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Total Marine Services, Inc. v. Director, Office of Worker's Compensation Programs

Court: Court of Appeals for the Fifth Circuit
Date filed: 1996-07-17
Citations: 87 F.3d 774
Copy Citations
21 Citing Cases

                   United States Court of Appeals,

                           Fifth Circuit.

                            No. 95-60421.

  TOTAL MARINE SERVICES, INCORPORATED;      Aetna Casualty & Surety
Company, Petitioners,

                                 v.

     DIRECTOR, OFFICE OF WORKER'S COMPENSATION PROGRAMS, U.S.
DEPARTMENT OF LABOR; C.P.S. Staff Leasing; Employer's Casualty
Insurance Company, Respondents.

                           July 16, 1996.

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

Before JOLLY, DUHÉ, and STEWART, Circuit Judges.

     E. GRADY JOLLY, Circuit Judge:

     Total Marine Services, Inc., appeals from a final order of the

Benefits Review Board (the "BRB") awarding CPS Staff Leasing, Inc.,

reimbursement for the compensation benefits it paid under the

Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901-

950 (the "LHWCA"), to Wayne Arabie, its injured employee who had

been "borrowed" by Total Marine.       We affirm the BRB's final order

because Total Marine, as Arabie's "borrowing employer," is Arabie's

"employer," and is thus liable for Arabie's compensation benefits

under the express provisions of section 4(a) of the LHWCA, 33

U.S.C. § 904(a).

                                   I

     Wayne Arabie is a welder who was formally employed by CPS.

CPS, however, is simply a temporary labor service that supplies

workers to its customers, including Total Marine.      CPS dispatched

Arabie to work under the direction and control of Total Marine at

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Total Marine's repair facility pursuant to an oral agreement.           In

the course of his work at Total Marine, Arabie injured his neck.

      Arabie filed a claim for benefits under the LHWCA against CPS.

CPS   and     its   insurer,   Employers   Casualty   Insurance    Company

(hereafter collectively, "CPS"), in turn asserted a reimbursement

claim against Total Marine and its insurer, Aetna Casualty & Surety

Company (hereafter collectively, "Total Marine"), on the basis that

Arabie was Total Marine's borrowed employee, making Total Marine

liable as Arabie's "employer" for his compensation claim under the

LHWCA.      CPS eventually settled with Arabie by paying his medical

expenses      and    compensation   benefits,     leaving   only     CPS's

reimbursement claim against Total Marine.        The parties stipulated

that Total Marine was Arabie's "borrowing employer" under the

borrowed employee doctrine.

      Total Marine filed a motion for summary judgment before the

Office of Administrative Law Judges, asserting that § 904(a)

precluded its liability for Arabie's compensation benefits.1           The

administrative law judge (the "ALJ") issued an order dismissing

Total Marine in February 1993.           The ALJ concluded that even if

Total Marine were Arabie's borrowing employer, Total Marine was a

      1
       Section 904(a) reads in pertinent part:

             Every employer shall be liable for and shall secure the
             payment to his employees of the compensation payable
             under sections 907, 908, and 909 of this title. In the
             case of an employer who is a subcontractor, only if
             such subcontractor fails to secure the payment of
             compensation shall the contractor be liable for and be
             required to secure the payment of compensation....

      33 U.S.C. § 904(a) (1994).

                                     2
contractor and thus could not be held liable for compensation

benefits for an employee of its subcontractor, CPS, under § 904(a)

because CPS had secured payment of compensation benefits.               CPS

appealed to the BRB.

      The BRB reversed the ALJ and remanded the case to the ALJ to

resolve any remaining issues and to award reimbursement to CPS.

The BRB held that a company determined to be an injured worker's

borrowing employer under the borrowed employee doctrine is liable

for that worker's compensation benefits as that worker's "employer"

under § 904(a) notwithstanding that the company is not a contractor

whose    "subcontractor    fail[ed]      to   secure    the   payment    of

compensation" under the second sentence of § 904(a). Arabie v. CPS

Staff Leasing, 28 B.R.B.S. 66, 1994 WL 186087 (1994).           The BRB's

final order affirmed the ALJ's award of reimbursement on remand.

