Staftex Staffing v. DOWCP ( 2001 )

REVISED, July 25, 2000
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
___________________________
No. 99-60587
___________________________
STAFTEX STAFFING and HOUSTON GENERAL INSURANCE COMPANY
Petitioners,
VERSUS
DIRECTOR, OFFICE OF WORKER’S COMPENSATION PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR, and RAMIRO LOREDO
Respondents.
___________________________________________________
Petition for Review of an Order of the
Benefits Review Board
___________________________________________________
July 18, 2000
Before REAVLEY, DAVIS and BARKSDALE, Circuit Judges.
DAVIS, Circuit Judge:
In this appeal, Petitioner, Staftex Staffing, challenges an
order of the United States Department of Labor Benefits Review
Board, which affirmed an Administrative Law Judge’s (“ALJ”) order
awarding attorney’s fees and compensation payments to Claimant,
Ramiro Loredo, pursuant to the Longshore and Harbor Worker’s
Compensation Act (“LHWCA”), 33 U.S.C. §§ 901-950. Staftex argues
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that the ALJ erred in calculating Claimant’s average weekly wage
and thereby awarded Claimant an excessive compensation rate.
Staftex also challenges the Board’s award of attorney’s fees to
Claimant. For the reasons that follow, we affirm the ALJ’s wage
calculation and compensation rate but reverse his award of
attorney’s fees.
I.
Ramiro Loredo injured his back on October 11, 1990, while
working as a welder for Staftex Staffing. Within thirty days of
receiving notice of Loredo’s injury, Staftex began to pay voluntary
benefits to Loredo based upon an average weekly wage of $438.47.
Several months later, Staftex reduced its payments to Loredo,
explaining that it had previously overcalculated Loredo’s wages by
$12,934.14. In response, Loredo filed an “Employee’s Claim for
Compensation” with the United States Department of Labor,
requesting that Staftex compensate him based upon an average weekly
wage of $490.24. Staftex acceded to this demand without requiring
an informal compensation conference.
Despite Staftex’s agreement with Loredo on the appropriate
compensation rate, the parties could not agree as to the nature,
extent, or permanency of Loredo’s injury. The parties referred
these disputes to the Department of Labor for an informal
conference. The Department issued a written recommendation on these
issues and referred the case to an ALJ for a formal hearing and
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resolution. Neither party requested, either before or during the
informal conference, that the Department address the issue of
average weekly wage.
At the formal hearing, however, the parties agreed that Loredo
was temporarily and totally disabled but could not agree upon the
average weekly wage for which Loredo would be compensated. Staftex
contended that it should compensate Loredo based upon his actual
earnings for the five years prior to his injury. Loredo contended
that he was entitled to an average weekly wage based upon his
earnings in the year immediately prior to his injury, excluding the
twenty-five weeks during which he was out of the labor market due
to a different on-the-job injury and for which he was compensated
under the LHWCA.
The ALJ accepted Loredo’s method of calculating his average
weekly wage and concluded that Loredo was entitled to compensation
based upon a weekly wage of $504.32. Furthermore, the ALJ held
that Loredo’s counsel was entitled to $7,239.28 in attorney’s fees
plus expenses.
Staftex appealed to the United States Department of Labor’s
Benefits Review Board, arguing that the ALJ erred both in
calculating Loredo’s average weekly wage and in awarding an
attorney’s fee. The Board affirmed the judgment of the ALJ and its
decision to award attorney’s fees. This appeal followed.
II.
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This Court gives “broad discretion to ALJs in determining
appropriate wage awards.” Louisiana Ins. Guaranty Assoc. v.
Director, Office of Worker’s Compensation Programs, U.S. Dept. of
Labor, 211 F.3d 294, 297 (5th Cir. 2000). We review the decisions
of the Benefits Review Board using the same standard that the Board
applies to review a decision of the ALJ: whether the decision is
supported by substantial evidence and is in accordance with law.
New Thoughts Finishing Co. v. Chilton, 118 F.3d 1028, 1030 (5th Cir.
1997). We may neither substitute our judgment for that of the ALJ
nor “reweigh or reappraise the evidence.” SGS Control Serv. v.
Director, Office of Worker’s Compensations Programs, US Dept. of
Labor, 86 F.3d 438, 440 (5th Cir. 1996). The ALJ’s decision need
not “constitute the sole inference that can be drawn from the
facts.” Avondale Industries v. Director, Office of Worker’s
Compensations Programs, U.S. Dept. of Labor, 977 F.2d 186, 189 (5th
Cir. 1992). Moreover, we must resolve all doubts “in favor of the
employee in accordance with the remedial purposes of the LHWCA.”
