Filed: Jan. 26, 1995
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 1995 Decisions States Court of Appeals for the Third Circuit 1-26-1995 Bundens v JE Brenneman Co Precedential or Non-Precedential: Docket 94-3163 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995 Recommended Citation "Bundens v JE Brenneman Co" (1995). 1995 Decisions. Paper 23. http://digitalcommons.law.villanova.edu/thirdcircuit_1995/23 This decision is brought to you for free and open access by the Opinions of the United State
Summary: Opinions of the United 1995 Decisions States Court of Appeals for the Third Circuit 1-26-1995 Bundens v JE Brenneman Co Precedential or Non-Precedential: Docket 94-3163 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995 Recommended Citation "Bundens v JE Brenneman Co" (1995). 1995 Decisions. Paper 23. http://digitalcommons.law.villanova.edu/thirdcircuit_1995/23 This decision is brought to you for free and open access by the Opinions of the United States..
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Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
1-26-1995
Bundens v JE Brenneman Co
Precedential or Non-Precedential:
Docket 94-3163
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995
Recommended Citation
"Bundens v JE Brenneman Co" (1995). 1995 Decisions. Paper 23.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/23
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 94-3163 and 94-3175
BARBARA J. BUNDENS,
(widow of Howard E. Bundens),
Petitioner (No. 94-3163)
v.
J.E. BRENNEMAN COMPANY;
TRAVELERS INSURANCE COMPANY; and
DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR,
Respondents
J.E. BRENNEMAN COMPANY and
TRAVELERS INSURANCE COMPANY,
Petitioners (No. 94-3175)
v.
BARBARA J. BUNDENS
(widow of Howard E. Bundens) and
DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS,
UNITED STATES DEPARTMENT OF LABOR;
BENEFITS REVIEW BOARD,
Respondents
Petitions from Benefits Review Board
Nos. 0090-1 and 91-1242
Argued: September 19, 1994
BEFORE: Becker and Cowen, Circuit Judges
and Pollak, District Judge*
(Filed: January 26, 1995)
*Honorable Louis H. Pollak, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
Morris M. Shuster (argued)
Chimicles, Jacobsen & Tikellis
361 West Lancaster Avenue
One Haverford Centre
Haverford, PA 19041
Counsel for Barbara J. Bundens
Widow of Howard E. Bundens
Petitioner in No. 94-3163
Respondent in No. 94-3175
Gabriel D. Cieri (argued)
Krusen, Evans & Byrne
6th & Walnut Streets
Curtis Center, Suite 1100
Philadelphia, PA 19106
Counsel for J.E. Brenneman Company
Petitioner in No. 94-3175
Respondent in No. 94-3163
Counsel for Travelers Insurance Company
Petitioner in No. 94-3175
Respondent in No. 94-3163
Allen H. Feldman
Deborah Greenfield (argued)
Joshua T. Gillelan, II
Nathaniel I. Spiller
United States Department of Labor
Office of the Solicitor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Counsel for Director, Office of
Workers' Compensation Programs,
United States Department of Labor
Respondent in Nos. 94-3163 and 94-3175
OPINION
COWEN, Circuit Judge.
Claimants are the widow and son of a deceased diver and
dockbuilder. They appeal the decision of the United States
Department of Labor, Benefits Review Board ("Board"), which held
that the decedent's employer was not required to pay benefits
under the Longshore Harbor Workers Compensation Act, 33 U.S.C. §
901, et seq., ("LHWCA") due to statutory exemption and credit
provisions which applied as a result of a court-approved
settlement of their previous federal court litigation. The
employer has filed a protective cross-appeal solely to preserve
its right to have this court examine the employment status of the
decedent in the event that we reverse the Board on the release
and credit issues.
We will affirm the order of the Board that the decedent
was a harbor worker, not a seaman. Although the Board concluded
that the employer could receive a full credit under either §
903(e) or § 933(f), we hold that only when these two sections are
applied together do they provide a credit to the employer where
the apportionment of funds between prior settled claims is
unknown. The Board concluded that the "written approval"
requirement of § 933(g)(1) does not apply. We will affirm the
order of the Board, however, on other grounds. Next, we will
affirm its determination that the notice provision of § 933(g)(2)
was satisfied by virtue of the employer's participation in the
tort settlement. Finally, we will reverse the order of the Board
that the claimants are not entitled to any benefits under the
LHWCA and remand this case for further proceedings consistent
with this opinion.
I.
A. Factual History
Howard Bundens ("decedent") was employed by J.E.
Brenneman Co. ("Brenneman") as a diver and dockbuilder on a
variety of marine construction jobs. On August 29, 1978,
decedent had been assigned with other employees of Brenneman to
the Monsanto pier on the Delaware River to remove a damaged
mooring platform, known as a dolphin. A tug boat towed
Brenneman's heavy-lifting derrick barge, the Conqueror, to the
Monsanto main pier where it picked up the decedent together with
the other members of the crew. Before going down-river to the
area of the broken dolphin, the Conqueror attached an anchor
cable from its bow to the main pier. The tug then towed the
barge some distance past the site of the broken dolphin. At that
location, the Conqueror set an anchor off its stern. The tug
next brought the Conqueror back near the site of the broken
dolphin and departed. By pulling itself with its winches along
the cables at its bow and stern, the Conqueror was able to
maneuver along the pier to facilitate cutting and removal of the
damaged dolphin.
The decedent and other workers performed this work by
using torches to cut the steel H-beam supports underneath the
dolphin, while the Conqueror's 90-ton derrick supported the
weight of the dolphin. The workers did the cutting work from
planks fastened to the beams under the dolphin and from float
stages, which were floating wooden work platforms about forty
feet long. When the dolphin was cut free, the derrick lifted it
onto the deck of the barge.
After this task was accomplished, the decedent walked
back to the main pier via the shoreline. Meanwhile, the crew
made ready to move the Conqueror to a location at Monsanto's main
pier where it was to be secured for the night. The Conqueror
maneuvered itself down-river to weigh its stern anchor and then
pulled itself back up-river along its bow cable approximately 300
feet past the damaged pier to the main pier. Once the Conqueror
arrived at the site at the main pier where Brenneman intended to
moor her overnight, several lines were heaved to the decedent and
another worker on the pier, and the anchor cable at the bow was
unfastened.
A strong wind caused the bow of the Conqueror to "hang
up" behind a piling at the pier and, simultaneously, the stern
pitched out into the river. Decedent went on board the Conqueror
to help pull the aft end of the barge closer to the pier.
Several workers, including the decedent, rigged an additional
mooring line from a point on the pier, around and through various
points at the stern of the barge, and along the starboard side.
