Court Opinion

ID: 990388
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:20:33.051679+00
Date Added: 2024-06-11T15:35:32.811697
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CERES CORPORATION,
Petitioner,

v.

WILLIE L. BRANCH; DIRECTOR, OFFICE
                                                                     No. 95-1902
OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES
DEPARTMENT OF LABOR,
Respondents.

On Petition for Review of an Order
of the Benefits Review Board.
(91-0445)

Argued: March 5, 1996

Decided: September 10, 1996

Before WILKINSON, Chief Judge, and LUTTIG and MICHAEL,
Circuit Judges.

_________________________________________________________________

Affirmed and petition dismissed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Robert Alan Rapaport, KNIGHT, DUDLEY, DEZERN &
CLARKE, P.L.L.C., Norfolk, Virginia, for Petitioner. John Harlow
Klein, RUTTER & MONTAGNA, Norfolk, Virginia, for Respon-
dents. ON BRIEF: Jimese L. Pendergraft, KNIGHT, DUDLEY,
DEZERN & CLARKE, P.L.L.C., Norfolk, Virginia, for Petitioner.
Gregory E. Camden, RUTTER & MONTAGNA, Norfolk, Virginia,
for Respondents.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit.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

_________________________________________________________________

OPINION

PER CURIAM:

This worker's compensation case arises under the Longshore and
Harbor Workers' Compensation Act, 33 U.S.C #8E8E # 901 et seq. (the
"Act"). Ceres Terminal, Inc. ("Ceres" or"the employer") has brought
this petition seeking review of a Decision and Order of the Benefits
Review Board ("the Board") in which the Board awarded compensa-
tion benefits in the nature of temporary total disability benefits to
Longshoreman Willie L. Branch ("the claimant"). We are asked to
decide whether the Board erred in denying Ceres a credit against
compensation owed the claimant based on container royalty and
vacation/holiday payments made to the claimant during his period of
disability. Such payments are made to the claimant pursuant to a
negotiated union contract, and the Board determined that the claim-
ant's "receipt of these payments has no bearing on his entitlement to
temporary total disability compensation under the Act."

We conclude that the Board correctly determined that Ceres is not
entitled to a credit based on container royalty and vacation/holiday
payments made to the claimant during his period of disability. We
therefore affirm the Decision and Order of the Board and dismiss
Ceres's petition.

I.

On November 21, 1987, the claimant suffered an injury to his
lower back while working for Ceres. Ceres voluntarily paid the claim-
ant temporary total disability compensation from November 22, 1987,

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until May 2, 1990, when he returned to work with the restriction that
he was not to lift more than 40 to 50 pounds. The claimant sought
compensation under the Act for the period of his disability. He argued
that he was entitled to a higher average weekly rate than that at which
Ceres had made voluntary payments during his period of disability.1

The parties stipulated that in 1987 the claimant received $5,071.51
in payments from the Vacation/Holiday Fund and the Container Roy-
alty Fund.2 The parties further stipulated that while he was disabled
the claimant received $5,045.67 in payments from these Funds in
1988 and $8,031.82 in 1989. At the hearing held before the adminis-
trative law judge ("the ALJ"), two issues were in dispute: (1) whether
payments the claimant received from the Container Royalty and
_________________________________________________________________
1 Section 8(b) of the Act, 33 U.S.C. § 908(b), provides that "[i]n the
case of disability total in character but temporary in quality 66 2/3 per
centum of the average weekly wage shall be paid to the employee during
the continuance thereof." In contrast, section 8(e) of the Act, 33 U.S.C.
§ 908(e), provides that "[i]n the case of temporary partial disability
resulting in decrease of earning capacity the compensation shall be two-
thirds of the difference between the injured employee's average weekly
wages before the injury and his wage-earning capacity after the injury in
the same or another employment . . . ." Accord 33 U.S.C. § 908(c)(21)
(section 8(c)(21) of the Act).
2 Under the collective bargaining agreement between the Hampton
Roads Shipping Association - International Longshoremen's Association
("HRSA/ILA") and ship carriers/employers, an employee becomes eligi-
ble for payments from the Vacation/Holiday and Container Royalty
Funds if he works or receives credit for 700 hours during each contract
year. If an employee is out of work due to illness or disability, he is cred-
ited with 20 hours every week he is out of work due either to temporary
total or temporary partial disability.

