Supplemental Brief — Morrison-Knudsen Constr. Co. v. Director, Office of Workers' Compensation Programs

ARGONAUT INSURANCE COMPANY,

. Petiti

Dmector, OFFICE OF WORKERS’ COMPENSATION

ProcRsMs, UNITED STATES DEPARTMENT OF LABOR,

and

Sonia Hun. vnn, Wmow or JAMES H. HILyER,

Respondenis.

In THE

Supreme Court of the United States

OcTosER TERM, 1981

No. 81-1891

MORRISON-KNUDSEN CONSTRUCTION COMPANY,

and

ARGONAUT INSURANCE COMPANY,

* Petitioners,

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,

and

SonrA HILYER, Wipow OF JAMES H. HILYER,

Respondents.

PETITIONERS’ SUPPLEMENTAL MEMORANDUM

If there had been any doubt that the opinion below

would have a far-reaching and unsettling influence upon

the law of workers’ compensation, that doubt has now

been laid to rest by the Ninth Circuit’s ruling on Septem-

ber 14, 1982, in Duncanson-Harrelson Co. v. Director,

Nos. 79-7093 and 79-7094. A copy of that ruling is

printed as an Appendix hereto.

The Ninth Circuit, in Section V of its opinion, has

fully adopted and endorsed the opinion below. Thus, the

District of Columbia Circuit’s conclusion is now the law

throughout the Ninth Circuit, where, as noted i- our

In our Reply Brief in the instant case, we stated (p. 3) that

the Ninth Circuit had not yet calendared Duncanson-Harrelson for

argument. This statement was based upon an assurance by counsel

for one of the appellants in the case. We are now told that counsel

misunderstood the inquiry and thought that, since the case had been

pending for almost two years, the question was whether the case

would be re-calendared for argument.

Reply Brief (p. 4), it is not uncommon for a single em-

ployer to contribute to eight different union funds. Pay-

ments to all of these funds, as well as others, are now

incorporated into the definition of “wages” in the

LHWCA.

The Ninth Circuit appears to concede that when Con-

gress passed the LHWCA in 1927, it did not intend for

payments to union funds to be included in the definitions

of “wages” or “average weekly wage.” Thus, after noting

in a footnote (n.7) the argument of the Labor Depart-

ment that this Court’s decision in Potomac Electric

Power Co, v. Director, 449 U.S. 268 (1980) “supports

the view that we must interpret the term ‘wages’ accord-

ing o the definition that was commonly accepted in

1927,” the court added, “We disagree.” But the Ninth

Cire t does not cite any legislative history—nor is there

any—for the proposition that Congress changed its mind

after 1927. We respectfully submit, therefore, that the

Ninth Circuit’s ruling amounts to judicial legislation.

We urge this Court to grant certiorari to resolve a

serious matter in the compensation field that has now

taken on national implications.

Respectfully submitted,

E. BARRETT PRETTYMAN, JR.*

HOGAN & HARTSON

815 Connecticut Avenue, N.W.

Washington, D.C. 20006

(202) 331-4685

ARTHUR LARSON

Duke University School of Law

Durham, North Carolina 27706

(919) 684-2834

RICHARD W. GALIHER, JR.

GALIHER, CLARKE, MARTELL

& DONNELLY

1215 - 19th Street, N.W.

Washington, D.C. 20086

(202) 331-8330

* Counsel of record Counsel for Petitioners

la

APPENDIX

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. CA 79-7093

No. BRB 76-314

DUNCANSON-HARRELSON COMPANY and

EMPLOYERS MUTUAL LIABILITY INSURANCE

COMPANY OF WAUSAU,

Petitioners,

vs.

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,

Respondent,

and

NANCY A. FREER,

Claimant.

No. CA 79-7094

No. BRB 76-314A

NANCY A. FREER,

Petitioner,

vs.

UNITED STATES DEPARTMENT OF LABOR, OFFICE OF

WORKERS’ COMPENSATION PROGRAMS,

Respondent.

[Filed Sept. 14, 1982]

2a

Petition to Review a Decision of the

Benefits Review Board

United States Department of Labor

Argued December 10, 1980

Submitted April 6, 1982

Before: TRASK and ANDERSON, Circuit Judges, and

STEPHENS,” District Judge

OPINION

TRASK, Circuit Judge:

Claimant Freer challenges the amount of compensation

awarded her under the Longshoremen’s and Harbor

Workers’ Compensation Act, 33 U.S.C. §§ 901-950

(1976) (Act or LHWCA), by the Benefits Review

Board (BRB). Freer’s husband (the decedent) was em-

ployed as a pile driver and was killed over navigable

waters while cutting pilings for the construction of a

pier. Freer asserts that the Administrative Law Judge

(ALJ) and the BRB erred in determining the amount of

compensation by applying the wrong subsection of 33

U.S.C. § 910 and by failing to include employer contribu-

tions to the union pension and health funds as part of

decedent’s wages.