The line continued through a fair lead block, also known as the
main snatch block (which was affixed to the deck), and then onto
a winch drum or spool. Once the line was through this last fair
lead block, the decedent took the end of the line and wrapped it
several times around the spool. Due to the tension on the
mooring line created by the spool, without warning the fair lead
block broke. The decedent was killed almost instantly when he
was struck by either a piece of the broken fair lead block or the
ruptured line.1
B. Procedural History
Barbara Bundens ("Bundens"), on behalf of herself, her
minor son, Gregory Bundens, and her deceased husband's estate,
filed a tort action in the United States District Court for the
Eastern District of Pennsylvania on March 13, 1979.2 The next
day, Bundens filed a claim for death benefits on behalf of
herself and her son under the LHWCA. Bundens contacted the
Deputy Commissioner of the Office of Workers' Compensation
Programs to request that the LHWCA claim be held in abeyance
pending the termination of the federal court action. In the
federal court action, Bundens asserted claims against Brenneman
both under the Jones Act and as the vessel owner for negligence
under 33 U.S.C. § 905(b) of the LHWCA.3 When Brenneman joined
1
. When the decedent was struck, his right arm was amputated and
he received lacerations of the liver, diaphragm, and one of his
lungs. App. at 25.
2
. All references to "Bundens" will be understood to include her
son, Gregory, unless it becomes necessary to make a distinction,
in which case we will refer to Barbara Bundens as "Barbara" and
to Gregory Bundens as "Gregory."
3
. The complaint stated as follows: "Plaintiff brings this
action pursuant to the general maritime law of the United States
(..continued)
and/or the Jones Act, 46 U.S.C. § 688 . . . ." App. at 26.
Brenneman argues in its answering brief (and at oral argument)
that a § 905(b) claim was never asserted in the complaint and
that they have been unable to determine if an amended complaint
was filed which set forth such a claim. Brenneman's answering
brief at 14 n.3. Bundens argues that although § 905(b) was never
asserted as such in the complaint, throughout the federal court
litigation, she maintained that Brenneman was liable for
negligence pursuant to § 905(b). In fact, the district court
judge who signed the order, App. at 84a, settling the federal
tort suit referenced and approved Bundens' Motion for Approval of
Settlement which stated:
Plaintiff's alternative claims against
Brenneman were that the decedent was a seaman
and that Brenneman, as vessel owner, had
breached its warranty of seaworthiness or if
the decedent was not a seaman, Brenneman as
vessel owner, was liable because of its
negligence pursuant to 33 U.S.C. § 905(b).
App. at 87a (emphasis added).
We are unable to find anywhere in the district court
record an objection by Brenneman that the complaint did not set
forth a § 905(b) claim. Additionally, there is no indication
that Brenneman, at the time the settlement was approved, objected
to Bundens' characterization of the federal court litigation as
including a § 905(b) claim. Furthermore, as stated above, this
characterization of the federal court litigation was accepted by
the district judge.
Section 905(b) of the LHWCA states in relevant part:
Negligence of Vessel. In the event of injury
to a person covered under this chapter caused
by the negligence of a vessel, then such
person, or anyone otherwise entitled to
recover damages by reason thereof, may bring
an action against such vessel as a third
party in accordance with the provisions of
section 933 of this title, and the employer
shall not be liable to the vessel for such
damages directly or indirectly and any
agreements or warranties to the contrary
shall be void.
33 U.S.C. § 905(b) (1988).
The 1972 amendments to the LHWCA added § 905(b) which
provided that a longshore worker employed directly by the vessel
owner could file suit against his or her employer with certain
additional parties as third-party defendants, Bundens filed suits
against these parties as direct defendants.4
Brenneman filed a motion for summary judgment on
December 9, 1981, claiming that as a matter of law the decedent
was not a seaman under the Jones Act. Bundens by cross-motion
for summary judgment claimed that the decedent was either a
seaman under the Jones Act or a harbor worker under the LHWCA.
The district court denied both motions.
(..continued)
limited exceptions. The Supreme Court affirmed this dual
capacity doctrine in Jones & Laughlin Steel Corp. v. Pfeifer, 462
U.S. 523, 528-32,
103 S. Ct. 2541, 2546-48 (1983), thus
confirming that an employee can sue his employer as vessel owner.
In 1984, § 905(b) was amended to prohibit recovery by
an employee against an employer for negligence if the employer is
the owner of the vessel and the employee is engaged in
shipbuilding, repairing, or breaking services. The amended
provision, however, only applies to injuries sustained after
September 28, 1984, approximately five years after the filing of
the federal tort suit. Therefore, when the suit was initiated,
Bundens, regardless of her husband's duties, was able to maintain
a negligence action in federal court against Brenneman, who was
owner of the barge.
4
. Specifically, Bundens filed suit against the following
companies: (1) Independent Lighterage Company ("Independent") --
the company that sold the barge, Conqueror, to Brenneman; (2) A.
Moe & Company, Inc. ("A. Moe") -- the company that performed
repair and testing services on the vessel; (3) Universal
Technical Testing Laboratories, Inc. ("Universal") -- the company
that performed tests and inspections of the blocks and associated
gear of the vessel; (4) Merritt-Chapman & Scott Corporation
("Merritt") -- the builder of the barge; and (5) Raymond
International Builders, Inc. and its parent company, Raymond
International, Inc. (collectively "Raymond") -- the companies
that later took control of the assets of the builder and sold the
barge to Independent. She sued all five parties alleging
negligence. Additionally, she sued Merritt and Raymond alleging
strict products liability.
Extensive settlement negotiations ensued, after which
Bundens and all defendants entered into a comprehensive
settlement of the federal litigation. The settlement provided
for: (1) a Release Agreement ("Release") between Bundens and
Brenneman; (2) an Indemnity Agreement ("Indemnity") between the
same parties; and (3) a Settlement Agreement and Mutual Release
("Settlement") among all of the co-defendants.
The Release provided that in exchange for one million
dollars, Bundens released Brenneman (but not any compensation
insurance carrier) from all tort claims arising out of and
related to the death of the decedent. The Release was structured
in such a way as to preserve Bundens' right to pursue the LHWCA
claim for death benefits that had been filed earlier. The
Release also preserved any factual or legal contentions that
could be raised in the LHWCA proceedings, including a defense by
the compensation carrier that its liability had been discharged
by virtue of the federal court settlement.5
5
. The Release stated in relevant part:
It is specifically understood that the
Releasor [Bundens] may pursue and prosecute a
claim for compensation benefits under the
[LHWCA] on behalf of herself and Gregory
Bundens, a minor, which claim Releasor
represents has previously been filed. The
parties hereto intend that this release shall
be without prejudice to the factual and legal
contentions which may be raised in any future
compensation proceedings by Releasor and by
Brenneman's compensation insurer or
underwriter. Neither the execution and
acceptance of this release, nor the payment
and acceptance, nor the payment and
acceptance of the consideration recited
The Indemnity was designed to ensure that Brenneman
would not have to pay in excess of one million dollars as a
consequence of decedent's death. Thus, in the event that
Travelers Insurance Company ("Travelers"),6 made a claim against
Brenneman for reimbursement for any monies paid to Bundens as
compensation benefits under the LHWCA, Bundens agreed to
indemnify and hold Brenneman harmless from any liability,
including counsel fees. The Indemnity anticipated that, if
Travelers were to succeed in an action against Brenneman, the
amount of benefits already paid to Bundens, combined with
Brenneman's costs and counsel fees incurred in defending
Travelers' indemnity claim, would not exceed $400,000.
