Court Opinion

ID: 994062
Source: CourtListenerOpinion
Date Created: 2013-07-04 00:17:17.596827+00
Date Added: 2024-06-11T15:35:37.360048
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NEWPORT NEWS SHIPBUILDING AND
DRY DOCK COMPANY,
Petitioner,

v.
                                                                   No. 96-2547
JOHN T. FIRTH; DIRECTOR, OFFICE OF
WORKERS' COMPENSATION PROGRAMS,
UNITED STATES DEPARTMENT OF
LABOR,
Respondents.

On Petition for Review of an Order
of the Benefits Review Board.
(95-984-BLA)

Submitted: January 13, 1998

Decided: January 28, 1998

Before MURNAGHAN and ERVIN, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.

_________________________________________________________________

Vacated and remanded by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

Lawrence P. Postol, SEYFARTH, SHAW, FAIRWEATHER & GER-
ALDSON, Washington, D.C., for Petitioner. Burt M. Morewitz, New-
port News, Virginia, for Respondents.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Newport News Shipbuilding and Dry Dock Company ("Newport
News") appeals an award of attorney's fees to its employee John T.
Firth, under the Longshore and Harbor Workers' Compensation Act
(the "Act"), 33 U.S.C.A. §§ 901-950 (West 1986 & Supp. 1997). We
previously granted Newport News' motion to waive oral argument,
and we now vacate and remand.

Firth injured his left hand while on the job on July 14, 1975. New-
port News voluntarily provided Firth with medical treatment and paid
temporary total disability benefits under the Act. Firth injured his
right hand while on the job around January 3, 1984. Newport News
again voluntarily paid medical benefits and temporary total disability.

Firth filed a claim for disability benefits on July 24, 1984. On
August 9, Newport News filed notices of controversion regarding
"extent of permanent disability," "extent of temporary disability," and
"average weekly wage." On April 1, 1986, the Department of Labor
conducted an informal conference. The issues were"average weekly
wage" and "extent of disability." Firth's claims were denied.

In July 1986, Firth developed an unrelated cardiac problem.
Shortly thereafter, Firth sought a hearing with an Administrative Law
Judge ("ALJ"). It is at this point in time that his attorney began the
services detailed in his fee petitions. The hearing was scheduled for
February 12, 1987.

On January 29, 1987, at Newport News' request, Dr. Frank
McCue, III, rated Firth as having permanent partial disability of ten
percent of each hand. Thereafter, on February 10, Newport News paid
permanent partial disability benefits based on this rating.

                    2
At the hearing, Firth sought compensation for fifteen percent per-
manent partial disability, additional periods of temporary total disabil-
ity, miscalculation of his 1984 compensation rate, and permanent total
disability based on a combination of his hand injuries and cardiac
problems. On July 17, the ALJ denied all of Firth's claims and deter-
mined that Firth's permanent partial disability was properly rated at
ten percent. The ALJ also concluded that Firth was entitled to a fee
award because Newport News did not pay the permanent partial dis-
ability benefits "until well after the claim was filed, and, indeed, until
just prior to the oral hearing herein." The ALJ further reasoned that
Firth's claim for benefits was "successful," because Firth "received
nearly $8,800.00 in permanent partial disability compensation." In a
supplemental decision filed on December 14, the ALJ 1 ordered New-
port News to pay attorney's fees of $3875, reflecting all hours logged
prior to the hearing, as this work produced "something of value for
Claimant, namely the payments for 10% impairment of each hand."

Firth appealed the ALJ's denial of his claims, and Newport News
cross-appealed the fee award. The Benefits Review Board ("BRB")
affirmed the denial of permanent total and temporary total disability.
The BRB modified the ALJ's decision to reflect a higher 1984 aver-
age weekly wage on the second hand injury and remanded for a deter-
mination of penalties. Next, the BRB affirmed the fee award, because
"voluntary payment of benefits just prior to the formal hearing in this
matter is insufficient to relieve [Newport News] of liability for claim-
ant's attorney's fees." In light of Firth's success on the average
weekly wage issue, the BRB vacated the ALJ's finding that Newport
News was not liable for fees during and after the hearing and
remanded for consideration of an additional fee award. Finally, the
BRB made an additional award of $3562.50 in attorney's fees for
counsel's representation on appeal.

On remand, the ALJ, finding that "commonality" existed between
the permanent partial disability claim (on which Firth prevailed) and
the permanent total disability claim (on which he lost), awarded coun-
sel a fee for all time spent on Firth's case: $10,293.75 (which
included the previous award of $3875). On February 15, 1995, New-
_________________________________________________________________
1 Judge Bradley, who issued the July 17 decision, retired. The Decem-
ber 14 order was authored by Judge von Brand.

