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                                 BRB Nos. 99-0680
                                   and 99-0992

PATTI FREEMAN                           )
                                        )
          Claimant-Respondent           )
                                        )
     v.                          )
                                        )
                                             DEPARTMENT OF NAVY/MWR                  )    DATE ISSUED:   03/22/2000
                                             
                                        )
          Self-Insured                  )
                                                       Employer-Petitioner           )    DECISION and ORDER

          Appeal of the Supplemental Decision and Order Awarding Attorney's Fees
     of Samuel J. Smith, Administrative Law Judge, United States Department
     of Labor, and the Compensation Order-Award of Attorney Fees of Joyce L.
     Terry, District Director, United States Department of Labor.

          Diane L. Middleton (Law Offices of Diane L. Middleton), San Pedro,
     California, for claimant.

          Christopher M. Galichon (Dupree, Galichon & Associates), San Diego,
     California, for employer.

          Before: HALL, Chief Administrative Appeals Judge, SMITH and BROWN,
     Administrative Appeals Judges.

          PER CURIAM:

     Employer appeals the Supplemental Decision and Order Awarding Attorney's Fees
(97-LHC-2850) of Administrative Law Judge Samuel J. Smith and the Compensation
Order-Award of Attorney Fees (Case No. 18-056276) of District Director Joyce L.
Terry rendered on a claim filed pursuant to the provisions of the Longshore and
Harbor Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq.
(the Act).[1]    The amount of an attorney's fee
award is discretionary and may be set aside only if the challenging party shows it
to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.
See, e.g., Muscella v. Sun Shipbuilding & Dry Dock Co., 12 BRBS 272 (1980).
     Claimant was injured when she tripped over a cord on the floor and fell into
a counter.  She immediately sought treatment and was eventually referred to a
neurosurgeon, who performed a cervical diskectomy, a route decompression, and a
fusion of C4-5 and C5-6 on May 9, 1994.  Claimant underwent a second operation on
July 5, 1995.  Claimant, who was still working for employer at the time of the
hearing, sought benefits under the Act.

     In his Decision and Order, the administrative law judge found that claimant
has no current loss in wage-earning capacity, but that there is a significant
potential that her injury will cause diminished earning capacity in the future.[2]   Thus, the administrative law judge awarded
claimant nominal permanent partial disability benefits in the amount of $2.85 per
week. See Metropolitan Stevedore Co. v. Rambo [Rambo II], 521 U.S. 121, 31
BRBS 54(CRT) (1997). The administrative law judge also granted employer a
credit  pursuant to Section 14(j) of the Act, 33 U.S.C. §914(j), in the amount
of $869.04, as a result of its overpayment of temporary total disability benefits.

     Subsequently, claimant's attorney filed a petition with the administrative law
judge for a fee in the amount of $15,193.75, representing 10.75 hours at the hourly
rate of $125 and 69.25 hours at the hourly rate of $200.  In addition, counsel
requested $2,364.50 in costs.  The administrative law judge considered and rejected
employer's objections based on claimant's limited success, and thus awarded the
full amount requested, $17,558.25.  In addition, claimant's counsel filed a fee
petition for work performed before the district director.  The district director
rejected employer's objections based on claimant's limited success and awarded a
fee in the amount of $5,393.75.

     On appeal, employer contends that the administrative law judge and district
director erred in failing to reduce the amount of the attorney's fees based on
claimant's limited success.  In addition, employer contends that it is not liable
for any fee before the administrative law judge after the date it offered to settle
the case for an amount greater than that ultimately awarded by the administrative
law judge.  Claimant responds, urging affirmance of the awards of attorney's fees.

