TOPIC 8.7     Special Fund Relief

[ED. NOTE:  The following announcement by a federal agency may eventually affect the administration of the LHWCA on issues of suitable alternate employment and Section 8(f).]

Study of Hearing-Impaired Employees

            The National Institute for Occupational Safety and Health (NIOSH) plans to study methods of accommodation for hearing-impaired workers. The proposed study will look at an evaluation and intervention protocol used to accommodate noise exposed, hearing-impaired workers so they can continue to perform their jobs without further hearing loss. Results from the proposed study will be used to make recommendations to hearing health professionals and hearing conservation program managers on the auditory management of hearing-impaired workers. (69 Fed. Reg. 44537). Comments on the study were due within 30 days of the request's publication and can be sent to CDC Desk Officer, Human Resources and Housing Branch, New Executive Office Building, Room 10235, Washington, D.C., 20503.

[ED. NOTE:  The following announcement by a federal agency may eventually affect the administration of the LHWCA on issues of suitable alternate employment and Section 8(f).]

Obesity

            While not directly calling obesity a disease, Medicare has nevertheless adopted a new policy by abandoning its previous position that "obesity itself cannot be considered an illness." The new policy will not have an immediate impact on Medicare coverage and does not affect existing coverage of treatments of diseases resulting in or made worse by obesity. However, as requests for coverage of obesity treatments are made by the public, Medicare will review the scientific evidence about their effectiveness.

Back to Top

Topic  8.7.1    Special Fund Relief—Applicability and Purpose of Section 8(f)

Newport News Shipbuilding & Dry Dock Co. v. Harris-Smallwood, (Unpublished)(No. 02-1590) (4th Cir July 12, 2004).

            In this unpublished matter involving Sections 12 and 13, the Fourth Circuit provides a good discussion dealing with crediting testimony of witnesses and weighing contradictory evidence and Section 8(f).

Topic  8.7.1    Special Fund Relief--Applicability and Purpose of Section 8(f)

Weber v. S.C. Loveland Co. (Weber III), 35 BRBS 190 (2002).

            Previously in Weber I, 28 BRBS 321 (1994), and Weber II, 35 BRBS 75 (2001), the Board held that a worker (with status) injured in the Port of Kingston, Jamaica, had situs and therefore, was covered by the LHWCA. The now-insolvent employer had two insurance policies with different carriers. One policy insured the employer for LHWCA coverage within the U.S. and the other policy insured the employer in foreign territories, but did not include an LHWCA endorsement. Besides the issue of jurisdiction, at issue previously had been which of the two, if any, insurers was on the risk for longshore benefits at the time of the claimant's injury and is therefore liable for benefits.

            Of significance in Weber III are: (1) the issues of scope of authority to decide carrier issues and (2) whether the employer is entitled to Section 8(f) relief.

            In finding that it had authority to decide the matter, the Board distinguished Weber III from Temporary Employment Services, Inc. v. Trinity Marine Group, Inc. (TESI), 261 F.3d 456, 35 BRBS 92 (CRT) (5th Cir. 2001) (Contractual disputes between and among insurance carriers and employers which do not involve the claimant's entitlement to benefits or which party is responsible for paying those benefits, are beyond the scope of authority of the ALJ and the Board.). The Board noted that Weber III does not involve indemnification agreements among employers and carriers, but presents a traditional issue of which of the employer's carriers is liable.

            The Board also found that the employer was not in violation of Section 32 (failure to secure LHWCA insurance coverage) and thus could assert a Section 8(f) claim. The Director had argued that the employer was not entitled to Section 8(f) relief because the employer did not have longshore coverage in Jamaica. The Director cited the Board's decision in Lewis v. Sunnen Crane Services, Inc., 34 BRBS 57, 61 (2000), in which the Section 8(f)(2)(A) bar was applied to prevent an employer from obtaining Section 8(f) relief due to its non-compliance with Section 32, and argued that Lewis is dispositive of this issue.

            Employer disagreed and countered that it had sufficient coverage for all work-related injuries as of the date of the claimant's injury, because, as of that date, injuries which occurred in foreign territorial waters had not been held covered under the LHWCA. Accordingly, the employer argued that it complied with Section 32. The Board found that Lewis was distinguishable from Weber III and therefore, does not control. The Board found that in Weber III, the employer purchased insurance appropriate for covering the claimant's injuries under the statute and case law existing at that time. It was not until the Board's decision in Weber I that an injury in the Port of Kingston was explicitly held to be compensable under the LHWCA. In Weber I, the Board's holding rested on cases holding that "navigable waters of the United States" could include the "high seas." Thus, the Board held that Section 8(f)(2)(A) is not applicable to the facts of this case and does not bar the employer's entitlement to Section 8(f) relief.