Defendants Duncanson-Harrelson Company and its lia-

bility insurer (collectively D-H) also appeal urging that

the decedent was not covered by the Act. D-H argues

alternatively that decedent did not meet the Act’s test of

* Honorable Albert Lee Stephens, Jr., Senior United States Dis-

trict Judge for the Central District of California, sitting by designa-

tion.

3a

coverage or that he belonged to a class of employees

specifically excluded.

I. FACTS

David W. Freer, the decedent, was killed while work-

ing as a pile butt or pile driver on the expansion of the

oil tanker docking facilities operated by Pacific Gas &

Electric Company in Pittsburg, California. The dock

extends into Suisun Bay, a body of navigable water, and

D-H was expanding the facilities at the Pittsburg dock

to accommodate a rising volume of fuel oil deliveries.

Decedent was employed by D-H and was fatally injured

when the top of a dolphin piling he was cutting fell on

him. The dolphin was located in 35 feet of water, ap-

proximately 25 feet from the nearest dock.“

Decedent's wife was awarded death benefits by the

ALJ who found that the decedent was killed over navi-

gable waters, that he was engaged in maritime employ-

ment and was therefore an employee within section 2(3)

of the Act. The ALJ also found that decedent was not a

member of the crew of the crane barge on which he

worked. The ALJ applied section 10(c) of the Act to

determine decedent’s average weekly wage in the amount

of $368.64.

Both D-H and the claimant appealed the decision of

the ALJ to the BRB. D-H challenged the findings that

decedent was engaged in maritime employment and that

he was not a member of the crew of a vessel. The claim-

ant sought review of the average weekly wage computa-

tion arguing that the ALJ erred in applying section 10

(e) rather than section 10(a) of the Act in determining

the amount. Claimant also urged that the ALJ erred in

failing to include certain fringe benefits in the compu-

1A dolphin is a free standing pier consisting of metal, concrete

or wooden pilings which support a concrete deck. Dolphins are used

as temporary docks and as abutments.

4a

tation of decedent’s earnings. The BRB affirmed the

decision of the ALJ. The parties press the same argu-

ments in their appeal to this court.

II. STANDARD OF REVIEW

The Findings of Fact of the ALJ are reviewed by the

BRB under the “substantial evidence” standard. 33

U.S.C. § 921(b) (3). The courts have held that the BRB

must accept the ALJ’s ceterminations unless they are

contrary to the law, irrational, or unsupported by sub-

stantial evidence. E.., Director (OWCP) v. Campbell

Industries, 678 F.2d 836, 838 (9th Cir. 1982). We must

review BRB decisions for “ ‘errors of law and for adher-

ence to the statutory standard governing the Board’s re-

view of the administrative law judge’s factual determi-

nations.’” Id., citing Bumble Bee Sea Foods v. Director

(OWCP), 629 F.2d 1327, 1329 (9th Cir. 1980). In

Duncanson-Harrelson Co. v. Director (OWCP), 644 F. ad

827, 830 (9th Cir. 1981), this court indicated that the

BRB’s determinations should be given deference since an

administrative agency’s interpretation of the statute

which it administers is deserving of considerable respect.

644 F.2d at 830. See, e.g. E. I. duPont de Nemours & Co.

v. Collins, 482 U.S. 194, 209 (1947). The Supreme Court,

however, has noted that because the BRB does not make

policy, its interpretations of the LHWCA sre not entitled

to any special deference. Potomac Electric Powe, Co. v.

Director (OWCP), 449 U.S. 268, 278 n.18 (1980).

III. COVERAGE OF DECEDENT UNDER 7. = ACT

A. Maritime Employment

Before the 1972 amendments to the Act, a single

geographic test (the “situs” requirement) governed cov-

erage. An employee was entitled to benefits if he was

injured while working on or over navigable waters of the

United States, even though his occupation was not “mari-

time.” P. C. Pfeiffer Co. v. Ford, 444 U.S. 69, 72 (1979).

5a

There was also a requirement that the worker’s employer

have at least one employee, not necessarily the injured:

one, engaged in maritime employment. Northeast Marine

Terminal Co. v. Caputo, 432 U.S. 249, 264 (1977). Be-

cause most of those who employ workers for jobs on or

over navigable waters also employ someone in a tradi-

tional maritime capacity, this second requirement was

nearly always met, leaving the situs test as the only

operative limitation on coverage.

The 1972 amendments expanded the definition of

“navigable waters” to include “any adjoining pier, wharf,

dry dock, terminal, building way, marine railway, or

other adjoining area customarily used by an — in

loading, unloading, repairing or building a vessel .

