Temporary Employment Services v. Trinity Marine Group, Inc. , 261 F.3d 456 ( 2001 )

Revised August 29, 2001
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 00-60064
_____________________
TEMPORARY EMPLOYMENT SERVICES; MARYLAND CASUALTY CO
Petitioners
and
DIRECTOR, OFFICE OF WORKER’S COMPENSATION PROGRAMS,
US DEPARTMENT OF LABOR
Respondent
v.
TRINITY MARINE GROUP, INC
Respondent
_________________________________________________________________
Petition for Review of a Final Order
of the Benefits Review Board
_________________________________________________________________
August 7, 2001
Before KING, Chief Judge, and ALDISERT* and BENAVIDES, Circuit
Judges.
KING, Chief Judge:
Petitioners Temporary Employment Services, Inc. and Maryland
Casualty Company appeal from the final order of the Benefits
*
Circuit Judge of the Court of Appeals for the Third
Circuit, sitting by designation.
Review Board holding them liable for compensation owed to Leroy
Ricks under the Longshore and Harbor Workers’ Compensation Act
and advocate a reversal of the Benefits Review Board’s decision
on the merits. Respondent Director, Office of Workers’
Compensation Programs, United States Department of Labor, urges
reversal on the ground that the administrative tribunal lacked
jurisdiction to resolve the contractual dispute in this case.
Respondent Trinity Marine Group, Inc. requests affirmance of the
Benefits Review Board’s decision on the merits.
For the following reasons, we GRANT the petition for review,
VACATE the Benefits Review Board’s decision, and REMAND with
instructions to reinstate the original decision of the
Administrative Law Judge holding Respondent Trinity Marine Group,
Inc. alone liable under the Longshore and Harbor Workers’
Compensation Act and to dismiss without prejudice the claims
regarding the contractual indemnification provisions for lack of
jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
Petitioner Temporary Employment Services, Inc. (“TESI”)
provides temporary employees and payroll services to various
businesses, including shipyards. TESI and Respondent Trinity
Marine Group, Inc. (“Trinity”) entered into a contract in which
TESI agreed to provide temporary workers to Trinity. Pursuant to
2
this agreement, Leroy Ricks, a TESI employee, was assigned to
work for Trinity.
While working for Trinity, Ricks was injured at Trinity’s
shipyard on January 11, 1993. From January 15, 1993 through
April 24, 1994, Petitioner Maryland Casualty Company
(“Maryland”),1 TESI’s workers’ compensation insurance carrier
under the Longshore and Harbor Workers’ Compensation Act (the
“LHWCA”), 33 U.S.C. §§ 901-950, voluntarily paid Ricks’s
temporary total disability compensation and medical benefits.
Thereafter, Maryland controverted the claim on the basis of a
doctor’s medical opinion that Ricks could return to work. Ricks
then filed a claim for workers’ compensation benefits under the
LHWCA against TESI and Maryland. Subsequently, at the request of
TESI and Maryland, Trinity was added as an additional alleged
employer to the action.
A formal hearing was held before an Administrative Law Judge
(“ALJ”) on January 10, 1996. The ALJ issued a decision on
November 26, 1996, awarding Ricks certain benefits; holding
Trinity, as Ricks’s “borrowing employer,” solely responsible for
those benefits; and ordering Trinity to reimburse Maryland for
benefits that Maryland had previously paid to Ricks.
Trinity appealed the ALJ’s decision to the Benefits Review
Board (the “Board”), and on December 26, 1997, the Board issued a
1
TESI, Trinity, and Maryland will be collectively
referred to hereinafter as “the parties.”