Accordingly, the Indemnity specified the sum of $400,000 to be
(..continued)
herein, shall estop or be deemed to estop the
Releasor, Brenneman, its insurers or
underwriters or any entities or persons
appearing on its behalf, from raising or
proving any factual or legal contentions in
such compensation proceedings, which they
would otherwise be entitled to raise and
prove. Nothing herein shall be construed as
preventing the compensation carrier from
defending the compensation claim on the basis
that its liability is discharged because this
Agreement constitutes settlement of a "third
party claim", or as preventing the Releasor
from contending that such defense is
inapplicable.
App. at 93a-94a (emphasis added).
6
. Travelers was Brenneman's compensation carrier under the
LHWCA. However, as an owner and operator of vessels, Brenneman
was insured by Continental Insurance Co. ("Continental"). The
policy that Brenneman had with Continental insured Brenneman
against claims by its employees under the Jones Act and general
maritime law.
set aside out of the $1,000,000 paid to Bundens under the
Release.
The Settlement executed among all of the defendants in
the district court litigation dismissed with prejudice all of the
Bundens' claims.7 It also fixed the respective amount that each
defendant would contribute to the $1,000,000 settlement
established in the Release.8
7
. Bundens was not a party to and did not sign this settlement
agreement and mutual release, but she is referenced in the
document as follows:
WHEREAS, in consideration of the payment of
One Million Dollars ($1,000,000.00) by
negotiable instrument(s), in United States
currency, receipt of which shall be
acknowledged by Bundens for all those
entitled to recover for the wrongful death of
Howard E. Bundens, deceased, Bundens has
agreed to dismiss with prejudice all of the
aforementioned lawsuits against Defendants
and has agreed to release and indemnify
Brenneman as specifically set forth in the
Release Agreement and Indemnity Agreement
attached hereto as Exhibits "A" and "B",
respectively, and incorporated herein by
reference . . . .
App. at 63 (emphasis added).
As we understand the terms of the settlement, Bundens'
approval of the settlement was conditioned on her receiving a
total of $1,000,000 from any or all of the defendants. Likewise,
Brenneman's approval of the settlement was conditioned on its
paying no more than $861,600. Thus, as we will later explain,
although Bundens signed a settlement agreement only with
Brenneman, she necessarily settled the lawsuits with all of the
other defendants at the same time. (NOTE: All monetary amounts
in this opinion will be rounded to the nearest dollar.)
8
. The $1,000,000 was to be funded by the defendants as follows:
a.) Brenneman $861,600
b.) Independent $ 41,700
c.) A. Moe $ 20,000
Although Travelers was invited to participate in the
settlement negotiations, it declined. After the settlement was
reached on June 8, 1983, Travelers filed a motion to intervene in
the federal court litigation with the intention of opposing the
settlement as an attempt by Bundens to receive a double recovery.
The motion to intervene was denied on the grounds that Travelers
was not prejudiced by the settlement.
The district court approved the Settlement Agreement
and the dismissal of the federal court tort litigation in July of
1983.9 Because the lawsuit was dismissed when the parties agreed
upon a settlement, the district court never adjudicated whether
the decedent was a seaman or a harbor worker.
After the case was settled, Bundens pursued her claim
for compensation benefits under the LHWCA. An evidentiary
hearing was held before an Administrative Law Judge ("ALJ"), and
in January of 1986, the ALJ issued a decision and order
(..continued)
d.) Universal $ 5,000
e.) Raymond $ 41,700
f.) Merritt $ 30,000
Pursuant to the Release, Brenneman was to pay the
$1,000,000 to Bundens. It was the responsibility of Brenneman to
collect contribution from the other defendants.
9
. In a later order, the district judge approved Bundens'
attorneys' fees request for one-third of the recovery, and
reimbursement for costs in the amount of $20,589. The balance of
the settlement funds ($646,078) was apportioned 70% to Barbara
and 30% to the guardian of Gregory. Thus, the net recoveries
from the settlement were:
Barbara Bundens $452,255
Gregory Bundens $193,823
concluding that the decedent satisfied all three prongs of the
Griffith test for crew member status and was therefore a seaman.
Griffith requires that: (1) a worker have a more or less
permanent connection with a vessel; (2) the vessel be in
navigation; and (3) the worker must be on board primarily to aid
in navigation. Griffith v. Wheeling Pittsburgh Steel Corp., 521
F.2d 31, 36 (3d Cir. 1975), cert. denied,
423 U.S. 1054, 96 S.
Ct. 785 (1976). The ALJ dismissed Bundens' claim for benefits
after concluding that the decedent was expressly excluded from
coverage under § 902(3) of the LHWCA because he was a seaman, not
a harbor worker.10
On appeal to the Board, Bundens challenged the ALJ's
determination that her husband was on board the barge Conqueror
primarily to aid in navigation. The Board concluded that the
ALJ's finding was neither supported by the record evidence nor
applicable law. Accordingly, it reversed the ALJ's finding that
the decedent was a seaman excluded from coverage under the LHWCA.
The Board additionally noted that it did not need to reach
Bundens' challenge to the ALJ's finding that the decedent had a
10
. Section 902 of the LHWCA states in relevant part:
When used in this chapter -- (3) The term
"employee" means any person engaged in
maritime employment, including any
longshoreman or other person engaged in
longshoring operations, and any harbor-worker
including a ship repairman, shipbuilder, and
ship-breaker, but such term does not include
-- (G) a master or member of a crew of any
vessel.