33 U.S.C. § 903 (a). See Caputo, 432 U.S. at 260-64. But

an injury sustained in this expanded area is covered only

if the employee was engaged in “maritime employment”

which includes “any longshoreman or other person en-

gaged in longshoring operations, and any harborworker

including a ship repairman, shipbuilder, and shipbreaker”

but not “a master or member of any vessel or any person

engaged by the master to load or unload or repair any

small vessel under eighteen tons net.” 33 U.S.C. § 902(3).

In Weyerhaeuser Co. v. Gilmore, 528 F.2d 957 (9th

Cir. 1975), cert. denied, 429 U.S. 868 (1976), this court

held that in order for an injured employee’s work to be

considered “maritime,” it “must have a realistically sig-

nificant relationship to ‘traditional maritime activity in-

volving navigation and commerce on navigable waters,“

.... Id. at 961, quoting Executive Jet Aviation, Inc. v.

City of Cleveland, 409 U.S. 249, 272 (1972). Although

2 We note that the Fifth Circuit in a recent en bane decision

reexamined the Weyerhaeuser interpretation of “maritime employ-

ment” and, based on the legislative history of the 1972 amendments

to the Act, rejected the view that Congress intended to withdrew

coverage from workers who previously were entitled to benefits

based on the “situs” test alone-—i.c. workers injured on navigable

6a

D-H argues that the decedent’s employment as a pile

driver on a marine construction project fails to satisfy

the Weyerhaeuser test for “maritime employment,” we

recently stated that the Act covers workers involved in

construction related to maritime activities. Schwaben-

land v. Sanger Boats, Nos. 81-7064, 81-7075, slip op. at

3345 (9th Cir. July 26, 1982). In Duncunson-Harrelson

Co. v. Director (OWCP), 644 F.2d 827, 830 (9th Cir.

1981), a case involving facts very similar to the present

appeal, we upheld the finding of the BRB that two em-

ployees, injured while constructing an off-shore dock for

the unloading of oil from tankers, were engaged in mari-

time employment. One of the claimants was constructing

a dolphin when his injury occurred. Similarly, the dece-

dent in the present case was killed when the top of a

dolphin piling he was cutting fell on him.

B. Member of a Crew of a Vessel

D-H argues that decedent was a crew member as de-

fined by section 2(3) of the Act, 33 U.S.C. § 902(3).

Section 2(3) provides that “the term ‘employee’ means

any person engaged in maritime employment . , but

such term does not include a master or member of a

crew of any vessel... To find that an employee is a

waters whose employment was not maritime in nature. Boudreaux

v. American Workover, Inc., 680 F.2d 1034 (5th Cir. 1982). The

result in this appeal would be the same regardless of whether the

Ninth or the Fifth Circuit’s interpretation is applied: we find

decedent’s employment to be “maritime” even under the narrower

Weyerhaeuser standard. The debate over the scope of “maritime

employment” will be resolved when the Supreme Court reviews the

Second Circuit’s decision in Churchill v. Perini North River Asso-

ciates, 652 F.2d 255 (2d Cir. 1981), cert. granted sub nom. Director

(OWCP) v. Perini North River Associates, 102 S. Ct. 1425 (1982).

In Perini, the Second Circuit denied compensation under the Act

to workers injured over navigable waters who were engaged in the

construction of a sewage treatment plant. The court held that the

work on the sewage treatment facility did not constitute “maritime

employment.”

Ta

member of a crew excluded from coverage, the court must

conclude that the vessel is in navigation, that the worker

had a permanent connection with the vessel and that the

employee was aboard the vessel primarily to aid in navi-

gation. Griffith v. Wheeling Pittsburgh Steel Corp., 521

F.2d 31, 36 (3d Cir. 1975), cert. denied, 423 U.S. 1054

(1976) ; accord, Burks v. American River Transportation

Co., 679 F.2d 69, 75-76 (5th Cir. 1982). Whether the

decedent was a master or crew member is primarily a

question of fact. Longmire v. Sea Drilling Corp., 610

F.2d 1342, 1345 (5th Cir. 1980); Wilkes v. Mississippi

River Sand & Gravel Co., 202 F.2d 383, 389 (6th Cir.),

cert. denied. 346 U.S. 817 (1953). Thus, the finding of

the ALJ that decedent was not a member of a crew must

be affirmed if it is supported by substantial evidence.