3
decision remanding the matter to the ALJ and directing him to
consider whether a valid contractual obligation between TESI and
Trinity obligated TESI, rather than Trinity, to pay the benefits
owed to Ricks. On remand, the ALJ held that TESI had agreed to
indemnify Trinity and that Maryland’s insurance policy contained
a waiver of subrogation in favor of Trinity. Accordingly,
Maryland reimbursed Trinity for the amounts Trinity had paid to
Ricks and to Maryland. TESI and Maryland then appealed the
merits of this ALJ decision to the Board. The Respondent
Director, Office of Workers’ Compensation Programs, United States
Department of Labor (the “Director”) challenged the jurisdiction
of the administrative tribunal to decide these contractual
issues. Rejecting the Director’s jurisdictional challenge, the
Board affirmed the merits of the ALJ’s decision on June 8, 1999.
Subsequently, the Board denied a motion by TESI and Maryland for
reconsideration.
TESI and Maryland timely appealed to this court, urging
reversal on the merits. The Director has also filed in this
court urging reversal, but on jurisdictional grounds.2
We have jurisdiction over petitions for review of final
orders of the Board pursuant to 33 U.S.C. § 921(c).
2
The Supreme Court has held that the Director may appear
as a respondent before the courts of appeals. See Ingalls
Shipbuilding Inc. v. Dir., Office of Workers’ Comp. Programs,
Dep’t of Labor, 519 U.S. 248, 265-266 (1997).
4
II. STANDARD OF REVIEW
“The Supreme Court has instructed us that the preferred
starting point in reviewing an administrative order is to satisfy
ourselves that the agency whose order we are asked to review ‘had
jurisdiction over the matter in dispute.’” Harmar Coal Co. v.
Dir., Office of Workers’ Comp. Programs, U.S. Dep’t of Labor, 926
F.2d 302, 307 (3d Cir. 1991) (quoting Cardillo v. Liberty Mut.
Ins. Co., 330 U.S. 469, 473 (1947)). “Jurisdiction is a question
of law which we review de novo.” Groome Res. Ltd., L.L.C. v.
Parish of Jefferson, 234 F.3d 192, 198 (5th Cir. 2000).
“This court reviews the [Board’s] interpretation of the
LHWCA, an issue of law, de novo, affording no special deference
to the [Board’s] construction because it is not a policymaking
agency.” Equitable Equip. Co. v. Dir., Office of Worker’s Comp.
Programs, U.S. Dep’t of Labor, 191 F.3d 630, 631 (5th Cir. 1999);
see also Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469,
476 (1992) (stating that “the [Board] is not entitled to any
special deference”); H.B. Zachry Co. v. Quinones, 206 F.3d 474,
478 (5th Cir. 2000) (“Indeed, deference is owed to the Director’s
views and not the views of the [Board].”); Ceres Gulf & ESIS/INA
v. Cooper, 957 F.2d 1199, 1204 (5th Cir. 1992) (stating that
“[s]ubject matter jurisdiction is a question of law[, and] our
review is plenary”).
5
III. JURISDICTION
Due to the maritime character of their employment, longshore
workers3 were precluded from participating in state workers’
compensation schemes. See S. REP. NO. 973, at 16 (1926); 1 THOMAS
J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW § 7-1, at 380 (3d ed. 2001).
Therefore, in order to protect longshore workers, Congress
enacted a federal no-fault workers’ compensation system — the
LHWCA. See 33 U.S.C. § 904; 1 SCHOENBAUM, ADMIRALTY AND MARITIME LAW
§ 7-1, at 380-81 (“In return for compelling the employer to pay
compensation without proof of negligence, [the LHWCA] provides a
statutory scheme of benefits which are substantially less than
tort damages, and grants the employer immunity from tort
liability, regardless of how serious its fault may have been.”).
“A fundamental aspect of [this system] is the expectation
that employers will pay compensation promptly and directly,
without the necessity of a formal award.” 1 SCHOENBAUM, ADMIRALTY AND
MARITIME LAW § 7-1, at 381. However, when a worker’s benefits are
controverted, a claim for compensation may be filed and heard
before an ALJ, see 33 U.S.C. § 919, and appealed to the Board,
see id. § 921.
