JUDGES' BENCHBOOK:
Longshore and Harbor Workers' Compensation Act
April 16, 2002 [2002 Revision]
DISABILITY SPECIAL FUND RELIEF
DISCLAIMER:
The Longshore Benchbook was created solely to assist the Office of Administrative Law
Judges as a first reference in researching cases arising under the Longshore and Harbor Workers'
Compensation Act, and extension acts, as amended. This Benchbook does not constitute the official
opinion of the Department of Labor, the Office of Administrative Law Judges, or any individual
judge on any subject. This Benchbook does not necessarily contain an exhaustive or current
treatment of case holdings, and should, under no circumstances, substitute for a party's own research
into the statutory, regulatory, and case law authorities on any given subject referred to therein. It is
intended to be used as a research tool, not as final legal authority and should not be cited or relied
upon as such.
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
Section 8(f) shifts part of the liability for permanent partial and permanent total disability, and death
benefits, from the employer to the Special Fund established by Section 44, when the disability or death is
not due solely to the injury which is the subject of the claim. The Special Fund is not responsible for
benefits pursuant to Section 8(f) if an employer fails to comply with Section 32(a) securing
insurance or being designated as a self-insured employer. Section 8(f)(2)(A). In Lewis v. Sunnen
Crane Service, Inc., 34 BRBS 57( 2000), the Board held that the applicability
of Section 8(f)(A) is an issue which may be raised at any time since its language
is mandatory rather than discretionary. Thus the
Director was permitted to raise it for the first time in a motion for reconsideration
before the ALJ, even if his doing so was the result of a lack of diligence
in presenting his case. The Board noted that its holding "is bolstered by the limited legislative history of Section 8(f)(2), which, states only that an employer is
"precluded from realizing a benefit by avoiding the insurability requirements
of the Act."
The Board has since distinguished Lewis. SeeWeber v. S.C. Loveland Co. (Weber III), ___
BRBS ___ (BRB Nos. 00-838, 00-838A and 00-838B) (Jan. 30 2002)(The Port of Kingston, Jamaica
is a situs under the LHWCA; this is not an extension act case); Weber v. S.C. Loveland Co.(Weber I),
28 BRBS 321 (1994); Weber v. S.C. Loveland Co. (Weber II), 35 BRBS 75 (2001). In Weber III, the
Director argued that the employer should not be entitled to Section 8(f) relief because the employer did not
have longshore coverage in Jamaica. The Director further argued that Lewis was dispositive of this issue.
The 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.(The employer had a foreign liability policy for injuries
occurring outside of the United States and it had a separate LHWCA policy for injuries occurring within
the United States.) Accordingly, the employer argued that it complied with Section 32. 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,
in Weber III, the Board held that Section 8(f)(2)(A) is not applicable to the facts of Weber III and
does not bar the employer's entitlement to Section 8(f) relief.
In construing Section 8(f), the courts have repeatedly stated that Section 8(f) was enacted to avoid
discrimination against handicapped workers, which would naturally flow from the so-called aggravation
rule. (See discussion of aggravation at Topic 8.7.2, infra.)
For example, the District of Columbia and Ninth Circuits have said:
[T]he Act makes the employer liable for compensation. Hence, the
employer risks increased liability when he hires or retains a partially
disabled worker. By virtue of the contribution of the previous partial
disability, such a worker injured on the job may suffer a resulting disability
greater than a healthy worker would have suffered. Were it not for the
shifting of this increased compensation liability from the employer to the
Special Fund under § 8(f), the Act would discourage employers from
hiring and retaining disabled workers.
Director, OWCP v. Campbell Indus., 678 F.2d 836, 839, 14 BRBS 974 (9th Cir. 1982), rev'gLostaunau
v. Campbell Indus., 13 BRBS 227 (1981), cert. denied, 459 U.S. 1104 (1983), overruledbyDirector,
OWCP v. Cargill 709 F.2d 616 (9th Cir. 1983) (quoting C & P
Tel. Co. v. Director, OWCP, 564 F.2d
503, 512, 6 BRBS 399 (D.C. Cir. 1977), rev'gGlover
v. C & P Tel. Co., 4 BRBS 23 (1976), overruledbyDirector, OWCP v. Cargill, 709 F.2d 616 (9th Cir. 1983)). Seealso H. Rep. No 92-1441, 92nd
Cong., 2d Sess. 8 (1972), reprinted in [1972]
U.S. Code Cong. & Admin. News, pp. 4698, 4705-06;
Larson, Workers' Compensation Law § 59.00
(1992).
Lawson v. Suwanee Fruit & Steamship
Co., 336 U.S. 198 (1949) is the leading United States
Supreme Court case. The Special Fund is set up pursuant to Section
44 of the LHWCA, 33 U.S.C. §
944. The regulations are in 20 C.F.R. § 702.321.
Section 8(f) is, therefore, invoked in situations where a work-related injury combines with a pre-existing partial disability to result in greater permanent disability than would have been caused by the injury
alone. Lockheed Shipbuilding v. Director, OWCP, 951 F.2d 1143, 1144, 25 BRBS 85 (CRT) (9th Cir.
1991). Relief is not available for temporary disability, no matter how severe. Jenkins
v. Kaiser Aluminum & Chem. Sales, 17 BRBS 183, 187 (1985).
Most frequently, the effect of Section 8(f) is to limit the employer's liability to 104 weeks of
compensation; thereafter, the Special Fund makes the compensation payments. (See discussion on
duration of employer's liability at Topic 8.7.7, infra; and hearing loss cases, at Topic 8.13, infra.)
Many cases have stated the requirements for Special Fund relief in some variation of the following
language:
To qualify for § 8(f) relief, an employer must make a three-part showing
(i) that the employee had a pre-existing partial disability, (ii) that this
partial disability was manifest to the employer, and (iii) that it rendered
the second injury more serious than it otherwise would have been.
A more rigorous analysis, and a careful reading of the statute, shows that in cases of permanent
total or permanent partial disability there are the following requirements: 1. a new injury (or aggravation)
(see 8.7.1, infra); 2. a pre-existing permanent partial disability (see 8.7.2, infra); 3. which was manifest (see
8.7.3, infra) to the employer; and 4. the disability must not be due solely to the new injury (see 8.7.4, infra).
There is an additional requirement in cases of permanent partial disability: 5. the disability
must be materially and substantially greater than that which would have resulted from the new injury alone
(see 8.7.5, infra).
[ED. NOTE: Where the employer is seeking Section 8(f) relief for both a permanent total disability
and for death benefits, the courts have held that the requirements for entitlement must be satisfied
for both claims individually. Perry v. Bath Iron Works Corp., 29 BRBS 57 (1995); Graziano v.
General Dynamics Corp., 14 BRBS 950 (1982), aff'dsubnom. Director, OWCP v. General
Dynamics Corp., 705 F.2d 562 (1st Cir. 1983); SeealsoNewport
News Shipbuilding & Dry Dock
Co. v. Howard, 904 F.2d 206 (4th Cir. 1990); Fineman
v. Newport News Shipbuilding & Dry Dock
Co., 27 BRBS 104 (1993); Adams
v. Newport News Shipbuilding & Dry Dock Co., 22 BRBS 78
(1989). If Section 8(f) covers both claims, and the two claims arise from the same work-related
condition, the employer is only liable for one 104 week period. Perry, 29 BRBS at 59 (1995);
Bingham v. General Dynamics Corp., 20 BRBS 198 (1986).]
8.7.2 New Injury (or Aggravation) Required
If a claimant does not sustain an injury (see definition
in § 2(2) of the LHWCA) while working for
employer, employer is not liable for the claimant's condition and there is
no occasion for limiting liability. Thus, if a claimant's current disability
(or death) is due to the natural progression of the pre-existing
condition, or is its natural consequence, the employer cannot be held liable
for a "second" injury. Jacksonville Shipyards v. Director, OWCP, 851 F.2d 1314, 1316-17, 21 BRBS 150 (CRT) (11th Cir.
1988) (en banc), aff'gStokes v. Jacksonville Shipyards, 18 BRBS 237 (1986) (claimant's exposure to
silica extending over many years was one injury, precluding Special Fund relief for the last employer,
notwithstanding that the last employer was liable under Director, OWCP v. Cooper Assocs. (Cooper),
607 F.2d 1385, 1390-91, 10 BRBS 1058, 1064-66 (D.C. Cir. 1979), rev'gCooper v. Cooper Assocs.,
7 BRBS 853 (1978) (claimant's depression which led to his suicide was one continuous injury because it
resulted from one persistent problem, the decline of claimant's business); Travelers Ins. Co. v. Cardillo, 225
F.2d 137, 145 (2d Cir.), cert. denied, 350 U.S. 913 (1955)). (See Last employer rule, Topic 70, infra; "Natural Progression/Intervening Cause," Topics
2.2.7, 2.2.8, supra.)
It is possible for an aggravation to be considered a new injury. Bath Iron Works Corp. v. Director,
U.S. Dept. of Labor, (Jones), 193 F.3d 27 (1st Cir. 1999)(Initial
asbestos-related injury was aggravated by further exposure to pulmonary irritants
and was subsequently found to be a "new" injury resulting in an
increase in benefits payable by a new carrier and based upon the average weekly
wage at the time of the new injury).
Aggravation of a pre-existing disability during employment constitutes a second injury. Foundation
Constructors v. Director, OWCP, 950 F.2d 621, 625, 25 BRBS 71 (CRT) (9th Cir. 1991), aff'g 22
BRBS 453 (1989) (claimant's pre-existing disability to his back was aggravated by six months of jack
hammering); Director, OWCP v. Potomac Elec. Power Co. (Brannon), 607 F.2d 1378, 1385, 10 BRBS
1048 (D.C. Cir. 1979), aff'gBrannon v. Potomac Elec. Power Co.,
6 BRBS 527 (1977) (work-related trauma (first injury) caused a mental disease
which was aggravated by re-exposure to "energized" equipment (second injury)
which led to claimant's suicide); C & P
Tel. Co. v. Director, OWCP, 564 F.2d
503, 514, 6 BRBS 399 (D.C. Cir. 1977), overruledbyDirector, OWCP v. Cargill, 709 F.2d 616 (9th
Cir. 1983) (claimant's pre-existing "back problems" were aggravated
by an elevator accident sustained at
work); Ortiz v. Todd Shipyards Corp., 25 BRBS 228, 239 (1991) (claimant's intra cranial bleeding was
aggravated by his employment which resulted in a stroke; the fact that there were only twelve days between
the first and second injury does not negate the principle of aggravation).
Section 8(f) relief may be available even where the pre-existing disability and the second injury (or
aggravation) result from the same course of employment with the same employer. Brannon, 607 F.2d at
1382-84. The Brannon court
acknowledged that if Section 8(f) relief is awarded when employees are injured
twice by the same employer it might "provide an incentive for venal employers
to retain and injure their handicapped employees." Id. at 1384.
The Board has indicated, however, that if an employer intentionally placed an employee in a
dangerous position for the purpose of invoking Section 8(f), the employer would be denied Special Fund
relief. Frame v. Sun Shipbuilding & Dry
Dock Co., 8 BRBS 855, 856-57 (1978), aff'dsubnom. Director,
OWCP v. Sun Shipbuilding & Dry Dock Co., 600 F.2d 440, 10 BRBS 621 (3d Cir. 1979) (citing
Johnson v. Bender Ship Repair, 8 BRBS 635, 639 (1978)).
