Opinion ID: 460105
Heading Depth: 2
Heading Rank: 1

Heading: The government's claim against Green and Stacker.

Text: 9 Three major issues are raised on appeal. First, both Green and Stacker argue that the district court erred in ruling that the government is entitled to reimbursement for FECA payments to Green representing medical expenses and lost wages because Green's recovery against General Electric compensated him solely for pain and suffering and future lost wages. We disagree. 10 In United States v. Lorenzetti, 467 U.S. 167, 104 S.Ct. 2284, 81 L.Ed.2d 134 (1984), the Supreme Court held that section 8132 on its face creates a general right of reimbursement, not conditioned on the nature of the loss for which the beneficiary received payment in the third party tort action. Id. 104 S.Ct. at 2289. Thus, the federal employee in Lorenzetti was required to reimburse the federal government for FECA payments representing lost wages and medical expenses even though his third-party recovery represented only compensation for pain and suffering. The Supreme Court emphasized that the primary purpose of section 8132 was to minimize the cost of the FECA program to the federal government and that this policy was furthered by construing section 8132 to create a general right of reimbursement, however harsh that result might be in a particular case. Id. at 2291. Based on Lorenzetti, the district court allowed the Government reimbursement from Green's award against General Electric, even though that award did not include compensation for lost wages or medical expenses. We agree with the district court that Lorenzetti controls the case and that the government is thus entitled to reimbursement out of Green's state court damage award. 11 Green and Stacker make several arguments for the inapplicability of Lorenzetti to the facts of this case. First, Green argues that Lorenzetti is inapplicable where, as here, the federal government is itself partially responsible for its employee's injuries. The Ninth Circuit has recently held, however, that the government's negligence does not affect its right to reimbursement under 5 U.S.C. Sec. 8132. See Ward v. United States Department of Labor, 726 F.2d 516, 517 (9th Cir.1984); see also Randall v. United States, 282 F.2d 287, 288 (D.C.Cir.1960), cert. denied, 365 U.S. 813, 81 S.Ct. 693, 5 L.Ed.2d 692 (1961) (government is entitled to reimbursement under section 8132 even though the employee's death was caused in part by the negligence of a government co-employee). Furthermore, Green's argument requires a strained reading of section 8132. Although the policy arguments for denying the federal government reimbursement when it is partially responsible for an employee's injuries or death are compelling, Green's interpretation of section 8132 seems clearly to offend the Supreme Court's plain meaning approach in Lorenzetti. See United States v. Lorenzetti, 104 S.Ct. at 2289. 12 Stacker's argument that Lorenzetti should not apply where the government can proceed directly against the third party tortfeasor for reimbursement is also without merit. In Lorenzetti, the government could not have itself sued the third party tortfeasor under section 8131 for the plaintiff's medical expenses and lost wages because the third party tortfeasor was liable only for non-economic losses under the state no-fault statute. In contrast, Stacker argues, Minnesota law would allow a plaintiff to litigate or settle that part of a claim that is not subject to the subrogation claim of the workers' compensation carrier, preserving for direct resolution between the workers' compensation carrier and the third party tortfeasor that part of the employee's claim that is subject to subrogation. Stacker thus asserts that because the government could sue General Electric directly for Green's medical expenses and lost wages under Minnesota law, Lorenzetti should not apply. 13 Initially, we express doubt regarding whether Minnesota law has any effect on the government's reimbursement rights under the FECA and, even assuming that it does, whether Minnesota law would allow claim splitting under the facts presented here. In any event, the federal government has wide latitude under the FECA to either require the beneficiary to assign its right of action against the third party under section 8131, or to seek reimbursement from the beneficiary under section 8132. See United States v. Hayes, 254 F.Supp. 849, 851 (W.D.Ky.1966); cf. Lorenzetti, 104 S.Ct. at 2290. 14 Both Green and Stacker also argue that the government should be equitably estopped from seeking reimbursement from them. Although the Supreme Court has recently declined to rule that estoppel may never be asserted against the federal government, see Heckler v. Community Health Services of Crawford County, Inc., 467 U.S. 51, 104 S.Ct. 2218, 2224, 81 L.Ed.2d 42 (1984), it is well settled that the government may not be estopped on the same terms as any other litigant, id. At a minimum, estoppel will never be allowed as a defense against the federal government unless the private party demonstrates the presence of the traditional elements of an estoppel, id., and that the government engaged in affirmative misconduct, INS v. Miranda, 459 U.S. 14, 17, 103 S.Ct. 281, 282, 74 L.Ed.2d 12 (1982) (per curiam); McDermott v. United States, 760 F.2d 879, 882 (8th Cir.1985). 15 Green and Stacker attempt to establish their estoppel defense by arguing that the government could have easily protected its reimbursement rights by either participating in Green's state court action against General Electric or by providing Stacker with requested information regarding a breakdown of Green's FECA benefits. As we previously noted, however, the federal government has unfettered discretion to determine whether to require an assignment of the beneficiary's claim under section 8131 or to seek reimbursement from the beneficiary under section 8132. See United States v. Hayes, 254 F.Supp. at 851; cf. United States v. Lorenzetti, 104 S.Ct. at 2290. The government's failure to become involved in Green's state court action thus does not preclude it from seeking reimbursement from Green or Stacker. 