33 U.S.C. § 902(3)(G) (1988).
permanent connection to a vessel, because the Board's holding
nullified the ALJ's determination of seaman status on other
grounds. It remanded the case for the ALJ to determine if
Bundens was entitled to LHWCA benefits, and whether Brenneman was
entitled to statutory credit under § 903(e) for its payment under
the tort settlement agreement.11
On remand another ALJ found that Bundens was entitled
to benefits under the LHWCA, and rejected Brenneman's argument
that it was entitled to a credit under § 903(e). The ALJ
reasoned that Brenneman would be entitled to § 903(e) credit only
if the tort settlement disposed of the claims under the Jones
Act, but not if it disposed of Bundens' § 905(b) claim under the
LHWCA. The ALJ further noted that this issue was not decided in
the federal litigation.12 According to the ALJ, the settling
11
. Section 903(e) of the LHWCA states:
Notwithstanding 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 section 688 of title 46, Appendix [the
Jones Act] (relating to recovery for injury
to or death of seamen) shall be credited
against any liability imposed by this
chapter.
33 U.S.C. § 903(e) (1988) (emphasis added).
12
. Had there been a judicial determination of the decedent's
employment status, the case before us would be quite different.
If there had been an adjudication that the decedent was a seaman,
then Bundens would be legally precluded from recovering
compensation benefits under the LHWCA because only harbor workers
can recover under the LHWCA. Conversely, if there had been a
judicial determination that the decedent was a harbor worker, he
would not have been entitled to recover under the Jones Act and
parties intended the nature of the settlement to depend on the
decedent's status as a seaman under the Jones Act or as a harbor
worker under the LHWCA, as later determined in the LHWCA
proceeding. The ALJ concluded that Bundens was a harbor
worker,13 and that the tort settlement disposed of the claims
under § 905(b) of the LHWCA, rather than under the Jones Act. He
therefore concluded that Brenneman was not entitled to a credit
under § 903(e).
In a supplemental petition for further consideration
following denial upon reconsideration, Brenneman argued that the
ALJ must revisit the issue of the decedent's employment status in
light of recent Supreme Court precedent which eliminated the "aid
in navigation" element of the seaman status test. McDermott
Int'l v. Wilander, 498 U.S. 337, 353,
111 S. Ct. 807, 816 (1991).
Since Wilander was decided after the decisions of the Board and
ALJ, the Board could not have considered it when remanding the
case. The order of the Board was erroneously premised on the
view that because the evidence had not supported the finding of
the first ALJ that the decedent did not aid in navigation, he
could not be a seaman. On remand, the ALJ acknowledged that the
"aid in navigation" element is no longer applicable, but that the
(..continued)
all of the money obtained from the federal tort settlement would
be attributable to the § 905(b) negligence claim.
13
. The ALJ made the following findings: (1) the decedent's
duties included diving and dockbuilding; (2) the decedent's job
on the date of his death was that of a wharf and dockbuilder; and
(3) during the last three years of his employment, the decedent
spent approximately one-third of his employment as a diver and
two-thirds as a dockbuilder.
decedent was still a harbor worker because: (1) he engaged in
traditional longshore (harbor worker) activities; and (2) the
barge was not a "vessel in navigation" since at the time of
decedent's death, it was simply being secured at the dock for the
night. All parties concede that this latter finding by the ALJ
was clearly error since Brenneman and Bundens had stipulated to
the fact that the barge was a "vessel in navigation."
Brenneman appealed the decisions of the ALJ and also
argued that Bundens' compensation claim was barred under §
933(g), because she had failed to obtain Travelers' written
consent to the settlement.14 After reviewing the factual
14
. Section 933(g) of the LHWCA states in relevant part:
Compromise obtained by person entitled to compensation.
(1) If the person entitled to compensation
(or the person's representative) enters into
a settlement with a third person referred to
in subsection (a) of this section for an
amount less than the compensation to which
the person (or the person's representative)
would be entitled under this chapter, the
employer shall be liable for compensation as
determined under subsection (f) of this
section only if written approval of the
settlement is obtained from the employer and
the employer's carrier, before the settlement
is executed, and by the person entitled to
compensation (or the person's
representative).
(2) If no written approval of the settlement
is obtained and filed as required by
paragraph (1), or if the employee fails to
notify the employer of any settlement
obtained from or judgment rendered against a
third person, all rights to compensation and
medical benefits under this chapter shall be
terminated, regardless of whether the
findings of the ALJ, the Board affirmed the determination of the
ALJ that the decedent was a harbor worker and not a seaman, thus
entitling Bundens to $335,75415 in LHWCA benefits. The Board
reasoned that the determination by the ALJ that the decedent was
primarily a dockbuilder who performed construction, salvage, and
repair work, was reasonable and supported by evidence in the
record. The Board did not address the fact that the ALJ had
erred by finding that the vessel was not "in navigation."
With respect to the § 903(e) credit issue, the Board
agreed with Brenneman that the company was entitled to a credit
for its net payment in settlement of the federal court
litigation.16 It reasoned that the settlement did not delineate
how the settlement money was apportioned between the two claims.
Therefore, the Board concluded that it was error for the ALJ to
rely on the subsequent LHWCA proceedings to determine that
(..continued)
employer or the employer's insurer has made
payments or acknowledged entitlement to
benefits under this chapter.
33 U.S.C. § 933(g) (1988) (emphasis added).
15
. The $335,754 was allocated as follows:
Barbara Bundens $100,628
Gregory Bundens $232,205
We note that the above figures total $332,833 and not $335,754.
We are uncertain why there is a difference of $2,921. However,
because of our final disposition of this case, the discrepancy is
irrelevant.
16
. As mentioned previously, although the gross settlement was
$1,000,000, after attorneys' fees and costs, the net settlement
was $646,078.
Bundens was a harbor worker and then to attribute the settlement
exclusively to Bundens' § 905(b) claim. The Board concluded that
since the record was unclear as to how the settlement amount was
to be apportioned between the Jones Act and the LHWCA claim,
Brenneman was entitled to offset the net amount of the settlement
against its liability under the LHWCA.
The Board held in the alternative that even if
Brenneman could not claim a credit under § 903(e), it would still
be entitled to a credit under § 933(f) which provides a credit
for an employer where a claimant recovers an amount in a suit
against a third party for which compensation is payable under the
LHWCA.17 The Board concluded that because Bundens had filed suit
and recovered against third parties, Brenneman was entitled to
offset the net amount of the third party recovery against its
17
. Section 933(f) states:
Institution of proceedings by person entitled
to compensation.
If the person entitled to compensation
institutes proceedings within the period
prescribed in subsection (b) of this section
the employer shall be required to pay as
compensation under this chapter a sum equal
to the excess of the amount which the
Secretary determines is payable on account of
such injury or death over the net amount
recovered against such third person. Such
net amount shall be equal to the actual
amount recovered less the expenses reasonably
incurred by such person in respect to such
proceedings (including reasonable attorneys'
fees).
33 U.S.C. § 933(f) (1988).
LHWCA liability.18 Thus, the Board modified the ALJ's decision
to allow Brenneman a full credit for the net amount of the
settlement.
