disability. 33 U.S.C. § 908(f); see also Sealand
Terminals, Inc. v. Gasparic, 7 F.3d 321, 323 (2d Cir. 1993) (per curiam). After the employer has
compensated the employee for two years, the obligation to compensate the employee shifts to a
special fund (“Special Fund”) that is administered by the Secretary of Labor (“Secretary”). 33
U.S.C. § 908(f); see also id. § 944 (establishing the Special Fund); Sealand Terminals, 7 F.3d at
323.1 Thus, ALJ Shatz ordered Electric Boat to compensate Mr. Barscz for 104 weeks; after 104
1
The Special Fund is funded, in part, through annual assessments on covered employers
by the Secretary. 33 U.S.C. § 944(c). The amount of that assessment is determined by several
factors including the amount of payments under 8(f) that are attributable to the employer. Id. §
944(c)(2)(B).
4
weeks any “continuing benefits” would be paid by the Special Fund. The order did not mention
the Settlement, which had already been approved, but it did provide that “[t]he Employer shall
receive a credit for all amounts of compensation previously paid to the Claimant as a result of his
pulmonary injury.” Despite this statement, Electric Boat paid the entire 104 weeks of
compensation without taking a credit for the Settlement. After that time the Special Fund made
disability payments to Mr. Barscz until his death in September 1992. The Special Fund did not
take any credit for the Settlement.
Following Mr. Barscz’s death, Mrs. Barscz sought death benefits under the
Longshoreman’s Act. In an order dated June 9, 2004 (“June 9 Order”), administrative law judge
Colleen A. Geraghty (“ALJ Geraghty”) concluded that because Mr. Barscz’s “work-related lung
disease hastened [his] death,” Mrs. Barscz was entitled to death benefits. Further, ALJ Geraghty
determined that because the elements of 8(f) had been satisfied and Electric Boat had covered the
first 104 weeks of Mr. Barscz’s disability claim, the Special Fund was responsible for paying
Mrs. Barscz’s death benefits.
Electric Boat moved for reconsideration of the June 9 Order, and for the first time, raised
the existence of the Settlement. It argued that under section 3(e) of the Act (“Section 3(e)”)
$30,000 should be credited against the Special Fund’s liability to Mrs. Barscz for death benefits.
Section 3(e) provides that “[n]otwithstanding any other provision of law, any amounts paid to an
employee for the same injury, disability, or death for which benefits are claimed under this
chapter pursuant to any other workers’ compensation law or [the Jones Act] shall be credited
against any liability imposed by this chapter.” 33 U.S.C. § 903(e).
5
ALJ Geraghty granted the motion and modified her original order to reflect a credit for
the entire amount of the Settlement. She acknowledged that disability and death benefits are
separate claims under the Act but noted that Mrs. Barscz had signed the Settlement, which
specifically mentioned death benefits and concluded that “[u]nder these circumstances, it is
appropriate to permit a credit against the death and survivor benefits due under the Act for the
amounts received in settlement of the State claim for death or survivor benefits.” Turning to the
question of what portion of the Settlement to credit against the death benefits, ALJ Geraghty
concluded that under prior Board decisions, because the Settlement resolved multiple claims and
the record did not establish how the settlement funds were to be apportioned the “employers and
the Special Fund are entitled to offset the entire amount paid to the parties under the State
settlement.” While conceding that this was a “harsh” result, she noted that claimants were in the
best position “to ensure that the settlement agreement specifically apportions the amounts paid in
settlement among the various claims.”
The Director of the Office of Workers’ Compensation Programs (“Director”) appealed
the ALJ’s decision to the Board.2 Because any death benefits would be paid by the Special Fund,
the Director was an interested party in both Mrs. Barscz’s original claim for death benefits and in
Electric Boat’s motion for reconsideration, but had not appeared in either proceeding. On appeal,
the Director argued that the burden of proving the apportionment of the Settlement should have
been placed on Electric Boat, not Mrs. Barscz, and that placing the burden on Mrs. Barscz was
2
Responsibility for the administration of the Longshoreman’s Act has been delegated to
the Office of Workers’ Compensation Programs. See 20 C.F.R. § 1.2. Under Department of
Labor regulations the Director may be represented in front of the Board “[o]n any issues
requiring representation” by attorneys designated by the Solicitor of Labor. Id. § 801.401.
