NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash-ington, D.C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

No. 96–272

METROPOLITAN STEVEDORE COMPANY, PETITIONER v. JOHN RAMBO et al.

on writ of certiorari to the united states court of appeals for the ninth circuit

[June 19, 1997]

Justice Souter delivered the opinion of the Court.

This case under the Longshore and Harbor Workers' Compensation Act is before us a second time, now raising the question whether the Act bars nominal compensation to a worker who is presently able to earn at least as much as before he was injured. We hold nominal compensation proper when there is a significant possibility that the worker's wage-earning capacity will fall below the level of his pre-injury wages sometime in the future.

Respondent John Rambo injured his back and leg in 1980 while doing longshore work for petitioner Metropolitan Stevedore Company. Rambo claimed against Metropolitan for compensation under the Longshore and Harbor Workers' Compensation Act (LHWCA or Act), 44 Stat. 1424, as amended, 33 U. S. C. §901 et seq., and the parties stipulated that Rambo had sustained a 22½% permanent partial disability, which would normally reflect a $120.24 decline in his pre-injury $534.38 weekly wage. This, in turn, was reduced to an award of $80.16 per week under §8(c)(21) of the Act, 33 U. S. C. §908(c)(21), providing for compensation at the rate of 662 3% of the difference between an employee's pre-injury wages and post-injury wage-earning capacity. An Administrative Law Judge (ALJ) entered an order incorporating this stipulated award. App. 51; Metropolitan Stevedore Co. v. Rambo (Rambo I), 515 U. S. 291, 293 (1995).

Rambo was later trained as a longshore crane operator and got full-time work with his new skills, with occasional stints as a heavy-truck operator to earn extra pay. His resulting annual earnings between 1985 and 1990 were about three times what he had made before his injury. As a consequence, Metropolitan moved in 1989 to modify Rambo's earlier disability award, see §22, 33 U. S. C. §922, and a hearing was held before an ALJ. While there was no evidence that Rambo's physical condition had improved, the ALJ ordered the disability payments discontinued based on the tripling of Rambo's pre-injury earnings:

"After taking into consideration the increase in wages due to the rate of inflation and any increase in salary for the particular job, it is evident that [Rambo] no longer has a wage-earning capacity loss. Although [Rambo] testified that he might lose his job at some future time, the evidence shows that [Rambo] would not be at any greater risk of losing his job than anyone else. Moreover, no evidence has been offered to show that [Rambo's] age, education, and vocational training are such that he would be at greater risk of losing his present job or in seeking new employment in the event that he should be required to do so. Likewise, the evidence does not show that [Rambo's] employer is a beneficent one. On the contrary, the evidence shows that [Rambo] is not only able to work full time as a crane operator, but that he is able to work as a heavy lift truck operator when the time is available within which to do so." App. 55.

See also Rambo I, supra, at 293–294.

The Benefits Review Board affirmed the modification order, App. 57, 61, but the Court of Appeals for the Ninth Circuit reversed on the ground that §22 authorizes modification of an award only for changed physical conditions, Rambo v. Director, OWCP, 28 F. 3d 86 (1994). We in turn reversed in Rambo I, holding that "[t]he fundamental purpose of the Act is to compensate employees (or their beneficiaries) for wage-earning capacity lost because of injury; where that wage-earning capacity has been reduced, restored, or improved, the basis for compensation changes and the statutory scheme allows for modification." Rambo I, 515 U. S., at 298. Since the essence of wage-earning capacity is economic, not physical, id., at 296–298, that capacity may be affected "even without any change in the employee's physical condition," id., at 301.

On remand, the Court of Appeals again reversed the order discontinuing compensation payments. It recognized that when a worker suffers a significant physical impairment without experiencing a present loss of earnings, there may be serious tension between the statutory mandate to account for future effects of disability in determining a claimant's wage-earning capacity (and thus entitlement to compensation), see §8(h), 33 U. S. C. §908(h), and the statutory prohibition against issuing any new order to pay benefits more than one year after compensation ends or an order is entered denying an award, see §22, 33 U. S. C. §922. The Court of Appeals reconciled the two provisions by reading the statute to authorize a present nominal award subject to later modification if conditions should change. Rambo v. Director, OWCP, 81 F. 3d 840, 844 (CA9 1996). The court reversed the order ending Rambo's benefits as unsupported by substantial evidence, due to "overemphasi[sis on] Rambo's current status and fail[ure] to consider the effect of Rambo's permanent partial disability on his future earnings," ibid., and it remanded for entry of a nominal award reflecting Rambo's permanent partial disability, id., at 845. We granted certiorari. 519 U. S. ___ (1996). While we agree that nominal compensation may be awarded under certain circumstances despite the worker's present ability to earn more than his pre-injury wage, we vacate the judgment of the Court of Appeals directing entry of such an award and remand for factfinding by the ALJ.