16 Nor does the government's delay in providing a breakdown of Green's FECA benefits support a claim of estoppel. Several alleged facts do suggest that the government's delay did prejudice Green's ability to recover medical expenses and lost wages both at trial and on appeal. For example, although Stacker requested information from the government on January 28, 1980, and February 21, 1980, the government had not provided the information by June 3, 1980, the date of the pretrial conference before the Minnesota Supreme Court. Although this delay may constitute negligence by the government, it does not rise to the level of affirmative misconduct required before this court will consider whether an estoppel defense may be asserted against the United States. See McDermott v. United States, 760 F.2d at 883; see also INS v. Miranda, 459 U.S. at 18, 103 S.Ct. at 283. Thus, Green and Stacker failed to establish a prima facie case of estoppel against the government. We therefore affirm the district court's ruling that the government is entitled to reimbursement under 5 U.S.C. Sec. 8132. 17 The trial court also determined that Green and Stacker were jointly and severally liable to reimburse the government under 5 U.S.C. Sec. 8132. Section 8132 provides that [n]o court, insurer, attorney, or other person shall pay or distribute to the beneficiary or his designee the proceeds of such suit or settlement [recovered against a third party tortfeasor] without first satisfying or assuring satisfaction of the interest of the United States. 5 U.S.C. Sec. 8132 (1982). The legislative history of the 1974 amendments to the FECA shows that this sentence was added to expedite reimbursement by granting the government a lien on the proceeds of any third party recovery to the extent of the government's reimbursement rights. See S.Rep. No. 93-1081, 93d Cong., 2d Sess., reprinted in 1974 U.S.Code Cong. & Ad.News 5341, 5351. Any person who deals with funds against which the government has a lien under section 8132 is thus liable to the United States for conversion. See United States v. Limbs, 524 F.2d 799, 803 (9th Cir.1975). We agree with the district court that Stacker became liable to the government under section 8132 when Stacker accepted Green's damage award from General Electric, deducted the attorney fee and forwarded the remainder to Green without protecting the government's reimbursement rights. We therefore affirm the district court's decision that Green and Stacker are jointly and severally liable to reimburse the government. 6 II. Stacker's claim against General Electric. 18 After the government counterclaimed against Green and Stacker, Stacker impleaded General Electric, seeking indemnity or contribution in the event Stacker was required to reimburse the government. 7 The district court granted General Electric's motion to dismiss Stacker's third party claim, stating only that there is no basis in law for [Stacker's] claim for indemnity or contribution against General Electric. We must agree with the district court. 19 Stacker bases its claim of contribution or indemnity on one of two theories: (1) General Electric's underlying negligence in causing Green's injuries and (2) General Electric's violation of its duty under section 8132 to protect the government's right of reimbursement before transferring the proceeds of the state court damage award to Stacker and Green. 20 Stacker cannot, however, base its claim for contribution or indemnity on General Electric's underlying negligence in causing Green's injuries. Both indemnity and contribution require a common liability of the party charged and the party sought to be charged to the injured party for the same damages. See Lawrence v. Great Northern Ry. Co., 98 F.Supp. 746, 747 (D.Minn.1951) (applying Minnesota law); Grothe v. Shaffer, 305 Minn. 17, 23, 232 N.W.2d 227, 232 (1975); American Mutual Liability Insurance Co. v. Reed Cleaners, 265 Minn. 503, 509, 122 N.W.2d 178, 182 (1963). Stacker is liable to the government for $63,765.56 under section 8132 of the FECA for failing to protect the government's right of reimbursement. In contrast, General Electric's underlying negligence in causing Green's injuries involves a duty General Electric owes to Green, not to the government. Only by focusing on Stacker's and General Electric's violation of section 8132 does a common liability exist, making Stacker's claim for indemnity or contribution even possible. 21 Stacker's claim must fail as well, however, under this alternative basis for contribution or indemnity. Recent Supreme Court cases make it clear that a defendant held liable under a federal statute has no standing to sue others who have also violated the statute unless (1) the federal statute expressly or implicitly provides for such an action, (2) Congress empowered federal courts to develop substantive law under the statute, or (3) a right of contribution or indemnity is necessary to protect a uniquely federal interest. See Texas Industries, Inc. v. Radcliff Materials, 451 U.S. 630, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981) (under the Clayton and Sherman Acts); Northwest Airlines v. Transport Workers Union, 451 U.S. 77, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981) (under the Equal Pay Act and Title VII). None of these exceptions apply here. Thus, we find that Stacker has no claim for indemnity or contribution based on General Electric's violation of section 8132 or General Electric's underlying negligence. 22