(Bench Opinion)

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

METROPOLITAN STEVEDORE CO. v. RAMBO

et al.

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

No. 96–272. Argued March 17, 1997—Decided June 19, 1997

Respondent Rambo, injured while doing longshore work for petitioner Metropolitan Stevedore Company, received a compensation award under the Longshore and Harbor Workers' Compensation Act (LHWCA or Act), based on the parties' stipulation that he had sustained permanent partial disability. After Rambo acquired new skills as a longshore-crane operator and began making about three times his pre-injury earnings, Metropolitan moved to modify his LHWCA award. Despite an absence of evidence that Rambo's physical condition had improved, the Administrative Law Judge (ALJ) ordered his benefits discontinued because of his increased earnings. The Benefits Review Board affirmed, but the Ninth Circuit reversed on the ground that LHWCA §22 authorizes modification of an award only for changed physical conditions. This Court in turn reversed in Metropolitan Stevedore Co. v. Rambo, 515 U. S. 291, holding that the Act's fundamental purpose is economic, to compensate employees for wage-earning capacity lost because of injury; where that capacity has been reduced, restored, or improved, the basis for compensation changes and the statutory scheme allows for modification, id., at 296–298, even without any change in physical condition, id., at 301. On remand, the Ninth Circuit again reversed the order discontinuing compensation. It recognized that when a worker suffers a significant physical impairment without experiencing a present loss of earnings, there may be serious tension between §8(h)'s mandate to account for disability's future effects in determining wage-earning capacity (and thus entitlement to compensation), and §22's prohibition against issuing any new order to pay benefits more than one year after compensation ends or an award denial is entered. The court reconciled the two provisions by reading the Act to authorize a present nominal award subject to later modification if conditions should change. It held that the order discontinuing benefits was based on the ALJ's overemphasis on Rambo's current status and failure to consider his permanent partial disability's effect on his future earnings, and remanded the case for entry of a nominal award.

Held:

1. A worker is entitled to nominal compensation under the LHWCA 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 Act refers to compensable economic harm as "disability," defining that term as the measure of earning capacity lost as a result of work-related injury, §2(10). Section 8(c)(21) sets compensation for permanent partial disability due to unscheduled injuries at a percentage of the difference between the worker's average weekly pre-injury wages and his wage-earning capacity thereafter, while §8(h) explains that such capacity is to be determined by the worker's actual earnings if they fairly and reasonably represent that capacity; if not, the factfinder may, "in the interest of justice," fix such capacity as shall be "reasonable," having due regard for, inter alia, "the effect of disability as it may naturally extend into the future." A problem in applying these provisions arises in the situation here at issue, where a worker presently earning at least as much as before his injury, but having a basis to anticipate that a future combination of the injury and job-market conditions will leave him with a lower earning capacity, must nevertheless file his disability claim within a year of the injury under §13(a). If the worker is awarded no compensation, §22 will bar him from seeking a modification in response to future changes in condition after one year. To implement §8(h)'s mandate in this class of cases, "disability" must be read broadly enough to cover loss of capacity not just as a product of the worker's injury and present job market conditions, but as a potential product of injury and market opportunities in the future. Thus, a potential disability is treated as a present disability, albeit a presently nominal one. It is "reasonable" and "in the interest of justice" (to use §8(h)'s language) to reflect merely nominal current disability with a correspondingly nominal award. Ordering nominal compensation holds open the possibility of a modification upward under §22 if in the future circumstances so warrant. This approach is consistent with the wait-and-see approach the Act adopts generally with respect to benefits modification questions, and is the best way to reconcile §8(h)'s mandate to consider future effects with the requirements of §§13(a) and 22. The Court's view on this point coincides with, and is reinforced by, the position of the Director of the Office of Workers' Compensation Programs (OWCP), who is charged with administering the Act. It would be imprudent for the Court to attempt to resolve for all time the question of how high the potential for disability need be to be recognized as nominal, since that issue was not addressed by the parties. Those lower courts to have dealt with the matter have required a showing of a significant possibility of a future decline in wage-earning capacity, and, in the absence of rulemaking by the OWCP on the point, the Court adopts that standard. Pp. 4–17.

2. Although the Ninth Circuit adopted the correct legal standard, it erred in directing entry of a nominal award based on its own appraisal of the evidence, rather than remanding the case to the ALJ for further findings of fact. Since the ALJ is the factfinder under the Act, see §21(b)(3), (c), it is the ALJ's duty, not the Court of Appeals's, to consider whether a future decline in Rambo's earning capacity is sufficiently likely to justify nominal compensation. The ALJ failed to do so. Pp. 17–19.

81 F. 3d 840, vacated and remanded.

Souter, J., delivered the opinion of the Court, in which Rehnquist, C. J., and Stevens, Kennedy, Ginsburg, and Breyer, JJ., joined. O'Connor, J., filed a dissenting opinion, in which Scalia and Thomas, JJ., joined.