South Chicago Coal & Dock Co. v Basset, 309 U.S. 251,

257 (1940); Hardaway Contracting Co. v. O'Keeffe, 414

F.2d 657, 660-61 (5th Cir. 1968). The Supreme Court in

Bassett stated that the question turns upon the employee’s

actual duties and held that the claimant’s employment did

not aid in navigation except for the incidental task of

throwing the ship’s rope or securing the line—duties

which could be performed by any harbor worker. 309

U.S. at 260. The ALJ in this case made similar findings

regarding decedent Freer’s duties. The ALJ stated:

Decedent] did not have a permanent connection

with the barge. He neither ate nor slept on the

barge. In addition, he was not aboard the barge

primarily to aid in navigation. See Ryan [v. McKie

Co., 1 BRBS 221 (1975)]. Anything he did in this

regard was incidental te his primary work as a pile

butt. As the Court noted in South Chicago Coal &

Dry Dock Co. v. Bassett, 309 U.S. 251, 60 S. Ct. 544,

549, ‘They were persons serving on vessels, to be

sure, but their service was not of laborers . . . and

thus distinguished from those employees on the vessel

who are naturally and primarily on board to aid in

her navigation.’ Moreover, it is not without signifi-

8a

cance that at the time of his death Mr. Freer was

not even aboard the barge but instead was standing

on the dolphin.

C.T., Vol. I at 198. The determination of the ALJ that

decedent was not a member of a crew was upheld by the

BRB. We affirm on the basis that the findings of the

ALJ are supported by substantial evidence.

IV. APPLICATION OF SECTION 910(c)

Claimant challenges the use of subsection (c) of sec-

tion 910 of the Act and urges that subsections (a) or

(b) should be applied to compute the decedent’s average

annual earnings.“ The parties disagree on whether the

333 U.S.C. §§ 910(a), (b), (e) provide in pertinent part:

(a) If the injured employee shall have worked in the employ-

ment in which he was working at the time of the injury,

whether for the same or another employer, during substantially

the whole of the year immediately preceding his injury, his

average annual earnings shall consist of three hundred times

the average daily wage or salary for a six-day worker and two

hundred and sixty times the average daily wage or salary for

a five-day worker, which he shall have earned in such employ-

ment during the days when so employed.

(b) If the injured employee shall not have worked in such em-

ployment during substantially the whole of such year, his aver-

age annual earnings, if a six-day worker, shall consist of three

hundred times the average daily wage or salary, and, if a five-

day worker, two hundred and sixty times the average daily wage

or salary, which an employee of the same class working sub-

stantially the whole of such immediately preceding year in the

same or in similar employment in the same or a neighboring

place shall have earned in such employment during the days

when so employed.

(c) If either of the foregoing methods of arriving at the

average annual earnings of the injured employee cannot rea-

sonably and fairly be applied, such average annual earnings

shall be such sum as, having regard to the previous earnings

of the injured employee in the employment in which he was

working at the time of the injury, and of other employees of

the same or most similar class working in the same or most

9a

issue is one of law or fact. We consider the nature of

the decedent’s work and the details of his employment to

be factual findings. Whether particular facts fit within

the meaning of certain legal terms is a question of law.

Cf. Estate of Franklin v. Commissioner, 544 F.2d 1045,

1047 n.3 (9th Cir. 1976) (characteristics of transaction

are questions of fact, but whether such characteristics

constitute a “sale for tax purposes” is a question of law) ;

K. Davis, Administrative Law Treatise § 30.01 (3d ed.

1972) (circumstances of arrest are questions of fact, but

whether such circumstances amount to “probable cause”

is a question of law). But cf. Parkside, Inc. v. Commis-

sioner, 571 F.2d 1092, 1094-95 & n.5 (9th Cir. 1977)

(two judges concurred in result, no majority rationale)

(whether realty was held “primarily for sale in the

ordinary course. . of trade or business” is a question

of fact arguably mixed with law, subject to the “clearly

erroneous” standard of review).

To determine whether the ALJ applied the correct sub-

section of section 910 in computing decedent’s average

annual earnings, we must examine whether the employ-

ment in which decedent was engaged at the time of his

injury was permanent and continuous, or seasonal and

intermittent. O’Hearne v. Maryland Casualty Co., 177

F.2d 979, 980-81 (4th Cir. 1949). Courts must consider

the type of job the worker held when he was injured, not

his personal employment history. Id. Permanent and

continuous job fall under subsections (a) or (b), whereas

seasonal and intermittent jobs fall under (c. Palacios v.

Campbell Industries, 633 F.2d 840, 842 (9th Cir. 1980) ;

Strand v. Hansen Seaway Service, Ltd., 614 F.2d 572,

575 (7th Cir. 1980); Tri-State Terminals, Inc. v. Jesse,

596 F.2d 752, 754-55, 756 & n.3 (7th Cir. 1979);

similar employment in the same or neighboring locality, or

other employment of such employee, including the reasonable

value of the services of the employee if engaged in self-

employment, shall reasonably represent the annua) earning

capacity of the injured employee.