Vacation/holiday pay benefits are administered through a trust fund
established by HRSA/ILA. Vacation payments are paid in December of
the contract year following the eligibility year (which ends September
30), and holiday benefits are paid in June of the contract year following
the eligibility year. The container royalty payment is made by shipping
companies in lieu of work lost by longshoremen due to containerization.
The royalty is paid yearly in December of the contract year following the
eligibility year, and the total dollar allocation is divided by the number
of people who worked over 700 hours.

                    3
Vacation/Holiday Funds in the year prior to his injury should be
included in the calculation of his average weekly wage,3 and (2)
whether monies paid to the claimant from these Funds during the time
of his work-related disability are "wages" for which the employer can
take a direct credit against future compensation benefits owed or for
which the employer would be entitled to a recalculation of claimant's
average weekly wage.

The ALJ held that the payments the claimant received from the
Container Royalty and Vacation/Holiday Funds were properly
included in determining his average weekly wage prior to his injury.
The ALJ further held that the employer was entitled to a credit for the
vacation/holiday and container royalty payments the claimant
received while he was disabled. In so holding, the ALJ rejected the
claimant's argument that the monies from the Funds were similar to
bonuses, which are not treated as wages under the Act. The premise
of the claimant's argument was that these monies should not be sub-
ject to the employer's credit because he did not have to work to
receive these benefits. The ALJ found this argument"unpersuasive as
well as confusing."

The ALJ noted that if the vacation and holiday payments were
treated as bonuses they would be considered fringe benefits, not
wages. He further determined that even though the claimant did not
have to work to receive these benefits while he was injured, they
nonetheless represented earnings paid by the employer, and to not
allow the employer a credit for these payments under such circum-
stances would make the claimant "more than whole" at the employ-
er's expense. Accordingly, the post-injury payments from the Funds
were treated as if they were indicative of a post-injury wage-earnings
capacity so as to reduce the average weekly wage and amount of tem-
porary total disability compensation owed to the claimant.

On appeal the Board reversed the ALJ's decision to the extent that
the ALJ held that Ceres is entitled to a credit for the holiday/vacation
and container royalty payments the claimant received while he was
_________________________________________________________________
3 At the hearing the parties stipulated that if the vacation/holiday and
container royalty payments are included as wages during the period prior
to the claimant's disability, then his average weekly wage is $470.99.

                    4
disabled.4 According to the Board, section 14(j) of the Act, 33 U.S.C.
§ 914(j), governs an employer's entitlement to a credit. Under this
provision the employer is entitled only to a credit for its prior pay-
ments of compensation against any compensation subsequently found
due. Here, the Board believed that the payments received from the
Container Royalty and Vacation/Holiday Funds were not payments of
compensation because under the union contract the parties did not
intend to treat them as such.

Moreover, the Board determined that although the payments
received from the Container Royalty and Vacation/Holiday Funds
may be properly deemed wages when received while a claimant is
working, the post-injury receipt of such payments does not create a
wage-earning capacity or establish that a claimant is less than totally
disabled. As the Board stated, the "[c]laimant is able to receive these
payments during a period when he is physically incapable of working
due to a provision in the union contract itself, and his receipt of pay-
ments has no bearing on his entitlement to temporary total disability
compensation under the Act."

Finally, the Board rejected the employer's argument that the claim-
ant will be made "more than whole" by his post-injury receipt of such
payments. It found that because the injured claimant continued to
receive the payments pursuant to the agreed upon union contract, it
was "irrelevant that claimant's [pre-injury] average weekly wage
included the payments . . . ."

Ceres now petitions this court for review of the Board's Decision
and Order.

II.

The Board's adjudicatory interpretation of the Act is entitled to no
special deference and is subject to our independent review. E.g.,
Pittman Mech. Cont., Inc. v. Director, OWCP, 33 F.3d 122, 125 (4th
Cir. 1994). In making this review, however, Ceres concedes that we
_________________________________________________________________
4 The employer did not challenge the ALJ's findings that the claimant's
average weekly wage before his injury properly included the holiday/
vacation and container royalty payments.

                    5
must construe the Act liberally in favor of the claimant, though the
statute must of course be given its plain meaning. See, e.g., Voris v.
Eikel, 346 U.S. 328, 333 (1953); Geddes v. Benefits Review Bd., 851
F.2d 440, 442 n.1 (D.C. Cir. 1988).

Beginning, therefore, as we must, with the statutory language of
the Act, section 2(10) of the Act, 33 U.S.C. § 902(10), defines "dis-
ability" as:

          [I]ncapacity because of injury to earn wages which the
          employee was receiving at the time of injury in the same or
          any other employment . . . .

