March 20, 2012

Supreme Court Decides Roberts v. Sea-Land Services, Inc.

On March 20, 2012, the U.S. Supreme Court decided Roberts v. Sea-Land Services, Inc., No. 10-1399, holding that an employee is "newly awarded compensation" under the Longshore and Harbor Workers' Compensation Act when he first becomes disabled and entitled to benefits under the statute, not when a compensation order is issued on his behalf.

The Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. § 901, et seq., provides compensation to employees who are disabled or killed as a result of an injury that occurs on the navigable waters of the United States. Section 906 caps compensation at twice the "applicable national average weekly wage," which is defined in Section 902(19). For most types of disability, the "applicable" national average weekly wage is the figure for the fiscal year in which the employee is "newly awarded compensation." The LHWCA requires employers to pay benefits voluntarily, without formal proceedings. But if an employer contests its liability or an employee disputes his benefits under the LHWCA, the dispute goes to the Office of Workers' Compensation Programs (OWCP), and ultimately to an administrative law judge (ALJ) if the parties do not resolve their dispute with the OWCP's help. ALJs hold hearings and issue compensation orders.

Dana Roberts was injured in fiscal year 2002 while working for Sea-Land's marine terminal in Alaska. Sea-Land voluntarily paid him benefits until fiscal year 2005 and then stopped. Roberts disputed Sea-Land's discontinuation of benefits and filed an LHWCA claim that proceeded to a hearing before an ALJ. The ALJ issued a compensation order in 2007 that awarded Roberts benefits at the maximum rate of twice the national average weekly wage, using the national average weekly wage for fiscal year 2002, the year that Roberts was injured. Roberts argued that the ALJ should have awarded benefits based on the national average weekly wage for fiscal year 2007, the year that the ALJ entered his award, because that was the fiscal year in which he was "newly awarded compensation." The ALJ denied reconsideration, and the Department of Labor's Benefits Review Board affirmed the ALJ's decision. The Ninth Circuit affirmed in relevant part, holding that an employee is "newly awarded compensation" under Section 906(c) when he first becomes entitled to compensation.

The Supreme Court affirmed. The Court acknowledged that the text of Section 906(c) could support either party's interpretation but held that Sea-Land's and the government's interpretation was better for several reasons.  First, the LHWCA requires employers to voluntarily pay benefits, and that is usually what happens. Under Roberts's interpretation of the statute, no employee receiving voluntary payments has been "awarded compensation" because there is no formal order requiring compensation, so there would be no way to identify the maximum rate of compensation, because that rate is based on the fiscal year in which the employee was "newly awarded compensation." That would be inconsistent with the Act's design. Second, using the national average weekly wage for the fiscal year in which the employee becomes disabled fits with the LHWCA's administrative structure, which requires employers to pay benefits within 14 days of notice of an employee's disability. To make those payments, the employer has to be able to calculate the cap, which suggests that the relevant national average weekly wage (which sets the cap) must be determined at the time of injury. Third, Sea-Land's reading advances the LHWCA's purpose to compensate disability, which Section 902(10) defines as the inability to "earn the wages which the employee was receiving at the time of injury" (emphasis added). Finally, using the national average weekly wage at the time of injury prevents employees from trying to delay entry of a compensation order to take advantage of the fact that the national average weekly wage tends to increase every year with inflation.

Justice Sotomayor wrote the opinion, joined by all justices except Justice Ginsburg, who filed an opinion concurring in part and dissenting in part.

Download Opinion of the Court

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