3
The class of land-based workers who perform a variety of
tasks for, on, and around vessels were commonly known as
“longshoremen.” See 1 THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW
§ 7-1, at 380 (3d ed. 2001). The term “longshore” was
substituted for “longshoremen” in the 1984 amendments. See Pub.
L. No. 98-426, 98 Stat. 1639, 1654 (1984).
6
Under the LHWCA, an ALJ has jurisdiction over a “claim for
compensation” and has “full power and authority to hear and
determine all questions in respect of such claim.” Id. § 919(a)4
(emphasis added); see also id. § 919(d) (vesting the powers,
duties, and responsibilities of the deputy commissioners with
respect to hearings in the ALJ).5 The threshold issue we must
decide is whether the parties’ claims regarding their
indemnification contractual provisions are “questions in respect
of” an LHWCA compensation claim and thus questions over which the
ALJ has jurisdiction. As we explain below, we find the
4
Section 919(a), “Filing of claim,” reads in full:
Subject to the provisions of section 913 of this title
a claim for compensation may be filed with the deputy
commissioner in accordance with regulations prescribed
by the Secretary at any time after the first seven days
of disability following any injury, or at any time
after death, and the deputy commissioner shall have
full power and authority to hear and determine all
questions in respect of such claim.
33 U.S.C. § 919(a).
5
Section 919(d), “Provisions governing conduct of
hearing; administrative law judges,” reads in full:
Notwithstanding any other provisions of this chapter,
any hearing held under this chapter shall be conducted
in accordance with the provisions of section 554 of
Title 5. Any such hearing shall be conducted by a
[sic] administrative law judge qualified under section
3105 of that title. All powers, duties, and
responsibilities vested by this chapter, on October 27,
1972, in the deputy commissioners with respect to such
hearings shall be vested in administrative law judges.
33 U.S.C. § 919(d) (footnote omitted).
7
contractual issues in this case are beyond the scope of the
authority granted to the LHWCA administrative tribunals.
A. The Question Presented
Before addressing the jurisdictional question, we make clear
precisely what the parties are asking us to decide in this case.
A body of law has developed under the LHWCA in response to
situations in which multiple employers and carriers possibly
played a role in the worker’s employment. The “borrowed
employee” doctrine deals with one such situation. This doctrine
is applicable in cases where one employer “loans” or “lends”
employees to another employer.
The instant case required application of this doctrine
because, as described supra in Part I, TESI “loaned” Ricks to
Trinity. We have determined that the “borrowing employer” is the
employer for purposes of the LHWCA and, as such, is responsible
for the payment of the worker’s compensation benefits. See Total
Marine Services, Inc. v. Dir., Office of Worker’s Comp. Programs,
U.S. Dep’t of Labor, 87 F.3d 774, 779 (5th Cir. 1996).
Therefore, Trinity, as the borrowing employer, is solely liable
for Ricks’s benefits.
This determination was made in the initial ALJ decision and
affirmed by the Board. It is not being contested in this appeal.
What is at issue here is Trinity’s contention that a contract
exists between itself and TESI pursuant to which TESI has agreed
to indemnify it from any claims arising from Ricks’s employment
8
(i.e., the worker’s compensation benefits) and that Maryland’s
insurance policy contains a waiver of subrogation in favor of
Trinity. In essence, Trinity is claiming that, although the
LHWCA places liability on its shoulders, it has contracted around
that rule via the Maryland-TESI/Trinity agreement. Trinity’s
claims are dependent, therefore, upon contractual provisions that
are not governed by the LHWCA. These issues are the ones
addressed by the ALJ on remand, an action that the Board
affirmed.
B. Scope of Authority of LHWCA Adjudicative
Administrative Tribunals in this Case
1. Jurisdictional Arguments
The Board held that the ALJ “acted within his authority in
resolving the issue of whether Maryland is liable for [Ricks’s]
disability compensation, based on his interpretation of the
relevant contracts.” Ricks v. Temp. Employment Servs., Inc.,
[1999] 33 Ben. Rev. Bd. Serv. (MB) 81, 84, available at 1999 WL
648934, at *3. To support its holding, the Board referenced
Pilipovich v. CPS Staff Leasing, Inc., [1997] 31 Ben. Rev. Bd.