The LHWCA authorizes compensation not for physical injury as such, but for economic harm to the injured worker from decreased ability to earn wages. See Rambo I, supra, at 297–298. The Act speaks of this economic harm as "disability," defined as the "incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or any other employment," §2(10), 33 U. S. C. §902(10). Such incapacity is conclusively presumed for certain enumerated or "scheduled" injuries, which are compensated at 662 3% of the worker's pre-injury wages over specified periods of time. See §§8(c)(1)–8(c)(20), 8(c)(22), 33 U. S. C. §§908(c)(1)–(20), 908(c)(22); Potomac Elec. Power Co. v. Director, Office of Workers' Compensation Programs, 449 U. S. 268, 269 (1980). For other, so-called "unscheduled" injuries resulting in less than total disability, the Act sets compensation at "662 3 per centum of the difference between the average weekly [pre-injury] wages of the employee and the employee's wage-earning capacity thereafter." §8(c)(21), 33 U. S. C. §908(c)(21) (permanent partial disability); see also §8(e), 33 U. S. C. §908(e) (temporary partial disability). For figuring this difference, §8(h) explains that the claimant's post-injury "wage-earning capacity" is to be determined

"by his actual earnings if such actual earnings fairly and reasonably represent his wage-earning capacity: Provided, however, That if the employee has no actual earnings or his actual earnings do not fairly and reasonably represent his wage-earning capacity, the deputy commissioner may, in the interest of justice, fix such wage-earning capacity as shall be reasonable, having due regard to the nature of his injury, the degree of physical impairment, his usual employment, and any other factors or circumstances in the case which may affect his capacity to earn wages in his disabled condition, including the effect of disability as it may naturally extend into the future." §8(h), 33 U. S. C. §908(h).

See also §10, 33 U. S. C. §910 (method for determining pre-injury wages). See generally Rambo I, 515 U. S. 297–298.

We may summarize these provisions and their implications this way. Disability is a measure of earning capacity lost as a result of work-related injury. By distinguishing between the diminished capacity and the injury itself, and by defining capacity in relation both to the injured worker's old job and to other employment, the statute makes it clear that disability is the product of injury and opportunities in the job market. Capacity, and thus disability, is not necessarily reflected in actual wages earned after injury, see id., at 300–301; Potomac Elec. Power, supra, at 272, n. 5, and when it is not, the fact-finder under the Act must make a determination of disability that is "reasonable" and "in the interest of justice," and one that takes account of the disability's future effects, §8(h).

In some cases a disparity between the worker's actual post-injury wages and his job-market capacity will be obvious, along with the reasons for it. If a disabled worker with some present capacity chooses not to work at all, or to work at less than his capacity, a windfall is avoided by determining present disability and awarding a benefit accordingly. See, e.g., Penrod Drilling Co. v. Johnson, 905 F. 2d 84, 87–88 (CA5 1990). At the other extreme, a worker with some present disability may nonetheless be fortunate enough to receive not merely the market wages appropriate for his diminished capacity, but full pre-injury wages (say, because an employer is generous, for whatever reason). See, e.g., Travelers Ins. Co. v. McLellan, 288 F. 2d 250, 251 (CA2 1961); see also Edwards v. Director, OWCP, 999 F. 2d 1374, 1375–1376 (CA9 1993) (holding that wages from short-lived employment do not represent actual earning capacity on open market). Once again, the present disability may still be calculated and a corresponding award made.

A problem in applying the provisions applicable when there is a disparity between current wages and wage-earning capacity arises in a case like this one, however. The worker now receives appropriate market wages as high or higher than those before his injury, thus experiencing no decline in present capacity. And yet (we assume for now) there is some particular likelihood that in the future the combination of injury and market conditions may leave him with a lower capacity. The question is whether such a person is presently disabled within the meaning of the statute, and if so, what provision should be made for the potential effects of disability in the future.