In turn, section 2(13) of the Act, 33 U.S.C. § 902(13), defines
"wages" as:

          [T]he money rate at which the service rendered by an
          employee is compensated by an employer under the contract
          of hiring in force at the time of the injury, including the rea-
          sonable value of any advantage which is received from the
          employer and included for purposes of any withholding of
          tax under subtitle C of the Internal Revenue Code of 1954
          [26 U.S.C.A. § 3101 et seq.] (relating to employment taxes).

Section 2(13) then goes on to expressly exclude from the definition
of "wages":

          [F]ringe benefits, including (but not limited to) employer
          payments for or contributions to a retirement, pension,
          health and welfare, life insurance, training, social security or
          other employee or dependent benefit plan for the employ-
          ee's or dependent's benefit, or any other employee's depen-
          dent entitlement.

Also, as noted above, see supra at 3 n.1, section 8(b) of the Act,
33 U.S.C. § 908(b), provides that "[i]n the case of disability total in
character but temporary in quality 66 2/3 per centum of the average
weekly wage shall be paid to the employee during the continuance
thereof." In contrast, section 8(e) of the Act, 33 U.S.C. § 908(e), pro-

                     6
vides that "[i]n the case of temporary partial disability resulting in
decrease of earning capacity the compensation shall be two-thirds of
the difference between the injured employee's average weekly wages
before the injury and his wage-earning capacity after the injury in the
same or another employment . . . ." (Emphasis supplied.) Accord 33
U.S.C. § 908(c)(21) (section 8(c)(21) of the Act).

In light of this statutory language, Ceres makes three interrelated
arguments on appeal. First, though Ceres concedes that the claimant
was totally disabled in a medical sense during his period of disability,
Ceres nonetheless argues that the question of the extent of the claim-
ant's disability is an economic as well as a medical concept. Second,
Ceres argues that the payments received by the claimant from the
Container Royalty and Vacation/Holiday Funds during his period of
disability are "wages" under the Act. In particular, Ceres points out
that the payments the claimant received from the Funds prior to his
injury are treated as "wages," the payments received post-injury are
reported on his W-2 forms under "wages, tips, other compensation,"
and the payments received post-injury are subject to federal withhold-
ing. Third, Ceres argues that because the claimant received payments
from the Funds post-injury, the claimant had a "wage-earning capac-
ity" during his period of disability. Therefore, according to Ceres, the
claimant is not entitled to temporary total disability compensation
under the Act, and it is entitled to a credit for the monies the claimant
received from Funds.5
_________________________________________________________________

5 Ceres does not argue that the payments are an advance of "compensa-
tion," which (if true) would allow it to take a credit under section 914(j).
See 33 U.S.C. § 914(j) (section 14(j) of the Act) (an employer is entitled
to reimbursement of any unpaid installment or installments of compensa-
tion due "[i]f the employer has made advance payments of compensation
. . ."). Although the Board relied in part upon section 14(j) in reversing
the ALJ's decision, we need not reach the question of whether section
14(j) precludes Ceres from taking a credit under the circumstances pres-
ented here because we conclude that the payments received by the claim-
ant from the Container Royalty and Vacation/Holiday Funds during his
period of disability may not be treated as "wages" and that the payments
do not create a "wage-earning capacity."

                     7
A.

Because of the Act's focus on a claimant's "wage-earning capacity
after the injury," we agree with Ceres to the extent it argues that the
question of the claimant's disability is an economic as well as a medi-
cal concept. As we stated in See v. Washington Metro. Area Trans.
Auth., 36 F.3d 375, 381 (4th Cir. 1994):

          In distinguishing between total and partial disability, the Act
          looks primarily at the claimant's "wage-earning capacity."
          See, e.g., 33 U.S.C. § 908 (e), (h) (1988). Because of the
          statutory focus on "the claimant's capacity for work, not
          actual employment," [Newport News Shipbuilding & Dry
          Dock Co. v.] Tann, 841 F.2d [540,] 543[(4th Cir. 1988)]
          (emphasis in original), disability under the [Act] is "an eco-
          nomic, rather than purely physical concept." Newport News
          Shipbuilding & Dry Dock Co. v. Director, OWCP, 592 F.2d
          762, 765 (4th Cir. 1979); see also Diamond M. Drilling Co.
          v. Marshall, 577 F.2d 1003, 1006 (5th Cir. 1978) (total dis-
          ability is possible under [the Act] when claimant is "physi-
          cally capable of performing certain work but otherwise
          unable to secure that particular kind of work")."The stat-
          ute's equation of disability with `wage-earning capacity'
          reflects a concern for the economic consequences of job-
          related injuries . . . ." McBride v. Eastman Kodak Co., 844
          F.2d 797, 799 (D.C. Cir. 1988).