                     3
port News again appealed to the BRB, which summarily affirmed.2
Newport News appeals and argues that the attorney's fees awards by
the ALJ and the BRB were improper because they awarded fees for
Firth's counsel's entire work on the case even though many issues
raised did not result in a "successful prosecution."

Our review of the BRB's decision is limited. The BRB's decision
must be affirmed unless it is either unsupported by substantial evi-
dence or contrary to applicable law. See Todd Shipyards Corp. v.
Director, Office of Workers' Compensation Programs , 950 F.2d 607,
610 (9th Cir. 1991). However, while an agency's interpretation of
statutory provisions and regulations is entitled to deference, courts are
the final authority on issues of statutory construction. Administrative
constructions which are contrary to congressional intent must be
rejected. See id.; see also Hicks v. Cantrell, 803 F.2d 789, 792 (4th
Cir. 1986) (discussing Federal Supplemental Compensation Act).

In Holliday v. Todd Shipyards Corp., 654 F.2d 415, 418 (5th Cir.
Unit A Aug. 1981), overruled on other grounds , Phillips v. Marine
Concrete Structures, Inc., 895 F.2d 1033 (5th Cir. 1990), the Fifth
Circuit noted that "[s]ection 28 does not provide for attorneys' fee
awards in every case in which the claimant is successful." Section
928(b) provides for an award of attorney's fees when the "employer
tenders partial compensation but refuses to pay the total amount
claimed by the claimant, and the claimant uses the services of an
attorney to successfully recover the total amount claimed." Savannah
Mach. & Shipyard Co. v. Director, Office of Workers' Compensation
Programs, 642 F.2d 887, 889 (5th Cir. Unit B Apr. 1981). Where the
employer has not contested the claim within the meaning of the stat-
ute, the claimant is not entitled to attorney's fees. Holliday, 654 F.2d
at 419.
_________________________________________________________________
2 The BRB never addressed the merits of the appeal. On September 12,
1996, the BRB sent the parties a notice stating that pursuant to the provi-
sions of Public Law Number 104-134, enacted on April 26, 1996, all
appeals to the BRB relating to claims under the Act were deemed to have
been affirmed if the case had been pending before the BRB for one year
by September 12, 1996. Because Firth's appeal met these criteria, the
BRB informed the parties that the ALJ's decision had been effectively
affirmed by the BRB on September 12, 1996, for purposes of their rights
to obtain review in this court.

                     4
Section 928(b) states as follows:

          If the employer or carrier pays or tenders payment of com-
          pensation without an award . . . and thereafter a controversy
          develops over the amount of additional compensation, if
          any, to which the employee may be entitled, the deputy
          commissioner or Board shall set the matter for an informal
          conference and following such conference the deputy com-
          missioner or Board shall recommend in writing a disposition
          of the controversy. If the employer or carrier refuse[s] to
          accept such written recommendation, within fourteen days
          after its receipt by them, they shall pay or tender to the
          employee in writing the additional compensation, if any, to
          which they believe the employee is entitled. If the employee
          refuses to accept such payment or tender of compensation,
          and thereafter utilizes the services of an attorney at law, and
          if the compensation thereafter awarded is greater than the
          amount paid or tendered by the employer or carrier, a rea-
          sonable attorney's fee based solely upon the difference
          between the amount awarded and the amount tendered or
          paid shall be awarded in addition to the amount of compen-
          sation . . . . If the claimant is successful in review proceed-
          ings before the Board or court in any such case an award
          may be made in favor of the claimant and against the
          employer or carrier for a reasonable attorney's fee for claim-
          ant's counsel in accord with the above provisions. In all
          other cases any claim for legal services shall not be assessed
          against the employer or carrier.

The statute authorizes an attorney's fee award against an employer
when the existence or extent of liability is controverted and the claim-
ant succeeds in establishing liability or obtaining increased compensa-
tion in formal proceedings. See National Steel v. U.S. Dep't of Labor,
606 F.2d 875, 882 (9th Cir. 1979); see also H.R. Rep. No. 92-1441
(1972), reprinted in 1972 U.S.C.C.A.N. 4698, 4706, 4717.

Turning first to the award of December 1987 for fees incurred prior
to the hearing, the ALJ granted these fees due to counsel's success in
securing payment for permanent partial disability of ten percent in
each hand. The BRB affirmed the award on this reasoning. However,

                    5
no recommendations were ever issued by the BRB or by the Commis-
sioner regarding proper payment, and Firth's claims at the informal
conference level were denied.3 It is unclear how the extent of perma-
nent partial disability was raised at the informal conference stage,4 but
the record shows that no doctor rated Firth's hand injury until Dr.
McCue examined Firth at Newport News' request in January 1987.
Approximately a week and a half later, Newport News sent Firth per-
manent partial disability benefits based on Dr. McCue's ten percent
rating.