Back to Top

Topic   8.7.6   Special Fund Relief–In Cases of Permanent Partial Disability, the Disability Must Be Materially and Substantially Greater than that Which Would Have Resulted from the Subsequent Injury Alone

Newport News Shipbuilding & Dry Dock Co. v. Ward, 326 F.3d 434 (4th Cir. 2003).

Newport News Shipbuilding & Dry Dock Co. v. Winn, 326 F.3d 427 (4th Cir. 2003).

Newport News Shipbuilding & Dry Dock Co. v. Pounders, 326 F.3d 455 (4th Cir. 2003).

Newport News Shipbuilding & Dry Dock Co. v. Cherry, 326 F.3d 449 (4th Cir. 2003).

            In these Section 8(f) claims, the employer failed to satisfy the contribution element and, therefore, the employer was not entitled to Section 8(f) relief.

            In Ward, the Fourth Circuit defined the “contribution element” of Section 8(f) criteria as follows:

            “...Third, [the employer must affirmatively establish] that the ultimate permanent partial disability materially and substantially exceeded the disability that would have resulted from the work-related injury alone in the absence of the pre-existing condition.”

            The Fourth Circuit noted that an employer can satisfy the contribution element only if it can quantify the type and extent of disability the employee would have suffered absent the pre-existing disability.  (In other words, an employer must present evidence of the type and extent of disability that the claimant would suffer if not previously disabled when injured by the same work-related injury.)  “The quantification aspect of the contribution element provides an ALJ with ‘a basis on which to determine whether the ultimate permanent partial disability is materially and substantially greater’ than the disability the employee would have suffered from the second injury alone.  Citing Director, OWCP v. Newport News Shipbuilding and Dry Dock Co. ( Harcum)  8 F.3d 175 at 185-86 (4th Cir. 1993), aff’d on other grounds, 514 U.S. 122 (1995).

            The court noted, “Importantly, in assessing whether the contribution element has been met, an ALJ may not merely credulously accept the assertions of the parties or their representatives, but must examine the logic of their conclusions and evaluate the evidence upon which their conclusions are based.”  Citing Director, OWCP v. Newport News Shipbuilding and Dry Dock Co. (Carmines) 138 F.3d 134 at 140 (4th Cir. 1998).

            In Ward, the doctor’s assertions were generalized and his overall conclusions lacked any supporting explanation.  The court found that in particular, his statement that the claimant would have been able to “return to light duty Shipyard work” if he had suffered only one of his back injuries “is conclusory and lacks evidentiary support.”  Simply noting that an earlier injury rates a minimum 5 percent permanent disability rating under the AMA Guides, fails to assess the level of the claimant’s disability that would have resulted from the later injury alone.

            In Winn, the Fourth Circuit again found that merely subtracting the extent of disability from the extent of the current disability is “legally insufficient under Carmines to establish that a claimant’s preexisting disability is materially and substantially greater than the disability due to the final injury alone.  (The Fourth Circuit took a similar tact in Cherry.)  Also, the Fourth Circuit noted that another medical opinion which merely states that if the claimant had not been a smoker, his disability would have been “much less” is also legally insufficient since this opinion does not attempt to quantify the level of impairment that would result from the work-related injury alone, as is required by Harcum.

            In Ponders, the Fourth Circuit noted that the competing policy goals problem of Section 8(f) “is exacerbated by the fact that the adversarial system breaks down to a degree with regard to Section 8(f) claims.”  The court noted that, “The evidentiary hearing in such cases may involve only the employer and the claimant...It is only after the initial hearing is concluded that the Director,...--the person with the interest in protecting the integrity of the special fund–enters the picture.  The record made at the original hearing may as a consequence be tilted in favor of Section 8(f) relief.”  In Ponders, the court acknowledged the difficulty which confronts a doctor called upon to make the assessment required by Carmines in a case involving successive lung diseases.” The difficulty of making the assessment in isolated cases, however, does not compel us to adopt a different rule.”  n. 2.

Back to Top

Topic  8.7.9.1 Special Fund Relief--Section 8(f)--Procedural Issues--Standing

Terrell v. Washington Metropolitan Area Transit Authority (WMATA), 36 BRBS 69 (2002).

            The issue here is whether an employer who is granted Section 8(f) relief, is dismissed from a subsequent modification proceeding by the ALJ on the claimant's motion, and who did not participate in the appeal of the modification before the Board, is responsible for the claimant's attorney fee at the Board level. (The employer did not participate in the Director's appeal before the Board, and the claimant argued in response to the Director's appeal for the employer's continued exclusion from the case.) The Board found that such an employer is not liable for an attorney fee. Furthermore, the Board found that, "The fact that employer had an economic interest in the outcome (due to the increased assessment under Section 44... .), is not sufficient for employer to be held for claimant's attorney's fee for work performed before the Board under the facts of this case." Thus, the Board found that since the claimant's attorney obtained an award of permanent total disability, an attorney's fee for his counsel can be made a lien on the claimant's compensation.

