Court Opinion

ID: 9488077
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:35:29.742686+00
Date Added: 2024-06-11T17:52:40.661201
License: Public Domain

McMILLIAN, Circuit Judge,
dissenting.
For the reasons discussed below, I respectfully dissent. In my view, the plan was entitled to set off the FELA award against the disability benefits due to Welsh. Accordingly, I would reverse the grant of summary judgment in favor of Welsh and remand the case to the district court with instructions to grant summary judgment in favor of the plan. In addition, although I agree with the majority opinion to reverse the district court’s decision denying attorney’s fees in favor of Welsh (for reasons different from those stated in the majority opinion), I would remand for reconsideration of that issue on the merits, not just for a determination of the amount of such an award.
First, I agree that the applicable standard of review of the plan’s setoff decision is de novo. Majority op. at 1385.
Unlike the majority opinion, I would argue that it makes no difference to the setoff issue whether or not the injury at issue in the FELA lawsuit (back injury) is the same as that for which Welsh receives disability benefits (arachnoiditis), id. at 1335, or whether Welsh’s arachnoiditis is an independent cause of his disability or a consequence of his original back injury. Id. at 1336. Both the short-term and long-term disability plans expressly provide that the amount of disability benefits shall be reduced by any amount paid or payable under the FELA. The short-term plan provides in part that short-term disability benefits “will be decreased by ... [a]ny disability benefit paid or payable under ... the Federal Employers Liability Act.” Similarly, the long-term plan provides in part that the amount of the benefits “shall be reduced by any amount paid or payable ... under the Federal Employers Liability Act.” *1344The setoff provisions thus provide that disability benefits are to be reduced by “any amount” paid under the FELA, whether or not the injury underlying the FELA award is the same as or unrelated to that underlying the disability benefits. I do not understand why this is a “completely irrational” construction of the setoff provisions, see majority op. at 1338, particularly when, as noted by the majority opinion, the disability plans themselves contain no language requiring “the same injury” to be the basis for a setoff of a FELA award against disability benefits. Id. at 1339. As noted by the majority opinion, the requirement that, in order to be used as a setoff against disability benefits, a FELA award must be for “the same loss” does not necessarily mean for “the same injury.” Id. Similarly, the lump sum payment provision in the long-term disability plan refers to payment “on account of such disability,” not payment “on account of such injury.” Id.
I agree with the majority opinion that, strictly speaking, the plan does not face double liability for future lost wages because the disability payments are based on Welsh’s total disability after 1985, which was apparently not an element of the damages sought in the FELA lawsuit (in which Welsh sought damages for future lost wages on the basis of his diminished earning capacity due to his partial disability between 1977 and 1985). Id. at 1339. However, I do not think the possibility of double liability is relevant to the availability of setoff under the plans as much as it is to the FELA analysis discussed below. As noted above, the setoff provisions expressly provide that disability benefits are to be reduced by “any amount” paid under the FELA, regardless of whether the FELA award was for pain and suffering or for future lost wages for partial disability, as was apparently the case here, or for total disability.
I would thus construe the disability plans to authorize a setoff of a FELA award against short-term and long-term disability benefits. This contractual right of setoff is not proscribed by § 5 of the FELA, 45 U.S.C. § 55. See Clark v. Burlington Northern, Inc., 726 F.2d 448, 450-51 & n. 3 (8th Cir.1984) (essentially same long-term and short-term disability plans at issue in the present case; setoff held appropriate because employer clearly intended to make voluntary disability plan supplemental to sums recovered under FELA); see also Burlington Northern R.R. v. Strong, 907 F.2d 707, 712-14 (7th Cir.1990) (same); Folkestad v. Burlington Northern, Inc., 813 F.2d 1377, 1380-83 (9th Cir.1987) (same); Kalanick v. Burlington Northern R.R., 242 Mont. 45, 56-57, 788 P.2d 901, 908-09 (1990) (same).
Nor is the setoff of a FELA award against short-term and long-term disability benefits proscribed by ERISA. See Nesom v. Brown & Root, USA Inc., 987 F.2d 1188, 1193 (5th Cir.1993) (worker’s compensation benefits setoff against long-term disability benefits), citing Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 521, 101 S.Ct. 1895, 1905, 68 L.Ed.2d 402 (1981) (amount of pension benefits reduced by worker’s compensation awards; ERISA did not prohibit “integration,” a calculation practice under which benefit levels are determined by combining pension funds with other public income streams available to retired employee).
Because I agree with the plan that the FELA award must be set off against the disability benefits due, I would not reach the issues involving the calculation of the amount of disability benefits or “the primary amount of payment received under the Railroad Retirement Act.”
Finally, I do agree with the majority opinion that the district court order denying attorney’s fees should be reversed, although for different reasons. Because I would reverse the district court decision on the setoff issue on the merits, I would also vacate the attorney’s fees order and remand the request for attorney’s fees to the district court for reconsideration on the merits, not just for a determination of the amount of such an award. A different decision on the merits may warrant reconsideration of the decision on attorney’s fees. Cf. Nesom v. Brown & Root, USA Inc., 987 F.2d at 1195 (reversing decision in favor of employee on the merits and awarding attorney’s fees).