Rehearing and Rehearing En Banc Denied March 31, 1988.
GARWOOD, Circuit Judge:
Plaintiff-Appellant Billie J. Atkinson (Atkinson) brought this diversity action seeking damages from defendant-appellee Gates, McDonald & Company (Gates, McDonald) for its alleged bad faith in terminating compensation benefits due Atkinson under the Longshoremen and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. § 901 et seq., on account of an injury she sustained on May 20, 1980 in the course of her employment with the Navy Resale Services Support Office (NAVRESSO). The latter is a nonappropriated fund
Gates, McDonald paid Atkinson LHWCA disability compensation benefits, and most but not all of her medical expenses, from the date of her injury through May 31, 1984, when it terminated all payments, allegedly without notification to Atkinson. After numerous but unsuccessful attempts to determine the reason for the discontinuance of benefits, Atkinson in March 1985 filed an employee's claim for compensation with the United States Department of Labor, as provided for under the LHWCA, and shortly thereafter Gates, McDonald was notified of the claim. Gates, McDonald at no time notified the Department of Labor of the suspension of compensation payments, nor did it ever file a controversion of Atkinson's entitlement to compensation, as required under the LHWCA. 33 U.S.C. §§ 914(a), (c), & (d). Ultimately, in January 1986, the Department of Labor ordered that Atkinson's disability benefits be reinstated and instructed NAVRESSO to bring her benefits up to date and to pay Atkinson a ten percent penalty thereon together with her attorneys' fees, as provided in the LHWCA. 33 U.S.C. §§ 914 (e) & 928. Gates, McDonald, with NAVRESSO funds, thereupon paid Atkinson all her back benefits, the ten percent penalty, and her attorneys' fees, and it reinstated and continued to timely pay her compensation benefits.
After her LHWCA compensation benefits were thus resumed, and Atkinson was paid the past due benefits, penalty, and attorneys' fees, she brought the present diversity action against Gates, McDonald. In her final amended complaint, Atkinson alleged that Gates, McDonald, "arbitrarily, callously, intentionally, capriciously, wrongfully, unreasonably, in bad faith, without any reasonably legitimate or reasonably arguable reason," did not make any disability or medical payments to Atkinson from March 31, 1984 to January 22, 1986, as well as failing prior to March 31, 1984 to pay certain medical expenses, "although the Plaintiff was clearly entitled to" all such payments. Atkinson also alleged that Gates, McDonald in so acting "willfully, intentionally, wrongfully and in bad faith used the fact of unequal wealth and bargaining position of the parties to effect economic gain for itself" and "intentionally caused the Plaintiff to suffer anxiety, worry, mental and emotional distress and other incidental damages." Atkinson sought one million dollars in compensatory damages and five million dollars in punitive damages. Following discovery, Gates, McDonald filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6) and for summary judgment, which the district court granted, dismissing Atkinson's claims with prejudice.
Atkinson brings this appeal, and we affirm, being essentially in agreement with the district court's well-reasoned opinion. Atkinson v. Gates, McDonald & Co., 665 F.Supp. 516 (S.D.Miss.1987).
As the district court correctly noted, Atkinson "is asserting what are in essence state law claims for bad faith intentional infliction of emotional distress" in terminating and refusing to pay compensation benefits and medical expenses which Atkinson was entitled to under the LHWCA. Id. at 519-20. The district court held, and we agree, "that the exclusivity provisions of both the Nonappropriated Fund Instrumentalities Act[
Other sections of the LHWCA, in addition to sections 5 and 14(e), reinforce this conclusion. Section 14(a) provides that compensation "shall be paid ... promptly ... without an award, except where liability to pay compensation is controverted by the employer." (Emphasis added.) Section 14(b) requires compensation to be paid on the fourteenth day after the employer has notice of the injury, and thereafter semimonthly. Section 14(c) requires the employer to give notice to the deputy commissioner when making the first payment of compensation "and upon suspension of payment for any cause," while section 14(g) requires notice to the deputy commissioner within sixteen days after the final payment of compensation is made and provides for a one hundred dollar civil penalty against the employer if such notice is not timely given. Section 14(d) requires the employer, if it "controverts the right to compensation," to file with the deputy commissioner, within fourteen days after knowledge of the alleged injury, a notice of controversion. As noted, section 14(e) calls for a ten percent penalty when pre-award benefits are not timely paid, unless notice of controversion has been filed (see note 3, supra). Subsection (f) provides for a twenty percent penalty on any compensation payable under the terms of an award that is not paid within ten days after it becomes due, unless the award has been appealed and a stay order entered. 33 U.S.C. § 914. Further, section 28 of the LHWCA provides for an award of attorneys' fees and certain expenses to the successful claimant where entitlement to compensation has been disputed. 33 U.S.C. § 928.