     Initially, employer contends that the administrative law judge erred in
finding it liable for claimant's attorney's fee after the date of its tender offer,
March 30, 1998.  In general, an attorney's fee can  be assessed against employer
pursuant to Section 28 of the Act only when employer has declined to pay some
benefits and claimant thereafter successfully pursues a claim. See Flowers v.
Marine Concrete Structures, Inc., 19 BRBS 162 (1986); National Steel &
Shipbuilding Co. v. United States Department of Labor, 606 F.2d 875, 11 BRBS
68 (9th Cir. 1979).  Section 28(b), 33 U.S.C. §928(b), specifically provides
that when employer pays or tenders payment of compensation without an award, and
the employee refuses to accept such payment or tender, employer will be liable for
an attorney's fee only if the employee successfully obtains greater compensation
than that paid or tendered by employer. See Armor v. Maryland Shipbuilding & Dry
Dock Co., 19 BRBS 119 (1986).

     In the present case, the administrative law judge noted that employer offered
to settle the claim based upon a ten percent loss in wage-earning capacity,
including payment of future medical benefits and a reasonable attorney's fee, in
a letter dated March 30, 1998.  Supplemental Decision and Order at 2.  It is not
contested that claimant did not accept this offer, and was ultimately awarded
nominal permanent partial disability benefits of $2.85 per week, which is one
percent of claimant's average weekly wage.  The administrative law judge found that
the March 1998 offer did not specify whether it was for benefits for a ten percent
permanent partial disability, or for a ten percent
temporary partial disability.[3]  
Thus, as the administrative law judge found that the offer was deficiently vague,
he found that it did not serve to sever employer's liability for claimant's
counsel's fee.

     The evidence, however, indicates that claimant was seeking two periods of
temporary partial disability benefits, i.e., from July 25, 1994, to July 5,
1995, and from September 11, 1995, to March 28, 1996, and continuing permanent
disability benefits thereafter.  The parties do not dispute that claimant's
condition reached maximum medical improvement on March 29, 1996.  Decision and
Order at 3.   The administrative law judge did not address the timing of employee's
offer in finding that the nature of the benefits that were offered by employer in
March 1998 was unclear.  As the administrative law judge did not consider that claimant's
condition had reached permanency prior to the date of the offer in construing it,
we vacate the administrative law judge's finding that employer's offer of March
1998 did not serve to sever employer's liability for claimant's counsel's fee
thereafter and remand the case to the administrative law judge for further
consideration.  If the administrative law judge finds that employer's offer was a
valid tender, then employer is liable only for a reasonable fee for work performed
prior to the offer.  The attorney's fee for work performed thereafter may be
assessed against claimant as a lien on the compensation award.[4]   See 33 U.S.C. §928(c); Ryan v.
Newport News Shipbuilding & Dry Dock Co., 19 BRBS 208 (1987).  When assessing
a fee against claimant, the administrative law judge must consider the financial
circumstances of claimant in his award.  20 C.F.R. §702.132(a). 

     Employer also contends that the administrative law judge and district director
erred in rejecting its contentions that the amount of the fee awards should be
reduced as claimant achieved only limited success in pursuing her claims.  We agree
with employer that the amount of the fees awarded by the administrative law judge
and the district director to claimant's counsel cannot be affirmed.  Specifically,
in light of the decision of the United States Supreme Court in Hensley v.
Eckerhart, 461 U.S. 424 (1983), we hold that the fee awards must be vacated,
and the case remanded for further consideration on this issue.  In Hensley,
a plurality of the Supreme Court defined the conditions under which a plaintiff who
prevails on only some of his claims may recover attorney's fees under the Civil
Rights Attorney's Fees Awards Act of 1976, 42 U.S.C.  §1988.  Specifically,
the Court created a two-prong test focusing on the following questions:

          First, did the plaintiff fail to prevail on claims that were unrelated
     to the claims on which he succeeded?  Second, did the plaintiff achieve
     a level of success that makes the hours reasonably expended a
     satisfactory basis for making a fee award?