There are two reasons to treat such a person as presently disabled under the statute. The first follows from the provision of law that on its face bars an injured worker from waiting for adverse economic effects to occur in the future before bringing his disability claim, which generally must be filed within a year of injury. §13(a), 33 U. S. C. §913(a); Pillsbury v. United Engineering Co., 342 U. S. 197 (1952). He is also barred from seeking a new, modified award after one year from the date of any denial or termination of benefits. §22, 33 U. S. C. §922. Because an injured worker who has a basis to anticipate wage loss in the future resulting from a combination of his injury and job-market opportunities must nonetheless claim promptly, it is likely that Congress intended "disability" to include the injury-related potential for future wage-loss. And because a losing claimant loses for all time after one year from the denial or termination of benefits, it is equally likely that Congress intended such a claimant to obtain some award of benefits in anticipation of the future potential loss.

This conclusion is confirmed by the provision of §8(h) that in cases of disparity between actual wages and earning capacity, the natural effects of disability that will occur in the future must be given "due regard" as one of the "factors or circumstances in the case which may affect [a claimant's] capacity to earn wages in his disabled condition." Although this mandate is phrased in general terms, its practical effect is limited to the class of cases at issue here, where the worker is presently able to earn at least as much as before his injury. In all other cases, when injury depresses the claimant's wage-earning capacity under the conditions prevailing at the time of an award, so that the present effects of his disability are unquestionably compensable immediately, the Act already makes provision for the future effects of disability by means of §22, which liberally permits modification of awards in response to changed conditions that occur within one year of the last payment of compensation (or a denial or termination of benefits). 33 U. S. C. §922. Rambo I held that this provision allows modification whenever a changed combination of training and economic (let alone physical) circumstances reduces, restores, or improves wage-earning capacity. 515 U. S., at 296–297. Since ongoing awards may be modified if future possibilities become present realities, there is no need to account for such possibilities in calculating a worker's immediately compensable disability; the Act plainly takes a wait-and-see approach to future contingencies here. The first award in this case was a standard illustration of the proper practice of basing capacity determinations and compensation awards on present reality. If Rambo's initial award had already been discounted to reflect the odds of his obtaining less strenuous but higher-paying work in the future, Rambo I could hardly have held that the Act permitted reduction of that initial award again when Rambo actually received training as a crane operator and found work using his new skills. The first award simply reflected the degree of diminished capacity operative at the time it was made, and it was proper to revise it when conditions changed.

Thus, if §8(h)'s admonition to consider future effects when calculating capacity has any practical application, it must be because it may apply in a case such as this one, in which there is no present wage loss and would thus be no present award if compensation were to be based solely on present employment conditions. If the future were ignored and compensation altogether denied whenever present earning capacity had not (yet) declined, §22 would bar modification in response to future changes in condition after one year. To implement the mandate of §8(h) in this class of cases, then, "disability" must be read broadly enough to cover loss of capacity not just as a product of the worker's injury and present market conditions, but as a potential product of injury and market opportunities in the future. There must, in other words, be a cognizable category of disability that is potentially substantial, but presently nominal in character.

There being, then, a need to account for potential future effects in a present determination of wage-earning capacity (and thus disability) when capacity does not immediately decline, the question is which of two basic methods to choose to do this. The first would be to make a one-time calculation of a periodic benefit following the approach of the common law of torts, which bases lump-sum awards for loss of future earnings on an estimate of "the difference . . . between the value of the plaintiff's services as they will be in view of the harm and as they would have been had there been no harm." Restatement (Second) of Torts §924, Comment d, p. 525 (1977). This predictive approach ordinarily requires consideration of every possible variable that could have an impact on ability to earn, including "[e]nvironmental factors such as the condition of the labor market, the chance of advancement or of being laid off, and the like." 4 F. Harper, F. James, & O. Gray, Law of Torts §25.8, pp. 550–551 (2d ed. 1986) (footnote omitted). Prediction of future employment may well be the most troublesome step in this wide-ranging enquiry. As the tripling of Rambo's own earnings shows, a claimant's future ability to earn wages will vary as greatly as opportunity varies, and any estimate of wage-earning potential turns in part on the probabilities over time that suitable jobs within certain ranges of pay will actually be open. In these calculations, there is room for error. Cf. id., §25.8, at 553 (to determine lost wage-earning capacity, juries must often "use their judgment (in effect, . . . speculate)"). That juries in tort cases must routinely engage in such difficult predictions (compounded further by discounting for present value) is the price paid by the common-law approach for the finality of a one-time lump-sum judgment.

