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Mays v. Director

United States Court of Appeals, Fifth Circuit

September 11, 2019

TOM L. MAYS, Petitioner - Cross-Respondent

          Petitions for Review of an Order of the Benefits Review Board

          Before HIGGINBOTHAM, ELROD, and HO, Circuit Judges.


         Tom Mays and his former employer, Huntington Ingalls, Inc. ("Avondale"), cross-petition for review of an order of the Benefits Review Board denying Mays's motion for modification of his Longshore and Harbor Workers' Compensation Act benefits. We affirm.


         This case arises from nearly three decades of administrative and state-court litigation. In the spring of 1991, Tom Mays was employed by Avondale as a welder at its shipyard in Avondale, Louisiana. Avondale contracted with International Marine & Industrial Applicators, Inc. ("IMIA" or "International Marine") for cleaning and sandblasting services on a Naval vessel. Under the companies' agreement, IMIA employees would work at Avondale's facility for up to ninety days, during which time they would continue to be supervised and insured by IMIA. Although Avondale reserved the right to remove IMIA employees from its shipyard, only IMIA could fire them. At the end of the sandblasting job, Avondale was to pay IMIA a fixed lump sum, out of which IMIA would compensate its own workers.

         John Gliott was one of the IMIA employees placed on temporary work duty at the Avondale shipyard. On March 18, 1991, Gliott kicked Mays in the head, fracturing Mays's cheekbone and injuring his eye. Mays was treated for his injuries, underwent surgery, and saw several psychiatrists to address a resulting psychological condition. Avondale voluntarily paid Mays $5, 514.68 in disability and medical benefits for a five-month period, after which it requested that he return to work. Mays did not return, and instead filed a claim for workers' compensation benefits under the Longshore and Harbor Workers' Compensation Act ("the Act").[1] The Office of Administrative Law Judges ("ALJ") initially denied Mays's claims for medical benefits and wage indemnity, but reversed its position as to medical benefits upon remand from the Benefits Review Board ("BRB" or "Board"). Avondale appealed, and the Board affirmed.

         Meanwhile, Mays had filed suit against Gliott and IMIA in Louisiana state court. In January of 2000, Mays accepted a settlement of $60, 000 from Gliott and IMIA without Avondale's approval. As part of the settlement agreement, Mays agreed to "dismiss all claims in the Longshoremen and Harbor Workers Compensation matter against Avondale." Following the settlement, Avondale sought relief against Mays under Section 33(g) of the Act, which requires an injured employee to obtain his employer's approval before accepting a third-party tort settlement for less than the value of his workers' compensation benefits.[2] If the employee fails to obtain employer approval of such a settlement, "all rights to compensation and medical benefits . . . shall be terminated."[3]

         Avondale argued that because it had not approved Mays's settlement with Gliott and IMIA, it was no longer liable for his medical expenses pursuant to Section 33(g). At the same time, Mays filed a request for modification of his workers' compensation award, providing new documentation showing that his injuries were more extensive than previously recognized.[4] The ALJ denied Avondale's request because the $60, 000 settlement exceeded the value of the workers' compensation benefits Mays had received up to that point, rendering Section 33(g) inapplicable. However, the ALJ granted Avondale relief under Section 33(f) of the Act, which entitles an employer to credit its liability for medical benefits against the net settlement amount.[5] Finally, the ALJ denied Mays's request for modification as untimely.

         On appeal, the Board affirmed the ALJ's grant of Section 33(f) relief but found that Mays's modification action was not time-barred. The Board remanded the case with instructions to determine whether Mays was entitled to any further periods of disability compensation and, if so, whether his lifetime compensation benefits would become subject to forfeiture under Section 33(g).

         Mays withdrew his request for modification in 2006 but reinstated it several years later, this time arguing that a mistake of fact had been made in the earlier proceedings. Mays claimed that he had never entered into a third-party settlement because Gliott was a borrowed servant of Avondale, not a third-party employee of IMIA. Because Longshore Act compensation is the exclusive remedy for an employee injured by a person "in the same employ," neither Section 33(f)'s setoff provision nor Section 933(g)'s forfeiture provision would apply if Gliott were determined to be Avondale's borrowed servant.[6]