Serv. (MB) 169, 171-72, available at 1997 WL 764428, in which it
had held that an ALJ should resolve contractual indemnity and
insurance issues between the lending employer, its insurer, and
the borrowing employer. The Board also relied on this court’s
holding in Total Marine, in which we stated: “[W]e conclude that
9
a borrowing employer is required to pay the compensation benefits
of its borrowed employee, and, in the absence of a valid and
enforceable indemnification agreement, the borrowing employer is
required to reimburse an injured worker’s formal employer for any
compensation benefits it has paid to the injured worker.” 87
F.3d at 779 (emphasis added). The Board stated further that it
was not in the interest of judicial economy to defer
consideration of the contractual issues “to another place and
time.” Ricks, [1999] 33 Ben. Rev. Bd. Serv. (MB) at 83,
available at 1999 WL 648934, at *3.
Objecting to the Board’s determination, the Director argues
that the LHWCA does not give ALJs the authority to determine
common law contractual rights and liabilities. He asserts that
an ALJ can decide only whether a valid compensation claim exists
and, if so, the amount of that claim and which insurer is
responsible for making that payment under the LHWCA. In essence,
the Director maintains that, by its terms, § 919(a) only grants
authority to ALJs to determine issues under LHWCA law as they
relate to compensation claims. The Director argues that
questions relating to who may be liable under non-LHWCA law is
beyond the purview of LHWCA adjudicative administrative
tribunals. In this regard, the Director points out that reading
§ 919(a) to grant expansive adjudicative powers to LHWCA
administrative tribunals could violate Article III. The Director
also states that the principles guiding our decision in Equitable
10
Equipment Co. v. Director, Office of Worker’s Compensation
Programs, U.S. Department of Labor, 191 F.3d 630, 632 (5th Cir.
1999), in which we held that an ALJ lacked jurisdiction to
adjudicate an employer’s claim against its insurers for
attorneys’ fees, command a finding that no jurisdiction exists in
this case. As for the Board’s reliance on its decision in
Pilipovich6 and Total Marine, the Director contends that
Pilipovich was wrongly decided and that the Total Marine language
on which the Board relied is dictum (i.e., that the panel in the
case was merely reserving a question not presented on the facts
before it).
In addition, the Director points out that placing non-LHWCA
contractual issues within the ambit of the ALJ’s authority will
result in an erosion of the objectives of the LHWCA. He states
that the critical, central theme of the LHWCA is to get benefits
(to which the claimant is entitled) to the claimant promptly.
This objective would be frustrated when ALJs attempt to decide
common law contract issues, questions that are beyond their
expertise, and when the claimant must rely on non-LHWCA-approved
entities, which are not set up to make such payments, to produce
those disbursements. Thus, the Director argues that finding that
ALJs do not have authority to interpret non-LHWCA indemnity
6
The Director notes that the Pilipovich decision was also
appealed on jurisdictional grounds, but the case settled on the
eve of oral argument before this court.
11
agreements supports the public policy justification of the ready
determinability of who it is that owes LHWCA benefits.
The parties all disagree with the Director that the ALJ did
not have authority to consider the contractual indemnification
dispute in this case.7 TESI and Maryland conclusorily state that
the ALJ does have authority to decide their contract issues and
that it would be inefficient to have to litigate these issues in
another forum. The public policy considerations of avoiding
multiplicity of litigation and efficacy underpin TESI’s and
Maryland’s arguments.