The second possible way to account for future developments would be to do in this situation just what the Act already does through the modification provision in the run of cases: to wait and see, that is, to base calculation of diminished wage-earning capacity, and thus compensation, on current realities and to permit modifications reflecting the actual effects of an employee's disability as manifested over time. This way, finality is exchanged for accuracy, both in compensating a worker for the actual economic effects of his injury, and in charging the employer and his insurer for that amount alone.

Metropolitan denies that the second, wait-and-see alternative is even open, arguing that §8(h) gives the factfinder only two choices: either deny compensation altogether because a claimant's actual wages have not diminished, or, if the ALJ concludes that the worker's current income does not fairly represent his present wage-earning capacity, calculate the extent of the worker's disability (and his consequent entitlement to compensation) in toto based on all relevant factors, including the future effects of the disability. See Brief for Petitioner 9. What we have already said, however, shows the unsoundness of Metropolitan's two options.

The practical effect of denying any compensation to a disabled claimant on the ground that he is presently able to earn as much as (or more than) before his injury would run afoul of the Act's mandate to account for the future effects of disability in fashioning an award, since those effects would not be reflected in the current award and the one-year statute of limitations for modification after denial of compensation would foreclose responding to such effects on a wait-and-see basis as they might arise. On the other hand, trying to honor that mandate by basing a present award on a comprehensive prediction of an inherently uncertain future would, as we have seen, almost always result in present over- or undercompensation. And it would be passing strange to credit Congress with the intent to guarantee fairness to employers and employees by a wait-and-see approach in most cases where future effects are imperfectly foreseeable, but to find no such intent in one class of cases, those in which wage-earning ability does not immediately decline.

There is moreover an even more fundamental objection to Metropolitan's proposed options. They implicitly reject the very conclusion required to make sense of the combined provisions limiting claims and mandating consideration of future effects: that a disability whose substantial effects are only potential is nonetheless a present disability, albeit a presently nominal one. It is, indeed, this realization that points toward a way to employ the wait-and-see approach to provide for the future effects of disability when capacity does not immediately decline. It is simply "reasonable" and "in the interest of justice" (to use the language of §8(h)) to reflect merely nominal current disability with a correspondingly nominal award. Ordering nominal compensation holds open the possibility of a modified award if a future conjunction of injury, training, and employment opportunity should later depress the worker's ability to earn wages below the pre-injury level, turning the potential disability into an actual one. It allows full scope to the mandate to consider the future effects of disability, it promotes accuracy, it preserves administrative simplicity by obviating cumbersome enquiries relating to the entire range of possible future states of affairs, and it avoids imputing to Congress the unlikely intent to join a wait-and-see rule for most cases with a predict-the-future method when the disability results in no current decline in what the worker can earn.

Our view, as it turns out, coincides on this point with the position taken by the Director of the Office of Workers' Compensation Programs (OWCP), who is charged with the administration of the Act, and who also construes the Act as permitting nominal compensation as a mechanism for taking future effects of disability into account when present wage-earning ability remains undiminished. See Brief for Director, Office of Workers' Compensation Programs 12–21, 24–31. The Secretary of Labor has delegated the bulk of her statutory authority to administer and enforce the Act, including rule-making power, to the Director, see Director, Office of Workers' Compensation Programs v. Newport News Shipbuilding & Dry Dock Co., 514 U. S. 122, 125–126 (1995); Ingalls Shipbuilding, Inc. v. Director, Office of Workers' Compensation Programs, 519 U. S. ___, ___ (1997) (slip op., at 13–14), and the Director's reasonable interpretation of the Act brings at least some added persuasive force to our conclusion, see, e.g., Skidmore v. Swift & Co., 323 U. S. 134, 140 (1944) (giving weight to agency's persuasive interpretation, even when agency lacks "power to control"); Robinson v. Shell Oil Co., 519 U. S. ___, ___ (1997) (slip op., at 8–9).

