Roberts v. Sea-Land Services (10-1399)
Oral argument: Jan. 11, 2012
Appealed from: United States Court of Appeals for the Ninth Circuit (Nov. 10, 2010)
In 2002, Petitioner Dana Roberts slipped on a patch of ice while working for his employer, Respondent Sea-Land Services. After the fall, Roberts claimed disability and sought compensation under the Longshore and Harbor Workers’ Compensation Act. Initially, Sea-Land paid Roberts, but, in May 2005, Sea-Land discontinued payments. An administrative law judge ordered Sea-Land to resume payments, but a dispute arose concerning the proper method for calculating payment. In this case, the Supreme Court will decide when Petitioner Roberts was “newly awarded compensation” under the Act. Roberts argues that this occurred in 2007, when the administrative law judge entered the compensation order. However, Sea-Land Services argues that the judge correctly determined that this occurred in 2002, the year Roberts became entitled to compensation. The Court’s decision will determine which fiscal year is used to calculate the maximum compensation owed. The result could substantially increase Roberts’s compensation under the Act, and will determine how such calculations are performed in similar federal compensation programs.
The Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901-50 ("Longshore Act") provides generally for compensation for total disability in periodic payments at a rate of two-thirds of the "average weekly wage of the injured employee at the time of the injury," and for most partial disabilities the same fraction of the difference between that weekly wage and the worker's residual "wage-earning capacity." §§ 8-10, 33 U.S.C. §§ 908-10. But it has always imposed upper and lower limits on the rate payable as so determined.
Section 6(b) of the Act, 33 U.S.C. § 906(b), provides that the compensation rate cannot be more than twice "the applicable national average weekly wage," as determined for each fiscal year; nor can compensation for total disability be less than the lesser of half the "applicable national average weekly wage" so determined and the worker's full pre-injury earnings.
The question which fiscal year's limits are the "applicable" ones is addressed by § 6(c):
Determinations under subsection (b)(3) of this section with respect to a [fiscal year] shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period, as well as those newly awarded compensation during such period. 33 U.S.C. § 906(c). The identity of the years whose limits are "applicable" under this provision has divided the two courts of appeals with the heaviest Longshore Act dockets.
The questions presented are simple and straightforward:
1. Whether the phrase "those newly awarded compensation during such period" in Longshore Act § 6(c), applicable to all classes of disability except permanent total, can be read to mean "those first entitled to compensation during such period," regardless of when it is awarded.
2. Whether the phrase "employees or survivors currently receiving compensation for permanent total disability or death benefits during such period" in § 6(c) can likewise be read to mean those "entitled to [such] compensation during such period," without reference to when it is received.
Whether, in order to determine the appropriate method for calculating the maximum and minimum compensation owed under Section 6 of the Longshore and Harbor Workers’ Compensation Act, “newly awarded compensation” means that compensation is awarded at the time the employee becomes entitled to the compensation, or at the time the administrative order directing compensation is issued.
Petitioner Dana Roberts worked as a gatehouse dispatcher in Dutch Harbor, Alaska, for Respondent Sea-Land Services (“Sea-Land”). See Roberts v. Office of Workers’ Comp. Programs, 625 F.3d 1204, 1205 (9th Cir. 2010). On February 24, 2002, Roberts slipped on a patch of ice and injured his neck and shoulder. See id. Because of these injuries, Roberts stopped working and sought compensation under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”), a federal law that protects maritime employees from disability or death incurred while working on United States’ waters. See id. Initially, Sea-Land paid Roberts, but, in May 2005, Sea-Land and the company’s insurer discontinued payments. See id.
Upon challenge, the case was brought before an administrative law judge (“ALJ”) who ruled in Roberts’s favor. See Roberts, 625 F.3d at 1205–1206. The ALJ found that, under LHWCA, Roberts’s injuries fell into three distinct compensable periods: temporary total disability from March 11, 2002 to July 11, 2005; permanent total disability from July 12, 2005 to October 9, 2005; and permanent partial disability thereafter. See id. The ALJ then calculated the compensation owed for each period under LHWCA. See id. at 1205–06. First, the ALJ estimated that Roberts’s average weekly earnings at the time of his injuries were $2,853.08. See id. at 1206. Next, the ALJ estimated Roberts’s residual wage-earning capacity in his injured state to be $720.00 per week. See id. From these figures, the ALJ calculated that Roberts’s compensation coverage entitled him to $1,902.05 per week for the period from March 11, 2002 to October 9, 2005, or two-thirds of his weekly wage. See id. For the period thereafter, the ALJ found that Roberts was entitled to $1,422.05, or two-thirds of the difference between Roberts’s average weekly wage and his residual wage-earning capacity. See id.