      Total Marine filed a timely appeal of the BRB's final order

under section 21(c) of the LHWCA, 33 U.S.C. § 921(c).

                                    II

        The broad question we face today is whether a borrowing

employer must indemnify an injured worker's formal employer for

compensation benefits the formal employer has paid to the injured

worker under § 904(a).     More specifically, the question is one of

statutory interpretation:       whether the borrowed employee doctrine

applies equally to § 904(a) to hold the borrowing employer liable

for   compensation   as   the   worker's   "employer"   under   the   first

sentence of § 904(a).      Total Marine argues that the BRB erred in

applying the Fifth Circuit's borrowed employee doctrine to negate


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the clear statutory language of § 904(a). Total Marine argues that

the second sentence of § 904(a) provides that a contractor is

liable for the compensation benefits of a subcontractor's injured

employee only if the subcontractor has failed to secure the payment

of compensation.    We agree that if the second sentence of § 904(a)

clearly were to apply to this situation, Total Marine would not be

liable for Arabie's compensation benefits because CPS, as Total

Marine's subcontractor, secured the payment of compensation. Based

on our decision in West v. Kerr-McGee Corp., 765 F.2d 526 (5th

Cir.1985), and Fifth Circuit precedent before the 1984 amendments

to the LHWCA applying the borrowed employee doctrine to the LHWCA,

however, we cannot agree with Total Marine because Total Marine, as

Arabie's borrowing employer, is, as a matter of law, his "employer"

in accordance with the first sentence of § 904(a).           It follows that

the second sentence does not apply because Total Marine, Arabie's

§   904(a)   "employer,"   is   not   a     subcontractor.    Our   reasoning

follows.

                                      III

          Our review of the BRB's order is limited to considering

errors of law and ensuring that the BRB adhered to its statutory

standard of review, namely, whether the ALJ's findings of fact are

supported by substantial evidence and consistent with the law.2

      2
      The Director argues that its "administrative construction"
of section 904(a) of the LHWCA is entitled to judicial deference.
We do not agree. The Supreme Court has recently reaffirmed, "Of
course we deny deference "to agency litigating positions that are
wholly unsupported by regulations, rulings, or administrative
practice.' The deliberateness of such positions, if not indeed
their authoritativeness, is suspect." Smiley v. Citibank (South

                                       4
Tanner   v.   Ingalls   Shipbuilding,   Inc.,   2   F.3d   143,   144   (5th

Cir.1993) (citation omitted).

                                    A

      The borrowed employee doctrine recognizes that

     [o]ne may be in the general service of another, and,
     nevertheless, with respect to particular work, may be
     transferred, with his own consent or acquiescence, to the
     service of a third person, so that he becomes the servant of
     that person with all the legal consequences of the new
     relation.

Standard Oil Co. v. Anderson, 212 U.S. 215, 220, 29 S.Ct. 252, 253,

53 L.Ed. 480 (1909) (emphasis added). This doctrine evolved in the

tort context to hold the "proper employer responsible for the torts

of his employee" under the concept of respondeat superior.          Gaudet

v. Exxon Corp., 562 F.2d 351, 355 (5th Cir.1977), cert. denied, 436

U.S. 913, 98 S.Ct. 2253, 56 L.Ed.2d 414 (1978).        The Fifth Circuit

has applied this traditional tort doctrine to cases arising under

the LHWCA.    E.g., Hebron v. Union Oil Co. of California, 634 F.2d

245 (5th Cir.1981);     Gaudet;   see also Ruiz v. Shell Oil Co., 413

F.2d 310 (5th Cir.1969) (assuming the applicability of the borrowed

employee doctrine to the LHWCA but affirming its non-application to

the facts of the case).     The primary focus of the Fifth Circuit's

application of this doctrine to the LHWCA has been the tort

immunity provision contained in section 5(a) of the LHWCA, 33



Dakota), N.A., --- U.S. ----, ----, 116 S.Ct. 1730, 1732-33, ---
L.Ed.2d ---- (1996) (quoting Bowen v. Georgetown University
Hosp., 488 U.S. 204, 212, 109 S.Ct. 468, 473-74, 102 L.Ed.2d 493
(1988)). The Director has given us no indication that its
construction of the statute is anything other than a litigating
position "unsupported by regulations, rulings, or administrative
practice."