8.7.3 Pre-Existing Permanent Partial Disability
8.7.3.1 Disability Defined: Not Just An Economic Term
The Supreme Court considered the meaning of the word "disability" as used in Section 8(f), and
concluded that Congress did not intend to use "disability" as a term of art
in Section 8(f), i.e., the meaning given that term in Section 2(10) of the
LHWCA. Lawson, 336 U.S. at 206. Although Lawson interpreted
Section 8(f) as it existed prior to the 1972 Amendments to the LHWCA, the courts
have concluded that no relevant change was intended by the rephrasing of "previous disability" in the original Section 8(f) to
"existing permanent partial disability" in the amended version. C & P
Tel. Co v. Director, OWCP (Glover),
564 F.2d 503, 512, 6 BRBS 399 (D.C. Cir. 1977), overruledbyDirector, OWCP v. Cargill, 709 F.2d
616 (9th Cir. 1983); Atlantic & Gulf
Stevedores v. Director, OWCP, 542 F.2d 602, 606-08, 4 BRBS
79, 83-86 (3d Cir. 1976), rev'g 1 BRBS 541 (1975).
An oft cited definition of "existing permanent partial disability" under Section 8(f) is:
[t]o summarize, the term 'disability' in new [post-1972] § 8(f) can be
economic disability under § 8(c)(21) or one of the scheduled losses
specified in § 8(c)(1)-(20), but it is not limited to those cases alone.
'Disability' under new Section 8(f) is necessarily of sufficient breadth to
encompass those cases, like that before us, wherein the employee had suchaseriousphysicaldisabilityinfactthatacautiousemployerwouldhavebeenmotivatedtodischargethehandicappedemployeebecauseofagreatlyincreasedriskofemployment-relatedaccidentandcompensationliability.
Glover, 564 F.2d at 513 (emphasis added). The Glover criteria is later referred to by the jurisprudence
as the "cautious employer test."
[ED. NOTE: Other laws may prevent an employer from discriminating against the handicapped.
See, e.g.,
the Rehabilitation Act of 1973, 29 U.S.C. §§ 793, 794; Americans with Disabilities Act of
1990 (ADA), 42 U.S.C. §§ 12101, etseq.
It is unresolved whether such laws change the courts' definition for purposes
of § 8(f).]
At one point, the Board held that "disability" in Section 8(f) is an economic
and not a medical concept, i.e., that the claimant must have experienced a
loss of earning capacity. E.g., Glover
v. C & P
Tel. Co., 4 BRBS 23, 26 (1976), rev'd, 564 F.2d 503 (D.C. Cir. 1977.
This "economic" requirement
has been rejected. Director, OWCP v. Campbell Indus., 678 F.2d 836, 840, 14 BRBS 974 (9th Cir.),
cert. denied, 459 U.S. 1104 (1982), overruledbyDirector, OWCP v. Cargill, 709 F.2d 616 (9th Cir.
1983); Equitable Equip. Co. v. Hardy, 558 F.2d 1192, 1197-98, 6 BRBS 666 (5thCir. 1977), rev'g 3
BRBS 426 (1976); Atlantic & Gulf
Stevedores, 542 F.2d at 608-09; Bickham v. New Orleans
Stevedoring Co., 18 BRBS 41, 42 (1986); Burch v. Superior Oil Co., 15 BRBS 423, 428-29 (1983).
"Section 8(f) is to be read broadly, and this provision thus may encompass
persons who are `disabled' but who do not meet the standards of `disability'
set forth in other statutory schemes." Preziosi
v. Controlled Indus., 22 BRBS 468, 473 (1989).
8.7.3.2 Mere Fact of a Previous Injury is Insufficient; Injury Must Produce Serious Lasting Problem
The permanent partial disability must predate the employment-related injury. Mikell v. Savannah
Shipyard Co., 26 BRBS 32, 37 (1992). The mere fact of past injury,
however, does not itself establish disability. Rather, "[t]here must exist,
as a result of that injury, some serious, lasting physical problem."
Lockheed Shipbuilding v. Director, OWCP, 951 F.2d 1143, 1145-46, 25 BRBS 85 (CRT) (9th Cir.
1991) (where there is both evidence of complete recovery from a prior back injury and evidence of
permanent partial disability, the ALJ must decide the issue of seriousness); Director, OWCP v. Belcher
Erectors, 770 F.2d 1220, 1222, 17 BRBS 146, 149 (CRT) (D.C. Cir. 1985).
SeeTodd Shipyards Corp. v. Director, OWCP, 793 F.2d 1012, 19 BRBS 1 (CRT) (9th Cir.
1986) (medical records showed no objective evidence of permanent disability and claimant resumed job
with overtime); Director, OWCP v. Campbell Indus., 678 F.2d 836, 14 BRBS 974 (9th Cir. 1982), cert.
denied, 459 U.S. 1104 (1983), overruledbyDirector, OWCP v. Cargill, 709 F.2d 616 (9th Cir. 1983)
(employer did not meet the C & P
Tel. Co. criteria because it did not prove that claimant's prior back injury
was disabling--he returned to work with no restrictions and had no future medical problems--nor that he
suffered from a disabling psychological condition).
SeealsoDirector, OWCP v. General Dynamics Corp., 982 F.2d 790, 796-97, 26 BRBS 139
(CRT) (2d Cir. 1992) (ALJ must decide whether a back disability asymptomatic for 16 years was so
serious as to motivate a cautious employer to discharge employee); CNA Ins. Co. v. Legrow, 935 F.2d
430, 436, 24 BRBS 202 (CRT) (1st Cir. 1991) (after suffering back injuries, claimant resumed regular
physical labor without medical restrictions or medical treatment including medication); Devine v. Atlantic
Container Lines, G.I.E., 25 BRBS 15, 23 (1990) (although claimant had gastrointestinal problems, he
returned to work after each incident of abdominal pain and there was no evidence of impairment); Dove
v. Southwest Marine, 18 BRBS 139, 142-43 (1986) (old ankle fracture did not produce serious lasting
physical problem; award of Section 8(f) relief reversed).
Mental disabilities must also be lasting and serious. Illiteracy due to
lack of education is not "permanent," because it is reversible if claimant
seeks an education. State Comp. Ins. Fund v. Director,
OWCP, 818 F.2d 1424, 1426, 20 BRBS 11 (CRT) (9th Cir. 1987) (if illiteracy stems from mental
retardation or a learning disability, however, a permanent pre-existing disability could be found, see
discussion, infra).
8.7.3.3 A Pre-Existing Disability Must Have a Physical or Mental Foundation
An existing permanent partial disability must have a physical or mental foundation. Director,
OWCP v. Potomac Elec. Power Co. (Brannon), 607 F.2d 1378, 10 BRBS 1048 (D.C. Cir. 1979)
(mental).
[ED. NOTE: It is the employer's burden to show that it could not have reasonably anticipated the
liability of the Special Fund as to the claimant's pre-existing condition. Farrel
v. Norfolk
Shipbuilding & Dry Dock Corp., 32 BRBS 118 (1998).]
Elements such as a claimant's background, age, limited education, language difficulties, and limited
prior work experience do not constitute a previous disability. Cononetz v. Pacific Fisherman, Inc., 11
BRBS 175, 178 (1979); butseeTodd Pac. Shipyards Corp. v. Director, OWCP, 913 F.2d 1426, 1432-33, 24 BRBS 25 (CRT) (9th Cir. 1990) (although illiteracy is not, mental retardation may be a pre-existing
disability; see discussion, infra); State Comp. Ins. Fund v. Director, OWCP, 818 F.2d 1424, 20 BRBS
11 (CRT) (9th Cir. 1987); Greene v. J.O. Hartman Meats, 21 BRBS 214 (1988) (age-related physical
conditions may qualify; this case discussed below). Neither do family dependents nor racial discrimination.
Collins v. Todd Shipyards Corp., 9 BRBS 1015, 1023 (1979).
Examples of Specific Diseases/Conditions
Lifestyles, habits, and the aging process are not, in and of themselves, pre-existing disabilities.
Physical impairments, diseases, or conditions which are the result of lifestyles, habits, or the aging process
may, however, constitute pre-existing disabilities. The following cases are illustrative:
Degenerative disc disease, caused by aging, may be a pre-existing permanent partial
disability. Greene v. J.O. Hartman Meats, 21 BRBS 214, 216-18 (1988);
Illiteracy is not a pre-existing permanent partial disability, though it may be a symptom of
mental retardation and/or a learning disability, both of which have met the definition. State
Comp Ins. Fund v. Director, OWCP, 818 F.2d 1424, 20 BRBS 11(CRT) (9th Cir.
1987);
Obesity, by itself, is not a pre-existing disability. Wilson v. Todd Shipyards Corp., 23
BRBS 24, 29 (1989). Seealso, Director, OWCP v. Bath Iron Works, 31 BRBS 155
(CRT) (1st Cir. 1997) (Record did not contain sufficient
evidence to show that claimant's
disability was "materially and substantially" greater than it would have been
from claimant's industrial asbestosis injury alone.). A pre-existing disability
must be a medically-cognizable
physical ailment, rather than an unhealthy habit or lifestyle. Brogden
v. Newport News
Shipbuilding & Dry Dock Co., 16 BRBS 259, 260-61 (1984). Physically disabling
symptoms attributable to obesity may, however, be sufficient to establish a pre-existing
permanent partial disability. Vogle v. Sealand Terminal, 17 BRBS 126, 130 (1985); and
Smoking by itself, is not a qualifying disability until
it results in medically cognizable symptoms that physically impair the employee.
Smoking is a "socially pervasive risk."
General Dynamics Corp. v. Sacchetti, 681 F.2d 37, 39-40, 14 BRBS 862 (1st Cir.
1982), aff'g 14 BRBS 29 (1981).
Many conditions that result in serious consequences (as discussed above) have been found to be
pre-existing disabilities. The following are examples of close questions:
Alcoholism. Settles v. Lane Constr. Corp., 15 BRBS 148 (1982) (noting that the ALJ
relied on Parent v. Duluth, Missabe & Iron
Range Ry. Co., 7 BRBS 41 (1977), for the
proposition that alcoholism can constitute a pre-existing disability under § 8(f),
the Board stated, "[w]ehavenoquarrelwiththatproposition" (emphasis
added); however, the Board did not find that alcoholism was a pre-existing
condition in Settles). (Compare decisions
under the Social Security Act, which hold that some severe alcoholism may be the basis
for a disability award. SeeIn re Petition of Sullivan, 904 F.2d 826, 842-46 (3d Cir.
1990));
Arthritic conditions. Currie v. Cooper Stevedoring Co., 23 BRBS 420, 426 (1990)
(although claimant was asymptomatic and did not miss work, doctors' testimony
established that the condition was serious because work restrictions would have been
imposed and because claimant was susceptible to further injury); Gibbs
v. Newport News Shipbuilding & Dry Dock Co., 14 BRBS 954 (1982)
(reversed ALJ's failure to classify the arthritic condition as a pre-existing
disability when x-rays and the uncontradicted
testimony of three doctors established it; the Board failed to analyze whether
the condition was serious, as is generally required in these cases, and in
fact commented that the x-rays
noted "mild degenerative changes");
Back Injuries. Lockheed Shipbuilding v. Director, OWCP, 951 F.2d 1143, 1145-46,
25 BRBS 85 (CRT) (9th Cir. 1991) (reversed the Board and affirmed
the ALJ, noting that claimant's failure to completely recover from previous
back injuries supported the
ALJ's finding that the claimant suffered from chronic back pain and disc disease
which constituted such a serious disability that a "cautious employer" would
have been motivated to discharge him); Equitable Equip. Co. v. Hardy, 558 F.2d 1192, 1194, 6 BRBS 666
(5th Cir. 1977), rev'g 3
BRBS 426 (1976) ("pseudoarthrosis" or false fusion of the joints,
a back impairment, is a permanent partial disability for purposes of § 8(f));
Diabetes and/or Hypertension and Heart Disease. Director, OWCP v. General
Dynamics Corp., 787 F.2d 723, 18 BRBS 88 (CRT) (1st Cir. 1986) (where substantial
evidence exists that claimant had debilitating hypertension, it is a pre-existing disability; the
court contrasted these circumstances, which established pre-existing disability, with a
situation in which there was but one elevated blood pressure reading followed by normal
readings, where disability might not be established); Director,
OWCP v. Universal Terminal & Stevedoring Corp., 575 F.2d 452, 454-57, 8 BRBS 498 (3d Cir. 1978), aff'gandrev'ginpart 5 BRBS 723 (1977); Atlantic & Gulf
Stevedores v. Director, OWCP,
542 F.2d 602, 608-09, 4 BRBS 79 (3d Cir. 1976); Dugan v. Todd Shipyards, 22 BRBS
42 (1989) (diabetes and hypertension are serious, even if claimant is not aware of having
heart disease). Where pre-existing heart disease made ameliorative back surgery
impossible, Section 8(f) relief was granted. Pino v. International Terminal Operating Co.,
26 BRBS 81 (1992);
Hernias. Marko v. Morris Boney Co., 23 BRBS 353, 359-60 (1990);
Interstitial Fibrosis. Patrick
v. Newport News Shipbuilding & Dry Dock Co., 15
BRBS 274, 276 (1983) (disease meets the "cautious employer" definition of a
pre-existing disability);
Mental retardation and/or learning disabilities. Todd Pac. Shipyards Corp. v.