10a

O’Hearne v. Maryland Casualty Co., 177 F.2d at 980-

81; Marshall v. Andrew V. Mahony Co., 56 F.2d 74, 76-

78 (9th Cir. 1932). Thus, for the ALJ to conclude, based

on the decedent’s employment history, that claimant’s

benefits should not be computed under either subsections

(a) or (b) was error. We find, however, for the reasons

set forth below that this was not a reversible error.

Assuming that decedent’s job should have been classi-

fied permanent and continuous, whether the decedent was

employed for “substantially the whole of the year” im-

mediately preceding his injury determines which of sub-

sections (a) or (b) should be applied. Palacios v. Camp-

bell Industries, 633 F.2d at 842; O’Hearne v. Maryland

Casualty Co., 177 F.2d at 981-82; see California Ship

Service Co. v. Pillsbury, 175 F.2d 873, 876 (9th Cir.

1949). Compare 33 U.S.C. §910(a) (“if the injured

employee shall have worked. . . during substantially the

whole of the year“) with 33 U.S.C. §910(b) (“if the

injured employee shall not have worked. .. during sub-

stantially the whole of the year”). Subsection (a) com-

putes an average daily wage based on the claimant’s ac-

tual employment history, whereas subsection (b) com-

putes this figure using the hypothetical history of a typi-

cal worker engaged in similar employment in the same

general locality. Subsection (b) applies to claims in

which the injured worker ha: had too little time on the

job to permit an accurate and fair computation of average

daily wage: for example, the subsection would apply if

a worker had been recently hired after having been un-

employed, or out of the work force, or in a lower paying

position. See O’Hearne v. Maryland Casualty, 177 F.d at

982; California Ship Service Co. v. Pillsbury, 175 F.2d

at 876. In this case, the decedent has been on the job

for several years, and the evidence in the record is suffi-

cient to enable computation of his average daily wage

based on his own employment record. Thus, the ALJ

should have found that decedent worked “substantially

lla

the whole of the year,” and claimant’s benefits initially

should have been determined under subsection (a).

We find, however, that the ALJ’s decision to compute

claimant Freer’s benefits under subsection (c) rather

than subsection (a) should be affirmed because the dece-

dent’s actual employment history indicates that applica-

tion of subsection (a) would provide excessive compensa-

tion. Because subsections (a) or (b) are premised on

the injured employee having worked the entire year with-

out injury, computation of benefits under either of these

subsections for a worker in seasonal employment would

result in overcompensation. National Steel & Shipbuild-

ing Co. v. Bonner, 600 F.2d 1288, 1291 (9th Cir. 1979) ;

Tri-State Terminals, Inc. v. Jesse, 596 F.2d at 757-58;

O’Hearne v. Maryland Casualty Co., 177 F.2d at 981;

Marshall v. Andrew F. Mahony Co., 56 F.2d at 76-78.

Similarly, the courts have held that even if the worker’s

employment is permanent and continuous, computation

of the average annual wage must be determined pur-

suant to subsection (c) if (a) or (b) cannot “reasonably

or fairly be implied.” 33 U.S.C. §910(c). Palacios v.

Campbell Industries, 633 F.2d at 842; National Steel &

Shipbuilding, supra, at 1291; Marshall, supra, at 76-78;

see Todd Shipyards v. Director (OWCP), 545 F.2d 1176,

1179 (9th Cir. 1976). This can occur when there is

insufficient evidence in the record to enable the ALJ to

make an accurate computation under subsections (a) or

(b), National Steel & Shipbuilding, supra at 1291; Todd

Shipyards, supra, at 1179, or when such computation

results in excessive compensation of the claimant in light

of the injured worker’s actual employment record. John-

son v. Britton, 290 F.2d 355, 357-59, (D.C. Cir.), cert.

denied, 368 U.S. 859 (1961); Marshall, supra, at 78

(dicta); see Tri-State Terminals, supra, at 756. Al

though both possibilities are present here, we affirm the

use of section 910(c) based on our finding that compu-

tation of Freer’s benefits under subsections (a) or b)

would result in overcompensation and we do not reach

12a

the question of whether the evidence claimant introduced

to show the earnings of a typical pile butt was insufficient.

