Court Opinion

ID: 8967611
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:14:05.931014+00
Date Added: 2024-06-11T17:10:21.443543
License: Public Domain

JOHN R. BROWN, Senior Circuit Judge,
dissenting.
I dissent since this imposes a fiscally damning and destructive burden on a law abiding employer who has in good faith complied scrupulously with the congressional scheme to either (i) qualify as a self-insurer, or (ii) procure and maintain insurance from a qualified and approved insurance carrier.
As the Court correctly points out, the Act prescribes a precise scheme. First, there is the statutory obligation to provide for benefits and medical care that is imposed on the employer. Next, it prescribes that this statutory obligation can be satisfied in one of two ways: (i) qualify as a self-insurer, or (ii) procure and maintain insurance from agency approved carriers covering all liabilities for benefits and medical care imposed by the Act with such insurance carrier having all of the duties, responsibilities and obligations of the employer.
By this means, Congress legislatively determined that an employer, by following either of these two routes, satisfies his obligations under the Act. In the long judicial struggle1 to afford at long last some character of workers’ compensation to harbor workers who could not constitutionally receive similar benefits afforded by local worker compensation schemes, it is presumptuous to hold that Congress was not only affording a constitutionally effective scheme, it was at the same time commanding that these new liabilities are mandatory on employers notwithstanding full faithful compliance with the Act. I cannot believe that Congress meant to impose this awful burden on the employer. Certainly not when, considering the extremely heavy ceilings imposed by the 1972 and 1984 amendments, this awful burden will drive an employer to bankruptcy on the failure of his approved insurer.
Congress could also not have intended that employers should be allowed to shirk obligations for injuries to workers under the guise of the LHWCA. Congress did want to devise a system whereby these types of claims could be settled quickly, efficiently, and which bypassed the normal mechanism of a suit in admiralty or an action-at-law.
What the Court does is to punish Costello for doing exactly what the statute requires. What the Court does not consider is that employers that fall under the statute can now no longer safely plan for their companies’ futures. Past liabilities that were presumed to have been adequately provided for may return to haunt a company many years in the future.
Moreover, if Congress had intended that an employer who has obtained and maintained insurance should nevertheless remain liable, then logically that employer constitutes a self-insuring organization. Consequently, such employer would have to show the Secretary of Labor that it possessed adequate resources to cover its *729liabilities. There is no evidence, historical or otherwise, that any employer who is fully insured under the Act has ever been required to show the Secretary of Labor that in addition to procuring insurance from an approved insurer, it possessed sufficient resources to fulfill LHWCA obligations if the insurer failed or went out of business.
Additionally, while Costello, the employer, is fiscally doomed by the Court’s opinion, it does not follow that Keough and Meagher, the injured workers, would be if the Court were to hold for Costello. The Court, in my mind, does not address adequately the purpose of the special fund. Reference to the legislative history of the Act, especially that of § 6, reveals that the fund
may be used to pay compensation under any award made under the act in cases where the employer has defaulted in the payment of compensation due to insolvency or any other circumstances.
Longshoremen and Harbor Workers — Increased Benefits for Disability Injuries, H.R.Rep. No. 2067, 84th Cong. 2nd Sess. 2, reprinted in 1956 U.S.Code Cong. & Admin.News 3542, 3546.
While this quotation refers specifically to the employer only, it nonetheless indicates congressional purpose that the fund may indeed be available to pay awards in cases of insolvency and similar circumstances which would naturally include insolvency or failure of the insurer. Thus, although the paying of awards otherwise uncollectible is not a primary function of the fund, the fund is not isolated from these claims.2 Moreover,
[Sjince from time to time a case arises in which the employee ... has been unable to collect compensation from the employer or the employer’s insurer, principally in insolvency situations, the fund can fill a great need in these occasional cases without prejudice to the other purposes for which the fund was established.

Id.

The Court feels that the fund can only be reached after both the insurer and the employer have become insolvent. This is both bad law and, worse, bad economics. All that will happen is that a legitimate business enterprise — which has meticulously fulfilled its exacting statutory obligations in good faith — will be driven into bankruptcy leaving the question whether the fund will then assume the obligation of compensation payments. The process need not be so destructive to industry and to the employees who will lose their jobs when the employer (or, more likely, his trustee) shuts down.
I,therefore, dissent.

. This is wrapped up in the judicial travail culminating in Southern Pacific Co. v. Jensen, 244 U.S. 205, 37 S.Ct. 524, 61 L.Ed. 1086 (1917).

. Even the majority would ultimately find the special fund liable for a claim which could not be otherwise collected from an employer or insurance company. See, 867 F.2d 722, 725 (1st Cir.1989). My disagreement lies not with the fund’s ultimate liability, but with when that liability commences.