At the Roberts Argument, SCOTUS Tries to “Make Sense” of Section 906(c)
By: Jon B. Robinson[fn1]
On January 11, 2012, the Supreme Court of the United States heard oral argument in Roberts v. Sea-Land Services, Inc., a case addressing Section 906 of the Longshore and Harbor Worker’s Compensation Act (“LHWCA”), 33 U.S.C.S. § 906 (1984). The question presented is whether the phrase “newly awarded compensation” can be read to mean newly entitled, or whether “newly awarded” refers to the issuance of a formal administrative compensation order.
II. The Ninth Circuit’s Take on “Newly Awarded Compensation:”
Roberts involves a gate dispatcher who injured his neck and shoulder when he slipped on a patch of ice in 2002. Roberts v. Dir., OWCP, 625 F.3d 1204, 1205, 44 BRBS 73 (CRT) (9th Cir. 2010), cert. granted 132 S. Ct. 71, 180 L. Ed. 2d 939 (2011). After making initial payments, compensation stopped in May 2005. Id. A formal hearing was held before an administrative law judge (“ALJ”), who issued a compensation order on October 12, 2006. Id. In that order, the ALJ determined that the applicable maximum compensation rate was the national maximum rate in effect in fiscal year 2002, when the claimant was injured. Id. at 1206.
Following an appeal to the Benefits Review Board (“BRB”), the claimant sought review from the Ninth Circuit. He argued that he was not “newly awarded compensation” when he was injured in 2002; instead, he was newly awarded compensation in fiscal year 2007, when the ALJ issued a formal award of compensation. Id. Thus, the question before the Ninth Circuit was one of statutory construction: what does “newly awarded compensation” mean? The language at issue comes from Section 906 of the LHWCA:
(b) Maximum rate of compensation
(3) As soon as practicable after June 30 of each year, and in any event prior to October 1 of such year, the Secretary shall determine the national average weekly wage for the three consecutive calendar quarters ending June 30. Such determination shall be the applicable national average weekly wage for the period beginning with October 1 of that year and ending with September 30 of the next year. The initial determination under this paragraph shall be made as soon as practicable after October 27, 1972.
(c) Applicability of determinations
Determinations under subsection (b)(3) of this section 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.
33 U.S.C.S. § 906.
The Ninth Circuit determined that “award” and “awarded” had different meanings throughout the LHWCA, and that, in Section 906(c), “awarded” meant entitled to compensation. To support this conclusion, the Ninth Circuit noted that other sections of the LHWCA could be read similarly. Section 908(c)(20)’s use of “awarded” for disfigurement refers entitlement of compensation for disfigurement regardless of a formal order. Roberts, 625 F.3d at 1206. See 33 U.S.C.S. § 908(c)(20) (1984). Section 910(h)(1)’s use of “awarded” also refers to entitlement. Roberts, 625 F.3d at 1206. See 33 U.S.C.S. § 910(h)(1) (1984). Further, because “award” is defined in Section 933(b), to mean a “formal order,” the undefined use of “award” in Section 906(c) indicates that the term is used in the broader sense (i.e. to mean entitlement). According to the Ninth Circuit, the claimant was limited to the maximum compensation rate in effect at the time of his injury (fiscal year 2002), not the time the ALJ issued a formal order (fiscal year 2007). Roberts, 625 F.3d at 1208.
III. The Oral Argument:
The central theme of the Roberts argument was whether Petitioner’s (the claimant’s) argument “made sense.” (Transcript of Oral Argument at 25, Roberts v. Sea-Land Servs., Inc., (2012) (No. 10-1399)). For instance, Justices Alito and Breyer questioned why it made sense to treat two identically-situated claimants differently because an employer paid one claimant voluntarily while the other claimant was paid by virtue of an award. (Id. at 14-16.) The Chief Justice asked why it simply did not make more sense to focus on a particular moment in time when calculating the benefits owed. (Id. at 12.) Further, Justices Scalia and Ginsburg questioned whether the Petitioner’s reading of the LHWCA would penalize an employer for voluntarily paying claims.
Petitioner proposed that Section 906(c) incentivized the employer to enter into an award to “lock in this year’s maximum rate not have his liability progress above [that rate].” (Tr. at 6, 16.) While Section 906(c) might make marginally more sense if “newly awarded” meant newly entitled, Petitioner contended that Section 906 was unambiguous and should be read literally. (Id. at 12-13.) If Congress wanted Section 906(c) to turn on the time of injury, it could have written Section 906(c) to effect that result. (Id.)
Justice Sotomayor expressed logistical concerns with Petitioner’s reading. (Tr. at 20-22.) Essentially, she questioned how an employer could lock in its rate if an employee never filed a claim. (Id.) If the employer was forced to induce the claimant to file a claim by cutting off benefits payments, then the end result would abrogate the voluntary payment goals of the LHWCA. (Id. at 21-22.) Justice Sotomayor voiced her displeasure by rhetorically asking, “Isn’t it an odd statute?”