Director, OWCP, 913 F.2d 1426, 1431-33, 24 BRBS 25 (CRT) (9th Cir. 1990)
(claimant's mental retardation, as proved by psychological evaluations and
vocational
testing, which showed claimant's ability to perform tasks would not improve,
was a "disability within the meaning of § 8(f)");
Psychiatric disorders. Brannon, 607 F.2d 1378 (claimant's mental condition, caused by
previous on-the-job exposure to high voltage equipment, was a pre-existing disability); butcf. Betts
v. Manson Constr. & Eng'g, 26 BRBS 778 (ALJ) (1993) (where pre-injury
mental deficiencies that could be categorized as a learning disability were not so far from
normal that they would motivate a cautious employer to discharge an employee);
Respiratory diseases. Preziosi v. Controlled Indus.,
22 BRBS 468, 473 (1989) (remanded for ALJ to decide whether, under the "cautious employer" standard,
claimant's respiratory condition constituted a pre-existing permanent partial
disability); Armand v.
American Marine Corp., 21 BRBS 305, 312 (1988) (chronic obstructive pulmonary
disease and bronchitis are pre-existing disabilities because they are serious and lasting
and a cautious employer would be motivated to discharge an employee suffering from
either condition); Enos v. General Dynamics Corp., 13 BRBS 47, 49 (1980); Boies
v. National Steel & Shipbuilding Co., 7 BRBS 81, 83 (1977); and
Thrombophlebitis. Stephens v. I.T.O. Corp. of Baltimore,
8 BRBS 406, 409 (1978) (reversed ALJ and found that thrombophlebitis constituted
a pre-existing permanent partial
disability, under the "cautious employer" definition in C & P
Tel. Co. v. Director, OWCP (Glover), 564 F.2d 503, 6 BRBS 399 (D.C. Cir. 1977), overruledbyDirector, OWCP
v. Cargill, 709 F.2d 616 (9th Cir. 1983), because it
is a "serious physical disability" which
can flare up as a result of trauma).
8.7.4Pre-Existing Disability Must Be Manifest To Employer
The requirement that a claimant's pre-existing disability must be manifest to the employer is not a
statutory requirement of Section 8(f) but has been added by the courts. American Mut. Ins. Co. v. Jones,
426 F.2d 1263 (D.C. Cir. 1970). It is "a 'judicial gloss'
which Congress has not acted to erase."
American Shipbuilding Co. v. Director, OWCP, 865 F.2d 727, 730, 22 BRBS 15 (CRT) (6th Cir. 1989).
The regulations have contained the requirement since 1985. 20 C.F.R. § 702.321(a),
50 Fed. Reg. 401 (1985), amended, 51 Fed. Reg. 4285 (1986).
The manifest requirement is regularly imposed "by all federal circuit courts
which have addressed the issue." Stone
v. Newport News Shipbuilding & Dry Dock Co., 20 BRBS 1, 5 n.2 (1987); C.G. Willis,
Inc. v. Director, OWCP, 31 F.3d 1112 (11th Cir. 1994); Sealand Terminals, Inc. v. Gasparic, 7 F.3d
321, 323 (2d Cir. 1993); Director , OWCP v. Luccitelli, 964 F.2d 1303 (2d Cir. 1992), rev'gLuccitelli
v. General Dynamics Corp., 25 BRBS 30 (1991); E.P. Paup Co. v. Director, OWCP, 999 F.2d 1341
(9th Cir. 1993); Director, OWCP v. General Dynamics Corp. [Lockhart], 980 F.2d 74 (1st Cir. 1992);
Bunge Corp. v. Director, OWCP [Miller], 951 F.2d 1109 (9th Cir. 1991); Director, OWCP v.
Berkstresser, 921 F.2d 306 (D.C. Cir. 1990); Two R Drilling Co. v. Director, OWCP, 894 F.2d 748
(5th Cir. 1990); Pennsylvania Tidewater Dock Co. v. Director, OWCP [Lewis], 202 F.3d 656, (3d Cir.
2000). The Supreme Court has not spoken on the validity of the requirement.
Only the Sixth and Fourth Circuits have not fully accepted the requirement. The Sixth Circuit holds
that "the condition must have manifested itself to someone"; however,
so long as it is documented prior to the second injury the employer need not
have actual knowledge. American Shipbuilding Co. v.
Director, OWCP, 865 F.2d 727, 731-32, 22 BRBS 15 (CRT) (6th Cir. 1989). The Fourth Circuit has
declined to extend it to the area of post-retirement occupational diseases. Newport
News Shipbuilding & Dry Dock Co. v. Harris, 934 F.2d 548, 551-53, 24 BRBS 190 (CRT) (4th Cir. 1991).
As recently as October 1991, the Board called it "a well-settled concept." Caudill v. Sea Tac Alaska Shipbuilding,
25 BRBS 92, 99 (1991); Esposito v. Bay Container Repair Co., 30 BRBS 67, 68 (1996).
A useful function of the requirement is that it insures that a disability
actually pre-existed the second injury. Although this function would be served
if medical records sufficed to establish a condition that
would deter a cautious employer from hiring or encourage a cautious employer
to terminate the worker because of increased risk of compensation liability,
the Board has held that "a post hoc diagnosis of a pre-existing condition,
even a diagnosis based only on medical records in existence prior to the date
of injury, is insufficient to meet the manifest requirement." Caudill v. Sea Tac Alaska Shipbuilding, 25 BRBS 92, 99
(1991); Hitt v. Newport News Shipbuilding & Dry
Dock Co., 16 BRBS 353 (1984) (post injury re-reading of pre-injury x-rays showed changes consistent with asbestosis, but no findings specific for
asbestosis).
[ED. NOTE: In Esposito v. Bay Container Repair Co.,
the Board held that: "It is well established
that a pre-existing disability will meet the manifest requirement of Section 8(f) if prior to the
subsequent injury, employer had actual knowledge of the pre-existing condition or there were
medical records in existence prior to the subsequent injury from which the condition was objectively
determinable." 30 BRBS 67, 68 (1996); Wiggins
v. Newport Shipbuilding & Dry Dock Co, 31 BRBS
142 (1997); SeealsoEymard & Sons
Shipyard v. Smith, 862 F.2d 1220, 1224 (5th Cir. 1989);
Director v. Universal Terminal & Stevedoring
Corp., 575 F.2d 452 (3d Cir. 1978); Director, OWCP
v. Campbell Industries, Inc., 678 F.2d 836 (9th Cir. 1982), cert. denied, 459 U.S. 1104 (1983). The
pre-existing condition need only have been of sufficiently seriousness that a cautious employer
would have been motivated to discharge the employee because of a greatly increased risk of an
employment-related accident and compensation liability. Dugas v. Durwood Dunn, Inc., 21 BRBS
277 (1988); Wiggins v. Newport Shipbuilding & Dry
Dock Co, 31 BRBS 142 (1997)("medical
records need not indicate the severity or precise nature of the pre-existing condition in order for the
condition to be manifest; rather, medical records will satisfy this requirement as long as they contain
sufficient and unambiguous information regarding the existence of a serious lasting problem")
However, in Callnan v. Morale, Welfare & Recreation,
Dept. of the Navy, 32 BRBS 246 (1998),
although hospital records diagnosed claimant with a cyclothymic personality and indicated that she
was receiving counseling from therapists, the ALJ rationally found that they did not establish the
existence of a serious, lasting emotional problem. However, it should be noted that, in Callnan,
deposition testimony supported the conclusion that the claimant did not have a diagnosed
permanent psychiatric condition prior to her work injury.]
Actual knowledge of the disability will, of course, satisfy the manifest requirement, as where the
claimant has been previously injured during his employment with the employer and received an award for
permanent partial disability. In such situations, the manifest requirement is ordinarily admitted and not
litigated. See, e.g., Director, OWCP v. Bethlehem Steel Corp., 868 F.2d 759, 22 BRBS 47 (CRT) (5th
Cir. 1989), aff'ginpart, rev'ginpart 19 BRBS 200 (1987), 20 BRBS 26 (1987).
Although one might assume an actual knowledge requirement might lead employers to insist on pre-employment physical exams, thereby creating barriers to the employment of the partially disabled, Director,
OWCP v. Universal Terminal & Stevedoring (De Nichilo), 575 F.2d 452, 454-57, 8 BRBS 498 (3d Cir.
1978), the ADA must be taken into account. Under the ADA, the potential employer can neither insist on
a physical examination nor force a potential employee to state any disabilities he may have.
At least one commentator has opined that, to the extent that the purpose of Section 8(f) is to
discourage discrimination against the handicapped, the manifest requirement is counterproductive. See
Schneider, Special Fund Relief Under the Longshore Act--The Manifest Requirement, 13 Tul. Mar. L.J.
51 (1988).
Medical Evidence
If the employer does not have actual knowledge of the pre-existing disability, constructive
knowledge will satisfy the requirement. Constructive knowledge may be proved from medical records in
existence at the time of the subsequent injury from which the condition was objectively determinable. De
Nichilo, 575 F.2d at 457 (heart disease and diabetes mellitus were readily discoverable from claimant's
medical record).
The Sixth Circuit holds that "the condition must have manifested itself to
someone"; however,
so long as it is documented prior to the second injury the employer need not
have actual knowledge. American Shipbuilding Co. v. Director, OWCP, 865 F.2d 727, 731-32, 22 BRBS 15 (CRT) (6th Cir.
1989).
The medical records need not indicate the severity or precise nature of the pre-existing condition
for it to be manifest, so long as there is sufficient information that might motivate a cautious employer to
consider terminating the employee because of the risk of compensation liability. Thus, pleural thickening
shown by x-ray shows a serious lung disease and fulfills the requirement, even though it does not establish
asbestosis. Topping v. Newport News
Shipbuilding & Dry Dock Co., 16 BRBS 40, 43-44 (1983). The
employer need not be absolutely sure that the condition is permanent; its permanence may be uncertain,
and yet cause a cautious employer to discriminate. Director, OWCP v. General Dynamics Corp., 980
F.2d 74, 80-83 (1st Cir. 1992).
Asymptomatic conditions that are objectively determinable may fulfill the manifest requirement.