Both subsections (a) and (b) compute the average an-

nual wage of an employee working a five-day week by

multiplying the worker’s average daily wage by 260 (5

days a week x 52 weeks). Thus, if a claimant has

worked less than 260 days in the year preceding his

injury, he is overcompensated under subsection (a) or

(b). When Congress amended section 910 of the Act in

1948 to reflect the five-day work week, it undoubtedly

was aware that virtually no one in the country works

every working day of every week; there are many rea-

sons including illness, vacations, strikes, unemployment,

family emergencies, etc. We can infer that Congress

knew that both subsections (a) and (b) would result in

some overcompensation, but retained the 260-day factor

for administrative convenience. See generally O’ Hearne

v. Maryland Casualty Co., 177 F.2d at 982. But in Pills-

bury v. Pacific Steamship Co., 56 F.2d 74, 78 (9th Cir.

1932), the court explained:

[I]t is not reasonable or fair to apply subdivisions

(a) or (b) when to do so would result in ascertain-

ing a mere theoretical earning capacity, having no

regard to the actual facts of the case, but which

would award arbitrarily to an injured laborer dis-

ability compensation in excess of what he was able

to earn if at work, as shown by earnings.

Johnson v. Britton, 290 F.2d at 359.

Subsection (c) provides greater flexibility in deter-

mining an injured employee’s average annual earnings.

Consideration must be given to the previous earnings of

the injured worker at the job where the injury occurred,

the previous earnings of other workers in the locality

employed in similar jobs, and other employment of the

injured worker. 33 U.S.C. § 910 (e); Palacios v. Camp-

bell Industries, 633 F.2d at 842; National Steel and

Shipbuilding Co. v. Bonner, 600 F.2d at 1292. The ac-

13a

tual wages earned by the employee are not conclusive.

Palacios, supra, at 843; National Steel and Shipbuilding,

supra, at 1292. “It is manifest that the prime objective

of §910(c) was to insure that compensation awards

would be based on accurate assessments of the claimant’s

earning capacity.” Palacios, supra, at 843, citing Tri-

State Terminals, Inc. v. Jesse, 596 F.2d at 756.

We do not believe that Congress contemplated over-

compensation as large as that, which would result in this

case if Freer’s benefits were to be calculated under sub-

sections (a) or (b). This is a question of line-drawing—

when does the disparity between the claimant’s actual

days worked and the 260-day factor became so large

that computation of the average annual wage under sub-

section (a) or (b) becomes unreasonable or unfair? If

Freer’s benefits are calculated under subsection (a),

claimant receives benefits for sixty-five (or 3344 percent)

more days than decedent actually worked. Because we

find this disparity is large enough to justify application

of subsection (c) in order to avoid excessive overcom-

pensation of Freer, we uphold the ALJ’s use of subsec-

tion (c).

V. EMPLOYER CONTRIBUTIONS TO

PENSION AND HEALTH FUNDS

The Act defines wages to include:

[T]he money rate at which the service rendered is

recompensed under the contract of hiring in force at

the time of the injury, including the reasonable value

of board, rent, housing, lodging, or similar advan-

tage received from the employer, and gratuities re-

ceived in the course of employment from others than

the employer.

33 U.S.C. § 902 (13) (emphasis added). Claimant Freer

urges that contributions to the union pension and health

funds made by D-H on behalf of the decedent are within

14⁴

the meaning of section 902 (13) and should have been

included in the ALJ’s calculation of the decedent’s aver-

age annual wage.“

The ALJ determined that these employer contribu-

tions are not wages under the Act. Under the collective

bargaining agreement, D-H paid its contributions directly

to the trust fund, not the individual employees, thus the

ALJ reasoned that “[t]his payment, which by its nature

is not capable of being converted to the immediate ad-

vantage of the employee, is not a ‘similar advantage’ to

‘board, rent, housing, lodging’ within the meaning of

section 2 (13).“ C. T., Vol. I at 202. The BRB affirmed,

stating that these benefits are too speculative to be in-

cluded in an employee’s wages because “the employee has

no entitlement to these benefits.” Id. at 6-7. The BRB

cited its previous decisions in Collins v. Todd Shipyards

Corp., 5 BRBS 334, BRB No. 76-177 (Jan. 5, 1977) and

Hilyer v. Morrison-Knudsen Co., 6 BRBS 754, BRB No.

76-410 (Sept. 30, 1977), rev’d, 670 F.2d 208 (D.C. Cir.

1981), petition for cert. filed sub nom. Morrison-Knudsen

Construction Co. v. Director, (OWCP), No. 18-1891

(April 13, 1982). In Hilyer, the Director of the Office of

Workers’ Compensation Programs (Director) successfully

argued before the court of appeals that employer con-

tributions to union pension plans should be included in

computing an injured employee’s average wage. 670 F.2d

at 211-13. Since that time, the Director has abandoned

the position argued in Hilyer and now urges this court

to hold that such payments are not wages. We do not find

any of the Director’s arguments for rejecting Hilyer

persuasive.