6
inconsistent with the Supreme Court’s holding in Director, OWCP v. Greenwich Collieries, 512
U.S. 267 (1994), that under the Administrative Procedure Act (“APA”) a proponent of a rule or
order bears the burden of proof.
In a decision and order dated September 29, 2005, a two-member majority of the Board
affirmed ALJ Geraghty’s decision. The Board focused its analysis on the language of Section
3(e), which the Board read to provide that an amount paid to an employee for a state claim
“offsets any liability the employer has under the [Longshoreman’s] Act that is related to that
same injury, disability or death.” (emphasis in original). Based on that language, which it
viewed as “quite expansive,” the Board held that “in the absence of specific evidence of the
apportionment of a state settlement . . . [the] employer is entitled to a credit for the amount of the
state benefits paid.” The Board’s decision did not address the question of the burden of proof.
One member of the Board dissented. The dissent emphasized that Section 3(e) credit is
given for “amounts paid for the same injury, disability or death for which benefits are claimed.”
(emphasis in original). In the dissent’s view the use of the present tense of claim was highly
significant and signaled that the credit could only be taken for state funds paid for the same injury
or death currently being claimed under the Act. Based on that reading of the statute, because
only death benefits were being claimed in the proceeding, only the portion of the Settlement that
was intended to resolve state law death claims could be credited against the award to Mrs.
Barscz. Turning to the allocation of the Settlement, the dissent agreed with the Director that the
party asserting the credit bore the burden of proof.
Mrs. Barscz appealed the Board’s decision on November 23, 2005. The Director moved
to dismiss the appeal as untimely, but that motion was denied on July 19, 2006. Barscz v. Dir.,
7
OWCP, No. 05-6420 (2d Cir. July 19, 2006) (order denying motion to dismiss).
II.
In reviewing a decision of the Board, our review is limited to whether the Board made
any errors of law and whether the findings of fact of the ALJ are supported by substantial
evidence. Uzdavines v. Weeks Marine, Inc., 418 F.3d 138, 143 (2d Cir. 2005). Our review of
questions of law is de novo, while mixed questions of law and fact are reviewed either de novo or
under the clearly erroneous standard “‘depending on whether the question is predominately legal
or factual.’” Id. (quoting from United States v. Selioutsky, 409 F.3d 114, 119 (2d Cir. 2005)).
A. Does Section 3(e) Allow the Entire State Settlement To Be Credited Against the Death
Benefits Award?
The principal question presented is one of statutory interpretation: Whether Section 3(e)
of the Longshoreman’s Act allows the entire amount of the Settlement, which both parties
concede covered both disability and death claims, to be credited against Mrs. Barscz’s death
benefits. We begin our inquiry with the text of the statute; if it is plain on its face, that is, if it is
unambiguous, our inquiry usually ends. Whether statutory language is ambiguous is determined
by “the language itself, the specific context in which that language is used, and the broader
context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
Section 3(e) limits the credit that can be taken to “any amounts paid . . . for the same
8
injury, disability, or death for which benefits are claimed under this chapter.” 33 U.S.C. §
903(e).3 We view the words “are claimed” as critical in answering the question before us. When
read together with the phrase “the same injury, disability, or death,” the use of the present tense
unambiguously indicates that only those injuries currently being claimed can be considered in
applying the Section 3(e) credit.
The Board reads Section 3(e) differently, rejecting any distinction between the death
benefits being claimed by Mrs. Barscz and the disability benefits that had previously been
claimed by Mr. Barscz: “In isolation, it is true that claimant herein sought only death benefits.