Thus, the scheme of the LHWCA is that the employer is absolutely required to pay compensation promptly on notice of injury and in the absence of a timely written controversion. Failure to do so incurs the ten percent penalty of section 14(e), unless the employer shows that "owing to conditions over which he had no control such installment could not be paid" timely. Similarly, however, the Act gives the employer the absolute, unfettered right to timely controvert the entitlement to compensation, in which event no compensation is owing, under the express terms of section 14(a), and no penalty is owing, under the express terms of section 14(e), unless and until an award is made by the deputy commissioner. In that event, compensation is due within ten days of the award, and failure to timely pay the award, unless it is stayed pursuant to an appeal, results in the twenty percent penalty of section 14(f). We have held that this penalty "does not admit to an exception for late payment for equitable reasons." Lauzon v. Strachan Shipping Co., 782 F.2d 1217, 1222 (5th Cir.1985). Moreover, where a plaintiff secures payment of compensation by an award, attorneys' fees and certain expenses may also be adjudged in his favor. 33 U.S.C. § 928.
In arguing that the LHWCA does not preempt her claims, Atkinson advances essentially two contentions. First, she asserts that the exclusivity provision of section 5(a) (see note 2, supra) applies only to liability "on account of such injury," and that under section 2(2) "injury" is defined as "accidental injury ... arising out of and in the course of employment." 33 U.S.C. § 902(2). Atkinson points to the fact that she has not worked for NAVRESSO since her May 20, 1980 injury, and that accordingly the damages which she claims for the subsequent failure to pay compensation benefits cannot possibly arise out of her employment. She also points to the fact that the exclusivity provision of section 5(a) is directed only to the liability of the "employer," and the defendant here is not her employer, NAVRESSO, but is rather Gates, McDonald.
We reject these contentions. The former contention overlooks the fact that Atkinson's claim necessarily presupposes an obligation to pay LHWCA benefits, and hence necessarily arises out of her on-the-job injury. See Sanders v. United States, 387 F.2d 142 (5th Cir.1967) (Federal Employees' Compensation Act prohibits separate suit for negligence of government doctors in treatment of covered injuries). More importantly, it also overlooks other specific provisions of the LHWCA, particularly sections 14 and 28, and its overall structure, as discussed in more detail below. As to the latter contention, we have held that the LHWCA impliedly grants the employer's insurance carrier, and the insurance carrier of co-employees, the same immunity which it grants the employer and co-employees. See Johnson v. American Mutual Liability Ins. Co., 559 F.2d 382 (5th Cir.1977); Nations v. Morris, 331 F.Supp. 771 (E.D.La.1971), affirmed, 483 F.2d 577 (5th Cir.1973). We reached this result in Johnson "in view of the overall purpose and provisions of the Act," which led us to conclude that the insurance carrier more appropriately fitted in the category of the employer as opposed to that of a "third person" who may be sued under section 33, 33 U.S.C. § 933. Johnson, 559 F.2d at 390. It obviously makes no sense for the employer's agent not to have the immunity which the employer would if carrying out the same actions directly. Our holdings in Johnson and Nations were likewise premised on the recognition that the ultimate cost would in any event be borne by the employer. See Johnson, 559 F.2d at 392; Nations, 483 F.2d at 589 ("in the long run it is the employer who pays the fare"). This is no less true where the liability is sought to be imposed on the self-insured employer's claims agent.
