Landmark Case: Roberts v. Sea-Land Services, Inc. et al
Oral argument will be held today at the U.S. Supreme Court in the case of Roberts v. Sea-Land Services, Inc. et al.
, which I briefly mentioned here last week. Following is a fuller discussion of the case. If you want to read more about the case, I also have an Argument Preview posted today at SCOTUSblog.com.
Roberts v. Sea-Land Services, Inc., et al.
What does section 6(c) of the Longshore and Harbor Workers’ Compensation Act mean? What maximum weekly rate applies to compensation for disability? Have we been applying it incorrectly ever since the 1972 Amendments added a cost of living provision? Have virtually all disabled workers at the maximum weekly rate been underpaid?
Do we pay the maximum in effect as of the date of first entitlement to permanent total disability (in this case 7/12/05), or do we pay the higher, later maximum as of the date of an Administrative Law Judge’s Compensation Order (in this case 10/12/06)?
Let’s start at the beginning.
The Longshore and Harbor Workers’ Compensation Act (The Act)
(33 U.S.C. 901 et seq., 1927) is a federal workers’ compensation law covering land based maritime workers employed on and around the navigable waters of the United States. In the event of a work related injury, the Act provides compensation for lost wages, medical care, vocational rehabilitation services, and survivor’s benefits. It is administered by the U.S. Department of Labor (DOL)
. Informal dispute resolution and medical management services are available at DOL district offices. Unresolved issues, if any and when necessary, are referred for formal hearing at the DOL’s Office of Administrative Law Judges (ALJ
), with appeals to DOL’s Benefits Review Board (BRB
). Appeals from BRB decisions go to the federal Courts of Appeal and ultimately to the U.S. Supreme Court.
Employers buy insurance from insurance carriers licensed by the DOL, or they obtain DOL approval to be self-insured.
Weekly benefits are paid at the rate of two-thirds of the disabled worker’s average weekly wage (AWW
), established as of the date of injury.
The weekly rate is capped at 200% of the applicable National Average Weekly Wage (NAWW
), which is determined as of each October 1 by the Secretary of Labor.
According to section 6(c), weekly benefits are increased each October 1 for employees or survivors “currently receiving” compensation for permanent total disability (PTD
) or related death benefits “during such period”, as well as those “newly awarded” compensation “during such period”, based on the change in the NAWW.
Recent Changes to NAWW
October 1, 2001 NAWW $ 483.04 Weekly Maximum $ 966.08
October 1, 2002 498.27 996.54
October 1. 2003 515.39 1,030.78
October 1, 2004 523.58 1,047.16
October 1, 2005 536.82 1,073.64
October 1, 2006 557.22 1,114.44
October 1, 2007 580.18 1,160.36
October 1, 2008 600.31 1,200.62
October 1, 2009 612.33 1,224.66
October 1, 2010 628.42 1,256.84
October 1, 2011 647.60 1,295.20
The question in Roberts v. Sea-Land Services, Inc., et al.
, 625 F.3d 1204 (9th Cir. 2010) (Docket No. 10-1399) is basic, and it is surprising that we are just now determining the correct benefit in maximum rate cases.
This worker’s average weekly wage is so high in relation to the NAWW at all times that the issue is significant. If, in fact, earnings in segments of the maritime industry have outpaced the NAWW to such a degree, then it is time to resolve this question.
The Court will interpret the following language:
– Applicability of determinations. Determinations under subsection (b)(3) (new NAWW) with respect to a period 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
So the weekly rate at which a disabled worker is paid a PTD benefit is increased each October 1 and is capped at 200% of the NAWW in effect “during the period” he is “newly awarded” benefits. Is this the date that he first becomes entitled or is it the later date of an ALJ’s Compensation Order?
Mr. Roberts’ date of injury is February 24, 2002. His AWW is $2,853.08, two-thirds of which is $1,902.05, far in excess of the maximum weekly rate on the date of injury ($966.08). Due to his high AWW, Mr. Roberts will be paid at whatever maximum rate the Court applies.
The ALJ’s Compensation Order, dated October 12, 2006, found that Mr. Roberts is entitled to: temporary total disability (TTD
) from March 11, 2002 to July 11, 2005, permanent total disability (PTD) from July 12, 2005 to October 9, 2005, and permanent partial disability (PPD
) from October 10, 2005 and continuing.
If Mr. Roberts was “newly awarded” PTD benefits during the period of his first entitlement on July 12, 2005, his benefit is $1,047.16 per week increasing to $1,073.64 on October 1, 2005, with the new NAWW and maximum.
If Mr. Roberts was “newly awarded” PTD benefits on the date of the ALJ’s Compensation Order on October 12, 2006, his weekly rate for PTD beginning back on July 12, 2005 is $ 1,114.44. There is no increase on October 1, 2005, since he would be already above the maximum for that year based on the retroactive application of the maximum in effect on the date of the ALJ’s Order.
Note: The time line in Mr. Roberts’ case is typical for contested cases. Following his date of injury on February 24, 2002, his employer voluntarily paid benefits up until May 18, 2005, when disputes arose and the employer ceased payments. The case was referred to an ALJ and a formal hearing was held in January 2006 followed by the ALJ’s Compensation Order dated October 12, 2006.
