Barnard v. Zapata

• Court: Court of Appeals for the First Circuit
• Decided: October 19, 1992
• Docket: 92-1017
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST  CIRCUIT

                                 ____________________

No. 92-1017

                                   GEORGE BARNARD,

                                Plaintiff, Respondent,

                                          v.

                              ZAPATA HAYNIE CORPORATION
                        AND AETNA CASUALTY AND SURETY COMPANY,

                               Defendants, Petitioners.
                                 ____________________

               APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. D. Brock Hornby, U.S. District Judge]
                                            ___________________

                                 ____________________

                                        Before

                                 Selya, Circuit Judge,
                                        _____________
                             Lay,* Senior Circuit Judge,
                                   ____________________
                            and Pieras,** District Judge.
                                          ______________

                                 ____________________

            Terry A.  Fralich  with whom  Peter  J.  DeTroy, III  and  Norman,
            _________________             ______________________       _______
        Hanson & DeTroy were on brief for petitioners.
        _______________
            William H. Welte with  whom Joseph M. Cloutier & Associates was on
            ________________            _______________________________
        brief for respondent.

____________________

____________________

        _____________________

        *  Of the Eighth Circuit, sitting by designation.
        ** Of the District of Puerto Rico, sitting by designation.

LAY,  Senior  Circuit   Judge.    This   case
                                  _______________________

             involves  the question  whether  the  Longshore  and  Harbor

             Workers'  Compensation  Act,  33  U.S.C.     901-950  (1988)

             (LHWCA), preempts  a suit brought by  George Barnard against

             his former employer and  its insurer for intentional failure

             to  make  timely  compensation  payments.   The  defendants,

             Zapata Haynie  Corporation (Zapata) and  Aetna Casualty  and

             Surety Company (Aetna), moved  for judgment on the pleadings

             pursuant  to  Fed. R.  Civ. P.  12(c).   The  district court

             denied  the  motion to  dismiss  under  Martin v.  Travelers
                                                     ____________________

             Insurance  Co., 497  F.2d 329  (1st Cir.  1974).   The court
             ______________

             certified  the  question for  interlocutory appeal  under 28

             U.S.C.    1292(b) (1988), and  this court granted permission

             to appeal.  We reverse  and find Martin distinguishable from
                                              ______

             the present  claims.  We  find plaintiff's  complaint to  be

             preempted by the LHWCA.

                       Barnard worked  as a  fish spotter for  Zapata and

             was  found disabled for work  by his family  physician and a

             Federal Aviation Administration  medical examiner.   He  was

             grounded  on November  8, 1984,  allegedly  due to  a stress

             related psychological  disability.  Plaintiff  filed a claim

             for compensation benefits under the LHWCA and a hearing  was

             held on July  28, 1986.  On May 21,  1987, an Administrative

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Law Judge  (ALJ) ordered Zapata to  pay Barnard compensation

             for  temporary  total  disability  and  to  provide  medical

             treatment.1   Payments were made regularly  until October of

             1988,  when  the United  States  Postal  Service returned  a

             compensation  check  to Aetna,  noting  that  the forwarding

             period  had expired.  Defendants failed  to make any further

             payments to Barnard until June 20, 1990, when Aetna issued a

             compensation check  in  the  amount  of  $63,762.60,  paying

             compensation to July 10, 1990.

                       Barnard  filed suit  against Zapata  and Aetna  on

             June 10, 1991, asserting  various state tort claims relating

             to defendants' failure to comply with the compensation terms

             ordered  by the  ALJ.  Barnard  contends that  the liability

             sought  in this case is  not on account  of his work-related

             injury  but  arises  from  injuries  caused  by  defendants'

             intentional, willful, and malicious refusal to pay.  Barnard

             claims to have suffered  permanent psychological damage as a

             result of defendants' actions.

                       The district court  denied defendants' motion  for

             judgment  on the pleadings  under rule 12(c)  because of its

             inability to distinguish precedent  of this court, Martin v.
                                                                _________

____________________

             1Zapata appealed  the award of compensation  to the Benefits
             Review Board.  The Board affirmed the award.

