
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                                         -2-                                          2             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.                                         -3-                                          3             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.             ______                                         -4-                                          4                       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.             ______                                         -5-                                          5             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).                                         -6-                                          6                       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                                         -7-                                          7             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.                            _________________                                         -8-                                          8