Currie v. Cooper Stevedoring Co., 23 BRBS 420, 427 (1990) (x-ray showed degenerative arthritis of hip;
claimant was unaware of any restrictions; physician testified that hip motion was restricted, that claimant
was susceptible to injury, and that he would have advised employer not to hire claimant).
The pre-existing disability need not be manifest at the time of hiring, but only at the time of the
compensable subsequent injury. Director, OWCP v. Cargill, Inc., 709 F.2d 616, 619, 16 BRBS 137
(CRT) (9th Cir. 1983) (en banc).
The First Circuit and the District of Columbia Circuit have upheld the Board's holding that the
permanency of an employee's prior disability need not have been initially manifest to the employer in order
to qualify for Section 8(f) relief. Director, OWCP v. General Dynamics Corp., 26 BRBS 116 (CRT) (1st
Cir. 1992); Director, OWCP v. Berkstresser, 921 F.2d 306 (D.C. Cir. 1990)
(court rejected the Director's argument that "what must be manifest to the employer is the existence of a permanent partial
disability, i.e., a serious condition that actually impairs the employee").
The Berkstresser court reasoned
that because "disability" under the LHWCA is not limited to economically disabling
conditions, neither should the manifest requirement be limited to cases where
the employee is actually prevented from
performing some aspect of his job.
The First Circuit stated:
As we have previously held,..."[d]isability" under new § 8(f) is necessarily
of sufficient breadth to encompass those cases, like that before us,
wherein the employee had such a serious physical disability in fact that a
cautious employer would have been motivated to discharge the
handicapped employee because of a greatly increased risk of
employment-related accident and compensation liability. ... This broad
definition of "disability" governs the manifest requirement under § 8(f).
When the evidence shows that such a "disability" was objectively
apparent, the "manifest" requirement has been met. Thus, contrary to the
Director's contention, the manifest condition need not be "a serious
condition that actually impairs the employee" at the time of hiring or
retention; an asymptomatic disability may be sufficient to motivate an
employment decision and fulfill the "manifest" requirement.
General Dynamics Corp., 26 BRBS at 134 (CRT).
The following cases illustrate how the manifest issue has been treated.
Injury was manifest:
A secondary diagnosis of asymptomatic osteoarthritis in an x-ray report made five years prior to
the claimant's subject hip injury met the manifest requirement even though the x-ray was intended to
diagnose a kidney stone problem. Currie v. Cooper Stevedoring Co., 23 BRBS 420, 426-27 (1990).
Medical records establishing a three to four year history of diabetes and hypertension make these
conditions manifest. Even if the claimant had been unaware of underlying heart disease, the manifest
requirement would be satisfied. Dugan v. Todd Shipyards, 22 BRBS 42, 45 (1989).
Where a claimant's spinal condition was clearly shown on a previously un-read
barium enema x-ray and "his 'list and tilt' were apparent to the naked eye," the court held that "proof
that [claimant's] condition had manifested itself prior to his injury was uncontroverted. American Shipbuilding Co. v. Director,
OWCP, 865 F.2d 727, 729, 732, 22 BRBS 15 (CRT) (6th Cir. 1989) (court found condition was
manifest while at the same time declining to adopt the judicially-created manifest requirement).
Injury was not manifest:
An Orthopaedic Consultant Panel Report which concluded that there was no objective basis for
a claimant's continuing reports of pain, did not constitute manifest evidence of an undiagnosed psychological
disorder. The court acknowledged that a specific diagnosis is not always necessary, but found that this was
not a situation where the disorder was so obvious from the available records that a formal diagnosis was
not required. Bunge Corp. v. Director, OWCP, 951 F.2d 1109, 1111-12, 25 BRBS 82 (CRT) (9th Cir.
1991).
Where a worker's pre-injury medical reports established episodes of shoulder and neck pain but
did not contain a specific diagnosis of cervical spondylopathy or any other cervical disease, the reports did
not satisfy the manifest requirement. Caudill v. Sea Tac Alaska Shipbuilding, 25 BRBS 92, 99-100
(1991).
Employer's knowledge of a claimant's illiteracy at the time of hiring did not constitute manifest
evidence of his mental retardation or learning disability, particularly where neither condition was diagnosed
until after the subject injury. Lacey v. Raley's Emergency Rd. Serv., 23 BRBS 432, 437-38 (1990).
Medical records which mentioned anxiety once and indicated that the claimant was prescribed
valium for hand tremors (from 1979 until the subject injury in 1984) were not manifest evidence that the
claimant suffered from pre-existing depression. Hayes
v. P & M Crane Co., 23 BRBS 389, 394 (1990).
Medical records which showed that the claimant had minimal spinal degeneration which was not
medically significant, no worse than normal, and present in most people his age, did not meet the manifest
requirement because they did not establish that claimant had a disability. Berkstresser, 921 F.2d at 310-11.
Where x-ray reports showed abnormalities but did not result in the diagnosis of a particular disease,
no disease was manifest. Eymard & Sons
Shipyard v. Smith, 862 F.2d 1220, 1224, 22 BRBS 11 (CRT)
(5th Cir. 1989).
Multiple conflicting x-ray reports (a lung abnormality was described as a possibility) none of which
contained a definitive diagnosis, do not satisfy the manifest requirement. Armstrong v. General Dynamics
Corp., 22 BRBS 276, 278-79 (1989).
Where the claimant was tired and needed occasional decongestants for chest pain the judge held,
and the Board affirmed, that there was insufficient medical evidence to suggest to the employer that the
claimant had lung cancer. Todd v. Todd Shipyards Corp., 16 BRBS 163, 167-68 (1984).
In Transbay Container Terminal v. United States Department of Labor, Benefits Review Board
[Dermont], 141 F.3d 907 (9th Cir. 1998), the Ninth Circuit held
that Claimant's pre-existing cardiovascular atherosclerosis was not manifest
for purposes of Section 8(f). Employer had argued that
the ALJ's findings that the condition was not manifest were not supported by
substantial evidence because several "risk factors" for cardiovascular disease
and myocardial infarction were discoverable from claimant's medical records.
These factors included the claimant's four incidents of high blood pressure in six years, a 20-year
smoking habit of two-packs a day, a family history of diabetes mellitus, and claimant being an obese male.
In upholding the ALJ's finding that the claimant's condition was not manifest to the employer, the Ninth
Circuit stated that the mere presence of certain "risk factors" is not
legally sufficient. Without a documented diagnosis, there must be sufficient
unambiguous, objective and obvious indication of a disability
reflected by the factual information contained in the available records so that
the disability should be considered manifest even though actually unknown by
the employer.
In Director, OWCP v. Sun Ship, Inc.,
150 F.3d 288 (3rd Cir. 1998), nine years after the claimant
retired he was diagnosed with asbestosis resulting from his years of work-related asbestos exposure. The
same month he was diagnosed, doctors discovered he also had a work-related pulmonary malignancy. At
issue was whether the employer qualified for Section 8(f) relief because of the pre-existing (yet unknown)
asbestosis.
The
court held that the 1984 amendments to the LHWCA did not eliminate the judicially
created "manifest" requirement of Section 8(f) Trust Fund relief. In this
case the pre-existing injury [asbestosis] did not become manifest until after
the employee had retired and therefore the pre-existing disability was not
manifest to the employer. Thus, the court found that the employer was not entitled
to Section 8(f) relief.
Where hospital records diagnosed a claimant with a cyclothymic personality and indicated that she
was receiving counseling from therapists to help her cope with problems she was facing with her work and
marriage, the ALJ rationally found that the records did not establish the existence of a serious, lasting
emotional problem. Callnan .v Morale,
Welfare & Recreation, Dept. of the Navy, 32 BRBS 246(1998).
However, it should be noted that subsequent deposition testimony supported
the conclusion that the claimant did not have a diagnosed permanent psychiatric
condition prior to her work injury. In fact, one
doctor testified that the claimant had a latent dissociative identity disorder
which was "triggered" by the
work-related incident, and thus, speculated that her condition may not have
manifested itself if she had not experienced what had happened on the job.
8.7.5 The Disability Must Not Be Due Solely to the New Injury
From 1927 to 1972, employers could seek Section 8(f) relief only in cases where a claimant's
injury resulted in permanent total disability. According to the 1927 version of the statute:
If an employee receives an injury which of itself would only cause
permanent partial disability but which, combined with a previous disability,
does in fact cause permanent total disability, the employer shall provide
compensation only for the disability caused by the subsequent injury.
33 U.S.C. § 908(f) (1927). The 1972 amendments broadened Section 8(f) relief to include permanent
partial disability and in the course of doing so changed the language. Pub. L. No. 92-576, § 9(a).
In cases of permanent and total disability,
the requirement that the two injuries "combine" was
replaced by a requirement that the current level of "disability [be] found not to be due solely" to the most
recent injury. As a result, in many cases the "combined with" and "not due solely" language
is used either interchangeably or in conjunction. Either analysis appears to
achieve the same result.
Simply proving a prior disability is not enough, however; the employer must show that the second
injury by itself would not have led to total disability. Two "R" Drilling
Co. v. Director, OWCP, 894 F.2d
748, 750, 23 BRBS 34 (CRT) (5th Cir. 1990) (employer did not meet its burden of showing that the
current total disability was not due solely to the employment injury because it failed to put on medical
evidence to suggest that claimant's pre-existing back diseases contributed to his current total back
disability).
SeeDirector, OWCP v. Luccitelli, 964 F.2d 1303, 1306, 26 BRBS 1 (CRT) (2d Cir. 1992);
rev'gLuccitelli v. General Dynamics Corp., 25 BRBS 30 (1991) (remanded two cases to judges to
determine whether the second injury alone (a knee injury, in one case, and a back injury, in the other case),
was sufficiently debilitating to have caused permanent total disability); FMC Corp. v. Director, OWCP,
886 F.2d 1185, 1186-87, 23 BRBS 1 (CRT) (9th Cir. 1989) (pre-existing bursitis and heart murmur are
not evidence that back injury is not the sole cause of the disability).
In E.P. Paup Co. v. Director, OWCP, 999 F.2d 1341, 27 BRBS 41 (CRT) (9th Cir. 1993), the
employer failed to prove pre-existing hand impairment contributed to total disability caused by back injury;
not enough that hand injury made total disability even greater. SeealsoDirector, OWCP v. General
Dynamics Corp., 982 F.2d 790, 26 BRBS 139, 150 (CRT) (2d Cir. 1992).
Courts have sometimes suggested that Special
Fund relief is assured in "aggravation cases." See,
e.g., Brannon,
607 F.2d at 1382. The issue of "aggravation" has no bearing, however, on
the element of Section 8(f) under discussion. Aggravation is a separate
issue (see Topic 8.7.1, supra) pertaining to
whether there was a second injury. If there was a second injury the employer must still prove that it alone
would not have resulted in permanent total disability. SeeJacksonville Shipyards v. Director, OWCP, 851
F.2d 1314, 1316, 21 BRBS 150 (CRT) (11th Cir. 1988).
An employer is entitled to Section 8(f) relief in a death claim if the death is not due solely to the
work injury, a standard which can be met if the pre-existing condition hastens the employee's death.
Requiring the employer to prove that the decedent would not have died at the time he did had he not
suffered from the pre-existing condition is consistent with the hastening standard. Brown & Root,
Inc. v. Sain, 162 F.3d 813, 32 BRBS 205 (CRT) (4th Cir. 1998). Seealso, Stilley
v. Newport News Shipbuilding & Dry Dock Company, 33 BRBS 224 (2000)(evidence legally insufficient to establish that
decedents death was not due solely to mesothelioma) for a good example of insufficient medical evidence.
Significantly, in Stilley,
the decedent died within the expected time frame after having been diagnosed
with mesothelioma. Additionally, the doctor did not state that the decedent
would not have died when he did
if not for the hypertension. The doctor's statement that death was hastened "to some degree" was
vague and plainly insufficient to meet the standard of Sain. The medical opinion was also capable of several
interpretations: did the hypertension hasten death, or did decedent's mesothelioma worsen the
hypertension?
