                        REVISED, APRIL 3, 2000

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                         _____________________

                              No. 99-20278
                         _____________________


          H B ZACHRY COMPANY; INSURANCE COMPANY OF THE STATE OF
PENNSYLVANIA

                                 Plaintiffs - Appellants

          v.

          JOSE B QUINONES; DIRECTOR, OFFICE OF WORKERS’
COMPENSATION PROGRAMS, US DEPARTMENT OF LABOR

                                 Defendants - Appellees

_________________________________________________________________

           Appeal from the United States District Court
                for the Southern District of Texas
_________________________________________________________________
                           March 8, 2000

Before KING, Chief Judge, and DUHÉ and DeMOSS, Circuit Judges.

KING, Chief Judge:

     Plaintiffs-Appellants appeal from the judgment of the

district court adopting and affirming a Decision and Order of the

Benefits Review Board and denying their petition for review.    For

the following reasons, we reverse the district court’s denial of

the petition and remand for further proceedings consistent with

this opinion.



                I.   FACTUAL AND PROCEDURAL BACKGROUND

     Defendant-Appellee Jose Quinones was employed by Plaintiff-

Appellant H.B. Zachry Company (“Zachry”) on and off from 1980
until 1994.    In 1993, he accepted a one-year position with Zachry

as a construction foreman on the Kwajalein Army base in the

Marshall Islands.    He began experiencing back troubles while in

the Marshall Islands and made several visits to doctors there.

       Upon returning to the United States, Quinones sought further

medical treatment.    Because of some debate regarding the cause of

his symptoms, Zachry and its insurance carrier, Plaintiff-

Appellant Insurance Company of the State of Pennsylvania

(together with Zachry, “Appellants”), refused to pay any more of

Quinones’s medical bills.    Quinones brought a claim for

compensation benefits under the Longshore and Harbor Workers’

Compensation Act (“LHWCA”), 33 U.S.C. § 901 et seq., as amended

and extended by the Defense Base Act (“DBA”), 42 U.S.C. § 1651 et

seq.

       The Administrative Law Judge (“ALJ”) awarded Quinones

ongoing temporary total disability benefits, basing his

calculation of Quinones’s average weekly wages in part on the

value of meals and lodging that Zachry provided Quinones while he

was working in the Marshall Islands.    Appellants appealed to the

Benefits Review Board (“BRB”), which affirmed the ALJ’s decision.

See Quinones v. H. B. Zachry, Inc., 32 BRBS 6 (1998).       Appellants

then petitioned the district court for review of the BRB’s

decision, which petition the district court denied.    Appellants

timely appeal to this court raising three issues.    First, they

argue that the value of meals and lodging provided to Quinones

should not be included in his wages for the purpose of


                                  2
calculating disability benefits.       Second, they argue that the ALJ

failed to detail his reasons for rejecting certain evidence, and,

finally, they contest the rate at which the BRB calculated

attorney’s fees for Quinones’s counsel.



                      II.    STANDARD OF REVIEW

     Generally, disability compensation claims brought by persons

employed at United States military bases abroad are governed by

the DBA.   The DBA provides that the LHWCA applies to such claims,

unless the DBA modifies the provisions of the LHWCA.       See 42

U.S.C. § 1651(a) (1994).    One such modification is the process

for seeking review of a decision of the BRB.      Under the LHWCA, a

claimant petitions directly to this court for such review.          See

33 U.S.C. § 921(c) (1994).    Under the DBA, 42 U.S.C. § 1653(b)

(1994), review is sought first in the district court, and an

appeal of the district court’s judgment can then be brought in

this court. See AFIA/CIGNA Worldwide v. Felkner, 930 F.2d 1111,

1114, 1116 (5th Cir. 1991).

     Felkner did not address the deference this court pays to the

judgment of the district court in such a situation.      Our review

of the case law in sister circuits has likewise yielded no

guidance on this question.    In reviewing a district court’s

decision on agency action in a different context, however, we

have explained that “since an appellate court reviews the

administrative decision on the identical basis as did the

district court, appellate court review need accord no particular


                                   3
deference to the district court’s conclusion as to whether the

identical administrative record does or does not support the

administrative determination . . . .”   Louisiana Envtl. Soc’y,

Inc. v. Dole, 707 F.2d 116, 119 (5th Cir. 1983).    This reasoning

applies equally in the case at hand, and we therefore accord no

deference to the decision of the district court and proceed as

though reviewing the decision of the BRB in the first instance.