Entitlement Determined by Ninth Circuit
Administrative Law Judge Order BRB Ninth Circuit
TTD 03/11/02-07/11/05 – $ 966.08/wk affirmed affirmed
PTD 07/12/05-09/30/05 – $ 966.08/wk affirmed $1,047.16/wk
PTD 10/01/05-10/09/05 – $1,073.64/wk affirmed affirmed
PPD 10/10/05- cont. – $ 966.08/wk affirmed affirmed
Entitlement Claimed by Mr. Roberts
TTD 03/11/02-07/11/05 $ 966.08/wk
PTD 07/12/05-09/30/05 $1,114.44/wk
PTD 10/01/05-10/09/05 $1,114.44/wk
PPD 10/10/05-cont. $ 966.08/wk
Reminder: the rates for TTD and PPD are subject to the maximum on the date of injury, which is $966.08, and are not increased annually.
Note that the Ninth Circuit partially reversed the BRB and increased Mr. Roberts’ rate to $1,047.16, the then current maximum on July 12, 2005, the date that he was first entitled to PTD. But the Ninth Circuit and the Benefits Review Board both agree that Mr. Roberts was “newly awarded” PTD benefits on the date that he first became entitled to those benefits, and not as of the date of the ALJ’s Compensation Order. Mr. Roberts wants the date of the Compensation Order to control the applicable maximum.
The amount at stake in this case is only $830.99, since Mr. Roberts’ entitlement changed from PTD to PPD on October 10, 2005, after only 3 months of PTD. (PPD benefits based on a loss of wage earning capacity are paid at two-thirds of the difference between the worker’s AWW and his residual wage earning capacity, are capped at the maximum on the date of injury, and are not subject to annual increases.) In the typical case, however, PTD benefits are paid for life and the difference per week based on a higher maximum rate each week for each affected disabled worker, multiplied in each case by life expectancy, would add up significantly for maritime employers.
After the petition for writ of certiorari was granted on September 27, 2011, the Eleventh Circuit published Bernard D. Boroski v. Dyncorp International, et al
., a Defense Base Act case (the Defense Base Act is an extension of the Longshore and Harbor Workers’ Compensation Act which incorporates the relevant statutory provisions). The Eleventh Circuit reached conclusions opposite to those of the Ninth Circuit in Roberts
Although the Eleventh Circuit viewed the statutory language as “clear and express” and based its decision on a plain reading of the terms, it conducted an elaborate forty one page analysis and concluded that the Ninth Circuit, the BRB, and the DOL have all been reading the clear and express language of section 6(c) incorrectly. In the opinion of the Eleventh Circuit, “newly awarded compensation” occurs at the time of the Compensation Order.
The Ninth Circuit acknowledged the inconsistent use of the term “award” in the Act and interpreted it within the overall context of the statute. It issued a 6 page decision: “newly awarded compensation in section 6 means newly entitled to compensation”.
There is also a Fifth Circuit case that supports Mr. Roberts’ position, but the Ninth Circuit and the BRB marginalized it as lacking pertinent analysis (Lovett R. Wilkerson v. Ingalls Shipbuilding, Inc. and Director, Office of Workers’ Compensation Programs
, 125 F.3d 904 (5th Cir. 1997)).
The Act does not define “award” for purposes of section 906(c), and the term does not have a consistent meaning throughout the Act.
For example, section 914(f), establishing a penalty for late payment of compensation, uses the term “award” to mean a Compensation Order.
On the other hand, section 908, in discussing the different types of disability, uses “award” to mean entitlement, with or without a Compensation Order. Similarly, section 910(h)(1) discussing the annual increase uses “awarded” as equivalent to “entitled to”. Section 933(b), seemingly anticipating this issue, specifies that “award”, for purposes of that section only, means Compensation Order.
There are additional examples both ways.
Mr. Roberts wants to be paid retroactively the maximum weekly rate that applied on the date that the Compensation Order was eventually issued in his case. It does not help his case that his meaning of “award” will result in workers who are injured on the same day, even with the same AWW, being paid at different rates, based on the fortuitous date that a Compensation Order is issued in each case. It could also lead to the spectacle of workers trying to delay their Compensation Orders for as long as possible, or at least until the next October 1 and its new maximum rate. Presumably, when survivor’s benefits are ultimately “awarded” by Compensation Order, we will have still another (higher) maximum rate to apply.
Mr. Roberts’ argument adds an extra-statutory penalty whenever an employer exercises its due process rights to contest entitlement and go to a formal hearing, even though there are already existing penalties in the Act for the late payment of compensation. Mr. Roberts will leave an employer with two poor alternatives; 1) either seek an early Compensation Order, and if the worker is not at maximum medical improvement, be stuck with a running Order for TTD, or 2) follow what Mr. Roberts concedes are “slow-moving adjudication procedures”, go to a formal hearing when the issues are ripe, and pay retroactively a higher rate based on the maximum in effect on the date of the eventual Compensation Order.
This is the Longshore Act, however, and it is interpreted liberally in the tradition of remedial statutes, and in the maritime tradition in which workers are treated as “wards of the court” even to this day. In a close case of statutory construction, the disabled worker usually wins. It can also be argued that if Mr. Roberts wins then employers will be motivated to resolve disputes as quickly as possible, thus promoting a primary purpose of the Act, to provide prompt payment of compensation.
The Ninth Circuit’s reasoning is rational within the statutory context and internally consistent with the dates of injury and entitlement. The Eleventh Circuit’s decision undeniably has support in the statute and reflects the plain meaning of words, and its discussion is thorough. This case can go either way.
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.