However, both of these payments exceeded 200% of the national average weekly wage in 2002, the time of Roberts’s injury. See Roberts, 625 F.3d at 1206. Under Section 6 of the LHWCA, compensation cannot exceed 200% of the national average weekly wage. See id. Thus, the ALJ applied the 2002 average, reducing Roberts’s compensation to only $966.08 per week for all disability periods. See id.
Roberts subsequently challenged the ALJ’s use of the 2002 national average weekly wage to calculate the maximum, arguing that the LHWCA called for use of the 2007 average, the year in which the case was decided and the compensation order was issued. See Roberts, 625 F.3d at 1206. The ALJ denied Roberts’s challenge, and upon appeal the Benefits Review Board affirmed the ALJ’s findings. See id. at 1206, 1209. However, the United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part, finding that the ALJ should have applied the 2005 national average for Roberts’s permanent total disability period. See id. at 1209. On September 27, 2011, the Supreme Court granted certiorari to determine the appropriate method for calculating maximum compensation under Section 6 of the LHWCA.
In this case, the Supreme Court must decide when Petitioner Roberts was “newly awarded compensation” under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”). Roberts argues that this occurred in 2007 when the administrative law judge (“ALJ”) entered the compensation order. See Brief for Petitioner, Dana Roberts at 45. However, Respondent Sea-Land argues that the ALJ correctly determined that this occurred in 2002, the year Roberts was injured and became entitled to compensation. See Brief for Respondent, Sea-Land Services, Inc. at 17. The Court’s decision will determine which fiscal year’s national average weekly wage is included in the LHWCA’s maximum compensation calculation. See 33 U.S.C. § 906(c).
Roberts insists that his interpretation of “newly awarded compensation” is consistent with the LHWCA’s goal of prompt payment for disabled longshoremen. See Brief for Petitioner at 42. Roberts argues that allowing an employer to calculate compensation at the time of injury, rather than at an augmented rate post-challenge, encourages the employer to delay payments as long as possible. See id. at 44–45. In fact, challenging a claimant’s entitlement is a simple procedure, and Roberts suggests that his interpretation discourages meritless claims brought by employers. See id. The American Association for Justice (“AAJ”) agrees, arguing that, without the threat of augmented compensation, the incentive is to controvert liability and hope that the injured worker will succumb to a small settlement offer in the face of mounting bills. See Amicus Curiae Brief for the American Association for Justice in Support of Petitioner at 21. The AAJ notes that this clearly runs counter to Congress’s purpose: to provide longshoremen and harbor workers the same compensation protections available to workers under state law. See id. at 4. Moreover, the Court’s decision here, the AAJ argues, could have far-reaching implications for similar federal compensation laws, such as the Defense Base Act which will affect many workers currently stationed on military projects in Afghanistan. See id. at 4–5.
However, Sea-Land argues that an augmented compensation penalty is unnecessary because the terms of the statute already contemplate a penalty for delayed payments. See Brief for Respondent at 40. Specifically, Section 14 provides a 10% penalty if compensation payable without an award has not been made within fourteen days from the date it becomes due. See id. In fact, Sea-Land suggests Congress intended to provide employers the opportunity to contest questionable claims without the “specter of a penalty.” See id. Moreover, Sea-Land notes that Roberts’s interpretation discourages voluntary compensation by the employer, since voluntary compensation is made without a compensation order. See id. at 38–39. Sea-Land argues that, under Roberts’s interpretation, the incentive exists for disabled employees to challenge voluntary payment in hopes of a protracted lawsuit so that the delayed compensation order results in a higher award. See id. at 39. Removing the motivation for efficient and voluntary payments, Sea-Land insists, runs counter to Roberts’s promptness argument. See id.
The AAJ maintains that the LHWCA exists to provide the claimant with a way to continue his or her life without becoming dependent on others. See Brief for the AAJat 15. The AAJ notes that workers’ compensation statutes like the LHWCA grew out of the industrial revolution as a way to allocate the risk and cost of workplace injuries to employers, who are better positioned to identify such risks and, wherever possible, prevent accidents from occurring in the first place. See id. at 18. The AAJ argues that employees gave up the right to pursue relatively larger damages available in tort, but in return they gained the certainty and efficiency of payment under these workers’ compensation programs. See id. at 18–19. Thus, the AAJ states that allowing employers such as Sea-Land to contest the payments effectively denies workers the benefit of that bargain. See id.