However, when decedent was alive, he claimed, and was awarded, disability benefits under the
Act. The two cases are integral in that they are both related to the same injury . . . .” As the
Board’s own opinion makes evident, to sustain its interpretation of Section 3(e) the Board was
compelled to read the words “are claimed” as including both the present tense and the past tense
of the verb “claim” despite the fact that when given their plain meaning, the words refer only to
the present tense. The Board’s approach runs afoul of the rule that “Congress’ use of a verb
tense is significant in construing statutes,” United States v. Wilson, 503 U.S. 329, 333 (1992).
Its reading of Section 3(e) is therefore not supported by the language of the statute.
While our analysis could rest on the text of the statute alone, there are three other reasons
we adopt our reading of Section 3(e) and not the one adopted by the Board. First, Section 3(e)
lists “injury, disability, or death” in the disjunctive, signifying a distinction among the three. 33
3
Though on its face Section 3(e) is limited in application to “employees” it has been
applied in cases involving their survivors as well. See Bouchard v. Gen. Dynamics Corp., 963
F.2d 541, 543 (2d Cir. 1992).
9
U.S.C. § 903(e). We have previously held that when disability and death are listed in the
disjunctive in the Longshoreman’s Act, they should be treated independently, even when the
death and disability were caused by the same event. See Int’l Mercantile Marine Co. v. Lowe, 93
F.2d 663, 664-65 (2d Cir. 1938). In Lowe, we read section 14(m) of the Longshoreman’s Act,
which limited the “total compensation payable under this chapter for injury or death” to $7,500,
33 U.S.C. § 914(m) (repealed 1972), to separately limit to $7,500 compensation for injuries
sustained in an accident and compensation in the form of death benefits for the same accident.
Id. at 665. In rejecting the argument that the combined value of disability and death benefits for
the same accident should be limited to $7,500, we noted that death and disability benefits are
“separately provided for by separate sections of the act and accrue on different bases,” and that
the right of widows and next of kin to death benefits “is entirely separate and distinct from the
compensation for disability allowed the employee.” Id. at 664-65.4 By lumping together Mrs.
Barscz’s death claim and Mr. Barscz’s disability claim despite the use of the disjunctive, the
Board’s reading of Section 3(e) is in tension with the understanding of the Longshoreman’s Act
that guided our analysis in Lowe.
Second, our reading is supported by Section 3(e)’s legislative history. Congress passed
Section 3(e) to overrule United Brands Co. v. Melson, 594 F.2d 1068 (5th Cir. 1979), a Fifth
Circuit decision that read the Longshoreman’s Act to allow an employee to recover for the same
heart attack for which he had already received compensation in a state proceeding. In Melson,
the employee sought compensation from different employers in the state and federal actions; the
issue was not that one employer had been made to pay twice but that a single claimant had
4
The Act also provides separately for medical treatment for injuries. 33 U.S.C. § 907.
10
recovered twice for the same injury. Id. at 1075. The Fifth Circuit began its discussion by noting
that there was nothing in the Longshoreman’s Act that allowed an employer to have its liability
offset by compensation received for the same event under state law. Id. It then asked whether
“any overriding policy” required that the federal award be reduced. Id. The Fifth Circuit
reasoned that because the claimant was seeking compensation from two different employers,
either the employer who was liable under the Longshoreman’s Act or the claimant would receive
“a windfall” and that “[u]ntil Congress is moved by this unusual situation, we think that the
solution to this difficult problem is to allow the windfall of double recovery to reside with the
injured worker.” Id.It was this windfall to claimants that Congress sought to overrule in adding Section 3(e)
to the Longshoreman’s Act. See 130 Cong. Rec. 8326 (“[T]he offset is intended to apply where
the employee’s non-Longshore claim is against an employer other than the one against whom he
has filed a Longshore claim. Accordingly, the court’s decision on this point in Melson . . . is
overruled.”); 130 Cong. Rec. 25905 (same); see also E.P. Paup Co. v. Dir., OWCP, 999 F.2d
1341, 1350 (9th Cir. 1993) (noting that Congress was attempting to overrule Melson and address
the issue of double-recovery when it passed Section 3(e)).5 The reading of Section 3(e) we adopt
is consistent with Congress’s purpose of limiting double recoveries for the same injury by the
same claimant; the reading adopted by the Board would go beyond Congress’s limited purpose of
preventing double recovery by the same claimant and would decrease awards based on amounts
5
While the legislative history also states that the “scope of the offset is to be broadly
construed,” that statement refers to the fact that it applies “not only to instances where the
employee received State workers’ compensation” but also to benefits received under other
federal statutes. 130 Cong. Rec. 8326.
