Bourgeois v. Avondale Shipyards, Inc.

United States Court of Appeals,

Fifth Circuit.

No. 96-60608.

Robert A. BOURGEOIS, Petitioner,

v.

AVONDALE SHIPYARDS, INC., Director, Office of Worker's
Compensation Programs, U.S. Department of Labor, Respondents.

Sept. 9, 1997.

Petition for Review of an Order of the Benefits Review Board.

Before REYNALDO G. GARZA, HIGGINBOTHAM and DAVIS, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

Background

On May 13, 1973, Robert A. Bourgeois ("Bourgeois"), appellant,

was employed at Avondale Shipyards, Inc. ("Avondale") when he fell

into a barge and, among other things, broke his left wrist. At

that time, he was earning $229.90 per week and was paid a weekly

Longshoremen's and Harbor Workers' Compensation Act ("LHWCA")1

benefit of $153.27 for work he missed. Bourgeois returned to work

shortly after the incident and worked continuously for ten years

until May of 1983 when he was diagnosed with a bone cyst at the

site where it was previously injured.

On May 17, 1983, Dr. Gordon McFarland performed surgery on

Bourgeois to remove the cyst on his wrist. During the operation,

McFarland severed the left lateral femoral nerve, causing a

disabling injury to Bourgeois. Avondale voluntarily began paying

1
33 U.S.C. § 901, et seq. (1986).

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benefits to Bourgeois. However, he was paid $153.27 a week, a rate

based on Bourgeois' earnings at the time of the original accident

in 1973. These benefits were paid from May 17, 1983 to March 15,

1988.

Bourgeois complained throughout this period of compensation,

claiming that his rate of compensation should have been based on

the earnings as of the date of disability (May 1983) and not the

date of injury (May 1973). This eventually resulted in the filing

of an official claim in 1988 to have his benefits raised to the

level of earnings at the time of disability. Originally, this

claim was filed because Avondale was allegedly not paying

compensation at the proper rate. However, Bourgeois instituted

negligence proceedings against his doctor. This raised other

issues which were ultimately added to this case.

In the midst of Bourgeois' dispute with Avondale over the rate

of compensation, Bourgeois filed a medical malpractice suit against

Dr. McFarland on November 27, 1985. Bourgeois was eventually

awarded $762,811.00 in that lawsuit and in 1990 received

$533,051.00, exclusive of attorneys' fees and expenses.

Bourgeois subsequently sought a formal hearing from

Administrative Law Judge C. Richard Avery to resolve the various

issues involved the proceedings brought against Avondale. These

issues centered around whether: (1) Bourgeois' compensation rate

should have been based on his average weekly wage at the time his

disability began in 1983 rather than the wages he was earning at

the time he originally suffered his wrist injury in 1973; (2) he

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was entitled to penalties pursuant to § 14(e) and (f) due to

Avondale's arbitrary and capricious termination of his benefits in

March, 1988; and (3) Avondale's credit pursuant to § 33(f) should

have been limited to the actual damages awarded to Bourgeois and

should not have included the legal interest which was added as a

result of having to wait to receive the money from his malpractice

case.

Judge Avery ultimately found that Bourgeois should have been

compensated at a rate based on his salary from the time of his

disability and that this rate should be $615.77.2 He also

concluded that Bourgeois' net recovery and the amount of Avondale's

credit was $533,051.00, an amount which included pre-judgment

interest. Finally, he held that penalties pursuant to 33 U.S.C. §

914(f) and (e) would not be assessed against Avondale. In a

Supplemental Decision and Order rendered on November 4, 1994, Judge

Avery awarded Bourgeois' attorney fees in the amount of $3,750.00

plus expenses totaling $274.38.

Bourgeois appeals this decision from the Administrative Law

Judge.

Discussion

I. Average Weekly Salary

Bourgeois argues that Johnson v. Director, Office of Workers

Compensation Programs, 911 F.2d 247 (9th Cir.1990), supports his

2
Judge Avery presents two different figures in his order
regarding average weekly salary. One amount is $615.77 and the
other is $614.37. The correct amount is $615.77. Accordingly,
this is the figure upon which we will base our conclusions.

