Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs

PETITIONER: Ingalls Shipbuilding, Inc.
RESPONDENT: Director, Office of Workers' Compensation Programs
LOCATION: Western District Court of New York

DOCKET NO.: 95-1081
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 519 US 248 (1997)
ARGUED: Nov 12, 1996
DECIDED: Feb 18, 1997

ADVOCATES:
Beth S. Brinkmann - Department of Justice, argued the cause for the federal respondent
Richard P. Salloum - Argued the cause for the petitioners
Wynn E. Clark - Argued the cause for the private respondent

Facts of the case

After being exposed to asbestos while working for Ingalls Shipbuilding as a shipfitter, Jefferson Yates filed a claim for disability benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA). While Ingalls and Yates settled, Yates also sued the manufacturers and suppliers of the asbestos products that were allegedly present in his workplace when he contracted asbestosis. Yates also settled with some of the manufacturers and suppliers he sued, each of whom required releases from Yates and his wife. Ingalls did not approve of any releases. When Yates died, his wife then filed for benefits under the LHWCA, which provides, "If the person entitled to compensation... enters into a settlement with a third person... for an amount less than the compensation to which the person... would be entitled under this [Act], the employer shall be liable for compensation only if written approval of the settlement is obtained from the employer before the settlement is executed." Ultimately, the Court of Appeals affirmed that at the time Mrs. Yates executed the predeath settlements, she was not a "person entitled to compensation" because her husband was still alive, thus her right to death benefits had not yet vested.

Question

Is an injured worker's spouse, who may be eligible to receive death benefits under the Longshore and Harbor Workers' Compensation Act after the worker dies, a "person entitled to compensation" when the spouse enters into a settlement agreement with a third party before the worker's death?

Media for Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs

Audio Transcription for Oral Argument - November 12, 1996 in Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs

William H. Rehnquist:

We'll hear argument next in No. 95-1081, Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs, Department of Labor.

Mr. Salloum, you may proceed whenever you're ready.

Richard P. Salloum:

Mr. Chief Justice, and may it please the Court:

If the opinion and judgment of the Fifth Circuit in this case is allowed to stand, it would defeat the purpose that Congress enacted section 33(g) of the Longshoremen and Harbor Workers' Compensation Act which was to protect an employer from increased compensation liability when a worker, or those claiming through him, settle a third party case for less than the compensation they would be entitled under the Longshore Act.

It would also defeat the purpose for which Congress passed section 33(f) of the Longshore Act which is the give an employer credit to the extent of net third party recoveries received by a worker or those claiming through him.

The facts of this case are that Jefferson Yates, between 1953 and 1967, worked as a ship fitter for Ingalls Shipyard.

He left Ingalls in 1967 and worked several land-based jobs for other employers.

14 years after he left Ingalls, he was diagnosed with asbestosis in March of 1981.

In April of 1981, he filed a claim against Ingalls for compensation and medical benefits under the Longshore Act.

In May of 1981, his lawyers, who are the same lawyers that represent him in the compensation claim against Ingalls, filed a products liability suit in Federal court in Biloxi, Mississippi, seeking $6 million in actual and punitive damages against 23 asbestos manufacturers who he claimed made the asbestos to which he was exposed at Ingalls.

Less than a year after his compensation claim was filed against Ingalls, Ingalls wrote the district director for the Sixth Compensation District and accepted his claim, voluntarily accepted his claim, under the Longshore Act and agreed to pay him medical benefits and tendered to him all benefits under the Longshore Act.

In May of--

Sandra Day O'Connor:

Mr. Salloum, may I get you to... Salloum, may I get you to clarify for me how the employer is injured here?

Now, I assume the employer could file suit against those third parties who were at fault for the employee's injuries to recover payments that you... the employer made... may have made.

Richard P. Salloum:

--If a Burnside action was filed separate and apart from the Longshore Act, the employer would be faced... if the employer sued the 23 asbestos manufacturers directly, the employer would be faced with certain common law defenses in the Burnside tort action, tort indemnity action, that the employer would not be faced in a direct action by the worker against those defendants under the Longshore Act.

For example, if the employer filed a direct suit outside the Longshore Act under the Burnside tort indemnity theory, the defendants, the asbestos manufacturers, could assert certain contributory negligence features of coworkers of Mr. Yates which would serve to reduce Ingalls' recovery against those asbestos manufacturers.

More important than that... and this Court made it clear in Bloomer... that an employer is entitled to receive back 100 percent of his compensation and medical benefits plus its attorney's fees.

That's provided by Congress under section 933 of the Longshore Act.

If an employer is required, because of some wrongful act of a worker, to file a separate Burnside tort indemnity lawsuit, the employer, in addition to being faced with common law defenses which would reduce its recovery in the Burnside action, would also be faced with having to bear its own attorney's fees and cost in the Burnside action which Congress has made it clear in section 933(e), as interpreted by this Court in Bloomer, that the employer has its inviolate right to have 100 percent of its compensation and medical benefits--

Sandra Day O'Connor:

So, you say you might not be made whole or as whole as you would be otherwise.

How about recovering monies that you pay to Mrs. Yates out of the post-death settlements?

Yes, ma'am.

Your Honor, Ingalls approved the post-death settlements.

And I think the classic example of that and why section 933(g) and section 933(f) are so important is that after Ingalls accepted Mr. Yates' claim in June of 1992 and agreed to pay him lifetime benefits under the Longshore Act, Mr. Yates and Mrs. Yates between 1982, when Ingalls accepted the claim, and 1986 when he died, entered into four settlements with asbestos manufacturers in that third party case which Mrs. Yates released her wrongful death claims for Mr. Yates during his lifetime.

A classic example of that is that those four settlements that were entered into between the time Ingalls accepted the claim and the time Mr. Yates died where she released her wrongful death claims totaled $30,000, which were much less--

--And that money is not recoverable by the employer.

Richard P. Salloum:

--That's correct, Your Honor.

But... that's exactly right, Your Honor, but the comparison that I'm making... and the reason why Congress felt it so important for an employer to have a right to consent to a third party settlement is that after Mr. Yates died, Mrs. Yates and her adult children... the next three settlements that they entered into after Mr. Yates died were for $105,000.

Sandra Day O'Connor:

Well, you know, what you're basically saying is that the rule should kick in once the employer starts making payments, but that's not... it's not consistent with our holding in Estate of Cowart which said a person satisfies the prerequisites attached to the right and thus becomes a person entitled to compensation at the moment the right to recovery is vested, that is, at the time of the injury.

Richard P. Salloum:

Your Honor, that's exactly what we're saying.