                                    5
U.S.C. § 905(a).        This section makes compensation benefits the

exclusive     remedy    available   to      an     injured    worker     from    his

"employer."        33 U.S.C. § 905(a) (1994).3            The Fifth Circuit has

extended this tort immunity provision by means of the borrowed

employee doctrine to encompass a worker's borrowing employer.

E.g., Hebron, Gaudet.        In effect, we have read the term "employer"

in the LHWCA to include borrowing employers under the borrowed

employee doctrine.4

                                        B

     We have also concluded that a borrowing employer is liable for

compensation benefits of its borrowed employee under the LHWCA. In

Champagne     v.    Penrod   Drilling       Co.,    341    F.Supp.     1282,    1283

(W.D.La.1971), aff'd, 459 F.2d 1042 (5th Cir.), modified on other

grounds, 462 F.2d 1372 (1972), cert. denied, 409 U.S. 1113, 93

S.Ct. 927, 34 L.Ed.2d 696 (1973), the administratrix of a deceased

worker's estate brought suit against Penrod Drilling Company.

Penrod had a contract with the deceased worker's formal employer,

     3
      Section 905(a) reads in pertinent part:

            The liability of an employer prescribed in section 904
            of this title shall be exclusive and in place of all
            other liability of such employer to the employee....
            For purposes of this subsection, a contractor shall be
            deemed the employer of a subcontractor's employees only
            if the subcontractor fails to secure the payment of
            compensation as required by section 904 of this title.
     4
      The LHWCA contains a definition of the term "employer,"
section 2(4), 33 U.S.C. § 902(4), but it merely limits the
meaning of the term to those who carry on at least some "maritime
employment" at a maritime location. It thus is of no assistance
in determining the identity of the entity that is to be treated
as the "employer" of an injured worker for purposes of the LHWCA.


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a temporary labor service, to provide four workers to complement

one of Penrod's platform erection crews.                             The district court

dismissed    the         suit   against        Penrod   on   the     basis   of   §   905(a)

immunity, relying on the borrowed employee doctrine.                         Id. at 1285.

The court held that the worker "was a borrowed or loaned employee

and entitled to [claim] the benefits of the applicable compensation

statute against Penrod, [and was] subject to the limitations [on

tort suits] imposed [by § 905(a) ]."                         Id. (citations omitted)

(emphasis added). The district court thus made clear the liability

of Penrod to pay compensation benefits to the estate of the

deceased worker.

     We affirmed this judgment on the basis of the district court's

opinion.     Champagne v. Penrod Drilling Co., 459 F.2d 1042 (5th

Cir.1972).       On       petition        for   rehearing,      we    re-emphasized     the

district court's holding that the borrowing employer was liable for

compensation benefits to the estate of the deceased employee:

     We remain of the view that whether [the deceased worker] be
     labeled a borrowed, rented or loaned employee the district
     court correctly applied the legal standards in determining
     that [he] was an employee entitled to the benefits of the
     compensation statute against Penrod....

Champagne v. Penrod Drilling Co., 462 F.2d 1372 (5th Cir.1972)

(emphasis added), cert. denied, 409 U.S. 1113, 93 S.Ct. 927, 34

L.Ed.2d 696 (1973).             Thus, at least from this point, the law was

clear   that     a       borrowing    employer       was     liable    for   compensation

benefits under § 904(a) and entitled to tort immunity under §

905(a).    The continued validity of this rule was cast into doubt,

however,    as       a    result     of    a    Supreme      Court    decision    and   the


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congressional response to that decision.

                                 C

     The Supreme Court in Washington Metropolitan Area Transit

Authority v. Johnson, 467 U.S. 925, 104 S.Ct. 2827, 81 L.Ed.2d 768

(1984) ("WMATA "), addressed the question of contractor immunity

under § 905(a) in the absence of a borrowed employee relationship.

Reversing a number of circuits, including the Fifth Circuit in

Probst v. Southern Stevedoring Co., 379 F.2d 763 (5th Cir.1967),

the Court held that a contractor generally is entitled to tort

immunity under § 905(a), irrespective of whether the contractor

actually secured the payment of compensation.   WMATA, 467 U.S. at

938-40, 104 S.Ct. at 2835.   Congress amended both § 904(a) and §

905(a) in order to reverse the Supreme Court's decision,5 Louviere

v. Marathon Oil Co., 755 F.2d 428, 429-30 (5th Cir.1985), which

Congress characterized "as an unwanted deviation from 56 years of

precedent."   West, 765 F.2d at 530.