Justice Kagan explored the use of the word “award” in other LHWCA statutes: 33 U.S.C.S §§ 908(d)(1), 910(h)(1), and 933(b). (Tr. at 25.) Although the Ninth Circuit discussed Sections 910(h)(1) and 933(b) in its decision, Section 908(d)(1) did not appear in the decision below. Nonetheless, Justice Kagan contended that the use of “award” in Section 908(d)(1) means entitlement. (Id.) Petitioner, as well as Justice Scalia, disagreed…but for different reasons. (Id. at 26-27.) Petitioner argued that Section 908(d)(1)’s use of “award” necessarily referred to a formal administrative award, as evidenced by Section 8(d)(3)’s reference to an “award…made after the death of the injured employee.” (Id. at 26.) Justice Scalia, on the other hand, suggested that Section 8(d)(1) “means an amount, a specific amount due,” not entitlement. (Id. at 27.)
Next it was the federal Respondent’s turn. The Court’s questions explored the use of “award” in the LHWCA statutory scheme, the penalty for an employer’s refusal to pay benefits, and a possible middle ground between the parties’ contentions. Continuing on with the statutory comparisons, Justice Scalia again stated that “award” did not mean entitlement in some of the statutes identified by Justice Kagan. (Tr. at 30.) Justice Scalia suggested that Section 33(b) supported his contention that a voluntary payment of compensation could still be considered an “award of compensation.” (Id. at 32.) And in response to questioning by Justice Breyer, the federal Respondent contended that the most analogous provision where “award” refers to “the time a person became entitled to a thing” is Section 10(h)(1). (Id. at 45.)
Justice Ginsburg’s questions implied a concern that employers could protract litigation and refuse to pay without an incentive to do otherwise. (Tr. at 38-40.) She also suggested a middle ground—perhaps the same middle ground suggested by Justice Scalia at the outset of the arguments. (Id. at 39-40.) The middle ground suggests that “newly awarded” means newly paid. The employer who voluntarily pays benefits will lock in the earlier maximum compensation rate; but the employer who does not voluntarily pay benefits will have to accept the rate issued at the time an administrative award is entered. (Id.) The federal Respondent mentioned logistical concerns with this middle ground where a handful of payments are voluntarily made but then stopped. (Id.) Further, the LHWCA already has incentives to prevent protracted litigation: attorneys fees and interest. (Id. at 48.)
Next up was the private Respondent, who argued that Petitioner’s definitional analysis necessarily requires the use of a compensation order in all claims. Essentially, an employer would have to threaten a bad-faith cutoff in order to secure an order where an employee did not file a claim. This would be “bad for everyone:”
It’s bad for the employee who has access to payments delayed. It’s bad for the employer who apparently is being told it must controvert liability in bad faith, because the employer doesn’t in fact disagree that the employee is entitled to liability, or face a 10 percent penalty for cutting off the employee without a basis for controverting liability. And it’s bad for the agency who suddenly has all these claims filed.
(Tr. at 54.)
Taken together, the oral arguments lean in the Respondents’ favor. Of concern, however, is that the Court likened the intricacies of the LHWCA to “an Abbott and Costello movie.” (Tr. at 20, 23.) Some of the questions posed to Petitioner failed to focus on the distinctions between permanent partial and permanent total disability/death claims, which are of particular importance to Section 6(c). To his credit, Petitioner went to great pains to answer why certain hypothetical questions asked by the Court were correct only for permanent total or death claims. (Id. at 9-12, 15.)
IV. Petitioner’s Argument Embraced By Boroski:
Although the Court questioned whether Petitioner’s arguments “made sense,” the fact remains that Petitioner’s arguments were embraced and adopted by the Eleventh Circuit in Boroski v. DynCorp Int’l, 662 F.3d 1197, 45 BRBS (CRT) (11th Cir. 10/27/2011), amended at 46 BRBS (CRT) (11th Cir. 11/16/2011). In the interim between the Court’s grant of certiorari in Roberts and the date of the oral argument, the Eleventh Circuit published Boroski. There, the claimant was exposed to chemicals, and he stopped working on April 20, 2002. Id. at 1198. Since that time, he has been permanently and totally disabled. Id. The employer contested liability, and, on February 15, 2008, an ALJ awarded compensation to the claimant. Just as in Roberts, the Eleventh Circuit was asked to determine whether “newly awarded compensation” referred to entitlement or to the issuance of an administrative award. Based upon the plain language of Section 6(c), the Eleventh Circuit held that the claimant, who had “never received compensation for a covered disability that commenced in 2002, and who is ‘newly awarded compensation’ in 2008, is entitled to have his maximum compensation rate determined by reference to the national average weekly rate applicable to the date on which he received his award.” Id. at 1214.
When the Court decides Roberts, it must resolve a circuit split that has developed over the phrase “newly awarded compensation.” The Court appeared to favor Respondent’s newly-entitled arguments over Petitioner’s administrative award requirement. Nonetheless, the Court also suggested a willingness to find a middle ground—a result akin to a newly-paid determination. At this point, the Court can choose between one of two extremes or apply a wholly-untested middle ground. We anticipate that the decision will be issued soon.
1. Member: Mouledoux, Bland, Legrand & Brackett, New Orleans, LA.
© Copyright 2012 Mouledoux, Bland, Legrand & Brackett. All rights reserved. This article, which will appear in an upcoming issue of the Benefits Review Board Service—Longshore Reporter, is reprinted with permission.