Morrison-Knudsen Construction Company v. Director, Office of Workers' Compensation Programs

PETITIONER: Morrison-Knudsen Construction Company
RESPONDENT: Director, Office of Workers' Compensation Programs
LOCATION: U.S. Court of Appeals for the Fifth Circuit

DOCKET NO.: 81-1891
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 461 US 624 (1983)
ARGUED: Mar 21, 1983
DECIDED: May 24, 1983

Alan I. Horowitz - on behalf of Respondent Director supporting Petitioners
Arthur Larson - on behalf of the Petitioners
George S. Leonard - on behalf of the Respondent

Facts of the case


Media for Morrison-Knudsen Construction Company v. Director, Office of Workers' Compensation Programs

Audio Transcription for Oral Argument - March 21, 1983 in Morrison-Knudsen Construction Company v. Director, Office of Workers' Compensation Programs

Warren E. Burger:

Thank you gentlemen, the case is submitted.

We will hear arguments next in Morrison-knudsen construction against the Director.

Mr. Larson, I think you may proceed whenever you are ready now.

Arthur Larson:

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

The question in this case is under the Longshoremen's Compensation Act should employer contributions into union trust funds for health and welfare, pensions and training for the first time in history be included in the concept of the individual's average weekly wage for purposes of calculating his benefits, adding on the average of 30 % to 40 % to those benefits which now stand at 88 % of take-home pay?

The legal issue, of course, is the intent of Congress.

Unfortunately, all the three major indicators of that intent, the clear language of the statute, the legislative history of the Act and of its amendments, and above all, the fact that Congress could not possibly have intended an interpretation of the Act that would severely damage the functioning of the Act and its ability to carry out its purposes.

First, I would like to say just a word about why this case came as such a bombshell to the compensation community.

Workers' compensation has been with us for 70 years and the Longshoremen's Act for 55.

During that time literally tens of millions of cases have been disposed of on the understanding that wages meant wages along with traditional non-cash wage substitutes such as board and lodging.

Now, suddenly we are being told that all those thousands of judges and administrators and lawyers and employers and employees and unions were wrong all along in what they thought wage included and overnight we are supposed to accept a new meaning of wage which, believe it or not, will raise benefits above pre-injury take-home pay and all this by judicial, not legislative action.

Sandra Day O'Connor:

Mr. Larson, would you tell us what happened to the legislation that had been introduced in the Congress, I guess, to overrule the decision below?

Arthur Larson:


There is a bill pending in Congress right now... There was a bill last year which passed the Senate.

The bill pending in Congress now has a small clause in there which in effect would undo the effect of this for the future.

Sandra Day O'Connor:

Did the House take any action on the bill?

Arthur Larson:

So far this year I don't think anything has happened.

Sandra Day O'Connor:

And last year the House took no action?

Arthur Larson:

No, they took no action last year.

Now, of course, there are two reasons at least why this doesn't really affect this decision very much.

The first is, as we all know, it is a long distance between introducing a bill, especially on workers' compensation, and getting it passed.

But, the other is that even if it were passed, enormous damage would be done just in cases now pending.

A lot of them are hanging fire right at the moment.

But, even more seriously, under the very permissive reopening provisions of the Longshoremen's Act, tens of thousands of cases would be reopened on the theory that there was a mistake of fact in the determination of the benefits.

So, most of the damaging consequences, as we have outlined in our brief, would happen.

Sandra Day O'Connor:

Assuming you are correct, what happens to things like medical insurance premiums that might be paid to a fund by the employer in the future?

Arthur Larson:

There are, of course, all kinds of benefits under this plan and the various others that occur and under some plans the medical payments go on during disability and others they don't.

Of course, in the case of death cases, they would not go on.

But, what we keep coming back to in this case is, of course, the intent of Congress and the intent of Congress is very well expressed in this case in the short but very specific definition we have been provided which is that wages means the money rate at which the service rendered is recompensed under the contract of hire in force at the time of injury, including the reasonable value of board, room, housing, lodging, or similar advantage received from the employer and gratuities received in the course of employment from others than the employer.

Now, the simplest way for the Court to dispose of this--