8.7.6In Cases of Permanent Partial Disability, the Disability Must Be Materially and Substantially Greater than that Which Would Have Resulted from the Subsequent Injury Alone.
Where a claimant is permanently partially disabled,
employer must also prove that the claimant's current level of disability
is "materially and substantially greater than that which would have resulted from
the subsequent injury alone." 33 U.S.C. § 908(f)(1). SeeSproull v. Director, OWCP, 86 F.3d 895 (9th
Cir. 1996), cert. denied, 520 U.S. 1155 (1997); Louis Dreyfus Corp. v. Director, OWCP, 125 F.3d 884
(5th Cir. 1997) (following the rational in Two R Drilling); Director, OWCP v. Ingalls Shipbuilding, Inc.,
125 F.3d 303, 306 (5th Cir. 1997); Director
v. Newport News Shipbuilding & Dry Dock Co.[Harcum],
8 F.3d 175, 27 BRBS 116 (CRT) (4th Cir. 1993), aff'donothergrounds, 514 U.S. 122 (1995), 131
F.3d 1079 (4th Cir. 1997) (vocational rehabilitation expert can prove materiality prong of the
contribution element); Two R Drilling v. Director, OWCP, 894 F.2d 748, 750 (5th Cir.
1990) (rejecting the "Common Sense Test"); Marine
Power & Equipment v. Dept. Of Labor [Quan], 203 F.3d 664, (9th
Cir. 2000).
[ED. NOTE: As was noted by the Fourth Circuit, "The
'combination' requirement should not be confused with the 'contribution'
requirement imposed when determining an employer's liability in
the case of a permanent partial disability." Tartan Terminals, Inc. v. Puller, (Nos. 98-1302, 98-1937)(4th Cir. 1999)(Unpublished).]
In Farrel
v. Norfolk Shipbuilding & Dry Dock Corp., 32 BRBS 118 ( 1998),
the Board vacated and remanded the ALJ's determination that the employer
was not entitled to Section 8(f) relief. The
claimant had a pre-existing mental impairment, evidenced by low Intelligence
Quotient (IQ) test scores. The employer's vocational expert performed a transferable
skills analysis to discern "what types of jobs or
percentage of jobs were available first with regard to his work injury, and then upon consideration of his
additional mental impairment." The vocational expert testified that the claimant's pre-existing mental
impairment increased the number of jobs no longer available to the claimant for "generally transferable
occupations" from 80 percent to 97 percent and for "unskilled occupations" from
48-49 percent to 76 percent.
The ALJ had found that this does not meet the "Harcum test" [seeDirector,
OWCP v. Newport News Shipbuilding & Dry Dock Co. (Harcum I), 8 F.3d 175 (4th Cir. 1993); and Director,
OWCP v. Newport News Shipbuilding & Dry Dock Co. (Harcum II), 131 F.3d 1079 (4th Cir. 1997)], that is, the
percentages given by the vocational expert did not reflect the extent of disability or impairment sustained
by Claimant.
The Board, however, found that the evidence, if credited, demonstrated the level of impairment that
would ensue from the work-related injury alone and thereby provides the ALJ with a basis to determine
if the claimant's ultimate permanent partial disability is materially and substantially greater than his disability
caused by the work-related injury alone. Since the ALJ had not considered this evidence, the matter was
vacated and remanded.
In the Fifth Circuit, an employer must prove that without the prior injury the worker would not
now be totally permanently disabled in order to meet the "not due solely" requirement. Two R Drilling,
894 F.2d 748, 750 (1997).
For permanent partial disability the employer need only show that an increased permanent
partial disability resulted when the prior and subsequent injuries are combined. Director, OWCP v. Ingalls
Shipbuilding, Inc., 125 F.3d at 307. This is still subject to the Congressional
mandate that it be a "material
and substantially" greater level of disability. Id.
n. 6; 33 U.S.C. §908(f)(1); Director, OWCP v. Bath Iron
Works Corp.[Johnson], 129 F.3d 45 (1st Cir. 1997); Director, OWCP v. Ingalls Shipbuilding, Inc.
[Ladner], 125 F.3d 303 (5th Cir. 1997). The Fifth Circuit,
has held that the lack of the magic words "materially and substantially" will
not bar Section 8(f) coverage per se. Id. at 307, citingCeres Marine
Terminal v. Director, OWCP, 118 F.3d 387, 391 (5th Cir. 1997).
Rather, when the 'magic words' are absent from the record, "'the fact finder's
inquiry must of necessity be resolved by inferences based on such factors as
the disabilities and the current employment injury, as well as the strength
of the relationship
between them.'" Id.
In the First and D.C. Circuits,
the employer proves entitlement by "showing that 'but for' the pre-existing
disability the claimant would be employable rather than by merely showing
that the claimant's pre-existing condition compounded his condition.'" Dominey
v. Arco Oil & Gas Co., 30 BRBS 134, 136
(1996); SeealsoDirector, OWCP v. Jaffe New York Decorating, 25 F.3d 1080 (D.C. Cir. 1994); CNA
Ins. Co. v. Legrow, 935 F.2d 430 (1st Cir. 1991).
This requirement has been reiterated in case law although neither the Board nor the courts have fully
addressed this requirement. In Sproull, the Ninth Circuit stated
that an employer could "establish the
contribution requirement by medical or other evidence." Sproull, 86 F.3d at 900 (emphasis original);
Director v. Newport News Shipbuilding & Dry
Dock Co.[Harcum], 8 F.3d 175, 27 BRBS 116 (CRT)
(4th Cir. 1993), aff'donothergrounds, 514 U.S. 122 (1995), 131 F.3d 1079 (4th Cir.
1997)(vocational rehabilitation expert can prove materiality prong of the contribution element);
Director, OWCP v. Luccitelli, 964 F.2d 1303, 1306 (2d Cir. 1992), rev'gLuccitelli v. General Dynamics
Corp., 25 BRBS 30 (1991). Two "R" Drilling
Co., 894 F.2d at 750; Thompson v. Northwest Enviro
Servs., 26 BRBS 53 (1992) (Board articulates proper standard and indicates
that the ALJ did not apply it; however, the Board affirmed the ALJ because
the "employer established the contribution [emphasis
added] element necessary for § 8(f) relief"); Beltran
v. California Shipbuilding & Dry Dock, 17 BRBS 225,
228 n.3 (1985) (court articulates standard but does not apply it in this case).
In Beckner,
Jr. v. Newport News Shipbuilding & Dry Dock Co., 34 BRBS 181(2000), the Board
reversed a Section 8(f) award finding that the claimant's pre-existing bilateral amputations did not cause
his asbestosis impairment to be substantially greater than that which would have resulted from the asbestos
exposure alone.
Where a scheduled injury materially increases a pre-existing permanent partial disability and where
the compensation due the employee on account of the overall resulting impairment exceeds 104 weeks'
compensation, then whenever a credit for previous compensation paid is available to offset the amount due the employee that credit shall first reduce the total award before there is any allocation of liability to the Special
Fund. Director, OWCP v. Bethlehem Steel Corp., 868 F.2d 759, 763 (5th Cir. 1989).
8.7.7 Duration of Employers' Liability Prescribed by Statute
Under the "aggravation rule" (see Topics 8.7.1, 2.26, supra), an employer is liable for the claimant's
entire resulting disability when an employment-related injury contributes to, combines with, or aggravates
a pre-existing disease or underlying condition. Strachan Shipping Co. v. Nash, 782 F.2d 513, 517, 18
BRBS 45 (CRT) (5th Cir. 1986) (en banc).
If an employer can prove entitlement to Section 8(f) relief, however, the Special Fund may assume
responsibility for part of the employer's obligation. Where the Special Fund is implicated, an employer's
obligation varies depending upon the type of injury (scheduled or non-scheduled) the claimant sustained
while working for the employer, and the portion of the entire resulting disability which is attributable to the
employment injury.
Under Section 8(f)(1):
(1) If the employment injury is a scheduled (§ 908(c)(1)-(20))
injury (other than hearing loss) which results in permanent partial
disability or permanent total disability, the employer is liable for
the greater of 104 weeks or the number of weeks due for the
subsequent injury; and
(2) If the employment injury is a non-scheduled (§ 908(c)(21))
injury which results in permanent partial or permanent total
disability or death, an employer's liability is limited to 104 weeks.
If the employment injury results in hearing loss, the employer's liability is limited to the lesser of 104
weeks or the number of weeks attributable to the injury. Director, OWCP v. General Dynamics Corp.,
900 F.2d 506, 509, 23 BRBS 40 (CRT) (2d Cir. 1990), aff'g 22 BRBS 128 (1989). For a complete
discussion see hearing loss at Topic 8.13, infra.
In each of the above scenarios, any remainder of compensation due is paid
from a Special Fund created under Section 44 of the LHWCA, 33 U.S.C. § 944.
>8.7.7.1Multiple Disability Periods and Multiple Injuries
Employer's Liability Limited to One 104-Week Period
The Board has held that in cases where a single injury results in a period of permanent partial
disability followed by permanent total disability, and Section 8(f) is applicable to both periods of disability,
the employer is liable only for the period of permanent partial disability prescribed by statute.
The Special Fund pays the remainder of the permanent partial period, as well as the entire
permanent total period. Hansen v, Container Stevedoring Co., 31 BRBS 155 (1997). Davenport v.
Apex Decorating Co. (Davenport II), 18 BRBS 194, 197 (1986), overrulingDavenport v. Apex
Decorating Co.(Davenport I), 13 BRBS 1029 (1981) (employer's liability was limited to 115.2 weeks
where claimant suffered a permanent partial disability and a subsequent permanent total disability due to
the same right hip injury); Huneycutt
v. Newport News Shipbuilding & Dry Dock Co., 17 BRBS 142, 143
(1985) (employer's liability was limited to 104 weeks because claimant's asbestosis was a non-schedule
injury).
Finding Davenport analogous, the Board held that the employer's liability is limited to one statutory
period if one injury results in one period of permanent partial disability followed by a second period of
permanent partial disability. Section 8(f) is applicable to both periods of disability. Murphy v. Pro-Football, Inc., 24 BRBS 187, 190-91 (1991).
Similarly, in cases where permanent total disability is followed by work-related death, and the
elements of Section 8(f) are met with respect to both Section 8 and 9 benefits, the employer is only liable
for one statutory period. Adams v.
Newport News Shipbuilding & Dry Dock Co., 22 BRBS 78, 86
(1989). The same rule applied where decedent died prior to the effective date of the 1984 amendments,
even if the cause of death was unrelated to the employment. Estate of Hickman v. Universal Maritime
Serv. Corp., 22 BRBS 212, 217 (1989).
Employer Liable for More than One 104-Week Period
The employer is liable for more than one statutory period where the claimant's permanent partial
disability is followed by total disability caused by a new distinct traumatic injury. Cooper
v. Newport News Shipbuilding & Dry Dock Co., 18 BRBS 284, 286 (1986) (claimant's permanent partial disability
was precipitated by asbestosis; claimant's permanent total disability was precipitated by a totally unrelated
back injury).
The employer is also liable for more than one statutory period where the claimant suffers
successive, unrelated injuries in the workplace. Newport
News Shipbuilding & Dry Dock Co. v.
Howard, 904 F.2d 206, 210-11, 23 BRBS 131 (CRT) (4th Cir. 1990) (claimant's back injuries/arthritis
and carpal tunnel syndrome were discrete injuries (though together they rendered the claimant permanently
disabled); therefore, the employer was liable for more than one 104-week period).