     5
      Congress rewrote the second sentence of § 904(a) and added
a third sentence. Before 1984, the second sentence of § 904(a)
read:

          In the case of an employer who is a subcontractor, the
          contractor shall be liable for and shall secure the
          payment of such compensation to employees of the
          subcontractor unless the subcontractor has secured such
          payment.

     See note 1 for the current version of § 904(a). Congress
     also added the following sentence to the end of § 905(a):

          For purposes of this subsection, a contractor shall be
          deemed the employer of a subcontractor's employees only
          if the subcontractor fails to secure the payment of
          compensation as required by section 904 of this title.

     West, 765 F.2d at 529 & n. 1.

                                 8
     In West, we addressed the question whether our borrowed

employee doctrine    as   applied   to   the   LHWCA   survived   the   1984

amendments to the LHWCA.    We held that "[t]he legislative history

of the 1984 amendments unambiguously demonstrates that Congress's

sole purpose in amending § 904(a) and § 905(a) was to overrule

WMATA, and not to amend the borrowed-servant doctrine or otherwise

modify LHWCA law."   Id. at 530.     We explicitly recognized that our

decision in Champagne survived the 1984 amendments to the LHWCA:

"The committee language shows that Congress intended to do no more

than restore the understanding that existed at the time of Ruiz,

Probst, and Champagne."     Id.     We now turn to the case before us

today.

                                    IV

     Total Marine argues that the BRB erred when it concluded that

"West controls the outcome in the present case."             Total Marine

contends that the court in West did not address specifically the

issue whether a borrowing employer is liable for compensation

benefits under § 904(a), but only addressed the issue whether the

borrowed employee doctrine survived the 1984 amendments to the

LHWCA.   Total Marine relies on Judge Tate's concurrence in West,

765 F.2d at 532-535, to argue that "a borrowing employer/general

contractor has no tort immunity and no compensation liability when

a subcontractor has secured payment of the Act's compensation

benefits to its employees."

     The problem with Total Marine's argument, however, is that the

majority opinion in West, not Judge Tate's concurrence, is the law


                                     9
of this circuit.           West 's holding that the borrowed employee

doctrine—with        all     its    legal    consequences—survived           the   1984

amendments to the LHWCA is binding on this court.                             As West

reasoned, "[I]f the contractor is the employee's "employer" under

the borrowed servant doctrine, the contractor is liable for §

904(a) compensation, and has § 905(a) immunity...."

      Total Marine has stipulated that it was Arabie's borrowing

employer.      Under the West rationale, which binds us, Total Marine

is thus Arabie's employer for purposes of the LHWCA.                   Total Marine,

as   Arabie's    employer,         is   liable   for   the   payment    of    Arabie's

compensation under the first sentence of § 904(a).                       The second

sentence of § 904(a) does not apply to this case because that

sentence applies only to employers who are subcontractors and Total

Marine, the employer, is not a subcontractor.                    We therefore hold

that Total Marine, as Arabie's borrowing employer, is liable for

Arabie's compensation benefits as Arabie's employer under § 904(a).

Because CPS has already paid those compensation benefits, it is

entitled to reimbursement from Total Marine.6

                                            V

          In   the   light    of    our   explicit     holding   in    West    and   in

accordance with our pre-1984 precedent in this area, we conclude

that a borrowing employer is required to pay the compensation


      6
      To the extent that it may be argued that our decisions in
Doucet v. Gulf Oil Corp., 783 F.2d 518, 523 (5th Cir.1986) and
Melancon v. Amoco Production Co., 834 F.2d 1238, 1247 n. 17 (5th
Cir.1988), suggest a different result, we note that we are bound
by our earlier decisions in Champagne and West. United States v.
Miro, 29 F.3d 194, 199 n. 4 (5th Cir.1994) (citations omitted).

                                            10
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.   For

the foregoing reasons, the final order of the BRB is

     AFFIRMED.




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