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Travelers Insurance Co., 497  F.2d 329 (1st Cir. 1974).   In
             _______________________

             Martin,  this court held the failure to honor a draft issued
             ______

             as  part of  the  benefits paid  constituted an  independent

             wrong and  that plaintiff was not precluded  under the LHWCA

             from pursuing independent state law remedies.2

                       We  must respectfully  disagree with  the district

             court's  ruling.   We find  Martin distinguishable  and hold
                                         ______

             that the LHWCA preempts  the present claim.  In  Martin, the
                                                              ______

             court made clear that

                       the crux  of the  complaint here  is the
                       insurer's  callous  stopping of  payment
                       without  warning  when  it  should  have
                       realized that acute  harm might  follow.
                       A stop payment on a sizable compensation
                       check which may have been  deposited and
                       drawn    upon   carries    the   obvious

____________________

             2The  facts  of Martin,  as outlined  by  the court,  are as
                             ______
             follows:

                       [A]bout two  weeks after the  drafts had
                       been  deposited and  substantially drawn
                       upon  by  plaintiff,  defendant  stopped
                       payment   on   the  drafts,   presumably
                       because  a decision had been made in the
                       interim to appeal  the adverse  decision
                       of the Bureau.  This action by defendant
                       is alleged by plaintiffs to have delayed
                       payment in violation of the terms of the
                       Act  and to  have subjected  claimant to
                       financial embarrassment due to  the fact
                       that  he  had written  checks  which had
                       become worthless.

             Martin, 497 F.2d at 330.
             ______

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possibility    of    embarrassment   and
                       distress.3

             Martin, 497 F.2d at 331.
             ______

                       Unlike  Martin,  the  facts  in  the  present case
                               ______

             relate  solely  to a  refusal to  pay  benefits, and  do not

             involve a  stop payment or dishonor  of a draft  issued to a

             claimant  against which  the claimant  in good  faith issued

             checks of his own.  Here, for whatever reason, the defendant

             refused to pay or issue payments between October of 1988 and

             June  of 1990.  While  Barnard urges that  defendants had no

             legal basis for doing so, we find the LHWCA to be  Barnard's

             exclusive  remedy  for defendants'  failure  to make  timely

             payments,   irrespective   of   defendants'    reasons   for

             nonpayment.   See 33 U.S.C.   905(a)  (1988) ("The liability
                           ___

             of an employer prescribed in section 904 of this title shall

____________________

             3The court observed in a footnote:

                       Plaintiff  relies  upon the  tort theory
                       creating  liability  for  infliction  of
                       mental    and     emotional    suffering
                       recognized by the Maine Supreme Judicial
                       Court in Wallace  v. Coca-Cola  Bottling
                       Plants,  Inc., 269 A.2d  117 (Me. 1970).
                       Alternatively,    see    generally,   W.
                                         ________________
                       Prosser,  Handbook of  the Law  of Torts
                          129, 130 (4th ed. 1971);  cf. Uniform
                                                    ___
                       Commercial Code   4-402.

Martin, 497 F.2d at 331.
             ______

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be exclusive and  in place  of all other  liability of  such

             employer to  the employee . . . on account of such injury or

             death . . . .").

                       Section  14(f) of  the  LHWCA  assesses a  penalty

             against employers who delay in making payments as ordered: 

                            If any  compensation, payable under
                       the  terms  of  an award,  is  not  paid
                       within  ten days  after it  becomes due,
                       there  shall  be  added to  such  unpaid
                       compensation  an amount equal  to 20 per
                       centum thereof, which  shall be paid  at
                       the same  time as,  but in addition  to,
                       such compensation, unless review  of the
                       compensation order making such  award is
                       had as  provided in section  921 of this
                       title  and an order  staying payment has
                       been issued by the Board or court.