Trinity argues that the import of Total Marine is that it is
proper for ALJs to consider whether a valid and enforceable
indemnification agreement exists between the employers. Trinity
notes that, as in this case, an allocation question (i.e., which
of two employers is responsible for the compensation benefits)
was at issue in Total Marine. Trinity also states that
consideration of the indemnification dispute conforms to
§ 919(a)’s requirement that the issues are “in respect of” a
compensation claim because the ALJ would be determining who pays
the claimant’s benefits. Finally, Trinity objects to the
7
Although the Director thoroughly briefed his
jurisdictional challenge, the parties did not respond to the
issue in their initial briefing to this court. During oral
argument, when pressed by the panel, the parties put forth the
arguments described infra in the text, and Trinity included some
of these arguments in its response to the Director’s supplemental
brief (filed after oral argument).
12
Director’s reliance on Equitable Equipment Co., stating that,
while attorneys’ fees are clearly ancillary to the compensation
determination, the responsible payer inquiry is not.
2. Analysis of Jurisdiction in this Case
We begin, of course, with the text of § 919(a). See
Landreth Timber Co. v. Landreth, 471 U.S. 681, 685 (1985) (“It is
axiomatic that ‘[t]he starting point in every case involving
construction of a statute is the language itself.’” (alteration
in original) (citation omitted)). The relevant language states
that an ALJ has authority “to hear and determine all questions in
respect of such claim” and the phrase “such claim” references “a
claim for compensation.” 33 U.S.C. § 919(a). Thus, a plain
reading of the text indicates that the ALJ’s authority extends
only to questions that are in respect of the LHWCA claim of an
injured or deceased worker.
The Supreme Court has not looked beyond the text of § 919(a)
to discern its meaning. In Cardillo v. Liberty Mutual Insurance
Co., the Court stated simply that “questions as to whether an
injury arose out of and in the course of employment necessarily
fall within the scope of [the administrative tribunal’s]
authority.” 330 U.S. 469, 477 (1947); see also Crowell v.
Benson, 285 U.S. 22, 62 (1932) (finding that the LHWCA withstood
various constitutional challenges and stating that the “such
claim” language in § 919(a) meant “the claim for compensation
13
under the [LHWCA] and by its explicit provisions is that of an
‘employee,’ as defined in the [LHWCA], against his ‘employer’”).
This court has, however, provided some guidelines regarding the
jurisdictional reach of § 919(a).
In interpreting § 919(a), we have explained that the
disputed issue must be “integral to deciding the compensation
claim.” Equitable Equip. Co., 191 F.3d at 632, 633 (stating that
§ 919(a) “does not vest jurisdiction in ALJs to decide a contract
dispute between an employer and its carriers when the cause of
action is wholly unrelated to an underlying claim for
compensation”). We held, therefore, that “a state law breach of
contract claim between an insurer and its insured . . . . is
beyond the jurisdictional reach of § 919(a), particularly when
the underlying compensation claim has been resolved and no
factual dispute regarding the compensation claim itself must be
decided.” Id. at 632; see also RESTATEMENT (SECOND) OF JUDGMENTS § 83
cmt. g (1982) (stating that an administrative tribunal
“ordinarily lacks authority to adjudicate claims arising out of
the transaction in question but based upon other substantive
legal premises”).
Equitable Equipment Co. essentially echoed the approach to
§ 919(a) taken by other courts. For instance, in BethEnergy
Mines, Inc. v. Director, Office of Workers’ Compensation
Programs, U.S. Department of Labor, the Court of Appeals for the
Third Circuit held that administrative bodies under the Black
14
Lung Benefits Act (which incorporates by reference the claim
management and adjudication procedures of the LHWCA, such as
§ 919(a)) lacked jurisdiction to resolve disputes regarding
interest assessed against employers on reimbursements to the
black lung disability trust fund for medical benefits that the
fund had previously paid into on behalf of the claimants. See 32
F.3d 843, 845-48 (3d Cir. 1994). Agreeing with the Director’s
construction of § 919(a) in the case, the court stated that
“[b]ecause the ‘claim’ to which [the LHWCA] sections refer is
that of the injured or deceased [worker], the administrative
procedure . . . is available only to a party . . . who seeks to
challenge some aspect of the [worker’s] ‘claim,’ such as the
[worker’s] eligibility for some or all of the compensation sought
or granted.” Id. at 847. The court contrasted “underlying
liability determinations” (i.e., “[p]roceedings before the ALJ
and the Board . . . [which] center on the evaluation of the
claimant’s entitlement to payments”), id. at 847-48 (emphasis
added), and interest assessments, which do not benefit the
claimant and are not sought on behalf of the claimant. See id.