11
previously received by other claimants (i.e., the deceased spouses of claimants seeking death
benefits). In the instant case, the Board’s interpretation would credit disability benefits recovered
under state law by Mr. Barscz against Mrs. Barscz’s federal death benefits. The Board’s
interpretation therefore exceeds Congress’s purpose in overruling Melson, which was to preclude
individual claimants from collecting the same benefits more than once.
Third, our reading is consistent with how other circuits have applied an analogous section
of the Act which also addresses the problem of double-recovery. Section 33(f) provides that if a
“person entitled to compensation” under the Longshoreman’s Act recovers for the same “injury
or death” against a third party, the employer may offset the net amount recovered from the third
party against the amount it is required to pay. 33 U.S.C. § 933(f). In applying section 33(f), the
circuits have held that where a third-party payment covers multiple parties, an employer can only
apply a credit for that portion of the payment that goes to the claimant under the Longshoreman’s
Act. See Force v. Dir., OWCP, 938 F.2d 981, 985 (9th Cir. 1991); see also Bundens v. J.E.
Brenneman Co., 46 F.3d 292, 304-05 & n.27 (3rd Cir. 1995); I.T.O. Corp. of Balt. v. Sellman,
967 F.2d 971, 972-73 (4th Cir. 1992).6 In its decision below, the Board distinguished cases
applying section 33(f) because while section 33(f) limits its credit to the “person entitled to
compensation,” 33 U.S.C. § 933(f), such limiting language “is absent from Section 3(e).” But
6
This reading of Section 3(e) is consistent with how other courts have applied section
14(j), which allows employers to be reimbursed from unpaid installments or payments for
“advance payments of compensation.” 33 U.S.C. § 914(j). In determining whether unpaid
installments can be a source for reimbursement, other circuits have ensured that the credit is
given against the funds going to the same claimant that received the advance payment. See, e.g.,
Cooper/T. Smith Stevedoring Co. v. Liuzza, 293 F.3d 741, 748 (5th Cir. 2002) (distinguishing
between disability payments made to widow as representative of decedent’s estate and death
benefits, which were paid directly to the widow).
12
the distinction the Board sought to draw is premised on its mistaken view that the use of the
present tense of claim in Section 3(e) does not limit the credit to the specific injury, disability or
death claimed. Because we think Congress’s choice of verb tense is significant, we believe
Section 3(e), like section 33(f), contains limiting language and thus cases applying section 33(f)
are instructive.
In sum, we hold that Section 3(e) limits the credit that can be taken to amounts paid for
the same injury, death or disability currently being claimed under the Longshoreman’s Act.7 The
Board erred when it ruled the entire $30,000 of the Settlement could be credited against Mrs.
Barscz’s death benefits. While the only “injury, disability, or death” at issue in this case is Mr.
Barscz’s death, the Settlement covered both claims for Mr. Barscz’s death and claims relating to
Mr. Barscz’s injury. In order to appropriately limit the credit to the death benefits being claimed,
the Settlement amount must be apportioned between the amount paid to settle Mr. Barscz’s
injury and disability claims and the amount paid to settle Mrs. Barscz’s future death claims. The
text of the Settlement provides scant guidance on this issue and on remand it may be necessary to
conduct further fact-finding. There remains the question of who bears the burden of proof on this
apportionment. It is to that question that we now turn.