     “Our review of Review Board decisions is limited to

considering errors of law and ensuring that the Review Board

adhered to its statutory standard of review, that is, whether the

ALJ’s findings of fact are supported by substantial evidence and

are consistent with the law.”   Sisson v. Davis & Sons, Inc., 131

F.3d 555, 557 (5th Cir. 1998); see also Shell Offshore, Inc. v.

Director, OWCP, 122 F.3d 312, 315 (5th Cir. 1997); Boland Marine

& Mfg. Co. v. Rihner, 41 F.3d 997, 1002 (5th Cir. 1995).     We

review the BRB’s interpretation of the LHWCA de novo.    See

Equitable Equip. Co. v. Director, OWCP, 191 F.3d 630, 631 (5th

Cir. 1999).



                III.   MEALS AND LODGING AS WAGES

     The first question we must address is whether the value of

meals and lodging exempted from federal income taxation by

section 119 of the Internal Revenue Code (“§ 119 Meals and




                                4
Lodging”)1 is included in “wages” under the LHWCA.    The LHWCA

provides:

     The term “wages” means the money rate at which the service
     rendered by an employee is compensated by an employer under
     the contract of hiring in force at the time of the injury,
     including the reasonable value of any advantage which is
     received from the employer and included for purposes of any
     withholding of tax under subtitle C of title 26 (relating to
     employment taxes). The term wages does not include fringe
     benefits, including (but not limited to) employer payments
     for or contributions to a retirement, pension, health and
     welfare, life insurance, training, social security or other
     employee or dependent benefit plan for the employee’s or
     dependent’s benefit, or any other employee’s dependent
     entitlement.

33 U.S.C. § 902(13) (1994).    Subtitle C of title 26, the Internal

Revenue Code, deals with employment taxes, three of which are

withheld from the pay of employees.    See I.R.C. §§ 3101(a),

3101(b) & 3201(a) (1994) (old-age, survivors, and disability

insurance tax; hospital insurance tax; and railroad retirement

tax, respectively).    Each of these taxes is calculated based on

wages, as defined in I.R.C. § 3121.    See id.   Since 1983, I.R.C.

§ 3121 has provided that “the term ‘wages’ . . . shall not

include . . . the value of any meals or lodging furnished by

. . . the employer if at the time of such furnishing it is

     1
         Section 119(a) of the Internal Revenue Code provides:

          There shall be excluded from gross income of an
     employee the value of any meals or lodging furnished to him,
     his spouse, or any of his dependents by or on behalf of his
     employer for the convenience of the employer, but only if
     (1) in the case of meals, the meals are furnished on the
     business premises of the employer, or (2) in the case of
     lodging, the employee is required to accept such lodging on
     the business premises of his employer as a condition of his
     employment.

I.R.C. § 119(a) (1994).

                                  5
reasonable to believe that the employee will be able to exclude

such items from income under section 119 . . . .”    I.R.C.

§ 3121(a)(19) (1994).2   The value of § 119 Meals and Lodging is

therefore not “included for purposes of any withholding of tax

under subtitle C of the Internal Revenue Code.”     All parties

agree that the room and board provided to Quinones in this case

qualified as § 119 Meals and Lodging.    The only question before

us then is the proper construction of § 902(13).

     Relying on Guthrie v. Holmes & Narver, Inc., 30 BRBS 48

(1996), rev’d sub nom. Wausau Ins. Cos. v. Director, OWCP, 114

F.3d 120 (9th Cir. 1997), on recons. 136 F.3d 586 (9th Cir.

1998), the ALJ determined that, as a matter of law, the value of

§ 119 Meals and Lodging is included in the calculation of wages

under § 902(13).   See Decision and Order Awarding Compensation

Benefits, dated Jan. 7, 1997, at 11 (“ALJ Decision”).    The BRB

agreed, see Quinones, 32 BRBS at 10, and the district court

affirmed.   See Memorandum and Order entered Feb. 26, 1999.   We

now reverse.

     In Guthrie, the claimant was provided with § 119 Meals and

Lodging under his employment contract.   The BRB concluded that

because these services were provided “under the terms of

claimant’s employment contract, and the value of these services

[was] readily ascertainable[,] . . . the room and board provided

by the employer [could not] be deemed a fringe benefit as the

     2
       Paragraph 19 was added to I.R.C. § 3121(a) by the Social
Security Amendments of 1983, Pub. L. 98-21 § 327(a)(1), 97 Stat.
65, 126-27 (1983).