Thus, the court concluded that “although the demand for interest
is predicated in the first instance on the fact that the [worker]
filed the claim, it cannot be said to raise any ‘questions in
respect of such claim,’ all of which have been resolved by then.”
Id. at 848.
15
Also regarding interest assessments in Black Lung Benefits
Act cases, the Court of Appeals for the Fourth Circuit held that
such disputes were not within the cognizance of the ALJ and the
Board. See Sea “B” Mining Co. v. Dir., Office of Workers’ Comp.
Programs, U.S. Dep’t of Labor, 45 F.3d 851, 854-56 (4th Cir.
1995). Relying on BethEnergy, the court noted that because
“underlying liability” was not at issue, “‘all questions in
respect of such claim’ have been resolved.” Id. at 855; see also
Indian Mountain Coal Co. v. Dir., Office of Workers’ Comp.
Programs, U.S. Dep’t of Labor, No. 96-2262, 1998 WL 382630, at *5
(4th Cir. June 11, 1998) (reaffirming Sea “B” Mining and stating
that questions “collateral to” an underlying claim for benefits
are those that do not involve the claimant’s eligibility for some
or all of the compensation sought or granted). Other circuits
have also similarly resolved the extent of administrative
adjudicatory authority under § 919(a) in this regard. See, e.g.,
Peabody Coal Co. v. Dir., Office of Workers’ Comp. Programs, U.S.
Dep’t of Labor, 40 F.3d 906, 908-09 (7th Cir. 1994) (stating that
“all questions in respect of such claim” had been resolved
because underlying liability was not at issue); B & S Coal Co. v.
Dir., Office of Workers’ Comp. Programs, U.S. Dep’t of Labor, 35
F.3d 1041, 1045-46 (6th Cir. 1994).
Thus, while no court has apparently considered the precise
question facing us today (i.e., whether issues involving
contractual indemnification provisions are “questions in respect
16
of” a worker’s compensation claim), courts have repeatedly
rejected attempts to read the “in respect of” language
expansively; rather, courts have focused on the fact that the
disputed issue must be essential to resolving the rights and
liabilities of the claimant, the employer, and the insurer
regarding the compensation claim under the relevant statutory
law.8 As in cases involving the Black Lung Benefits Act (which
incorporates, inter alia, § 919(a)) and other analogous
circumstances, we are presented today with a dispute that does
not involve the claimant’s entitlement to benefits or the
8
Although Board decisions regarding questions of law are
entitled to no deference, see supra Part II, we briefly discuss
some relevant decisions only to demonstrate that Trinity and the
Board’s reliance on those decisions is flawed. In Rodman v.
Bethlehem Steel Corp., the Board held that an ALJ had
jurisdiction “to merely adjudicate those limited insurance
contract disputes which arise out of or under the [LHWCA], the
resolution of which are necessary in order to determine
compensation liability in claims under the [LHWCA].” [1984] 16
Ben. Rev. Bd. Serv. (MB) 123, 126 (emphasis added). In addition,
the Board has acknowledged that an ALJ has jurisdiction to
resolve issues regarding insurance contract coverage when
determining the responsible employer or carrier under the LHWCA.
See Barnes v. Ala. Dry Dock & Shipbuilding Corp., [1993] 27 Ben.