B. Who Bears the Burden of Proof on Allocation of the State Settlement?
7
We note that our reading of Section 3(e) is consistent with the position taken by the
Director in his brief. We grant deference to the Director’s interpretation of the Longshoreman’s
Act, Fleischmann v. Dir., OWCP, 137 F.3d 131, 136 (2d Cir. 1998), so long as the Director’s
interpretation is “reasonable and consistent with the statute,” Lockheed Martin Corp. v.
Morganti, 412 F.3d 407, 411 (2d Cir. 2005). The Director’s reasonable interpretation of Section
3(e) “brings at least some added persuasive force to our conclusion.” Metro. Stevedore Co. v.
Rambo, 521 U.S. 121, 136 (1997).
13
The adjudicative procedures for claims brought under the Longshoreman’s Act are
governed by the APA. 33 U.S.C. § 919(d) (hearings under the Longshoreman’s Act conducted in
accordance with APA); see also Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 138 (1997).
Under section 7(c) of the APA “the proponent of a rule or order has the burden of proof.” 5
U.S.C. § 556(d). In Rambo, the Supreme Court explained that when an employer seeks to
modify a compensation award due to a “change in conditions” under section 22 of the
Longshoreman’s Act, the employer is the proponent of the order seeking modification and thus
section 7(c) of the APA dictates that the employer bears the burden of proof. Rambo, 521 U.S. at
139. We see no reason to treat a motion to modify an award by claiming a credit under Section
3(e) any differently than a motion to modify an award under section 22. We conclude that a party
seeking to claim a credit under Section 3(e) is a proponent of the order and, under section 7(c) of
the APA, that party bears the burden of proof in proving that a credit should be applied.8
It is beyond cavil that when a party bears the burden of proof, it bears that burden for each
element of its claim. As we have explained, it is a necessary element of the Section 3(e) credit
that the amount paid to the employee or their survivor be for the same injury claimed. Thus the
burden of proof on the issue of allocation lies with the party seeking the credit, Electric Boat.9
Placing the burden of proof on the proponent of the Section 3(e) credit is consistent with
8
To the extent that Section 3(e) can be understood to operate as an affirmative defense to
liability under the Longshoreman’s Act, we take note of the Supreme Court’s observation in
Greenwich Colleries that requiring a party asserting an affirmative defense to bear the burden of
proof on that defense is consistent with section 7(c). 512 U.S. at 278.
9
While the position we adopt is consistent with the views of the Director, this does not
add any persuasive force to our conclusion. The Director is not charged with administering the
APA and his views are not entitled to deference. Rambo, 521 U.S. at 137 n.9.
14
how courts have applied section 33(f), a section of the Longshoreman’s Act which we have
already noted is analogous to Section 3(e). See Force, 938 F.2d at 985; I.T.O. Corp., 967 F.2d at
973. While the decisions under section 33(f) rely, not on the APA, but on the “overall
humanitarian policy” of the Longshoreman’s Act which requires that “all doubtful questions of
fact be resolved in favor of the injured employee,” Force, 938 F.2d at 985 (quotation marks
omitted), we view their reasoning as providing additional support for our holding.
For the reasons stated above, we hold that in applying Section 3(e) the burden of proof
lies on the party that seeks to apply the credit. On remand Electric Boat will bear the burden of
proof on the allocation of the Settlement.
III.
For the reasons set forth above, we hold that under Section 3(e) only the portion of the
Settlement that covered Mrs. Barscz’s state law death claims may be credited against her
Longshoreman’s Act death benefits. Further, we hold that on remand, the party claiming the
Section 3(e) credit, Electric Boat, bears the burden of proof in establishing the apportionment of
the Settlement. The September 29, 2005 decision and order of the Board is REVERSED, and
we REMAND for further proceedings consistent with this Opinion.
15