However, Sea-Land insists that the general purpose of LHWCA is not solely for the benefit of the worker, but aims to balance the competing concerns of the longshoremen with those of the employer. See Brief for Respondent at 45. Moreover, Sea-Land insists that Roberts’s focus on the worker ignores the fact that, under his interpretation, similarly situated longshoremen could be treated very differently. See id. at 39-40. For example, Sea-Land suggests that two employees sustaining identical injuries at the same time could receive very different awards, depending on how long it takes the ALJs to issue the compensation orders. See id.
The Longshore and Harbor Workers’ Compensation Act ("LHWCA") is a federal compensation program for disabled longshoremen and harbor men who sustain injuries while working on navigable waters of the United States. The immediate dispute focuses on Section 6(c) of the LHWCA, a provision that determines the relevant fiscal year for calculating the maximum and minimum compensation rate. See 33 U.S.C. § 906(c). Petitioner Roberts contends that the plain meaning of “newly awarded compensation” in Section 6(c) suggests that the appropriate fiscal year is the year an ALJ issues a compensation order. See Brief for Petitioner, Dana Roberts at 45. Respondent Sea-Land counters that the meaning of “newly awarded compensation” is ambiguous, and that a proper interpretation suggests that the relevant fiscal year is the time the employee becomes entitled to compensation. See Brief for Respondent, Sea-Land Services, Inc. at 16–17. The Federal Respondent agrees, arguing that, when read in the context of the whole Act, “newly awarded compensation” is best read to mean the time the employee is injured. See Brief for Federal Respondent at 21.
Is the Meaning of “Newly Awarded Compensation” Ambiguous?
Roberts argues that, under the traditional rules of statutory construction, the meaning of “newly awarded compensation” is unambiguous and synonymous with compensation order. See Brief for Petitioner at 19–20. To support his contention, Roberts insists that, throughout the LHWCA, the words “award” and “compensation order” are used interchangeably. See id. at 22. As one example, Roberts notes that an employee who accepts “compensation under an award” assigns certain rights to his or her employer. See id. at 23; 33 U.S.C. § 933(b). As another example, if an employer defaults on a “payment of compensation due under any award of compensation,” an employee can take action by filing a supplementary order. See Brief for Petitioner; 33 U.S.C. § 918(a). Roberts insists that the legal significance of these rights stems from the “award” grant, rather than the employee’s mere entitlement to compensation. See Brief for Petitionerat 23.
Most notably, Roberts points to Section 33(b), where the term “award” was specifically defined as a formal compensation order. See Brief for Petitioner at 24–25. Roberts notes the Supreme Court’s decision in Pallas Shipping Agency, Ltd. v. Duris, where the Court equated the term “compensation order” to an administrative award. See id. at 26. Roberts argues that, because this decision preceded an amendment to LHWCA, Congress’s amendment to Section 33(b) was an attempt to incorporate the Court’s definition in Pallas Shipping. See id. at 26–29. Roberts insists that the court of appeals erred in relying on the language “[f]or the purposes of this subsection” in Section 33(b), because that language was unnecessary given the LHWCA’s consistent use of “award” to mean compensation order, and the Court’s holding in Pallas Shipping. See id. at 29.
Sea-Land argues that, in isolation, the meaning of “newly awarded compensation” is ambiguous, and that the meaning Congress intended must be gleaned from reading the LHWCA as a whole. See Brief for Respondent at 16–17. Sea-Land contends that, while in some contexts “award” may mean a judicial determination, the courts have on numerous occasions found the word “award” to be the grant of a legal entitlement. See id. at 18—19. Moreover, Sea-Land argues that, within the LHWCA itself, Congress has not used the word “award” exclusively to refer to a compensation order. See id. at 21. Sea-Land notes that Section 8 appears to repeatedly use the word “award” to mean “entitlement to compensation,” and that, within that section, the “awards” appear to exist regardless of whether a compensation order is made. See id. at 21–22. Therefore, while Sea-Land agrees that Roberts has provided many examples where the word “award” appears synonymous with compensation orders, sufficient counterexamples also exist to suggest that the meaning is ambiguous. See id. at 24.