In these circumstances, the LHWCA is plainly preemptive of any state law claim for intentional or bad faith wrongful refusal to pay benefits due under the Act, and this is true even in the absence of any expressly preemptive language. As the Supreme Court stated in Fidelity Federal Savings & Loan Ass'n v. de la Cuesta, 458 U.S. 141, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982), "Absent explicit preemptive language, Congress' intent to supersede state law altogether may be inferred because `[t]he scheme of federal regulation may be so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it' ... or because `the object sought to be obtained by federal law and the character of obligations imposed by it may reveal the same purpose.'" Moreover, "[e]ven where Congress has not completely displaced state regulation in a specific area, state law is nullified to the extent that it actually conflicts with federal law. Such a conflict arises ... when state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Id. In order to find such an actual conflict for this latter purpose, it is not necessary that compliance with both state and federal law be impossible. Id. at 3022-23.
Here, 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 Atkinson's state law claims are preempted. Surely when the LHWCA provides that there shall be a ten percent penalty on all required pre-award payments not made when due, except where circumstances beyond the employer's control precluded payment, it likewise 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, other than the inability of the employer to make the required payment due to circumstances wholly beyond its control. Such a construction of the LHWCA is but another application of the principle that " `[w]hen a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.'" National R. R. Passenger Corp. v. National Ass'n of R. R. Passengers, 414 U.S. 453, 94 S.Ct. 690, 693, 38 L.Ed.2d 646 (1974). Similarly, when Congress made provision in the Death on the High Seas Act for recovery of pecuniary loss, it impliedly proscribed recovery, under either general maritime law or state law, for loss of society. Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 98 S.Ct. 2010, 56 L.Ed.2d 581 (1978); Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 106 S.Ct. 2485, 2499, 91 L.Ed.2d 174 (1986). As the Court said in Higginbotham, "Congress did not limit DOHSA beneficiaries to recovery of their pecuniary losses in order to encourage the creation of nonpecuniary supplements." 98 S.Ct. at 2015. The Court in Tallentire reiterated this language
While we have not previously determined the precise issue presented in this case,
Some of the more recent state cases following the same approach are Zurich Ins. Co. v. Mitchell, 712 S.W.2d 340 (Ky.1986) (following "[t]he great majority of courts," id. at 343); Robertson v. Travelers Ins. Co., 95 Ill.2d 441, 69 Ill.Dec. 954, 448 N.E.2d 866 (Ill.1983) (following "[a] majority of the jurisdictions," id. 69 Ill.Dec. at 957, 448 N.E.2d at 869); and Dickson v. Mountain States Mutual Casualty Co., 98 N.M. 479, 650 P.2d 1 (1982).
Atkinson contends that the exclusivity rationale is defective because it inevitably leads to the conclusion that there could be no common-law tort claim against an insurance company if, for example, its employee, in the course of investigating the plaintiff's claim for LHWCA compensation benefits, were to illegally enter plaintiff's residence to get needed evidence. Atkinson cites her own passage from Larson, supra, in support of this argument.
Accordingly, we hold that the district court correctly determined that Atkinson's claims are preempted by the LHWCA and the Nonappropriated Fund Instrumentalities Act, and its dismissal of Atkinson's suit is therefore
Martin involved a situation where the defendant insurance company stopped payment on LHWCA compensation drafts, which had previously been given to the plaintiff worker and "had been deposited and substantially drawn upon by plaintiff" and on the faith of which plaintiff "had written checks which had become worthless." Id. at 330. The First Circuit held that the district court erred in dismissing the complaint for failure to state a claim, and remanded the case for further consideration, observing, "It remains less than clear whether and to what extent plaintiff claims that his damages were caused by delay in effective compensation payment as distinguished from the stop payments themselves." Id. at 331. Accordingly, it is perhaps possible to construe Martin as involving a situation where the conduct complained of, issuing and delivering drafts and then stopping payment on them after they had been deposited and checks drawn against them, would be actionable even if the compensation benefits for which the drafts were given were not actually owing to begin with. In other words, it might be possible to construe Martin as presenting a situation where the plaintiff's recovery would not depend on a determination that he was owed compensation under the LHWCA or that the defendant violated the LHWCA. If this be a correct reading of Martin, then that decision may not be inconsistent with our present holding, and we need not here address how we would dispose of such a claim. On the other hand, if this is not a correct reading of Martin, then we expressly decline to follow that decision.
"Again, suppose a claimant has a compensable broken toe, and is being tailed by a photographer. Claimant sees him in the bushes, a scuffle ensues, and claimant receives a skull fracture as a result of a blow from the camera. Is this skull fracture nothing but an aggravation of the broken toe?" Larson, supra, § 68.34(b) at 13-123-124.