         In July of 2016, the ALJ rejected Mays's mistake-of-fact argument and found that Gliott was not a borrowed servant. However, the ALJ also found that Mays was entitled to additional disability compensation of $335, 012.08.[7]Had the inquiry ended there, Mays's compensation would have been modified upward by this amount. However, per the Board's earlier instruction, the ALJ next considered the interaction between the hypothetical increase in compensation and Mays's settlement with Gliott and IMIA. Before the hypothetical increase, Mays's workers' compensation was less than his recovery under the settlement. However, with the increase, Mays's compensation would far exceed his recovery under the settlement, and this change would trigger Section 33(g) of the Act. Because Avondale had not approved the settlement and Gliott was not an Avondale employee, Mays would forfeit his benefits under the Act. In short, if the ALJ were to make the hypothetical increase in benefits, it would also have to cancel those benefits under Section 33(g)-resulting in no change for Mays. Thus, the ALJ denied the modification.

         In affirming this decision, the Benefits Review Board stated that because the request for modification was denied, the status quo ante remained in place: "The result of the denial of [Mays's] motion for modification is that the administrative law judge's prior award of medical benefits to claimant and offset to employer of the net amount of the third-party settlement pursuant to Section 33(f) remain in effect." The Board denied both parties' motions for reconsideration. Mays and Avondale now cross-petition for review of the Board's affirmance. Mays objects to the Board's findings on Gliott's employment status, while Avondale challenges the Board's denial of Section 33(g) relief.



         Our review of BRB decisions is limited. We inquire only whether the Board "correctly concluded that the ALJ's order was 'supported by substantial evidence on the record as a whole and is in accordance with the law.'"[8] Evidence is substantial if "a reasonable mind might accept [it] as adequate to support a conclusion."[9] "The substantial evidence standard is less demanding than that of preponderance of the evidence, and the ALJ's decision need not constitute the sole inference that can be drawn from the facts."[10] To the contrary, the ALJ "is exclusively entitled to assess both the weight of the evidence and the credibility of witnesses," and neither the Court nor the Board may substitute its judgment for that of the ALJ.[11]


         We consider the nine Ruiz factors to determine whether an employee is a borrowed servant:

(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?
(2) Whose work is being performed?
(3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?
(4) Did the employee acquiesce in the new work situation?
(5) Did the original employer terminate his relationship with the employee?
(6) Who furnished tools and place for performance?
(7) Was the new employment over a considerable length of time?
(8) Who had the right to discharge the employee?
(9) Who had the obligation to pay the employee?[12]

         Although no single one of these factors is decisive, the first is the most critical.[13] As we have stated, "[t]he central question in borrowed servant cases is whether someone has the power to control and direct another person in the performance of his work."[14]


         In general, the Longshore and Harbor Workers' Compensation Act "allows injured workers, without forgoing compensation under the Act, to pursue claims against third parties for their injuries."[15] However, Sections 33(f) and 33(g) of the Act place limits on this right. Section 33(f) provides in relevant part:

If the person entitled to compensation institutes proceedings [against a third-party tortfeasor] the employer shall be required to pay as compensation under this chapter a sum equal to the excess of the amount which the Secretary determines is payable on account of such injury or death over the net amount recovered against such third person.

         In other words, when an injured worker successfully sues a third party, the worker's employer is entitled to reduce the benefits it would otherwise owe under the Act by the amount the worker recovers from the third party.[16]

         In addition, Section 33(g) imposes duties on the worker-plaintiff himself. Under Section 33(g)(1), an injured worker must obtain his employer's written approval before accepting a settlement from a third-party tortfeasor for any "amount less than the compensation to which the [employee] would be entitled under" the Act.[17] If the employee fails to obtain that prior approval, "all future benefits including medical benefits are forfeited."[18] Where an employee obtains a court judgment against a third party or accepts a settlement for more than the compensation due under the Act, his duty to his employer is less onerous. In such cases, Section 33(g)(2) requires only that the employer receive notice, not register its approval.[19] Together, these provisions of Section 33(g) are "designed to ensure that the employer's rights are protected . . . and to prevent the claimant from unilaterally bargaining away funds to which the employer or its carrier might be entitled under" the Act.[20]


         Mays contends that the Benefits Review Board erred by concluding that Gliott was an independent contractor employed by IMIA rather than a borrowed servant of Avondale. Specifically, Mays challenges the Board's analysis of the Ruiz factors and its conclusions as to Avondale's purported judicial ...

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