‘ D-H agreed to pay pension fund benefits in the following amounts

for each hour that each covered employee worked or was paid for,

whichever is greater: 80 cents for work performed until Septem-

ber 1, 1974; 85 cents for work from that date until April 1, 1975;

$1.15 for work from that date until July 1, 1975; $1.23 for work

performed thereafter.

15a

The Director correctly argues that the court must con-

sider the language of the statute, guided by the plain and

ordinary meaning of the words Congress used. Richards

v. United States, 369 U.S. 1, 9 (1961). But the Director

insists we must apply a narrow definition of wages which

excludes fringe benefits because when Congress enacted

the statute in 1927 it would not have considered such

benefits to be part of an employee’s wages.“ The Director

further argues that only by congressional amendment

could the Act’s description of “wages” be expanded to

include fringe benefits.“ Although the concept of wages

may have changed since 1927, we do not find that Con-

gress intended an inflexible meaning of “wages” in the

definition provided by section 902(13).’ Examining the

5 The Director relies on the definition of “wages” provided in

Webster's New International Dictionary 2863 (2d ed. 1957): “pay

given for labor, usually manual or mechanical, at short intervals,

as distinguished from salaries or fees.” Webster's second edition,

published originally in 1934, remained unchanged until the third

edition, published in 1961. See Webster's Third New International

Dictionary 6a, 7a (1961). In contrast the third edition states that

“wages” often include “amounts paid by the employer for insurance,

pension, hospitalization, and other benefits.” Id. at 2569.

The Director points to the legislative history of the 1964 amend-

ment to section 1 of the Davis-Bacon Act, 40 U.S.C. § 276a(b), as

indication that only by congressional amendment could the Act’s

definition of “wages” be expanded to include fringe benefits. While

it is true that Congress’ 1964 amendment defined wages to include

employer contributions to trust funds, the Davis-Bacon Act is dis-

tinguishable because prior to the 1964 amendment, the scatute did

not provide any specific articulation of “wages.” See Act of March 3,

1931, c. 411, § 1, 46 Stat. 1494; Act of Aug. 30, 1935, c. 825, 49

Stat. 1011; Act of June 15, 1940, c. 373, § 1, 54 Stat. 399; Act of

July 12, 1960, P.L. 86-624, § 26, 74 Stat. 418. Because Congress

envisioned the inclusion of certain fringe benefits in its definition

of “wages” under the LHWCA, we disagree with the Director’s

argument that new legislation is required to reflect modern con-

cepts of wages.

7 The Director contends that the Supreme Court’s decision in

Potomac Electric Power Co. v. Director (OWCP), 449 U.S. 268

16a

plain meaning of the language Congress used, we note

that several fringe benefits were listed ineluding the

reasonable value of board, rent, housing, lodging, or simi-

lar advantage received from the employer .” Id.

This language indicates a flexible definition encompassing

other fringe benefits not specifically mentioned by Con-

gress that provide the employee with a “similar advan-

tage.” Morerver, the standard of liberal construction of

the Act in favor of claimants suggests that Freer’s

broader interpretation of “wages” should be adopted to

include employer contributions to health and pension

plans. See Voris v. Eikel, 346 U.S. 328 (1953); Balti-

more & Philadelphia Steamboat Co. v. Norton, 284 U.S.

408, 414 (1932).

We agree with the court’s reasoning in Hilyer v. Mor-

-rison-Knudsen Construction Co., 670 F.2d at 211-13, that

the Act’s definition of “wages” includes the values re-

‘ceived from the employer that are easily identifiable and

(1980) (PEPCO), supports the view that we must interpret the

‘term “wages” according to the definition that was commonly ac-

cepted in 1927. We disagree.

In PEPCO, the court of appeals had held that computation of the

employee’s award under the Act’s schedule benefit provisions was

inappropriate because these provisions provided inadequate com-

pensation for claimant’s permanent partial disability. But the Su-

preme Court rejected computation under an altcrnative provision

and reaffirmed the applicability of the Act’s schedule benefit provi-

sions as enacted in 1927 to determine the claimant’s benefits. Al-

‘though acknowledging the “recent trend“ in workmen's compensa-

tion decisions away from the position that scheduled benefits are

exclusive, the Supreme Court found such flexibility unsupported by

the statute and inconsistent with Congress’ intent. Jd. at 276-80.

In the present appeal, we are not determining whether the provi-

sions of section 902(13) should be ignored in light of more modern

concepts of “wages” or decisions affording greater latitude. We

are interpreting a definition of “wages” which by its terms provides

some flexibility. Congress specifically listed several fringe benefits

in its definition o? wages and stated that other benefits providing

“similar advantage” should also be considered. See 33 U.S.C.

3 902(13).