Empire United Stevedores v. Gatlin, 936 F.2d 819, 822 (5th Cir.
1991).
Both parties agree that 33 U.S.C. § 910(c) provides the basic
formula for determining the compensation to which Loredo is
entitled. Section 910(c), in relevant part, states that:
average annual earnings shall be such sum as, having
regard to the previous earnings of the injured
employee in the employment in which he was working at
the time of the injury, and of other employees in the
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same or most similar class working in the same or most
similar employment in the same or neighboring
locality, or other employment of such employee . . .,
shall reasonably represent the annual earning capacity
of the injured employee.
33 U.S.C. § 910(c) (1999). Once a court has determined the
claimant’s average annual wage, it must determine the average
weekly wage by dividing the average annual wage by fifty-two. 33
U.S.C. § 910(d)(1). The average weekly wage provides the basis for
the compensation rate. See 33 U.S.C. § 908.
In this case, the ALJ calculated Claimant’s compensation
solely by considering his earnings in the year immediately prior to
his injury. The undisputed evidence established that Loredo earned
$13,616.53 in the year preceding his back injury. The evidence
further established that Loredo worked during only 27 weeks of that
year due to a knee injury for which he was compensated under the
LHWCA. On this basis, the ALJ concluded that section 910(c)
entitled Loredo to compensation based upon a weekly wage of $504.32
–- $13,616.53 divided by 27.
Staftex argues that the one-year period considered by the ALJ
misrepresented Claimant’s earning capacity and that the ALJ should
have looked instead to a five year period preceding the injury.
Staftex notes that during the five years preceding Loredo’s back
injury he never made more than $9896.56 in a single calendar year1
1
Although Loredo earned $13,616.53 in the fifty-two-week
period leading up to his injury, he never made that much in any
single calendar year.
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and that Loredo’s average yearly earnings during that period
amounted to only $5617. Finally, Staftex explains that because it
is a temporary staffing company the duration of Loredo’s employment
is uncertain.
Based upon our review of the record, we conclude that the ALJ
acted well within his discretion in estimating Claimant’s average
weekly wage. First, no case law supports Staftex’s contention that
an ALJ cannot rely exclusively on the most recent year of
employment. While we have held that an ALJ should not randomly
pick and choose certain years from a period simply because the
judge believes that the other years in that period under-
represented the claimant’s earning capacity, see Chilton, 118 F.3d
at 1031, we have never held that a court cannot base its
calculation on the claimant’s most recent year of employment. In
Chilton, we simply reaffirmed that if “the ALJ looks beyond the 52
weeks immediately preceding the injury, ‘he must take into account
the earnings of all the years within that period.’” Id., (quoting
Gatlin, 936 F.2d at 823); accord Meehan Seaway Service Co. v.
Director, Office of Workers’ Compensation Programs, U.S. Dept. of
Labor, 125 F.3d 1163, 1170(8th Cir. 1997)(explaining that an ALJ may
“calculate average annual earnings under section 910(c) based on a
claimant’s earning pattern over a period of years . . . where . .
. all of the years within that period are taken into account”).
Indeed, “the prime objective of section 910(c) is to arrive at a
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sum that reasonably represents a claimant’s annual earning capacity
at the time of the injury.” SGS Control Serv., 86 F.3d at 441(emphasis in original)(citations omitted). And as we explained in
Hall v. Consolidated Employment Systems, 139 F.3d 1025 (5th Cir.
1998), “[t]ypically, a claimant’s wages at the time of injury will
best reflect the claimant’s earning capacity at that time. It will
be an exceedingly rare case where the claimant’s earnings at the
time of injury are wholly disregarded as irrelevant, unhelpful, or
unreliable.” Id. at 1031.
Second, Staftex has failed to present any evidence that
Loredo’s most recent year of employment does not accurately reflect
his current earning capacity. In calculating average weekly wage,
the ALJ must consider not simply the future of a claimant’s
employment with a particular employer, but rather the future of his
employment in his chosen field. Hall, 139 F.3d at 1030. In this
respect, the record supports the ALJ’s conclusion that the most
recent year most accurately reflected Loredo’s current earning
capacity.2
Staftex further argues that the district court erred in giving
2
Loredo presented evidence to the ALJ suggesting that his
current employment with Staftex was likely to be more permanent
than his past employment. Both he and his wife testified that, but
for the injury, Mr. Loredo would have continued his work as a
marine welder. Loredo explained that his previous low wages
resulted from a downturn in the ship-building industry, which
forced him to find work in other, less lucrative, fields. The ALJ
was entitled to credit this testimony.