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argument that his weekly wage for the purposes of benefits should

be $664.80 and not $615.77. The court in Johnson states that

compensation should be calculated at the time of disability, not

the time of injury. Avondale has already conceded this point.

Bourgeois' figure represents the average weekly wage he earned in

1982 based on his 1982 W-2 Form. The Administrative Law Judge's

figure represents the average weekly wage earned in the fifty-two

weeks prior to his disability of May 17, 1983.

The lower court's method of calculating compensation "at the

time of disability" under § 910 of the LHWCA is a fair and

reasonable method of determining compensation which we will not

disturb on appeal.

II. Credit

The LHWCA provides that an employer who has paid benefits to

an employee who later recovers for his injuries from a third party

shall receive a credit for the "net amount" recovered against that

third party. The statute states that the net amount:

shall be equal to the actual amount recovered less the
expenses reasonably incurred by such person in respect to such
proceedings (including reasonable attorneys' fees).

33 U.S.C. § 933(f).

In Jacques v. Kalmar Industries, AB, 8 F.3d 272 (5th

Cir.1993), we held that the employer's credit attaches to the

"total recovery obtained by the injured workman from a third-party

defendant, regardless of what that recovery replaces or is termed

by the court." Id. at 274. Although we interpreted "net amount"

to include punitive damages in Jacques, we cannot distinguish

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punitives from pre-judgment interest for purposes of "net amount."

Bourgeois argues that it would be unfair to include

prejudgment interest in the amount credited to the employer because

that amount represents compensation for the amount of time the

employee had to wait before receiving payment. However, the law of

this Circuit as well as the statute control. As such, the

Administrative Law Judge's finding that Avondale was entitled to a

credit for the full amount of Bourgeois' net recovery, including

pre-judgment interest, is proper.

Applying the $615.77 average weekly wage (and corresponding

compensation rate of $410.53 calculated under the LHWCA),

Avondale's credit will not amortize until the year 2008.3

III. Penalties

Bourgeois claims that the Administrative Law Judge erred in

failing to award penalties under either 33 U.S.C. § 914(e) or (f)

for Avondale's termination of his benefits on March 15, 1988 and

for paying Bourgeois at a compensation rate based on his 1973

wages. Section 914(f) provides:

If any compensation, payable under the terms of an award, is
not paid within ten days after it becomes due, there shall be
added to such unpaid compensation an amount equal to 20
percent thereof ...

Avondale correctly argues that § 914(f) provides penalties only if

an award is not paid in a timely manner. There was no award in

3
This is calculated by multiplying the weekly compensation
rate or $410.53 by fifty-two weeks to obtain an annual compensation
of $21,347.56. Dividing the credit amount of $533,051.00 by this
annual compensation reveals a credit for almost twenty-five years.

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this case as Avondale voluntarily paid benefits to Bourgeois.

Bourgeois alternatively argues that penalties should be

assessed under § 914(e). This section provides:

If any installment of compensation payable without an award is
not paid within fourteen days after it becomes due ... there
shall be added to such unpaid installment an amount equal to
10 percentum thereof ... unless notice is filed under
subdivision (d) of this section ...

Subdivision (d) provides:

If the employer controverts the right to compensation he shall
file with the deputy commissioner on or before the fourteenth
day after he has knowledge of the alleged injury or death, a
notice ... stating that the right to compensation is
controverted ...

Avondale filed its Notice of Controversion on March 11, 1988, and

made its last payment on March 16, 1988. There is also no basis

for assessing a penalty under § 914(e).

Accordingly, Sections 914(e) and (f) are not applicable to the

present case.

IV. Attorneys' fees

Given our decision in Ingalls Shipbuilding, Inc. v. Director,

OWCP, 991 F.2d 163 (5th Cir.1993), we find that the Administrative

Law Judge did not err in reducing all expenses as well as

attorneys' fees in its supplemental decision and order.

Conclusion

Based on the foregoing, we accordingly AFFIRM the findings of

fact and conclusions of law as submitted by the lower court.

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