                                 6
amount [was] readily calculable.       These services satisfy the

definition of ‘wages’ under [§ 902(13)].”       Guthrie, 30 BRBS at 50

(footnote omitted).   The employer in Guthrie appealed, and the

United States Court of Appeals for the Ninth Circuit reversed.

In a brief per curiam opinion, the Ninth Circuit held that the

LHWCA defers to the IRS definition of wages.       See Wausau Ins.

Cos. v. Director, OWCP, 114 F.3d 120, 121-22 (9th Cir. 1997), on

recons. 136 F.3d 586 (9th Cir. 1998).

     Defendant-Appellee Director, Office of Workers’ Compensation

Programs, Department of Labor (the “Director”), joins Appellants

in arguing that the value of § 119 Meals and Lodging is not

included in wages under the LHWCA.       The Director begins by

asserting that § 902(13) is clear on its face.       In the

alternative, the Director argues that this court owes Chevron

deference to the Director’s reasonable construction of the

statute.3   “Because the Department of Labor has been entrusted

with administering the workers’ compensation scheme of the LHWCA,

     3
       Under Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837 (1984), this court conducts a two step
process in reviewing an agency’s construction of a statute it
administers.

     [T]he court first must use “traditional tools of statutory
     construction” to determine “whether Congress has directly
     spoken to the precise question at issue.” If so, the court
     and the agency “must give effect to the unambiguously
     expressed intent of Congress.” However, “[i]f the statute
     is silent or ambiguous” on the particular issue, the court
     must determine “whether the agency’s answer is based on a
     permissible construction of the statute.”

Doyle v. Shalala, 62 F.3d 740, 745 (5th Cir. 1995) (quoting
Chevron, 467 U.S. at 842-43 & n.9) (internal citations omitted
and alteration in original).

                                   7
its construction of that scheme should be given considerable

weight.”   Texports Stevedores Co. v. Director, OWCP, 931 F.2d

331, 333 (5th Cir. 1991).    The Director’s views are entitled to

deference.   See Boudreaux v. American Workover, Inc., 680 F.2d

1034, 1046 (5th Cir. Unit A 1982).    Indeed, deference is owed to

the Director’s views and not the views of the BRB.    See id. at

1046 n.23; Potomac Elec. Power Co. v. Director, OWCP, 449 U.S.

268, 278 n.18 (1980)(“It should also be noted that the Benefits

Review Board is not a policymaking agency; its interpretation of

the LHWCA thus is not entitled to any special deference from the

courts.”).

     Appellants and the Director advance three arguments in

support of their position.   First, they argue that the phrase

“including the reasonable value of any advantage which is

received from the employer and included for purposes of any

withholding of tax” is one of expansion, explaining that the

section “provides that the term ‘wages,’ in general, means the

monetary rate at which work is paid, but expands the term to also

include the reasonable value of non-monetary advantages received,

if subject to withholding tax.”   Director’s Brief at 17.   Second,

they argue that the BRB’s construction of § 902(13) reads out

part of the statute.   Because the BRB includes in wages an

advantage not subject to withholding (the value of § 119 Meals

and Lodging), the limiting phrase “and included for purposes of

any withholding tax” becomes superfluous.   “As the Supreme Court

has recognized, ‘[t]he cardinal principle of statutory


                                  8
construction is to save and not to destroy.’” Director’s Brief at

17 (quoting United States v. Menasche, 348 U.S. 528, 538 (1955)).

     Finally, Appellants and the Director argue that an

examination of changes made to § 902(13) evinces congressional

intent to exclude the value of § 119 Meals and Lodging from the

definition of wages.    In Morrison-Knudsen Constr. Co. v.

Director, Office of Workers’ Compensation Programs, the Supreme

Court held that the value of certain employer-paid fringe

benefits was not included in wages under § 902(13).     See 461 U.S.

624 (1983).    Congress codified this holding in 1984 by amending

§ 902(13) to read as it currently does.4    The Director argues

that the 1984 amendments created a provision that clearly

explains what is and is not included in wages under the LHWCA,

and the value of § 119 Meals and Lodging is not included.

     Quinones, on the other hand, argues that “[t]he [post-1984]

definition of wages is the money rate at which the employee is

compensated under the contract of hire in force at the time of

injury, including the reasonable value of any advantage

received.”    Appellee’s Brief at 19.   He asserts that the mention

of taxable advantages in the provision is merely illustrative and

does not preclude including non-taxable advantages in wages.