             33  U.S.C.   914(f)  (1988); cf.  33 U.S.C.    914(e) (1988)
                                          ___

             (ten   percent  penalty   assessed  where   employer  delays

             compensation payable without an award).4   
                                 
             ____________________

             4In addition, the  LHWCA provides for an award of attorneys'
             fees and expenses to a successful claimant where entitlement
             to  compensation has  been disputed,  33 U.SC.   928 (1988).
             Martin was decided by this court in 1974.  In 1984, Congress
             ______
             passed extensive amendments to  the LHWCA following a debate
             over  Union concerns regarding abuse by insurers arbitrarily
             withholding  payment  of  benefits   under  the  Act.    See
                                                                      ___
             generally  Longshoremen's  and Harbor  Worker's Compensation
             _________
             Act Amendments  of  1981: Hearings  on  S. 1182  Before  the
             Subcommittee  on Labor of the  Senate Committee on Labor and
             Human  Resources, 97th  Cong.,  1st Sess.  433, 516-23,  545
             (1981).   Congress ultimately enhanced the  criminal penalty
             for  such arbitrary  withholdings  from a  misdemeanor to  a
             felony,  increasing  the maximum  fine  to  $10,000 and  the
             maximum  imprisonment  to five  years.    33 U.S.C.   931(c)
             (1988) (amended in 1984 by Pub. L. No. 98-426).

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As   the  Fifth   Circuit   has   observed,   "the

             pervasiveness  of  the LHWCA  treatment  of  the payment  of

             compensation   due,  and   the   conflict  therewith   which

             necessarily flows  from any state penalty  scheme respecting

             failure to pay LHWCA benefits  which differs from the scheme

             of the LHWCA itself, persuade us that [claimant's] state law

             claims  are preempted."  Atkinson  v. Gates, McDonald & Co.,
                                      __________________________________

             838 F.2d 808, 812 (5th Cir. 1988); see also Brown v. General
                                                ________ ________________

             Serv.  Admin.,  425  U.S.   820,  834-35  (1976)  ("We  have
             _____________

             consistently   held  that   a  narrowly   tailored  employee

             compensation scheme pre-empts the more general tort recovery

             statutes.").   The court  in Atkinson further  reasoned that
                                          ________

             the  statutory  penalty   "inferentially,  but   nonetheless

             plainly, also  provides that  the penalty  shall not  be any
                                                                      ___

             different  amount, and that liability for  it shall not vary

             according to  anything, such as good  or bad faith .  . . ."

             Atkinson, 838 F.2d at 812; see also Hall v. C  & P Tel. Co.,
             ________                   ________ _______________________

             809 F.2d  924 (D.C.  Cir. 1987)  (finding  state tort  claim

             based  on  employer's  intentional  refusal to  make  timely

             compensation  payments  preempted  by  exclusivity  and late

             payment provisions  of LHWCA);  Sample v. Johnson,  771 F.2d
                                             _________________

             1335, 1347  (9th Cir. 1985) (holding  state wrongful refusal

             to pay claim barred by exclusivity and penalty provisions of

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LHWCA,  and  distinguishing Martin  from  cases of  ordinary
                                         ______

             refusals  to pay), cert. denied, 475 U.S. 1019 (1986); Daley
                                ____________                        _____

             v.  Aetna Casualty & Sur.  Co., 573 N.E.2d  1128, 1130 (Ohio
             ______________________________

             Ct. App.  1988) (intent  to  preempt state  actions for  bad

             faith and intentional infliction of emotional distress based

             on employer's termination of benefits "is apparent both from

             the  pervasiveness   of  the  federal   regulation  and  the

             likelihood of conflicts between state and federal law."); 2A

             Arthur Larson, The Law of Workmen's Compensation   68.34(c),
                            _________________________________

             at 13-145 (1992) (noting majority view that "the presence in

             the  statute  of  an  administrative penalty  for  the  very

             conduct on  which the tort suit  is based . .  . evidences a

             legislative intent  that the  remedy for delay  in payments,

             even vexatious delay, shall remain  within the system in the

             form of some kind of penalty.").

                       The  district court  and claimant  here  urge that

             Martin is  controlling  in the  First  Circuit.   We  agree;
             ______

             however, for the reasons  discussed above we find Martin  to
                                                               ______

             be  inapposite  to  the   facts  alleged  here.     We  hold

             plaintiff's suit  for  alleged intentional  failure to  make

             timely  compensation payments  preempted by  the exclusivity

             and late payment provisions of LHWCA.

                            Judgment reversed.
                            _________________

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