Rev. Bd. Serv. (MB) 188, 191, available at 1993 WL 404281, at *3
(stating that the ALJ “has the power to hear and resolve
insurance issues which are necessary to the resolution of a claim
under the [LHWCA]” (emphasis added)).
We need not and do not address these decisions. They are
inapposite to this case. No party here contends that the
resolution of those contractual questions that were addressed by
the decisions of the ALJ and the Board after remand is required
to determine compensation liability under the LHWCA in the first
instance, a determination that was made in the initial decision
of the ALJ.
17
question who, under the LHWCA, is responsible for paying those
benefits.
Our Total Marine case is not to the contrary because it does
not stand for the proposition that any contractual
indemnification issues may be adjudicated by the administrative
tribunal. To restate, we held in Total Marine: “[W]e conclude
that a borrowing employer is required to pay the compensation
benefits of its borrowed employee, and, in the absence of a valid
and enforceable indemnification agreement, the borrowing employer
is required to reimburse an injured worker’s formal employer for
any compensation benefits it has paid to the injured worker.” 87
F.3d at 779. Thus, we held that, in the borrowed-employee
context, the borrowing employer is the entity responsible for the
payment of the claimant’s benefits. This holding was the result
of an analysis regarding how the LHWCA determines the responsible
employer in borrowed employee situations. As such, the
administrative tribunal properly adjudicated questions arising
under the LHWCA that bore directly on the compensation claim.
Furthermore, the language in Total Marine regarding “the absence
of a valid and enforceable indemnification agreement” was not
dispositive of the issues presented in that case because no such
agreement even existed. We agree with the Director that Total
Marine merely reserved a question not presented, a question we
resolve today.
18
Interpreting § 919(a) authority as not extending to the
contractual issues in this case is faithful not only to the
language of the statutory provision and the cases interpreting
that language, but also to the objectives and policy
considerations underlying the LHWCA. As mentioned briefly at the
outset of this section, the LHWCA is a no-fault compensation
scheme, in return for which employers are immune from tort
liability. The basic structure of the LHWCA provides that the
employer and its insurance carrier are responsible for the
claimant’s compensation benefits. The insurance relationship
under the LHWCA is closely regulated for the security, prompt
provision, and convenient supervision of payments of benefits to
the worker. See 33 U.S.C. §§ 932, 935-936; see also, e.g., id.§ 914(a), (b) (stating payments must be paid promptly,
periodically, and directly to the claimant). See generally 20
C.F.R. pt. 703 (2001). The carrier of record for the entity
ultimately determined to be the responsible employer under the
LHWCA must bear the liability for the compensation of the
claimant. See id. § 932(a)(1); 20 C.F.R. §§ 703.003, .115
(2001); see also 33 U.S.C. § 932(a)(2) (stating the requirements
for an employer to be authorized as a self-insurer and thus its
own carrier and the attending obligations); 20 C.F.R. §§ 703.002,
.301-.312 (2001) (same). The convenient and effective
administration of the LHWCA intended to be provided by the
LHWCA’s terms and implementing regulations depends in significant
19
measure on the prompt, accurate identification of the liable
employer and its carrier to whom the compensation system is
entitled to look for the prompt and continuing payment of all
benefits. See Rodriguez v. Compass Shipping Co., Ltd., 451 U.S.
596, 612 (1981) (stating that “the general policy of the [LHWCA
is] to encourage the prompt and efficient administration of
compensation claims”).
Once all the LHWCA issues in respect of the compensation
claim have been adjudicated (as they have been in this case), an
adjudication of who else may be liable on other grounds is,
therefore, unnecessary to the objective of the LHWCA proceedings.
Moreover, such resolution is potentially destructive to the
security of future payments, which has been accomplished by
identifying and ordering payments from an LHWCA-authorized
carrier. This is because a party deemed to be ultimately
responsible on contractual or other grounds may have far less
financial stability and long-term reliability than is required of
LHWCA carriers.