Hensley, 461 U.S. 434; see also George Hyman Construction Co. v.
Brooks, 963 F.2d 1532, 25 BRBS 161 (CRT);  General Dynamics Corp. v.
Horrigan, 848 F.2d 321, 21 BRBS 73 (CRT)(1st Cir. 1988), cert. denied,
488 U.S. 997 (1988).  Where claims involve a common core of facts, or are based on
related legal theories, the Court stated that the district court should focus on
the significance of the overall relief obtained by the plaintiff in relation to the
hours reasonably expended on litigation.  If a plaintiff has obtained "excellent"
results, the fee award should not be reduced simply because he failed to prevail
on every contention raised.  If the plaintiff achieves only partial or limited
success, however, the product of hours expended on litigation as a whole, times a
reasonable hourly rate, may result in an excessive award.  Therefore, the fee award
should be for an amount that is reasonable in relation to the results obtained.
Hensley, 461 U.S. at 435-436.

     In the instant case, the administrative law judge rejected employer's
contentions regarding the limited success of claimant's counsel, finding that
claimant was successful in establishing permanent partial disability benefits and
that the significance of an award of continuing permanent disability benefits
"cannot be understated."  However, claimant was seeking permanent partial
disability benefits based on a loss in wage-earning capacity of 60 percent.[5]   Instead, the administrative law judge found that
claimant is entitled to a nominal award in the amount of $2.85, or one percent of
her average weekly wage.  In addressing the fee, the administrative law judge found that
claimant's success was greater than the present nominal dollar value, as by
obtaining continuing permanent partial disability benefits, claimant preserved her
claim for modification pursuant to Section 22 of the Act, 33 U.S.C. §922,  and
the administrative law judge stated that there is clear potential for claimant's
disability to increase as her condition worsens over time.  While the administrative
law judge could properly rely on these facts to find that a strict dollar comparison
does not fully reflect claimant's success, this determination does not justify his
award of the entire fee sought or his failure to analyze the fee request as
required by Hensley.  In particular, the disparity between the extent of
disability sought by claimant and the extent of disability found by the
administrative law judge must be considered.  Therefore, we vacate the
administrative law judge's finding that the fee should not be reduced to reflect
claimant's limited success.  On remand, the administrative law judge must
reconsider the amount of the fee award pursuant to the holding in Hensley.

     In addition, the district director concluded that "although the benefits are
less than what was initially sought, and the employer has a credit, which will
defer beginning payment for some time, the claimant did prevail."  Compensation
Order at 2.  As the district director did not consider the significance of the
overall relief obtained by claimant in her determination of claimant's success in
pursuing the case, the district director's award of an attorney's fee similarly is
vacated, and the case is remanded for further consideration pursuant to
Hensley.

     Accordingly, the attorney's fee awards of the administrative law judge and the
district director are vacated, and the case is remanded for further consideration.

     SO ORDERED.



                                                                                                      
                         BETTY JEAN HALL, Chief
                         Administrative Appeals Judge


                                                                                                      
                         ROY P. SMITH
                         Administrative Appeals Judge


                                                                                                      
                         JAMES F. BROWN
                         Administrative Appeals Judge

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Footnotes.


1) 1Pursuant to employer's request, BRB No. 99-680 and BRB No. 99-992 were consolidated by Order dated July 2, 1999, for purposes of this decision. See 20 C.F.R. §802.104 Back to Text
2) 2During the course of the hearing, employer conceded that claimant would be entitled to nominal benefits equal to one percent of her average weekly wage. Tr. at 110-111. Back to Text
3) 3The administrative law judge found that if the offer was for temporary partial disability, claimant was successful in obtaining greater benefits than those offered as she was awarded continuing permanent partial disability benefits, as temporary partial disability benefits terminate after five years. See 33 U.S.C. §908(e). Back to Text
4) 4However, employer is liable for the payment of any attorney's fee prior to the date of the tender offer as a controversy remained until that time. See Rihner v. Boland Marine & Manufacturing Co., 24 BRBS 84 (1990), aff'd, 41 F.3d 997, 29 BRBS 43 (CRT)(5th Cir. 1995). Back to Text
5) 5Claimant argued, in the alternative, that she is entitled to permanent total disability benefits. Back to Text

NOTE: This is an UNPUBLISHED LHCA Document.

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