The Board rejected Brenneman's defense under §
933(g)(1), concluding that this subsection only applies where the
amount recovered from a settlement is less than the amount of
compensation due. It reasoned that Bundens received a net
recovery of $646,078 from the federal court tort settlement, and
would only be entitled to $335,754 under the LHWCA, an amount
less than the net recovery from the one million dollar
settlement. Under these circumstances, the Board ruled that §
933(g)(2) applied, which required Bundens to provide Brenneman
with notice of the settlement. It found that this requirement
was fulfilled here since Brenneman had been a party to the
settlement agreement.
We have before us the appeal by Bundens of the decision
of the Board which held that Brenneman was entitled to a credit
pursuant to § 903(e) or § 933(f) of the LHWCA as a result of the
court-approved settlement of Bundens' federal court litigation.
Additionally, we have the cross-appeal by Brenneman challenging:
(1) the Board's decision to affirm the ALJ's finding that the
18
. In its discussion, the Board never specified whether
Brenneman, the employer, was to be considered a "third person"
for the purposes of § 933(f). However, the Board did imply that
the employer was a third person because the Board treated the
entire net settlement recovery ($646,078) as a third party
settlement, instead of looking only to money that was contributed
by the defendants other than Brenneman.
decedent was a harbor worker; and (2) the Board's rejection of
Brenneman's § 933(g) defense.
II.
On review of an award of benefits under the LHWCA, the
factual findings of an Administrative Law Judge are binding on
the Benefits Review Board if they are rational, supported by
substantial evidence on the record as a whole, and consistent
with applicable law. 33 U.S.C. § 921(b)(3) (1988); Elliot Coal
Mining Co. v. Director, Office of Workers' Compensation Programs,
17 F.3d 616, 625-26 (3d Cir. 1994). We review the Board's
decision for the limited purpose of determining whether it
committed an error of law. A Board decision that sets aside
findings of an ALJ that are supported by substantial evidence is
legally erroneous. Elliot
Coal, 17 F.3d at 626.
A. Employment Status of the Decedent
Initially, we note that the test for ascertaining
whether an employee is a member of a crew under the LHWCA is the
same as that for determining seaman status under the Jones Act.
See Senko v. La Crosse Dredging Corp., 352 U.S. 370, 371, 77 S.
Ct. 415, 416 (1957). Thus, a conclusion that a worker is a
seaman necessarily precludes recovery under the LHWCA.
Conversely, a determination that a worker is not a member of a
crew permits recovery under the LHWCA. See
Wilander, 498 U.S. at
353, 111 S. Ct. at 817 ("We now recognize that the LHWCA is one
of a pair of mutually exclusive remedial statutes that
distinguish between land-based and sea-based maritime
employees."). The test to determine seaman status was identified
in Griffith: (1) the vessel must be in navigation; (2) the worker
must have a more or less permanent connection with the vessel;
and (3) the worker must be aboard primarily to aid in navigation.
521 F.2d at 36. The Supreme Court later modified this test in
Wilander, holding that, "the time has come to jettison the aid in
navigation
language." 498 U.S. at 353, 111 S. Ct. at 816. The
Court reasoned that there was no indication in either the Jones
Act or the LHWCA that Congress intended to exclude traditional
seamen who do not aid in
navigation. 498 U.S. at 354, 111 S. Ct
at 817. Thus, the Court held in order to qualify for coverage
under the Jones Act, the employee must: (1) have an "employment-
related connection to a vessel in navigation"; and (2)
"`contribut[e] to the function of the vessel or to the
accomplishment of its
mission.'" 498 U.S. at 355,
111 S. Ct. 817
(citing Offshore Co. v. Robison,
266 F.2d 769, 779 (5th Cir.
1959). Stated differently, the second element does not require
that "a seaman aid in navigation . . . of the vessel, but a
seaman must be doing the ship's work."
Id.
Because Wilander was not decided until 1991, that
opinion was not considered by the second ALJ until raised by
Brenneman in its supplemental petition following denial upon
reconsideration. Brenneman argues that even after considering
Wilander, the ALJ again erred by assuming that the barge
Conqueror was not a vessel in navigation despite a stipulation by
the parties to the contrary. We are called upon to determine
whether the Board properly affirmed the decision of the second
ALJ regarding the status of the decedent as a harbor worker
despite these factual and legal errors.
In the decision rendered on remand, the ALJ made
findings of fact and concluded that the decedent was a harbor
worker for the following reasons: (1) the decedent's duties
included diving and dockbuilding; (2) the decedent's job on the
date of his death was that of a wharf and dockbuilder; and (3)
during the last three years of his employment, the decedent spent
approximately one-third of his employment as a diver and two-
thirds as a dockbuilder. In his Decision and Order Denying
Supplemental Petition following reconsideration, the ALJ rejected
Brenneman's argument that the decedent was a seaman by virtue of
his performing the work of the barge Conqueror at the time of his
death. The ALJ found that the decedent was engaged in the
traditional longshore activity of repairing a dock or a pier at
the time of his death, and that he was on the barge to accomplish
a longshore function. The ALJ further concluded that although
the decedent maintained some connection with vessels, and with
the Conqueror in particular, his primary duties were related to
construction work as a dockbuilder, and his diving activities did
not constitute his predominant employment activities.
Although the ALJ erroneously concluded that the vessel
was not in navigation, the ALJ's determination that the decedent
was not a seaman was reasonable, supported by evidence in the
record, and in accordance with controlling precedent. Prior to
finding seaman status, Wilander mandates that the employee must
have an employment-related connection to a vessel in navigation
and the employee's duties must contribute to the function of the
vessel or the accomplishment of its mission. The factual finding
of the ALJ that the decedent was engaged in traditional longshore
activity may well have persuaded him that the decedent did not
have an employment-related connection with a vessel sufficient to
satisfy the first prong of the Wilander test.19 Because at least
one of the elements of the Wilander test was not satisfied, it
was not improper for the ALJ to conclude that the decedent was a
harbor worker, despite his erroneous conclusion that the vessel
was not in navigation.
Additionally, despite the fact that the barge was in
navigation, the Board found support for the ALJ's determination
in its findings that: (1) he kept his diving equipment at home;
(2) he commuted to work and received his diving assignments on
19
. We in no way mean to suggest that a worker who engages in
longshore activity may never be considered a seaman. Had we been
sitting as the finder of fact in this matter, we may not
necessarily have reached the same conclusion as the ALJ. As
noted by the Supreme Court in Wilander:
The inquiry into seaman status is of
necessity fact-specific; it will depend on
the nature of the vessel, and the employee's
precise relation to it . . . . "[W]hether an
individual was a `seaman' . . . depends
largely on the facts of the particular case
and the activity in which he was engaged at
the time of injury."