     4
       Prior to the 1984 amendment, § 902(13) had provided that
wages included “the reasonable value of board, rent, housing,
lodging, or similar advantage received.” Longshoremen’s and
Harbor Workers’ Compensation Act, Pub. L. No. 69-803, § 2(13), 44
Stat. 1424, 1425 (1927) (prior to 1984 amendment). The provision
did not require that these advantages be subject to tax.

                                  9
     We agree with the Director and Appellants that adopting

Quinones’s view of § 902(13), that all advantages received from

the employer are included in wages, would read the phrase “and

included for purposes of any withholding of tax under subtitle C

of title 26" out of the statute.       Moreover, Quinones implicitly

construes the first occurrence of the term “including” as meaning

“including but not limited to.”    That construction is undermined

by the fact that the second occurrence of the term “including” in

§ 902(13) is followed by the parenthetical “(but not limited

to).”   Both occurrences of the term “including” were added to

§ 902(13) in the 1984 amendments to the LHWCA, and it is

illogical to assume that Congress intended both to be construed

as “including but not limited to” but only chose to modify the

second occurrence of the term with a parenthetical.

     Section 902(13) is clear on its face.      It provides that

“wages” equals monetary compensation plus taxable advantages.       We

join the Ninth Circuit in holding that § 902(13), on its face,

excludes from the definition of “wages” the value of § 119 Meals

and Lodging.



         IV.   FAILURE TO COMPLY WITH 5 U.S.C. § 557(C)(3)

     Appellants next argue that the ALJ failed to comply with

§ 557(c)(3) of the Administrative Procedures Act (the “APA”)

which provides, in pertinent part, that “[a]ll [agency]

decisions, including initial, recommended, and tentative

decisions, are a part of the record and shall include a statement


                                  10
of . . . findings and conclusions, and the reasons or basis

therefor, on all the material issues of fact, law, or discretion

presented on the record . . . .” 5 U.S.C. § 557(c)(3)(A) (1994).

They assert that the ALJ failed to explain why he rejected the

testimony of Quinones’s supervisor, Joe Ramirez, why he rejected

evidence that there was no language barrier in this case, and why

he rejected the testimony of Dr. Goldstein.   Appellants turn to

cases from two other circuits, See v. Washington Metro. Transit

Auth., 36 F.3d 375, 384 (4th Cir. 1994), and Cotter v. Harris,

642 F.2d 700, 705-07 (3d Cir. 1981), for the proposition that an

ALJ must explain why evidence contradicting his conclusion was

rejected.   This circuit has expressly declined to adopt the

Cotter rule.   In Falco v. Shalala, a case dealing with subjective

complaints of pain, we stated:

          [Appellant] urges that we adopt the Third Circuit’s
     rule that an ALJ must articulate specifically the evidence
     that supported his decision and discuss the evidence that
     was rejected. Although we find that this rigid approach is
     unnecessary, we have nonetheless set our own strictures
     that, we feel, effectively reach the same result. . . .
     [F]or example, . . . when the evidence clearly favors the
     claimant, the ALJ must articulate reasons for rejecting the
     claimant’s subjective complaints of pain.

27 F.3d 160, 163 (5th Cir. 1994) (footnotes omitted).

     “Under the [APA], agency action is reviewed solely to

determine whether it is arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.”   Hernandez

v. Reno, 91 F.3d 776, 779 (5th Cir. 1996) (citing 5 U.S.C.

§ 706).   Under this standard, an agency “is not required to make

express findings on collateral contentions considered by it–only


                                 11
to make findings upon the material issues of fact, law, or

discretion presented to it by the administrative proceedings.”

Trailways, Inc. v. ICC, 676 F.2d 1019, 1022 (5th Cir. Unit A

1981).    An agency “is required to give reasons for its actions if

the protestants raise a material disputed issue or if the

existence of a material issue is apparent from the proceedings.”

Central Freight Lines, Inc. v. United States, 669 F.2d 1063, 1074

(5th Cir. Unit A 1982).    In the summary judgment area, we have

stated that “[a] fact is material if it might affect the outcome

of the suit under the governing substantive law.”    United States

v. Arron, 954 F.2d 249, 251 (5th Cir. 1992).