In Matson Terminals, Inc. v. Berg, 279 F.3d 694 (9th Cir. 2002) the multi-scheduled injury issue
once again was raised in the context of Section 8(f). Here both of a claimant's knees were injured in
one accident. The Ninth Circuit noted that Section
8(c)(22) indicates that there should be two liability periods and that since
the claimant's two knees were discrete injuries under Section 8(f), there should
be two 104-week liability periods on the employer. "It is irrelevant that the
injuries arose from the same working conditions or that they arose from a single
cause or trauma. What is relevant is that the working conditions caused two injuries, each separately compensable under Section 8(f)."
8.7.8 Miscellaneous Substantive Special Fund Issues
The scheduled award or 104 weeks due under Section 8(f) must be paid in addition to payments
for temporary total and temporary partial disability. Shaw v. Todd Pac. Shipyards Corp., 23 BRBS 96,
99-100 (1989).
The Special Fund is not liable for:
Medical benefits. Barclift
v. Newport News Shipbuilding & Dry Dock Co., 15 BRBS
418, 421 (1983), rev'donothergroundssubnom. Director,
OWCP v. Newport News Shipbuilding & Dry Dock Co., 737 F.2d 1295, 16 BRBS 107 (CRT) (4th Cir. 1984);
Scott v. Rowe Mach. Works, 9 BRBS 198, 200-01 (1978); Spencer v. Bethlehem Steel
Corp., 7 BRBS 675, 677 (1978); Duty v. Jet America, Inc., 4 BRBS 523, 531 (1976);
Funeral expenses. Perry v. Bath Iron Works Co., 29 BRBS 57 (1995); Bingham, 20
BRBS at 205.
An employer is entitled to interest, payable by the Special Fund, on monies paid in excess of its
liability under Section 8(f). Evangelista v. Bethlehem Steel Corp.,
19 BRBS 174, 175 (1986) (Special Fund paid pursuant to § 10(h)(2)); Campbell v. Lykes Bros. Steamship Co., 15 BRBS 380, 383 (1983) (not
yet in issue because case was remanded to determine whether Section 8(f) was applicable); Still v. Todd
Pac. Shipyards, 14 BRBS 890, 893 (1982) (Special Fund paid pursuant
to § 10(f)); Lewis v. American
Marine Corp., 13 BRBS 637, 639-40 (1981).
The employer is not entitled to Section 8(f) relief where the claimant receives a de minimis
permanent partial disability award. Peele
v. Newport News Shipbuilding & Dry Dock Co., 20 BRBS 133,
137-38 (1987); Porras v. Todd Shipyards Corp., 17 BRBS 222, 223-24 (1985), aff'dsubnom. Todd
Shipyards Corp. v. Director, OWCP, 792 F.2d 1489, 19 BRBS 3 (CRT) (9th Cir. 1986) (Board
affirmed ALJ's finding that where there is a de minimis claim it is
impossible to determine one of the elements of § 8(f)--whether claimant's disability
was materially and substantially greater than it would have been from claimant's
last injury alone). Cf. Murphy v. Pro-Football, Inc., 24 BRBS 187, 190-91 (1991)
(Special Fund relief granted where employer paid substantial award for permanent partial disability for 104
weeks; claimant entitled to de minimis award against Special Fund).
However, overturning the Board, the Fourth Circuit held that a small disability award that reflects
an actual loss in wage earning capacity does not preclude an employer from seeking relief under Section
8(f) of the LHWCA. Newport News Shipbuilding & Dry
Dock Co. v. Stallings, 250 F.3d 868 (4th Cir.
2001), vacat'gStallings v. Newport News Shipbuilding and Dry Dock Co., 33 BRBS 193 (1999). In
Stallings the Board had determined that the policy behind Section 8(f) would be undermined by allowing
an employer to get Section 8(f) relief for a nominal award and, thereby, allowing the employer to avoid
liability for a future substantial injury. However, the Fourth Circuit distinguished
this case from one in which the award was "nominal." In vacating the Board,
the Fourth Circuit recognized that the $3.78 per
week is insubstantial and that the claimant's disability does not greatly affect his wage-earing capacity.
Important to the court was the fact that the employer had been ordered to pay compensation calculated
on the basis of an actual loss in wage-earning capacity, to an employee with a permanent partial disability.
8.7.9 Procedural Issues
8.7.9.1 Standing
Claimant has no interest in the source of compensation and therefore has no standing to appeal the
applicability of Section 8(f). Henry v. George Hyman Constr. Co., 749 F.2d 65, 69-70, 17 BRBS 42
(CRT) (D.C. Cir. 1984), rev'g 15 BRBS 475 (1983); Coats
v. Newport New Shipbuilding & Dry Dock
Co., 21 BRBS 77, 79 n.2 (1988); Dove v. Southwest Marine, 18 BRBS 139, 140 (1986); Price v.
Greyhound Bus Lines, 14 BRBS 439, 440 n.1 (1981), dismissedforlackofsubjectmatterjurisdiction,
No. 81-2210 (4th Cir.), cert. denied, 459 U.S. 831 (1982). Embodied in these cases is the general
principle that a claimant should not be concerned with the source of compensation once it has been
awarded.
[ED. NOTE:Benefits received under the LHWCA andpaidbytheUnitedStatesgovernment,
i.e., the Longshore Trust Fund, are garnishable for purposes of child support and alimony.See 5
C.F.R. §§ 581.101-103, especially 5 C.F.R. § 581.103(c)(5) which specifically lists "Benefits
received under the Longshoremen's and Harbor Workers' Compensation Act." 5 C.F.R. § 581.101 etseq. was enacted to implement the objectives of 42 U.S.C. 659 and 666(a)(1) and (b), to make
the United States or the District of Columbia subject to legal process brought for the enforcement
of an individual's legal obligations to provide child support and/or to make alimony payments. SeeMoyle v. Director, OWCP, 147 F.3d 1116, 32 BRBS 107 (CRT) (9th Cir. 1998), cert. denied, 119
S.Ct. 1454 (1999).]
This regulation seemingly carves out an exception to Section 16 of the LHWCA. Thus, a distinction can
be drawn between compensation benefits payable by an employer/carrier and compensation benefits
payable by the Trust Fund. Only the latter benefits would be garnishable. There are currently no published
cases on this issue.
According to the Circuit Courts and the Board, the Director has a real interest in protecting the
financial integrity of the Special Fund and has standing as the proper party to appeal an award of Section
8(f) relief. E.P. Paup Co. v. Director, OWCP, 999 F.2d 1341, 27 BRBS 41 (CRT) (9th Cir. 1993);
Henry, 749 F.2d at 69-70; Director, OWCP v. Cargill, Inc., 718 F.2d 886, 888, 16 BRBS 85 (CRT)
(9th Cir. 1983); Director,
OWCP v. Newport News Shipbuilding & Dry Dock Co.(Langley), 676 F.2d
110, 114, 14 BRBS 716 (4th Cir. 1982); Hitt
v. Newport News Shipbuilding & Dry Dock Co., 16 BRBS
353, 354 (1984); Powell v. Brady-Hamilton Stevedore Co., 17 BRBS 1, (1984) (Order on
Reconsideration).
In Director, OWCP v. Newport News Shipbuilding and Dry Dock Co., 514 U.S. 122 (1995),
the Supreme Court found that where Section 8(f) was not in issue, the Director lacked standing to appeal
an order. Specifically, the Court found that the Director
was not a "person adversely affected or
aggrieved" within the meaning of the LHWCA by the Board's decision [regarding
the claimant's level and degree of disability]. The Court went on to note that since the agency lacked specific authorization to
appeal, it could not be adversely affected or aggrieved in its regulatory or policymaking capacity. In Ingalls
Shipbuilding, Inc. v. Director, OWCP (Yates), 519 U.S. 248 (1997), the Court held
that the Department of Labor is the "agency" which must be named as respondent
on review of decisions of the Benefits Review Board in LHWCA cases, pursuant
to the rules of appellate procedure and thus, the Director of OWCP
may be named as a respondent in the courts of appeal. However, Justice Scalia's
dissent is noteworthy. Justice Scalia stated:
Today's opinion concludes, on the basis of Federal Rule of Appellate Procedure
15(a), that the Director of the Office of Workers' Compensation Programs, a subagency
within the Department of Labor, is a proper respondent in the courts of appeals when
review is sought of an order of the Benefits Review Board (Board or BRB), an
independent adjudicatory body within that Department. This conclusion is at odds with the
plain language of the Rule, and produces a bizarre arrangement that will have troublesome
consequences for both agencies and private parties. I respectfully dissent from the Court's
judgment on this issue.
Pursuant to the 1984 Amendments, the employer
remains a party to the claim even after its liability terminates under Section
8(f) and retains all its rights under the LHWCA. 33 U.S.C. § 908(f)(2)(B). See
H.R. Rep. 98-1027, 98th Cong., 2d Sess. 32, reprinted 1984 U.S.C.C.A.A.N. 2782.
8.7.9.2 Timeliness of Employer's Claim for Relief
Current Law: Post-1984 Amendments-Absolute Bar
The 1984 Amendments added Section 8(f)(3) specifying when the Section 8(f) issue must be
raised:
Any request, filed after [September
28, 1984], for apportionment of liability to the special fund established
under section § 44 of this
Act for the payment of compensation benefits, and a statement of
the grounds therefore, shall be presented to the deputy
commissioner [now district director] prior to the consideration of
the claim by the deputy commissioner. Failure to present such
request prior to such consideration shall be an absolute defense to
the special fund's liability for the payment of any benefits in
connection with such claim, unless the employer could not have
reasonably anticipated the liability of the special fund prior to the
issuance of a compensation order.
33 U.S.C. § 908(f)(3).
Only claims filed after the September 28, 1984 effective date of the 1984 Amendments are subject
to the rules cited above. Verderane v. Jacksonville Shipyards, 772 F.2d 775, 778 n.5, 17 BRBS 154, 157
n.5 (CRT) (11th Cir. 1985); Scott v. S.E.L. Maduro, Inc., 22 BRBS 259, 261 (1989) (a claim occurring
within the 11th Circuit which was referred to OALJ prior to the effective date of the 1984 amendments.).
However, in Lassiter v. Nacirema Operation Co., 27 BRBS 168, 171, the Board held that where
a claim filed for permanent disability benefits prior to the effective date of the 1984 amendments, but the
employer first requests Section 8(f) relief at the initial informal conference held in 1986, approximately one
and one-half years after the effective date of the 1984 amendments, September 28, 1984, Section 8(f)(3)
should be applied.
In Serio v. Newport News Shipbuilding, 32 BRBS 106 (1998), the Board held that Section 8(f)
must be raised and litigated at the first hearing of a case. In this case, at hearing, the parties informed the
ALJ that the only remaining issue was Section 8(f) relief. Shortly thereafter, by letter, the employer informed
the ALJ that it was withdrawing its request for Section 8(f) relief and that it would not pursue a claim for
Section 8(f) relief at that time. A compensation order awarding benefits consistent with the parties'
stipulations was issued. Subsequently, the employer submitted a second request for Section 8(f) relief by
way of a petition for modification. The Director opposed the Section 8(f) claim on the ground that the
employer's withdrawal of that claim in the first hearing constituted a waiver which precludes employer's
pursuit of that issue in a second hearing. Agreeing with the Director, the Board stated that the purpose of
requiring an employer to raise and litigate Section 8(f) relief in the first proceedings wherein the permanency
of a claimant's disability is at issue, is to facilitate the policy of finality in litigation and to avoid the bifurcation
of issues.
A Section 8(f) request first raised in a Motion for Reconsideration is untimely. Ceres Marine
Terminals v. Hinton, 243 F.3d 222 (5th Cir. 2001).