Not only could security and prompt administration of the
LHWCA be impaired if ALJs resolve questions such as the
contractual agreement at issue in this case, but ALJs would be
acting beyond their expertise, thus further hindering the mission
of the LHWCA. As the Supreme Court stated: “[T]he obvious
purpose of the [LHWCA is] to furnish a prompt, continuous, expert
and inexpensive method for dealing with a class of questions of
20
fact which are peculiarly suited to examination and determination
by an administrative agency specially assigned to that task.”
See Crowell, 285 U.S. at 46 (emphasis added). The “judicial
economy” rationale on which the parties and the Board heavily
rely in their argument to permit the ALJ to make the contractual
indemnification determinations in this case is unpersuasive: “It
cannot be regarded as an impairment of the intended efficiency of
an administrative agency that it is confined to its proper
sphere[.]” Id. at 65. Therefore, the policy considerations
underlying the LHWCA provide further support for the
determination that Congress did not grant administrative
tribunals authority in § 919(a) to adjudicate the contractual
issues in this case because such a grant would undermine the very
goals it was attempting to achieve in creating and structuring
the LHWCA as it did.
Because we conclude that administrative tribunals under the
LHWCA have not been granted adjudicatory authority by Congress to
resolve the parties’ claims, we need not reach the question
whether such an adjudication would violate Article III of the
Constitution under Northern Pipeline Construction Co. v. Marathon
Pipe Line Co., 458 U.S. 50 (1982), and its progeny. We note,
however, that common law contract disputes generally “involve
‘private rights’ which are at the ‘core’ of ‘matters normally
reserved to Article III courts [and thus beyond the purview of
non-Article III entities].’” Coit Indep. Joint Venture v. Fed.
21
Sav. & Loan Ins. Corp., 489 U.S. 561, 578-79 (1989) (quoting
Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 853
(1986)). In this regard, “statutes can and should be read to
avoid [serious constitutional] difficulties.” Id. at 579 (citing
Schor, 478 U.S. at 841, and Crowell, 285 U.S. at 62); see also
Equitable Equip. Co., 191 F.3d at 632 (“Underpinning . . . cases
is a concern . . . that the jurisdiction of a non-article III
tribunal like those under the LHWCA workers compensation statute
should be consistent with . . . [Northern Pipeline].”).
We reaffirm, therefore, the principles put forth in our
Equitable Equipment Co. case and determine that those principles
dictate that the ALJ and Board overstepped their statutory
authority in this case by deciding questions that are not
“integral to” the compensation claim, see Equitable Equip. Co.,
191 F.3d at 633. In essence, whether TESI agreed to indemnify
Trinity for workers’ compensation claims relates to the
compensation claim only in the sense that the question would not
arise but for Ricks’s compensation claim. This “but for”
approach to § 919(a) casts too wide a net, and for the reasons
discussed above, we decline to rest administrative jurisdiction
“on too thin a reed,” id. at 632. As such, we are not presented
with a “question in respect of a claim” within the meaning of
§ 919(a) because all questions regarding Ricks’s LHWCA
compensation claim have already been resolved. See, e.g.,
BethEnergy, 32 F.3d at 847-48. Consequently, the ALJ and the
22
Board lacked authority to adjudicate the Maryland-TESI/Trinity
contractual dispute in this case.
Because we find the Director’s jurisdictional challenge to
the actions of the ALJ and the Board to be meritorious, we need
not and do not address the merits of this case. Therefore, the
parties’ claims are to be dismissed without prejudice and may be
filed in a court of general jurisdiction.
IV. CONCLUSION
For the foregoing reasons, we GRANT the petition for review,
VACATE the Board’s decision, and REMAND with instructions to
reinstate the original decision of the ALJ holding Trinity alone
liable, as employer and self-insurer, under the LHWCA and
ordering Trinity to reimburse Maryland for compensation paid to
Ricks and to dismiss without prejudice the claims regarding the
contractual indemnification provisions for lack of jurisdiction.
Each party shall bear its own costs.
23