17a

calculable. Although not expressly mentioned in section

902(13), the BRB has included such values as vacation

pay and overtime compensation within the Act’s concept

of “wages.” Id. at 211. In Hilyer, employer contribu-

tions to benefit funds were found to be identifiable, cal-

culable values and therefore included within “wages”

under the LHWCA. Id.

The court in Hilyer attached little significance to the

fact that the employer’s contributions were made directly

to the union benefit funds, not the employees, or that the

employees exercised no control over the day-to-day man-

agement of the funds. The court found that these pay-

ments provided substantial economic value because if the

employer did not provide health and pension benefits, the

employees would have to spend their own money to ac-

quire them. Id. at 211; see W. W. Cross v. NLRB, 174

F.2d 875, 878 (1st Cir. 1949). We agree that these con-

tributions represent “an important part of the employ-

ees’ total compensation, and an equally important part

of the employer’s labor costs.” Hilyer, supra, at 212 n.7.

The Director argues that the Court’s treatment of em-

ployer contributions in United States v. Carter, 353 U.S.

77 (1957), should not be interpreted to support claim-

ant’s position that the payments are wages under the Act.

In Carter, the Court held employer contributions to a

union benefit fund were part of the “sums justly due” to

employees under the Miller Act, 40 U.S.C. §§270a et

seg.“ The surety in Carter argued that employer con-

Section 1 (a) (2) of the Miller Act requires that before contracts

above $2,000 are awarded for construction involving public build-

ings, the contractor must post a payment bond with a satisfactory

surety “for the protection of all persons supplying labor and ma-

terial.” 40 U.S.C. § 270a (2).

Section 2(a) provides that “[e]very person who has furnished

labor or material in the prosecution of the work provided for in the

contract .. and who has not been paid in full therefor. . shall

heve the right to sue on such payment bond . for the sum or

sums justly due him... 40 U.S.C. § 2706(a) (emphasis added).

18a

tributions made directly to trust funds were not “wages”

owing to the employees and that its obligation had been

satisfied by payment of all “wages” owed to them. Id.

at 217. The Court, however, construed the contributions

to the health and pensior funds to be part of the con-

sideration that the employer agreed to pay its workers,

id. at 217-18, despite the terms of the trust agreement

which expressly stated that such payments were not to be

considered “wages” due the employees. Jd. at 214. Thus,

contract provisions which purported to define pension

fund contributions as something other than employee com-

pensation did not stop the Court from finding the pay-

ments to be “sums justly due” the employees.

Applying a common sense approach, the Court in

Carter reasoned that if the collective bargaining agree-

ment had specified that the employer would pay each

employee a certain amount above the prevailing wage,

and if the employee had in turn contracted with his union

to forward this amount to the pension fund, the contribu-

tion would be seen as part of the employee’s compensa-

tion. See id. at 217; Hilyer v. Morrison-Knudsen Con-

struction Co., 670 F.2d at 212. Similarly, we conclude

that the employer’s payments in the present case should

not be excluded from the computation of an employee’s

average weekly wage simply because D-H has eliminated

two unnecessary steps by agreeing to pay the contribu-

tions directly to the union benefit funds. Id.

The Director relies on United States v. Embassy

Restaurant, 359 U.S. 29 (1959), in which the Court

determined that benefit fund contributions were not en-

titled to the priority given to wages. . . due to work-

men” under the Bankruptcy Act. Although acknowledg-

ing that unions bargain for these contributions as part of

the employee’s total wage package and that decisions

under the National Labor Relations Act and the Social

Security Act had treated various fringe benefits as

“wages,” the Court emphasized that its construction of

19a

“wages .. due to workmen” must be governed by the

context of the Bankruptcy Act and by Congress’ purpose

in providing the priority. Jd. at 33. The Court expressed

concern that the protection afforded employees by the

priority given to their wages might be weakened if the

workers had to share their recovery with the benefits

plan. Id. at 33-34. Thus, the Court construed “wages

. . due to workmen” narrowly and found that Congress

did not intend to include other forms of compensation.

Id. at 35. Here, by contrast, the LHWCA expressly in-

cludes several forms of compensation within its definition

of “wages.” Hilyer v. Morrison-Knudsen Construction

Co., 670 F.2d at 213. Moreover, in accordance with the

Act’s remedial purpose, we find that Congress intended

to include all identifiable values provided to employees in

the formula for computing “wages” received in return

for their labor at the time of injury. Id.

In sum, we find that the contributions of D-H to the

union benefit plans must be included in the computation

of the decedent’s average weekly wage. Accordingly, the

portion of the BRB’s decision concerning employer con-

tributions is reversed and we remand to the BRB for the

computation of claimant’s benefits in a manner consistent

with this holding.

The ruling of the Benefits Review Board is AF-

FIRMED in part, REVERSED in part, and REMANDED.