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Loredo credit for twenty-five weeks during which, due to another
on-the-job injury, Loredo did not work. Staftex argues that by
dividing Loredo’s earnings by twenty-seven, which the district
court did to account for Loredo’s twenty-five weeks on disability,
the ALJ violated 33 U.S.C. § 910(d). This argument is without
merit.
Although section 910(d) states that the ALJ should divide
annual earnings by fifty-two, the Board has frequently held that,
when calculating annual earnings, an ALJ may account for time lost
due to a claimant’s job-related injury. See, e.g., Brien v.
Precision Valve, 23 BRBS 209 (1990); see also Hawthorne v.
Director, Office of Worker’s Compensation Programs, U.S. Dept of
Labor, 844 F.2d 318, 320 (8th Cir. 1988)(holding that ALJs should
account for time lost due to a strike or an injury caused by a
strike). Thus, although the ALJ should have increased its
estimation of Loredo’s annual wage, rather than increased his
weekly wage, in order to account for his knee injury, this error
was harmless. Either approach yields the same mathematical result.
As such, the Board did not err in affirming the wage calculations
of the ALJ.
III.
Staftex argues that 33 U.S.C. § 928(b), which exclusively
governs the award of attorney’s fees in LHWCA cases, did not
authorize the ALJ to award attorney’s fees in this case. According
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to Staftex, section 928(b) authorizes the award of attorney’s fees
only where the employer refuses to accept a written recommendation
of compensation that the Department of Labor issues following an
informal conference. As Staftex notes, although the parties
brought other elements of their dispute before an informal
conference, they never submitted their wage dispute to the
conference and thus never received a written recommendation.
Section 928(b), in relevant part, provides that:
If the employer or carrier pays or tenders
payment of compensation without an award . . . and
thereafter a controversy develops over the amount of
additional compensation, if any, to which the employee
may be entitled, the deputy commissioner or Board
shall set the matter for an informal conference and
following the conference the deputy commissioner or
Board shall recommend in writing a disposition of the
controversy. If the employer or carrier refuse to
accept such written recommendation . . . they shall
pay or tender to the employee in writing the
additional compensation, if any, they believe the
employee is entitled. If the employee refuses to
accept such payment or tender of compensation, and
thereafter utilizes the services of an attorney at
law, and if the compensation thereafter awarded is
greater than the amount paid or tendered by the
employer or carrier, a reasonable attorney’s fee based
solely upon the difference between the amount awarded
and the amount tendered or paid shall be awarded in
addition to the amount of compensation. If a claimant
is successful in review proceedings before the Board
or court in any such case an award may be made in
favor of the claimant and against the employer or
carrier for a reasonable attorney’s fees for
claimant’s counsel in accord with the above
provisions. In all other cases any claim for legal
services shall not be assessed against the employer or
carrier.
33 U.S.C. § 928(b)(1999).
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The plain wording of this section precludes Loredo from
obtaining attorney’s fees in this case. Section 928(b) permits
claimants to obtain attorney’s fees only where: (1) the board has
held an informal conference on the disputed issue; (2) the board
issues a written recommendation on that issue; and (3) the employer
refuses to accept the recommendation. Loredo failed to submit the
average weekly wage dispute to informal conference and thus did not
obtain a recommendation for Staftex to accept or reject.3 As we
explained in FMC Corp. v. Perez, 128 F.3d 908, 910 (5th Cir. 1997),
“[a]n award of attorney’s fees under section 928(b) is appropriate
only if the dispute has been the subject of an informal conference
with the Department of Labor.” Accord Todd Shipyards Corp. v.
Director, Office of Worker’s Compensation Programs, 950 F.2d
607,610 (9th Cir. 1991)(“Section 928(b) authorizes a payment of
attorney’s fees only if the employer refuses to pay the amount of
compensation recommended by the claims examiner following an
informal conference.”). Because Loredo failed to submit the
question of average weekly wages to informal conference, the ALJ
could not, as a matter of law, award him attorney’s fees.
Accordingly, we reverse the Board’s award of attorney’s fees.
3
Apparently, the dispute regarding Loredo’s average weekly
wage did not develop until after the Board had completed its
informal conference. Loredo does not allege that Staftex waited to
challenge Loredo’s average weekly wage until after the conference
in a strategic attempt to avoid liability for attorney’s fees or
that he attempted, without success, to obtain another conference
after the dispute arose.
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IV.
For the reasons stated above, the Benefits Review Board’s
affirmance of the ALJ’s award of compensation under section 910(c)
of the LHWCA is AFFIRMED and the ALJ’s award of attorney’s fees
under section 928(b) of the Act is REVERSED.
AFFIRMED in Part.
REVERSED in Part.
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