8.7.9.3 Filing for Section 8(f) Relief
[ED. NOTE: The following related issues are separated into two groupings: 1) filing for a claim
pending before OWCP; and 2) filing for a claim that has been transferred to OALJ.]
Filing for a claim pending before OWCP
The regulations require:
An employer or insurance carrier which seeks
to invoke the provisions of § 8(f) of the Act must request limitation of
its liability and file, in duplicate with the district director a fully documented application ...[In
addition, any] other evidence considered necessary for consideration of the
request for § 8(f) relief must be submitted when requested by the district director...
20 C.F.R. § 702.321(a)(1) (emphasis added); Wiggins
v. Newport Shipbuilding & Dry Dock Co, 31
BRBS 142 (1997). A fully-documented application includes a statement of the
grounds for Section 8(f) relief; the grounds for relief must be supported
by medical evidence. 20 C.F.R. § 702.321(a)(1)(i-iv)
(1986); Cajun Tubing Testors v. Hargrave, 951 F.2d 72, 740 (5th Cir. 1992).
The filing of the Section 8(f) application is not accomplished by the act of mailing the required
application to the district director. Lassiter at 172; SeealsoWiggins
v. Newport Shipbuilding & Dry Dock
Co, 31 BRBS 142 (1997). If Congress had meant for compliance with the requirements of Section 8(f)(3)
to be accomplished by the mailing of an application for Section 8(f) relief, it would have included language
similar to that in Section 30(d) in Section 8(f)(3) itself. Id.
Where an employer raises the Section 8(f) issue
before the district director but fails to submit a complete application,
the absolute defense may be raised and a judge cannot consider the merits
of the
employer's 8(f) request without initially considering whether the request submitted
to the district director was sufficiently documented pursuant to 20 C.F.R. § 702.321. Tennant v. General Dynamics Corp.,
26 BRBS 103 (1992) (employee had failed to provide district director with
medical documentation or list a "permanent" defect).
The Board, in Tennant, remanded to the judge for de novo consideration
as to whether the Section 8(f) application originally filed by the employer
with the district director meets the requirements of Section
8(f) and the regulatory requirements under 20 C.F.R. § 702.321. SeealsoFullerton v. General Dynamics
Corp., 26 BRBS 133 (1992).
A request for Section 8(f) relief should be made as soon as the permanency of a claimant's
condition is known or is an issue in dispute. See 20
C.F.R. § 702.321(b)(1). An application need not be
filed, however, if, prior to referral by the district director, the claimant's
condition has not reached maximum medical improvement and a claim for permanent
disability benefits has not been raised. See 20
C.F.R. § 702.321(b)(3).
The Board has held that a judge should only consider whether permanency was in issue, not
whether it should have been. Brazeau v. Tacoma Boatbuilding Co.,
24 BRBS 128, 131-33 (1990) (the Board reasoned that the "should have been" inquiry
placed the onus of raising the issue of permanency on
the employer rather than the claimant, which is inappropriate because the employer
is not required to monitor a condition's permanency and thus preserve its right
to relief under § 8(f)).
In Rice
v. Newport News Shipbuilding & Dry Dock Company, 32 BRBS 102 (1998)
the issue presented was the time frame in which an employer must request
Section 8(f) relief after the "permanency
of claimant's condition is known or is an issue in dispute." The Board upheld
the ALJ's determination that the petition was timely filed where it was filed
prior to the time that the permanency of the claimant's
condition became an issue before the district director. While the Section 8(f)
petition was filed five years after the claim was filed, at no point during
the five year period was the permanency of the claimant's
condition at issue. The employer is not required to monitor the claimant's
condition to determine the point at which his disability has become permanent.
The fact that the parties ultimately stipulated that the claimant
is entitled to permanent disability benefits for a period which begins prior
to the date of the filing of the Section 8(f) petition does not indicate that
the permanency of the claimant's condition actually was at issue
prior to the filing of the Section 8(f) petition.
The Fifth Circuit, however, requires the employer to raise the Section 8(f) issue when it has
"reason to believe" that the claimant has suffered a permanent disability. Cajun Tubing Testors v.
Hargrave, 951 F.2d 72, 75 (5th Cir. 1992). The employer
has "reason to believe that permanency is in
issue" when:
1) the employer has knowledge that the claimant is permanently
disabled,
2) permanent disability benefits are paid, or
3) an informal conference is held to discuss permanency of the claimant's
condition.
Id. at 75.
In the Ninth Circuit, the employer
was put on notice that permanent disability was in issue where a claim document
included a request for compensation for "severe permanent injuries" and a
medical record indicated a three percent permanent partial disability. Container Stevedoring Co. v. Director, OWCP, 935
F.2d 1544, 1546-48 (9th Cir. 1991); butsee dissenting view, Container Stevedoring,
935 F.2d at 1552-54 (concurring opinion) (judge disagreed with the majority's
interpretation of "permanency [as] either
'known' or 'in dispute' whenever it is mentioned in a compensation-related document, however tangential
to the actual course of the proceedings." Here, such information was at odds
with documents which indicated that only temporary disability was in issue
before the OWCP claims examiner. The judge would
not have drawn the conclusion that total disability was considered when the
only available evidence contradicted such an assumption.).
In the First Circuit, the absolute
bar has been upheld when permanency was not in issue, where an autopsy report
and medical records, including x-rays showing a pre-existing condition (lung
impairment)
and asbestosis, were available to the employer prior to hearing, so that the
employer could have "reasonably anticipated" the liability of the Special
Fund. Bath Iron Works Corp. v. Director, OWCP, 950
F.2d 56, 58-59, 25 BRBS 55 (CRT) (1st Cir. 1991); butseeOrtiz v. Todd Shipyards Corp., 25 BRBS
228, 237 (1991) (where medical records which were available to the employer prior to the director's
informal hearing merely indicated that the claimant was in pain, but did not specifically diagnose intra
cerebral bleeding, the employer did not possess sufficient medical evidence at the time of the informal
conference to have reasonably anticipated liability of the Special Fund).
Even where permanency is in issue, an employer's
failure to submit a fully-documented application by the date established
by the district director may not bar relief, if it is excused, because the
employer
could not have reasonably anticipated the liability of the Special Fund. 20
C.F.R. § 702.321(b)(3); Currie
v. Cooper Stevedoring Co., 23 BRBS 420, 422-23 (1990) (after holding
that "permanency" was in issue
before the director, the Board rejected the absolute bar because the delay in filing the § 8(f) petition was
caused by the employer's lack of access to documents which would prove the elements of § 8(f)).
Where a Section 22 Modification request is made (for an original award of temporary partial
disability to be modified to an award of permanent partial disability), the employer must begin his request
for Section 8(f) relief at OWCP. Firth v. Newport News Shipbuilding and Dry Dock Company, 33 BRBS
75 (1999). Section 22 is of no relevance to the applicability of Section 8(f)(3). Although
a district director may not "modify" a decision of an ALJ regarding an issue
in dispute, modification proceedings are properly initiated at the district
director level and the district director does have the power, pursuant to
Section 22, to review a compensation case in accordance with the procedure
prescribed in respect of claims under Section 19 of the LHWCA. The statute
does not provide an exception, applicable in
modification cases, to the rule that a claim for Section 8(f)(3) applies to
all claims for Section 8(f) relief.
Filing for a claim that has been transferred to OALJ
Section 8(f)(3) of the LHWCA provides:
Any request, filed after the dates of enactment of the Longshore and Harbor Workers'
Compensation Amendments of 1984, for apportionment of liability to the special fund...,
shall be presented to the deputy commissioner prior to the consideration of the claim by
the deputy commissioner. Failure to present such request prior to such consideration shall
be an absolute defense..., unless the employer could not have reasonably anticipated the
liability of the special fund prior to the issuance of a compensation order.
Section 702.321(a)(3), however, provides that:
>Where the claimant's condition has not reached maximum medical improvement and no
claim for permanency is raised by the date the case is referred to the OALJ, an
application need not be submitted to the district director to preserve the employer's
right to later seek relief under section 8(f) of the Act....The failure of an employer to
present a timely and fully documented application for section 8(f) relief may be
excused...where the employer could not have reasonably anticipated the liability of the
special fund prior to the consideration of the claim by the district director.
20 C.F.R. §702.321(a)(3).
20 C.F.R. §702.336 provides that any newly raised issues of Section 8(f) relief are to be treated
by the ALJ as he would any other new issue, which is also the thrust of 20 C.F.R. §702.345(a) ("When
one or more additional issues are raised by the [ALJ] pursuant to §702.336, such issues may, in the
discretion of the [ALJ], be consolidated for hearing and decision with other issues pending before him.").
As is evident from these provisions and others,
that the intent of the LHWCA and regulations is to provide quick and informal
resolution to claims brought by injured claimants. In that accord, all issues
should be adjudicated in one proceeding to avoid piecemeal litigation and procedural
delays. 20 C.F.R. §702.338 ( "The [ALJ] shall inquire fully into the matter at issue and shall receive in evidence the testimony
of witnesses and any documents which are relevant and material to such matters". The LHWCA states
in pertinent part: "With regard for the convenience and necessity of the parties of their representatives and
within a reasonable time, each agency shall proceed to conclude a matter presented to it." 5 U.S.C.
§555(b).
The case law is also clearly weighed against compelling the employer to file a Section 8(f) request
with the district director once the case is before OALJ. Once a matter is referred to OALJ the
adjudicatory process commences. The transmittal itself begins the adjudicatory process. See 20
C.F.R. §702.317(d). In Director,
OWCP v. Newport News Shipbuilding & Dry Dock Co., 514 U.S. 122
(1995), in an eight person majority opinion, the United States Supreme Court described
the district director as having a "lack of control over the adjudicatory process." 514 U.S. at 133. In Ingalls
Shipbuilding, Inc. v. Director, OWCP [Yates], 519 U.S. 248 (1997), the Court again referred to OALJ
as the beginning of the adjudicatory process. In Atlantic & Gulf
Stevedores, Inc. v. Donovan, the Fifth
Circuit found that every agency has a duty to conclude any matter
before it with reasonable dispatch and that the courts are essentially empowered
to review the inaction of an agency and to "compel agency action
unlawfully withheld or unreasonably delayed." 274 F.2d 794, 802 (5th Cir. 1960).
The Board's decisions also support the position that only the OALJ has jurisdiction over a case
once it is transferred to OALJ for adjudication. SeeBoone v. Ingalls Shipbuilding, Inc., 27 BRBS 250
(1993), aff'denbanc, 28 BRBS 119, 122 (1994); Maine v. Brady-Hamilton Stevedore Company, 18
BRBS 129 (1986) (en banc); O'Berry v. Jacksonville Shipyards, Inc., 22 BRBS 430 (1989).
20 C.F.R. §702.317 provides that generally formal
hearings are to address issues noted by the parties in pre-hearing statements
submitted prior to the case being transferred to the OALJ. However,
additional issues may be raised at the OALJ by amending an LS-18. SeeHall
v. Newport News Shipbuilding & Dry Dock Co., 24 BRBS 1, 3 (1990).
20 C.F.R. §702.336(a) provides that a hearing may
be expanded to allow consideration of new issues if the evidence presented
warrants their consideration. Seealso 20
C.F.R. §702.336(b) (providing that the parties be notified and given the opportunity
to present argument and new evidence on a new issue which arises during the
course of a hearing). SeealsoCurrie
v. Cooper Stevedoring Co., 23 BRBS 420, 424 (1990); Cowart v. Nichlos Drilling Co., 23 BRBS 42,
47-48 (1989), rev'dinpart, 907 F.2d 1552, 24 BRBS 1 (CRT)(5th Cir. 1990), aff'denbanc, 927 F.2d
828, 24 BRBS 93 (CRT)(5th Cir. 1991), aff'd , 505 U.S. 469 (1992); Klubnikin
v. Crescent Wharf & Warehouse Co., 16 BRBS 182, 184 (1984); Taylor v. Plant Shipyards Corp., 30 BRBS 90 (1996); Lewis
v. Todd Pacific Shipyards Corp., 30 BRBS 154 (1996).