498 U.S. at 356, 111 S. Ct. at 818 (citation omitted). However,
due to our deferential standard of review, we hold that the
conclusions of the ALJ as affirmed by the Board are rational,
supported by substantial evidence, and consistent with applicable
law.
shore; (3) he never ate or slept on the vessel; (4) his duties
included diving and dockbuilding; (5) his job title on the date
of his death was "wharf and dockbuilder;" (6) he was a member of
the Wharf and Dockbuilders and Pile Drivers Union; (7) his
dockbuilding duties remained the same whether he was working on
land or on the barges; and (8) he spent approximately two-thirds
of his time as a dockbuilder and only one-third as a diver during
the last three years of his employment.20 In reviewing the
decision of the Board, we conclude that it did not err in
upholding the finding of the ALJ that the decedent was a harbor
worker by virtue of his primary duties which related to
construction work as a dockbuilder.
B. Applicability of § 903(e) and § 933(f)
The ALJ reasoned that the only way to ascertain if the
§ 903(e) exemption applied was to first determine if the
settlement funds were paid to settle a Jones Act claim or a §
905(b) negligence claim under the LHWCA. He determined that if
the monies were paid to settle a Jones Act claim, then Brenneman
would be entitled to statutory credit under § 903(e). He further
20
. In reaching its decision, the Board recited from the record
several additional facts not found in the ALJ's prior decision.
Admittedly, the Board conducted some "fact-gathering" of its own.
We hesitate to refer to the Board's action as fact-finding,
because the facts averred to in its opinion were stipulated to
and, hence, undisputed. However, without commenting on the
propriety of the Board's action in "gathering" such facts, we
simply note that the ALJ's findings of fact that the Board did
refer to would be sufficient, by themselves, to uphold a
determination that the decedent was a harbor worker.
concluded that if the monies were paid to settle a LHWCA
negligence claim under § 905(b), then Brenneman would not be
entitled to a credit under § 903(e). The ALJ assumed that since
it was the intention of all the parties in the settlement
agreement to allow Bundens to pursue her LHWCA claim, it was
clear that the payment was not a settlement of the Jones Act
claim. On appeal, the Board held that when the record is unclear
as to how the settlement fund is apportioned among the various
claims being settled, the employer is entitled to offset the net
amount against its liability under the LHWCA. Bundens argues
that the wording of the Release clearly indicated that no one
intended to foreclose her rights to collect benefits under the
LHWCA.21
Additionally, Bundens argues that since the § 903(e)
credit is an affirmative defense, the burden of proof is not on
her to prove that the settlement fund was allocated to the LHWCA
claim, but rather it is the burden of Brenneman to show that the
settlement monies were allocated to the Jones Act claim.22
21
. See supra note 5.
22
. Because of our discussion below, we need not address
Bundens' argument concerning the allocation of the burden of
proof in the context of § 903(e). However, we note that this
issue has been addressed by other Courts of Appeals in analogous
cases. For example, in Force v. Director, Office of Workers'
Compensation Programs, 938 F.2d 981, 985 (9th Cir. 1991), the
Court of Appeals for the Ninth Circuit held:
LHWCA's "overall humanitarian policy" of
compensating employees for their injuries
requires that "all doubtful questions of fact
be resolved in favor of the injured
employee." Placing the burden of proof on
We believe the correct approach in addressing the
credit issue is the view espoused by the Director of the Office
of Workers' Compensation Programs ("Director"). The Director
argues that it is unnecessary to determine how the settlement
funds were apportioned between the Jones Act claim and the §
905(b) claim under the LHWCA because the combination of the
credit and offset provisions of § 903(e) and § 933(f) would
provide a full credit to the employer for amounts it actually
paid.23
Before explaining how the combined application of §
903(e) and § 933(f) works to provide the employer with a credit
for funds already paid in the tort settlement, we must first
address Bundens' contention that § 933(f) does not apply in these
proceedings. Bundens argues that § 933(f) was never properly
(..continued)
employers is particularly appropriate in the
context of [a credit provision] because the
employer remains liable for the full amount
of the statutory compensation absent a
showing that the claimant has [already] been
compensated by a third party.
(citation omitted). See also I.T.O. Corp. of Baltimore v.
Sellman, 967 F.2d 971, 973 (4th Cir. 1992) ("We therefore
conclude that it is both logical and consistent with the Act to
impose the burden of proof [of apportionment] upon the
employer."), cert. denied, __ U.S. __, 113 S. Ct. 1579 (1993).
These cases, however, deal with the burden of proving the
apportionment of funds between multiple parties, whereas here we
are dealing with the apportionment of funds between multiple
claims.
23
. The Director argues that it is not only unnecessary to
determine the apportionment of the settlement funds between the
two claims asserted in the federal tort litigation, but that it
is impossible to ever know how the settlement funds were
apportioned.
raised by Brenneman in the proceedings before the ALJ or the
Board and thus Brenneman has waived its right to assert § 933(f).
Bundens thus contends it was error for the Board to raise this
offset provision, sua sponte. We conclude that a § 933(f)
defense was raised.
Initially, we observe that Brenneman explicitly raised
a § 933(g) defense. Since § 933(f) governs the offset of third-
party settlements in the event that the requirements of § 933(g)
have been met, the Board's consideration of Brenneman's §
933(g)(1) defense fairly included consideration of § 933(f).
Next, even Bundens concedes that "§ 933(g)(1) refers to the
employer's compensation liability under 33 U.S.C. § 933(f)."
Bundens' answering brief at 19. Additionally, we observe that in
the settlement agreement signed by Bundens, the following
language was present:
Nothing herein shall be construed as
preventing the compensation carrier from
defending the compensation claim on the basis
that its liability is discharged because this
Agreement constitutes settlement of a "third
party claim", or as preventing the Releasor
from contending that such defense is
inapplicable.
App. at 94a. While this language has no bearing on the credit
issues that were actually raised by Brenneman in the LHWCA
proceedings, we observe that the "third party claim" language
explicitly refers to § 933(f). The combination of the fact that
Brenneman actually raised § 933(g) with the explicit reservation
of its right to raise the § 933(f) defense suffice to put Bundens
on notice. We also note that the failure of Brenneman to exhaust
its administrative remedies is not so troubling here because all
of the findings necessary to apply § 933(f) are included in the
findings for either § 903(e) or § 933(g).