Back to Top

Topic  8.7.9.2 Special Fund Relief--Section 8(f) Relief—Timeliness of Employer's Claim for Relief

Woodmansee v. Newport News Shipbuilding & Dry Dock Co., (Unpublished)(BRB No. 03-0614)(May 7, 2004).

[ED. NOTE: Might not consideration be given to limiting the "judicial economy" rule to issues where the claimant has an interest? Claimants have no standing concerning the application of Section 8(f). If employers are forced to "litigate" all issues, they may be reluctant to enter into agreements to pay compensation until the Section 8(f) issue is resolved. And, would such a scenario impact attorney fees at the OALJ level?]

            Despite the fact that there was no specific statute of limitations regarding when a party should request a hearing of the district director's recommendation that Section 8(f) relief be denied, the Board upheld the ALJ's determination that the employer waived the Section 8(f) issue by allowing compensation orders awarding claimants permanent disability benefits to become final without disposing of the Section 8(f) issue. The Board found the employer's actions to be an impermissible attempt to bifurcate issues. "The policy of judicial economy dictates that all claims relating to a specific injury, including affirmative defenses such as Section 8(f), be raised and litigated at the same time, especially as the Director is not bound by stipulations into which the private parties enter without his agreement."

Topic  8.7.9.2 Special Fund Relief—Timeliness of Employer's Claim for Relief

Newport News Shipbuilding & Dry Dock Co. v. Firth, 364 F.3d 311 (4th Cir. 2004).

            The Fourth Circuit held that an employer cannot obtain Section 8(f) relief if it does not comply with mandatory procedural requirements. When the claimant filed a request for an informal conference to determine his eligibility for permanent partial disability benefits, the district director scheduled the conference. However, Newport News responded by requesting that the conference be cancelled and that the matter be transferred to OALJ for a formal hearing "since this is not a matter which can be resolved at [OWCP]."

   Once before the ALJ, Newport News informed the judge that the only remaining issue to be determined was Newport's entitlement to relief from continuing liability under Section 8(f). In that regard, the Director did not contest that the employer qualified on the merits for Section 8(f) relief. However, the Director argued that the absolute defense contained in Section 8(f)(3) should be invoked since the employer, knowing of the permanency of the claimant's condition, failed to present its Section 8(f) claim to the Director while the claim was before the Director and prior to the time the Director transferred the case to OALJ.

   The Fourth Circuit found that it must adhere to the plain and unambiguous language of the statute which "provides an explicit scheme for obtaining a benefit… ."

Topic  8.7.9.2 Special Fund Relief—Timeliness of Employer’s Claim for Relief

Keys v. Ceres Gulf, Inc., (Unpublished)(BRB No. 03-0745) (Jan. 30, 2004).

            While this matter was on appeal, the employer moved for a partial remand, noting that it had reached an 8(i) settlement but also requesting that it be allowed to pursue its appeal regarding Section 8(f).  The Director asserted that employer’s signed settlement with the claimant precluded the employer from obtaining Section 8(f) relief and required dismissal of the appeal.  Agreeing with the director, the Board noted that there is no procedural mechanism for bi-furcating an appeal.

            The Board, denying the employer’s motion for partial remand, remanded the full case for consideration of the settlement agreement.  The Board stated:

If the settlement is approved and establishes compensation due for any period for which the Special Fund could be liable if Section 8(f) relief were granted, then employer’s continuation of its appeal is precluded by Section 8(i)(4).  If, however, the approved settlement affects only employer’s liability, i.e., the Fund cannot be liable for reimbursement to employer of any sums due under the settlement, then employer may seek reinstatement of its appeal.  In this event, or in the event that the proposed settlement is not approved, employer may request reinstatement by filing notice with the Board…

Back to Top

Topic  8.7.9.6 Special Fund Relief--The Effect of Settlements and Stipulations

Keys v. Ceres Gulf, Inc., (Unpublished)(BRB No. 03-0745) (Jan. 30, 2004).

            While this matter was on appeal, the employer moved for a partial remand, noting that it had reached an 8(i) settlement but also requesting that it be allowed to pursue its appeal regarding Section 8(f).  The Director asserted that employer’s signed settlement with the claimant precluded the employer from obtaining Section 8(f) relief and required dismissal of the appeal.  Agreeing with the director, the Board noted that there is no procedural mechanism for bi-furcating an appeal.

            The Board, denying the employer’s motion for partial remand, remanded the full case for consideration of the settlement agreement.  The Board stated:

If the settlement is approved and establishes compensation due for any period for which the Special Fund could be liable if Section 8(f) relief were granted, then employer’s continuation of its appeal is precluded by Section 8(i)(4).  If, however, the approved settlement affects only employer’s liability, i.e., the Fund cannot be liable for reimbursement to employer of any sums due under the settlement, then employer may seek reinstatement of its appeal.  In this event, or in the event that the proposed settlement is not approved, employer may request reinstatement by filing notice with the Board…

Back to Top