We find that Newport News never controverted the ten percent rat-
ing. Within two weeks of the date this rating was established, New-
port News paid permanent partial disability benefits. Furthermore, we
find that before Dr. McCue's rating there was no disputed claim.
Before this time, Firth failed to obtain a rating of his disability, so
there was nothing for Newport News to dispute. In addition, this
claim was never disputed in formal proceedings, because the claim
was paid before the ALJ hearing. While Firth continued to assert that
he was entitled to a higher disability rating, that claim was rejected
and has not been appealed. Since the correct rating was never contro-
verted and no formal proceeding was held on this issue, we find that
the statute is inapplicable and does not provide a basis for the ALJ's
initial fee award.5
_________________________________________________________________

3 Because Newport News did not ignore any recommendation at the
informal conference stage, the statute on its face appears inapplicable to
support any fees based on these permanent partial disability benefits.
Nonetheless, notwithstanding the statute, written recommendations are
not a necessary precondition to fee liability, because the congressional
intent was to limit liability to cases in which the parties disputed the exis-
tence or extent of liability, whether or not the employer had actually
rejected an administrative recommendation. See National Steel, 606 F.2d
at 882.
4 Newport News disputed the "extent" of Firth's permanent partial dis-
ability. It is not clear, however, what the opposing views of the parties
were at this stage in the proceedings.
5 While the ALJ's basis for the award was incorrect, Firth did success-
fully prosecute the average weekly wage issue and, as discussed below,
may be entitled to attorney's fees for some of the time reasonably
expended before the hearing and related to this issue.

                     6
We now turn to the remainder of the fee awards, which were based
on Firth's success on the average weekly wage issue and on the "com-
monality" between Firth's claims. It is beyond question, and Newport
News agrees, that Firth is entitled to attorney's fees for time spent on
the average weekly wage issue. Further, Firth's counsel is entitled to
reimbursement for time expended on defending the fee award. See
Anderson v. Director, Office of Workers' Compensation Programs,
91 F.3d 1322, 1325 (9th Cir. 1996). However, Newport News asserts
that the fee awards should be reduced by the time spent on issues
which Firth lost.

In determining whether a claimant who prevails on only some
issues may recover attorney's fees, a two step inquiry is appropriate:
first, whether the losing claims were related to the winning claims,
and second, whether the level of success was proportional to the
efforts expended by counsel. See George Hyman Constr. Co. v.
Brooks, 963 F.2d 1532, 1535 (D.C. Cir. 1992); see also General
Dynamics Corp. v. Horrigan, 848 F.2d 321, 325 (1st Cir. 1988) (if
claims are separable, the fee should be derived through equitable
judgment). Addressing the first inquiry, the factfinder is obliged to
determine whether the successful and unsuccessful claims share a
common core of facts or are based on related legal theories. See
George Hyman, 963 F.2d at 1537.

In the instant case, the ALJ's 1994 award was based on the deter-
mination that the issues of permanent partial disability and total per-
manent disability were sufficiently related to allow a fee award
representing all of counsel's time during the hearing and subse-
quently. However, as discussed above, Firth did not successfully pros-
ecute the permanent partial disability claim: Newport News
voluntarily paid these benefits once a disability rating was estab-
lished. Therefore, the ALJ addressed the incorrect issue. On remand,
the ALJ should instead focus on whether the issue of average weekly
wage (the only issue which Firth won) and the remainder of Firth's
claims were sufficiently related to permit a fee award representing all
of counsel's time.

The BRB's award was properly based on the successful litigation
of the average weekly wage issue. However, the BRB explicitly

                    7
declined to limit the award only to work performed on this issue.6 The
BRB was required to determine if the successful and unsuccessful
claims shared a common core of facts or were based on related legal
theories. See Hensley v. Eckerhart, 461 U.S. 424, 434-35 (1983)
(addressing the Civil Rights Attorney's Fees Awards Act); George
Hyman, 963 F.2d at 1537. From the record on appeal, we are unable
to make this determination as a matter of law. Further, the paucity of
the record regarding which fees were expended for which issue make
the second inquiry, that of reasonableness, likewise impossible to cal-
culate on the present record.

Thus, we vacate the BRB's orders affirming the ALJ's fee award
and awarding fees for work done on appeal. We direct the BRB to
reconsider the issue of attorney's fees in a manner consistent with this
opinion. We also direct the BRB to vacate the ALJ's fee award and
remand the case to the ALJ for further fact-finding consistent with
this opinion.

VACATED AND REMANDED
_________________________________________________________________
6 In so doing, the BRB stated that George Hyman was inapplicable,
because it dealt with different claims rather than different issues. We dis-
agree with the BRB's reading of George Hyman . See 963 F.2d at 1536-
38 (using the words "claim" and "issue" interchangeably). Further, here
there actually were two claims (one for each hand) and the average
weekly wage issue (the only issue Firth prevailed upon) was applicable
to only one claim.

                    8