Therefore, we also agree that if the payments from the Funds post-
injury are "wages," then the claimant has a"wage-earning capacity"
and the claimant's "disability" is less than"total in character." Section
8(e) of the Act, 33 U.S.C. § 908(e), would then apply, and Ceres
would be entitled to a credit. Of course, the opposite is true as well:
if such payments are not "wages," then they can not create a "wage-
earning capacity" in the claimant and his disability is "total in charac-
ter." Section 8(b) of the Act, 33 U.S.C. § 908(b), would then apply,
and Ceres would not be entitled to a credit. Accordingly, to determine
whether section 8(b) or section 8(e) governs here, we must determine
whether the payments received by the claimant post-injury are
"wages" within the meaning of the Act.

                     8
We now turn to that inquiry.

B.

The claimant argues that payments received from the Funds post-
injury are not "wages," but rather the payments are received as part
of a disability plan under the union contract which falls outside of the
Act's compensation scheme. We agree.

Pursuant to the union contract, when an employee is working, he
is entitled to payments from the Funds once he has worked 700 hours
in the contract year. Such payments are clearly"wages" within the
meaning of the Act because they are payments for"service[s]
rendered by an employee . . . under the contract of hiring in force at
the time of the injury . . . ." 33 U.S.C. § 902(13) (section 2(13) of the
Act) (emphasis supplied).

When, however, an employee is unable to work because of a dis-
ability, the union contract provides that the employee is credited with
20 hours every week the employee is out of work. And once the
employee reaches 700 hours, the employee is again entitled to pay-
ments from the Funds. Thus, when an employee is physically dis-
abled, the employee is not entitled to payments from the Funds based
on the hours of work performed in the contract year, but rather the
employee is entitled to payments from the Funds based on the length
of his disability. Indeed, as the Board pointed out, the "[c]laimant is
able to receive payments during his period of disability when he is
physically incapable of working due to a provision in the union con-
tract itself . . . ." It is therefore clear that an employee, post-injury,
does not receive payments from the Funds based on"service[s]
rendered by an employee . . . under the contract of hiring in force at
the time of the injury . . . ." The employee receives payments because
he is disabled, not because he has rendered services.

As a consequence, while payments received from the Funds are
properly treated as "wages" when the employee is working, such pay-
ments are not "wages" when received post-injury. We therefore hold
that the claimant's receipt of payments from the Funds while disabled
are not "wages" within the meaning of section 2(13) of the Act, 33
U.S.C. § 902(13). As such, the claimant's"disability" was "total in

                     9
character," and he is entitled to compensation benefits pursuant to
section 8(b) of the Act, 33 U.S.C. § 908(b).

Moreover, we agree with the Board that this result does not cause
any unfairness or make the claimant "more than whole." While it is
true that we are treating payments received pre-injury as "wages" and
payments received post-injury as "benefits," that result is dictated by
the union contract. Therefore, if Ceres wishes to receive a credit in
future cases, it should attempt to negotiate for a modification of the
union contract. Under the existing contract, however, it is clear that
the payments received by the claimant post-injury are considered part
of a disability plan and are not "wages" within the meaning of the
Act.

Finally, we disagree with Ceres that the payments must be treated
as "wages" because the payments from the Funds were shown on
claimant's W-2s as "wages, tips, other compensation," and because
the payments may have been subject to income tax withholding.
Under section 3121(a)(4) of the Internal Revenue Code the definition
of "wages" does not include:

          any payment on account of sickness or accident disability,
          or medical or hospitalization expenses in connection with
          sickness or accident disability, made by an employer to, or
          on behalf of, an employee after the expiration of 6 calendar
          months following the last calendar month in which the
          employee worked for such employer[.]

Accord I.R.C. § 3306(b)(4).

Here, the claimant was credited with 20 hours for every work-week
missed, and he was not entitled to payments from the Funds because
of his disability unless he received credit for 700 hours. That is, the
claimant had to be injured for at least 35 weeks before he was entitled
to payment, a period of time greater than six months. We therefore
believe that the payments would not be treated as"wages" under sec-
tion 3121 of the Internal Revenue Code. And, accordingly, they
should not be treated as "wages" within the meaning of the Act.

                    10
III.

The decision and order of the Board are affirmed, and Ceres's peti-
tion is dismissed.

AFFIRMED AND PETITION DISMISSED

                    11