Next, Bundens argues that even if § 933(f) has not been
waived by Brenneman, this provision does not apply here because
an employer cannot be a "third person" within the meaning of §
933(f). The question before the Court is whether an employer who
settles a negligence suit under § 905(b), when it is acting in
its capacity as a vessel owner, is considered a third person
under § 933(f). We believe that the only meaningful
interpretation of § 933(f) is to treat the employer as a third
party whenever the employee recovers funds from the employer in
other legal proceedings. Section 933(f), as set forth above,
indicates that an employer only has to pay compensation benefits
to the "person entitled to compensation" ("PETC") when the amount
of the benefits to which the PETC is entitled under the LHWCA
exceeds the net amount of money that the PETC has recovered from
a third party. If the employer/vessel owner is a third party,
then any monies paid by the employer in the negligence suit can
be used to offset the monies owed the PETC under the LHWCA. If
the employer/vessel owner is not considered to be a third party
under § 933(f), then the employer is prohibited from deducting
monies already paid.
It seems clear that if an employer is able to offset
his liability under the LHWCA with monies previously paid by
others under a tort settlement, then there is even stronger
reason to allow the employer to offset monies paid in a tort
settlement when the employer is the one who previously paid the
monies. Under § 933(f), an employer who settles a tort suit as a
vessel owner must be construed as a third party. To hold
otherwise would create a perverse result: an employer would have
to pay a double recovery simply because he is the owner of the
vessel, whereas if another party is the owner of the vessel and
the employee settles with that third party for a net sum which
exceeds the amount to which he is entitled under the LHWCA, the
employer would pay nothing. Thus, the net amount of $646,078
that the Bundens received for settling the suit can be said to be
an amount recovered against a third person and can be used by
Brenneman to offset its liability under the LHWCA.
After concluding that § 933(f) was properly raised and
that its third person setoff provision applies to Brenneman as
the employer/vessel owner, we now turn to the discussion of how
§§ 903(e) and 933(f), taken together, allow Brenneman a credit
for the net amount of its tort settlement. Section § 903(e)
provides an employer with a credit for payments made under the
Jones Act.24 Section § 933(f) states that an employer is
required to pay under the LHWCA only the difference between its
24
. Although § 903(e) provides for an offset for "any amounts
paid," presumably we should consider the net, and not the gross,
funds recovered from a Jones Act suit. Otherwise, for example, a
person entitled to $300,000 in compensation benefits under the
LHWCA who receives a $301,000 gross recovery pursuant to the
Jones Act would not be entitled to additional compensation
despite a net recovery of only $200,667 (assuming a one-third
deduction for attorneys' fees).
LHWCA liability and the net amount recovered by the employee in
suits against third parties for damages. Whatever amount of the
settlement is attributable to settlement of the Jones Act claim
will be credited against Brenneman's LHWCA liability under §
903(e). Whatever amount of the settlement is attributable to
settlement of the § 905(b) claim offsets Brenneman's liability in
accordance with § 933(f). Thus, no matter how the parties could
have apportioned the settlement between the claims under the
Jones Act and under § 905(b), and no matter who bears the burden
of proving apportionment,25 Brenneman is entitled to a credit for
the net settlement amount by virtue of the combined application
of §§ 903(e) and 933(f).26
Notwithstanding the applicability of §§ 903(e) and
933(f), these provisions must be applied to Barbara and Gregory,
25
. See supra note 22.
26
. Remembering that the net settlement funds for the Bundens
totalled $646,078 and assuming arguendo that the settlement funds
were apportioned so that 50% of the money settled the Jones Act
claim and 50% settled the § 905(b) claim, Brenneman would be
entitled to a $323,039 credit under § 903(e) and a $323,039
credit under § 933(f). This would suffice to eliminate its
$335,754 liability under the LHWCA. Assuming arguendo that the
settlement was apportioned 90% and 10% with regard to the Jones
Act and § 905(b) claim, respectively, Brenneman would be entitled
to a $581,470 credit under § 903(e) and a $64,608 credit under §
933(f). This also would suffice to eliminate its $335,754
liability under the LHWCA. Conversely, if it was a 10% and 90%
apportionment, the result would be the same. Finally, even
assuming arguendo that the settlement was apportioned 100% and 0%
with regard to the Jones Act and § 905(b) claim, respectively,
Brenneman would be entitled to a $646,078 credit under § 903(e)
and a $0 credit under § 933(f). Again, this would suffice to
extinguish its $335,754 liability under the LHWCA. And, of
course, if it was a 0% and 100% apportionment, the outcome would
be identical.
separately, since Barbara and Gregory are both "PETC" under §
905(a) which lists separately "wife" and "dependents." In
analyzing the tort award, we note that $1,000,000 was recovered
and was to be divided 70% to Barbara and 30% to Gregory. After
costs and attorneys' fees, the net amount awarded to Barbara and
Gregory, respectively, was $452,255 and $193,823.
Under § 933(f), the employer is to pay a sum "equal to
the excess of the amount which the Secretary determines is
payable on account of such injury or death over the net amount
recovered against such third person." 33 U.S.C. § 933(f)
(emphasis added). Likewise, to the extent that the employer does
not receive a credit under § 903(e), it is required to make up
the deficiency. Under the LHWCA, Barbara and Gregory are
entitled to $335,754 -- Barbara's share was $100,628 and
Gregory's share was $232,205.
Thus, applying §§ 903(e) and 933(f) together to each
of these separate claims, we note that Barbara received $452,255
from her tort settlement and would be entitled to $100,628 from
the LHWCA. Since her recovery under the LHWCA does not exceed
her net recovery from the third party suit, she is entitled to no
additional funds under the LHWCA. Gregory, on the other hand,
received $193,823 from the tort settlement and is entitled to
$232,205 from the LHWCA. Since his recovery under the LHWCA
exceeds his net recovery from the third party suit, he is
entitled to an additional $38,382 from Brenneman under the LHWCA,
barring any termination of benefits under § 933(g)(2).27
C. Applicability of § 933(g)
Section 933(g)(1) applies to settlements with third
persons where the settlement is for an amount less than the
compensation to which the claimant would be entitled under the
LHWCA. It requires that the employee receive the written
approval of the employer and the employer's carrier whenever the
employee enters into a settlement for an amount less than the
compensation that he or she is entitled to under the LHWCA.
The Board rejected Brenneman's defense under §
933(g)(1), concluding that this subsection only applies where the
amount recovered from a settlement is less than the amount of
compensation due. It reasoned that Barbara and Gregory Bundens
received a net recovery of $646,078 from the federal court tort
settlement, and would only be entitled to $335,754 under the
LHWCA, an amount less than the net recovery from the one million
dollar settlement.
27
. The fact that Gregory is still entitled to $38,382 from
Brenneman does not contradict our earlier conclusion that
Brenneman was entitled to claim a credit for the full amounts it
paid to Barbara and Gregory irrespective of the apportionment of
the settlement between the Jones Act and LHWCA claims. Instead,
the remaining liability to Gregory stems from the allocation of
the settlement between Barbara and Gregory and the operation of
that allocation in § 933(f).
