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September 5, 2006

Worst Statute in the World for September 5, 2006

This one was easy, but obscure.  In some circumstances, a prevailing claimant who brings a claim under the Longshore and Harbor Workers' Compensation Act is entitled to recover attorneys' fees.  33 U.S.C. 921(a) & (b).  The latter wins this week's award.

That subsection states that if an employer pays benefits to an employee 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 commissioner or Board shall recommend in writing a disposition of the controversy.  If the employer or carrier refuse 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.

33 U.S.C. §  928(b).  If the employee then does not accept the employer's offer and then relies on an attorney and comes to obtain compensation greater than that offer, an attorney-fee award is appropriate. 

Id.  Makes sense in that it encourages informal settlement and reasonable offers and acceptances, both of which are the purpose of the LWHCA.

Then the statute met the courts.  The circuit split on the meaning of this provision has turned it into a minefield for plaintiff's lawyers, has placed form well over substance, and will result in formality and expense.

In the most recent case interpreting what this provision required, for example, in a 2-1 decision a Sixth Circuit panel held that a plaintiff could not recover attorneys fees unless: "(1) an informal conference addressing the disputed additional compensation;  (2) a subsequent written recommendation suggesting a disposition of the controversy;  (3) the employer's rejection of the recommendation;  and (4) the claimant's use of an attorney to secure an award of compensation greater than the amount the employer was willing to pay."  Pittsburgh & Coneaut Dock Co. v. Director, Office of Workers' Compensation Programs, 456 F.3d 616 (6th Cir. 2006).  In that case, the written recommendation had not included a specific amount to dispose of the case -- specifically because the parties were negotiating settlement, and so any recommendation would interfere with settlement.  It was undisputed, however, that all of the other "elements" were present.  Despite that, the majority held that the plaintiff was not entitled to attorney's fees.

If you're a fan of statutory construction, you'll love it.  The majority relied on precedent from the 5th and 4th Circuits, but the dissent convincingly demonstrated those cases were, at best, inapposite and that in fact those circuits had interpreted the statute inconsistently.  But the really good part comes from the 9th Circuit.  That circuit had relied on legislative history to conclude that the statute didn't require all those steps.  But, both the majority and the dissent in Pittsburgh & Conneaut agreed that the 9th Circuit had misread the legislative history.

Why, then, did the dissent find that the majority had erred in its plain meaning interpretation?  Because it held that, not only did the plain language of the statute not support the majority's interpretation, but the majority's conflicted with the underlying purpose of the LWHCA, and so led to an absurd result.

So, where we are:  in a statute that's supposed to help informal settlement of these cases, we have judges disagreeing on the plain meaning in one circuit; we have another circuit incorrectly reasoning that the legislative history requires a certain meaning; and we have, overall, a split in the circuits.  The net result, of course, is going to be more formal proceedings and, no doubt, more litigation.

Today's Worst Statute in the World!

September 5, 2006 in Current Affairs | Permalink

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