There is, of course, the question of how high the potential for disability need be to be recognized as nominal, but that is an issue not addressed by the parties, and it would be imprudent of us to address it now with any pretense of settling it for all time. Here it is enough to recall that in those cases where an injury immediately depresses ability to earn wages under present conditions, the payment of actual compensation holds open the option of modification under §22 even for future changes in condition whose probability of occurrence may well be remote at the time of the original award. Consistent application of the Act's wait-and-see approach thus suggests that nominal compensation permitting future modification should not be limited to instances where a decline in capacity can be shown to a high degree of statistical likelihood. Those courts to have dealt with the matter explicitly have required a showing that there is a significant possibility that a worker's wage-earning capacity will at some future point fall below his pre-injury wages, see Hole v. Miami Shipyards Corp., 640 F. 2d 769, 772 (CA5 1981); Randall v. Comfort Control, Inc., 725 F. 2d 791, 800 (CADC 1984), and, in the absence of rulemaking by the agency specifying how substantial the possibility of future decline in capacity must be to justify a nominal award, we adopt this standard.

We therefore hold that a worker is entitled to nominal compensation when his work-related injury has not diminished his present wage-earning capacity under current circumstances, but there is a significant potential that the injury will cause diminished capacity under future conditions.

The application of this legal standard to the case before us depends in part on how the burden of persuasion is allocated. Section 7(c) of the APA, 5 U. S. C. §556(d), which applies to adjudications under the Act, see Director, Office of Workers' Compensation Programs v. Greenwich Collieries, 512 U. S. 267, 270 (1994), places the burden of persuasion on the proponent of an order, id., at 272–281; when the evidence is evenly balanced, the proponent loses, see id., at 281. On the initial claim for nominal compensation under the Act, then, the employee has the burden of showing by a preponderance of the evidence that he has been injured and that the odds are significant that his wage-earning capacity will fall below his pre-injury wages at some point in the future. But when an employer seeks modification of previously awarded compensation, the employer is the proponent of the order with the burden of establishing a change in conditions justifying modification. In a case like this, where the prior award was based on a finding of economic harm resulting from an actual decline in wage-earning capacity at the time the award was entered, the employer satisfies this burden by showing that as a result of a change in capacity the employee's wages have risen to a level at or above his pre-injury earnings. Once the employer makes this showing, §8(h) gives rise to the presumption that the employee's wage-earning capacity is equal to his current, higher wage and, in the face of this presumption, the burden shifts back to the claimant to show that the likelihood of a future decline in capacity is sufficient for an award of nominal compensation. We emphasize that the probability of a future decline is a matter of proof; it is not to be assumed pro forma as an administrative convenience in the run of cases.

In this case, the first award of compensation was based on the parties' stipulation that Rambo suffered 22½% permanent partial disability as a result of his injury, whereby Rambo established that the injury impaired his ability to undertake at least some types of previously available gainful labor and thus prevented him from earning as much as he had before his accident. Metropolitan sought termination of the award based solely on evidence, which the ALJ found persuasive, that Rambo is now able to earn market wages as a crane operator significantly greater than his pre-injury earnings. There is therefore substantial evidence in the record supporting the ALJ's decision to terminate actual (as opposed to nominal) benefits, since under present conditions Rambo's capacity to earn wages is no longer depressed. But the ALJ failed to consider whether there is a significant possibility that Rambo's wage-earning capacity will decline again in the future. Because there is no evidence in the record of the modification proceedings showing that Rambo's physical condition has improved to the point of full recovery, the parties' earlier stipulation of permanent partial disability at least raises the possibility that Rambo's ability to earn will decline in the event he loses his current employment as a crane operator. The ALJ's order altogether terminating benefits must therefore be vacated for failure to consider whether a future decline in Rambo's earning capacity is sufficiently likely to justify nominal compensation. Since the ALJ is the factfinder under the Act, see §21(b)(3), (c), 33 U. S. C. §§921(b)(3), (c), however, the Court of Appeals should have remanded to the agency for further findings of fact, see, e.g., Randall v. Comfort Control, Inc., 725 F. 2d, at 799–800 (remanding for consideration of nominal award), instead of directing entry of a nominal award based on its own appraisal of the evidence. We therefore vacate the Ninth Circuit's judgment insofar as it directs entry of an award of nominal compensation and remand for further proceedings consistent with this opinion.

It is so ordered.