Barnard v. Zapata
U.S. Court of Appeals for the First Circuit
Barnard v. Zapata
Opinion
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 92-1017
GEORGE BARNARD,
Plaintiff, Respondent,
v.
ZAPATA HAYNIE CORPORATION
AND AETNA CASUALTY AND SURETY COMPANY,
Defendants, Petitioners.
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APPEAL FROM AN ORDER OF THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Lay,* Senior Circuit Judge,
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and Pieras,** District Judge.
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Terry A. Fralich with whom Peter J. DeTroy, III and Norman,
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Hanson & DeTroy were on brief for petitioners.
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William H. Welte with whom Joseph M. Cloutier & Associates was on
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brief for respondent.
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* Of the Eighth Circuit, sitting by designation.
** Of the District of Puerto Rico, sitting by designation.
LAY, Senior Circuit Judge. This case
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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
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Insurance Co., 497 F.2d 329 (1st Cir. 1974). The court
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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
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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.
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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
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Martin, this court held the failure to honor a draft issued
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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
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that the LHWCA preempts the present claim. In Martin, the
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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
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2The facts of Martin, as outlined by the court, are as
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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.
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Unlike Martin, the facts in the present case
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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
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of an employer prescribed in section 904 of this title shall
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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.
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Prosser, Handbook of the Law of Torts
129, 130 (4th ed. 1971); cf. Uniform
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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)
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(ten percent penalty assessed where employer delays
compensation payable without an award).4
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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
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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
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generally Longshoremen's and Harbor Worker's Compensation
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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.,
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838 F.2d 808, 812 (5th Cir. 1988); see also Brown v. General
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Serv. Admin., 425 U.S. 820, 834-35 (1976) ("We have
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consistently held that a narrowly tailored employee
compensation scheme pre-empts the more general tort recovery
statutes."). The court in Atkinson further reasoned that
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the statutory penalty "inferentially, but nonetheless
plainly, also provides that the penalty shall not be any
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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.,
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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
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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
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refusals to pay), cert. denied, 475 U.S. 1019 (1986); Daley
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v. Aetna Casualty & Sur. Co., 573 N.E.2d 1128, 1130 (Ohio
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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),
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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;
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however, for the reasons discussed above we find Martin to
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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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