Turning to Roberts’s interpretation of Section 33, Sea-Land argues that, contrary to the normal rules of statutory construction, Roberts’s interpretation of Section 33(b) renders the text extraneous. See Brief for Respondent at 26. In fact, Sea-Land argues that Section 33 supports the contention that award does not always mean compensation order, because if it did then the specific definition that Section 33 provides would be superfluous. See id. at 25. Moreover, Sea-Land insists that Roberts’s reliance on Pallas Shipping is misplaced, because that case concerned the proper interpretation of “compensation order” not “award.” See id. at 26. Finally, Sea-Land argues that, had Congress wanted “award” to mean exclusively compensation order, it would have defined it as such in Section 2 of the LHWCA, along with the other defined terms. See id.
Sea-Land suggests that, when the statutory provision is read within the broader statutory context, calculation of the minimum and maximum rates from the time of entitlement, or injury, seems more appropriate. Sea-Land notes that, under the compensation calculation in the LHWCA, the judge must first determine the disabled individual's average weekly wage at the time of injury. See Brief for Respondent at 33. However, Sea-Land questions the consistency of Roberts’s analysis where the judge makes this initial calculation at the time of injury, but then calculates the minimum and maximum rates allowed based on a “national weekly average wage” from some uncertain later period when the judge issues a compensation order. See id. Instead, Sea-Land suggests that a more coherent analysis recognizes that the initial calculation creates a pattern of determining compensation calculations from the time of injury. See id.
In response, Roberts insists that a pattern of determining compensation calculations from the time of injury does not exist. See Brief for Petitioner at 37. As evidence, Roberts points to Section 10(f), which calls for annual adjustments for applicants who suffer from permanent total disability. See id. Moreover, Roberts notes that, under the Ninth Circuit's ruling, it is not the time of injury but the onset of the disability—which could occur at some later date—that triggers entitlement. See id. at 39. Therefore, under the “time-of-commencement-of-disability rule” proposed, the time of injury is not crucial to the maximum-minimum rate calculation, and whatever pattern suggested is already broken. See id. at 40. Finally, Roberts contends that, had Congress wanted to make the time of injury determinative for maximum and minimum calculations, it would have done so specifically. See Brief for Petitioner at 40.
Effects of the Interpretation
Roberts argues that determining “newly awarded compensation” at the time when a compensation order is filed will encourage employers to expedite compensation for the employee’s benefit. See Brief for Petitionerat 41. Moreover, Roberts argues that, although the statute already provides for penalties in the event compensation payments are untimely, reading the statute as he suggests will further facilitate prompt payments. See id. at 42. Roberts argues that this will also provide employees with additional recourse in the event that the compensation is delayed. See id. at 42. Roberts maintains that imposing an extra layer of liability in the form of additional penalty payments is fully consistent with the statutory goal of enforcing timely compensation payments. See id. at 44.
By contrast, Sea-Land argues that Roberts’s interpretation would produce inefficient and unworkable results. See Brief for Respondent at 36. For example, Sea-Land contends that in the majority of the cases, employers voluntarily pay compensation without a compensation order. See id. at 36. However, Sea-Land notes that under Roberts’s interpretation such situations would create a gap in the statutory scheme. See id. at 36. Specifically, Sea-Land suggests that, under Roberts’s interpretation, without a compensation order the LHWCA provides no maximum or minimum rate. See id. at 36. Moreover, Sea-Land argues, Roberts’s interpretation will actually discourage employers from voluntarily paying for compensation, because under his reading of Section 6(c) employers will not know in which fiscal year the compensation order will be made, rendering it impossible to determine the appropriate compensation rate. See id. at 37.
In this case, the Supreme Court will decide when Petitioner Dana Roberts was “newly awarded compensation” under the Longshore and Harbor Workers’ Compensation Act. Roberts argues that this occurred in 2007, when the administrative law judge entered the compensation order. However, Respondent Sea-Land Services argues that this occurred in 2002, the year Roberts became entitled to compensation. The Court’s decision will determine which fiscal year’s national average weekly wage is included in the calculation to determine the maximum compensation owed. The result could substantially increase Roberts’s compensation under the Act, and the way in which calculations are performed in similar federal compensation programs.
Edited by: Colin O’Regan
Business Law Daily, BLD Staff: U.S. Supreme Court to Hear LHWCA Case (Sept. 27, 2011).
Business Insurance, Roberto Ceniceros: Supreme Court to Hear Case Determining LHWCA Wage Time Frame (Sept. 27, 2011).