  A.    Joe Ramirez’s Deposition and the Alleged Language Barrier

       First, Appellants complain that the ALJ adopted Quinones’s

testimony that he reported an injury to his supervisor, Joe

Ramirez, and failed to explain why he rejected Ramirez’s

assertion that Quinones had never reported an injury to him.

Second, Appellants complain that the ALJ adopted Quinones’s

assertions regarding a purported language barrier without

explaining why he rejected contradictory evidence.    Several

hospital reports completed overseas state that Quinones did not

know how or when he had injured himself.    Quinones explains that

because of a language barrier, hospital staff did not understand

his explanation or he did not understand their questions.

Appellants argue that other evidence shows that Quinones speaks

and understands English well enough to have communicated when and


                                 12
how he injured himself, and the ALJ rejected that evidence

without explanation.    Neither Ramirez’s statements nor the

language barrier testimony is material to this dispute.

     In this case, the ALJ explained that Quinones had to

establish a prima facie case of compensability by showing an

injury existed that could have been caused by working conditions

or an accident at work.    The burden then shifted to Appellants to

introduce substantial evidence to rebut the presumption of

compensability.   Were Appellants to meet their burden, the ALJ

would have had to resolve the issue of causation based upon all

the evidence.   ALJ’s Order at 6-7.   Appellants do not challenge

this legal framework.

     The ALJ concluded that Quinones established his prima facie

case, and the burden shifted to Appellants to rebut with

substantial evidence.    First, the ALJ determined that Quinones

had an injury under the definition provided in the LHWCA.      The

ALJ noted that it was not clear what caused the injury but that

one existed nonetheless.    The ALJ then concluded that working

conditions existed that could have caused the injury:

     While a specific instance of injury has not been clearly
     established since, on multiple occasions, Claimant has
     stated he did not know how he got injured, it is clear that
     Claimant was engaged in labor which involved the lifting and
     moving of heavy materials such as rebar, bricks, and
     concrete panels. This fact alone will satisfy the prima
     facie condition of having working conditions that could have
     caused the accident.

Id. at 8.   Once the ALJ determined that Quinones met his burden

of establishing a prima facie case by showing that working

conditions existed that could have caused the injury, the

                                 13
contradictory testimony regarding whether a specific injury was

ever reported to Quinones’s supervisor and Quinones’s failure to

report a specific injury in medical records became immaterial.

Under the law of this circuit, therefore, the ALJ need not

address these contradictions specifically.



                   B.    Dr. Goldstein’s Findings

     Appellants further assert that the ALJ failed to give his

reasons for rejecting the findings of a Dr. Goldstein.

Appellants argued in their brief before us, as they had in their

post-hearing brief before the ALJ, that Dr. Goldstein’s findings

contradicted those of Dr. Meadows, Quinones’s current physician.

Our thorough review of the record reveals no testimony or

deposition of Dr. Goldstein.

     When discussing Dr. Goldstein’s findings, Appellants cite to

their own exhibit 40 at page 4.    Exhibit 40 on Appellants’

Exhibit List is described as “DOL certified administrative file.”

Employer and Carrier’s Exhibit List at 3.    Marginalia next to

that entry indicates that the exhibit was withdrawn, and there is

no tab for exhibit 40.    Moreover, no Respondents’ Exhibit 40 was

offered or received in evidence at the hearing.     See Hearing

Record at 21-23.   Finally, as previously stated, in our

independent review of the entire record we found no report from

or testimony or deposition of Dr. Goldstein.    The ALJ has no

obligation to consider, let alone explain his rejection of,

evidence not in the record before him.


                                  14
                V.   AWARD OF ATTORNEY’S FEES BY THE BRB

     Finally, Appellants dispute the hourly rate at which

attorney’s fees were awarded by the BRB.        An award of attorney’s

fees by the BRB is reversed only if it is arbitrary, capricious,

an abuse of discretion, or not in accordance with law.        See

Conoco, Inc. v. Director, OWCP, 194 F. 3d 684, 688 (5th Cir.

1999).   Appellants’ only support for their argument is a

photocopy of an 1996 order from this court granting attorney’s

fees at a rate lower than the rate at which the BRB granted fees

in this case.    Even were we to consider evidence outside of the

record, Appellants have failed to establish that the BRB abused

its discretion.



                             VI.   CONCLUSION

     For the foregoing reasons we REVERSE the judgment of the

district court denying Appellants’ petition for review and REMAND

for further proceedings consistent with this opinion.




                                    15