The Director argues that the Board made two errors in
applying § 933(g). First, the Board looked to the net settlement
amount instead of the gross settlement amount when deciding
whether Bundens had to obtain written approval of the settlement.
Second, the Board treated the tort recovery of Barbara and
Gregory as one settlement. Instead, it should have considered
Barbara and Gregory separately since both are "persons entitled
to compensation" under the LHWCA.
Comparing the language of § 933(f) to § 933(g), we observe
that whereas § 933(f) specifically refers to the "net amount
recovered against such third person" (and even defines it), §
933(g) refers simply to "a settlement . . . for an amount less
than the compensation to which the person . . . would be
entitled." Thus, although Congress demonstrated its ability to
specify "net amount" when it wanted to, it failed to do so in
subsection (g). "[W]here Congress includes particular language
in one section of a statute but omits it in another section of
the same Act, it is generally presumed that Congress acts
intentionally and purposely in the disparate inclusion or
exclusion." Immigration and Naturalization Service v. Cardoza
Fonseca, 480 U.S. 421, 432,
107 S. Ct. 1207, 1213 (1987)
(citations omitted). Moreover, as the Supreme Court has stated,
where "the plain meaning of th[e] statute appears to settle the
question," a court should look to other sources "to determine
only whether there is `clearly expressed legislative intention'
contrary to the language, which would require [the court] to
question the strong presumption that Congress expresses its
intent through the language it chooses."
Id. at 432 n.12, 107 S.
Ct. at 1213, n.12.
Additionally, the inclusion of "net" and its definition
in § 933(f) was part of a comprehensive 1984 overhaul of § 933.
During this revision, Congress rewrote four subsections,
including § 933(g). Although § 933(g) was elaborately recast,
Congress did not elect to include the "net" language that it
carefully placed in § 933(f).
Given the opportunity to redraft the statute, we might
well have included the "net" language in § 933(g).28 However,
28
. There are several compelling arguments for reading § 933(g)
to mean "net."
First, as even the Director concedes, interpreting the
term "settlement" as "gross settlement" will result in some cases
where the employer owes a deficiency under § 933(f) without being
given the opportunity to disapprove the settlement under §
933(g)(1). This could occur, for example, where the claimant is
entitled to $500,000 in compensation benefits under the LHWCA and
receives a $501,000 gross recovery ($334,000 net recovery,
assuming a one-third deduction for attorneys' fees) from a third
party settlement. Under the Director's approach, the claimant
would not be required to obtain the employer's and the carrier's
written approval pursuant to § 933(g)(1), but the employer would
be liable under § 933(f) for the shortfall between the $500,000
and the $334,000. Thus, the employer would be required to pay
$166,000 without first having had the option of disapproving the
settlement.
Second, no one subsection of a statute should be read
in isolation. Thus, there can be no meaningful interpretation of
§ 933(g) without also considering other sections and subsections
in the statute. Although § 933(f) and § 933(g) are two separate
subsections, they are meant to work in conjunction with one
another. In fact, the very language of § 933(g) directs the
reader back to § 933(f). Section 933(g) cannot be invoked and
applied without also applying § 933(f). That is to say, every
time § 933(g) is implicated, you must necessarily apply § 933(f).
Third, this interpretation of § 933(g) comports with
the overall scheme of § 933(f) and § 933(g) of ensuring that: (1)
a claimant who recovers under a third party action never receives
less than the claimant would be entitled to under the LHWCA
because our task is to interpret, and not to create law, we are
compelled to conclude that in applying § 933(g) the Board should
consider the gross, and not the net, settlement funds.29
Applying § 933(g)(2) separately to Barbara and
Gregory, we reach the following. Because the $700,00030 gross
settlement that Barbara received in the settlement exceeds the
$100,628 that she would be entitled to under the LHWCA, she was
not required under § 933(g)(1) to obtain the written approval of
either the employer or the employer's carrier prior to the
settlement. And since the $300,000 that Gregory received was
more than the $232,205 that he would be entitled to under the
LHWCA, he too was not required to obtain the written approval of
the employer or the employer's compensation carrier.
Although written approval was not required under §
933(g)(1), the Board ruled that the § 933(g)(2) notice provision
applied. The Board found that this requirement was fulfilled
(..continued)
simply because the gross settlement exceeds the LHWCA benefits;
and (2) an employer's written approval be required in a
settlement proceeding, so that the employer is not required to
pay additional benefits under the LHWCA where the claimant was
not aggressive in pursuing his or her third party claim.
29
. In addition to the compelling statutory construction
argument which prevails here, practical realities also militate
against the "net" approach. As the Director points out, a
claimant may not be able to calculate the net settlement before
accepting it, and thus may not know whether he needs to obtain
the employer's consent.
30
. In supra notes 8-9 we stated that Barbara and Gregory
recovered $1,000,000 in the settlement and it was apportioned 70%
to Barbara and 30% to Gregory. Thus, Barbara's gross recovery
was $700,000 and Gregory's gross recovery was $300,000.
here since Brenneman had been a party to the settlement
agreement. We agree. Section 933(g)(2) requires that the
employer receive notification of the third party settlement.
Because Brenneman itself was a party to the third party
settlement, the § 933(g)(2) notification requirement was clearly
satisfied in this case.31 See also Bethlehem Steel Corp. v.
Mobley, 920 F.2d 558, 561 (9th Cir. 1990) ("So long as the
employer has notice of the settlement before it has made any
payments and before the Agency orders it to make any payments,
the purposes of [§ 933(g)(2)] are satisfied.").
Although the Board erred in interpreting § 933(g)(1),
it reached the correct result in deciding that § 933(g)(1) did
not apply. Additionally, the Board did not err in holding that
the notice provision of § 933(g)(2) was satisfied. Thus, we will
affirm the order of the Board on this issue.
CONCLUSION
We will affirm the decision of the Board that: (1) the
decedent was a harbor worker, not a seaman; (2) the "written
approval" requirement of § 933(g)(1) does not apply, though we
affirm on other grounds; and (3) the notice provision of §
933(g)(2) was satisfied by virtue of the employer's participation
in the tort settlement. We will reverse the order of the Board
31
. Additionally, as mentioned previously, Travelers was invited
and declined to participate in the settlement negotiations.
However, Travelers received notice of the settlement when copies
of the Settlement and Release were sent to counsel for Travelers
prior to the execution of these documents.
that § 903(e) alone, or alternatively § 933(f) alone, provides a
credit for the employer. We hold that only when § 903(e) and §
933(f) are combined does an employer receive a credit when the
apportionment of funds between prior settled claims is unknown.
In sum, because the Board erred in applying and interpreting
various provisions of the LHWCA, we will remand this matter to
the Board to re-calculate the compensation benefits owed to
Gregory.