In Cornell Univ. v. Velez, 856 F.2d 402, 21 BRBS 155 (CRT)(1st Cir. 1988), the First Circuit
has ruled that an ALJ may raise a new issue -- such as Section 8(f) -- sua sponte where several
conditions are met. These conditions are: (1) there is evidence at least arguably sufficient to come within
the intent of the statute; (2) the case is not too far along; and (3) the petitioner's failure to plead the issue
earlier was subject to some mitigating circumstances.
[ED. NOTE: Given the Director's infrequent appearances in matters before OALJ, as noted in
Greenlaw v. Nationwide Bldg. Maintenance, Inc., 32 BRBS 323 (ALJ) (1997), it is noteworthy that
the Director would seek to add a layer of bureaucracy, thus requiring additional time for the
resolution of this matter. Both the courts [Ingalls Shipbuilding v. Asbestos Health Claimants, 17
F.3d 130 (5th Cir. 1994) (citing Atlantic & Gulf
Stevedores, Inc. v. Donovan, 274 F.2d 794, 802
(5th Cir. 1960), reh'gdenied, 270 F.2d 75 (5th Cir. 1960)] and Congress [Public Law 104-134
(Omnibus Appropriations for Fiscal Year 1996] have recently made clear their frustrations as to the
time it takes an LHWCA claim to travel through the adjudicatory process. Additionally, it is noted
that slowing the adjudicatory process would be especially unfair to claimants as they have no
standing as to Section 8(f) issues.]
When an employer/carrier first becomes aware
that Section 8(f) is at issue after a case has already been transferred to
OALJ, the employer/carrier should submit its request for Section 8(f) relief
directly to
the administrative law judge. Likewise, when "permanency" of a disability
is first raised as an issue while the claim is before the ALJ, the employer/carrier
should file its Section 8(f) application with the ALJ. As
noted infra, this view is supported by the LHWCA, regulations, and case law.
Adding a Late-Asserted Ground
Whether or not an employer could add a late-asserted ground for Section 8(f) relief was at issue
in Director, OWCP v. Newport News
Shipbuilding & Dry Dock Co., [Dillard], 230 F.3d 126, (4th Cir.
2000). The employer asserted, and the Director did not dispute, that the employer was unaware of the
critical information concerning the late-asserted ground. The ALJ allowed the late asserted ground and the
Board found that the ALJ, in effect, must have found that the employer could not have reasonably
anticipated the late-asserted grounds. The Fourth Circuit found that the ALJ had not determined whether
or not the employer could have reasonably anticipated the ground at the time it initially filed its application
with the district director.
8.7.9.4 Director's Burden to Raise the Absolute Bar
The Director bears the burden of affirmatively
raising the absolute bar as a defense and forwarding a copy of the application
for Section 8(f) relief to the judge along with other necessary documents.
20
C.F.R. § 702.321(b)(3); 20 C.F.R. § 702.321(c); Wiggins
v. Newport Shipbuilding & Dry Dock Co,
31 BRBS 142 (1997); Tennant v. General Dynamics Corp., 26 BRBS 103, 107, 109 (1992). SeeEmery
v. Bath Iron Works Corp., 24 BRBS 238, 241 (1991) (ALJs have "general adjudicatory powers" which
afford them discretion as to when new issues may be raised; thus ALJs may, although they are not required
to, raise new issues provided that the parties are given notice of the issue and time to respond to it;
therefore, it was within ALJ's discretion to refuse to hear the newly raised § 8(f)
issue). The absolute defense may not be raised by the Director for the first
time on appeal. Marko v. Morris Boney Co., 23
BRBS 353, 359 (1990).
In Abbey v. Navy Exchange,
the Director was estopped from asserting the absolute bar to the employer's
8(f) application because the Director "did not raise and plead the absolute
defense on his own
behalf." 30 BRBS 139, 140 (1996) (emphasis added). The employer
had requested Section 8(f) relief at the informal conference, however the claimant
had not reached MMI. Upon his reaching MMI the
district director advised the employer to submit the application within 45
days. The employer failed to file the application at all and the district director
referred the case to the OALJ. In his referral, the district
director noted, using a form letter with boxes checked, that no Section 8(f)
application had been filed, the district director was asserting the absolute
defense.
The Director made his first appearance in the
case at the Board's hearing of the employer's appeal. In holding that the
Director had waived his rights under Section 8(f)(3), the Board began with
an analysis
of the LHWCA and the Regulations. Starting with the LHWCA, the Board noted
that Section 8(f)(3) does not identify "the entity who must raise and plead
the absolute defense." Id. at 141. However the Director
is the guardian of the Special Fund. Id.; Director,
OWCP v. Newport News Shipbuilding & Dry Docks
Co.[Harcum], 8 F.3d 175 (4th Cir. 1993), aff'd, 514 U.S. 122 (1995); Director, OWCP v. General
Dynamics Corp.[Lockhart], 980 F.2d 74 (1st Cir. 1992).
Section 702.321(b)(3) states that the Director, as guardian, must raise and
plead the absolute defense. This is reenforced by the Comments which "restate
the rule that the absolute defense is an affirmative defense and emphasize
that 'it must be raised and specifically pleaded by the Director before the
OALJ.'" Id.; 51 Fed. Reg. 4279 (Feb. 3, 1986).
The issue in Abbey revolved around whether the Director's obligation could be satisfied by the
actions of the district director. The Board found clear authority for their holding that in this situation the
district director could not act on behalf of the Director. The Board analyzed the differences in the two:
The district director fills the statutory role of the 'deputy commissioner,' a title found in the
statute but replaced in the regulations by 'district director.' See 33
U.S.C. §919, 20
C.F.R. §701.301(a)(7). As such, the district director performs a wide range of duties
related to the filing, investigation and informal resolution of claims under the provisions of
the Act and the implementing regulation. The 'Director' is not a creation of the statute, but
of the regulations. Under the Act, certain duties, notably those involving medical care and
vocational rehabilitation, 33 U.S.C. §§ 907, 939, are entrusted to the Secretary. By
regulation, the Secretary's responsibilities under the Act are delegated to the Assistant
Secretary of Labor for Employment Standards, who established the Office of Worker'
Compensation Programs, headed by the Director, to administer the benefits program under
the Act. 20 C.F.R. §§701.201, 701.202.
Abbey, 30 BRBS at 141.
The Board closed its analysis with a study of
20 C.F.R. 702.321. The Board found that filing must be with the district
director [§702.321(a)(1)], the district director establishes a date for submission of the
application [§702.321(b)(1)], and the district director has the authority to
excuse late filings. Id. The
Director is required to raise and plead the absolute defense. 20 C.F.R. §702.321(b)(3). Finally, "Section
702.321(c) requires the district director to award Section 8(f) relief after
concurrence by the Associate Director, DLHWC, or his designee, if all relevant
evidence is submitted and the facts warrant relief." Id.
at 142. Thus, the Board concluded that if the both the district director and the Director could raise the
Section 8(f)(3) absolute defense, then Section 702.321(b)(3) would have expressly stated the duel ability.
SeealsoConnecticut Dep't of Income Maintenance v. Heckler, 471 U.S. 524 (1985) (giving meaning to
two different phrases); Bethlehem Steel Corp. v. Mobley, 920 F.2d 558 (9th Cir. 1990) (two terms equals
two meanings).
When the Director has properly raised the Section 8(f)(3) absolute defense, a judge initially must
give de novo consideration to whether the employer submitted a sufficient
application requesting Section 8(f) relief, which is in compliance with the
regulations at 20 C.F.R. § 702.321. Callnan
v. Morale, Welfare & Recreation, Dept. of the Navy, 32 BRBS 246 (1998). The burden is on the employer to show that it
could not have reasonably anticipated the liability of the Special Fund as to the claimant's pre-existing
condition. Farrel v. Norfolf Shipbuilding & Dry
Dock Corp, 32 BRBS 118 (1998).
If the absolute bar does not apply, the judge may then consider the merits of the employer's request
for Section 8(f); if the bar applies, the request for Section 8(f) must be denied. Tennant,
26 BRBS at 108 (Board vacated ALJ's denial of Director's motion to dismiss
employer's § 8(f) application and ALJ's award
of § 8(f) relief and remanded the case to ALJ so that ALJ could determine whether the application was
complete, and if so, whether employer had proved entitlement to § 8(f)); Fullerton v. General Dynamics
Corp., 26 BRBS 133, 139 (1992).
8.7.9.5 Prior Law: Pre-1984 Amendments
In claims which were filed prior to 1984, an employer had to raise Section 8(f) at the first hearing
wherein the claimant sought permanent disability benefits; if Section 8(f) was not raised, the claim was
waived. Reynolds v. Cooper Stevedoring Co., 25 BRBS 174, 178 (1991). Once waived, the claim could
not be raised for the first time on appeal. Moore v. Paycor, Inc., 11 BRBS 483, 493 (1979).
The "use it or lose it" nature of Section 8(f)
was affirmed by the circuit courts on appeal. Director,
OWCP v. Edward Minte Co., 803 F.2d 731, 735, 19 BRBS 27 (CRT) (D.C. Cir. 1986), aff'g 16 BRBS
314 (1984); Brady-Hamilton Stevedore Co. v. Director, OWCP, 779 F.2d 512, 513, 18 BRBS 43
(CRT) (9th Cir. 1985), aff'g 16 BRBS 350 (1984); Verderane v. Jacksonville Shipyards, 772 F.2d 775,
778, 17 BRBS 154 (CRT) (11th Cir. 1985); American Bridge Div., U.S. Steel Corp. v. Director,
OWCP, 679 F.2d 81, 83, 14 BRBS 923 (5thCir. 1982), aff'gCarroll v. American Bridge Div., U.S.
Steel Corp., 13 BRBS 759 (1981); Director, OWCP v. Todd Shipyards Corp., 625 F.2d 317, 12 BRBS
518 (9th Cir. 1980); Avallone v. Todd Shipyards Corp., 13 BRBS 348 (1981), petitionforreviewdenied, 672 F.2d 901 (2d Cir. 1981).
There have, however, been exceptions to the first hearing rule. There appear to be two types of
exceptions: 1) the employer's apparent waiver was either excused, or not viewed as a waiver (the Board
has characterized these as "compelling circumstances" cases--seePrice v. Cactus Int'l, 15 BRBS 360,
363 (1983)); or 2) the employer proved either a change of condition or a mistake of fact as grounds for
a Section 22 modification.
The employer's waiver has been excused in the following four situations:
1) Section 8(f) was properly raised as an issue and the judge failed to consider it
during the hearing. Bacon v. General Dynamics Corp., 14 BRBS 408, 411 (1981).
2) A judge erroneously indicated that Section 8(f) was not properly before her and/or
that it would be considered at a future proceeding. Davenport
v. Daytona Marine & Boat
Works, 16 BRBS 196, 200 (1984) (§ 8(f) was raised as an issue but employer
abandoned its § 8(f) claim after ALJ indicated that it could be pursued separately before
district director--Board held that ALJ erred in not considering § 8(f)); Tibbetts v. Bath
Iron Works Corp., 10 BRBS 245, 252 (1979) (parties mistakenly believed
that § 8(f)
could not be raised where the claim was only for permanent partial disability
and this belief was not corrected by ALJ); Egger
v. Willamette Iron & Steel Co., 9 BRBS 897, 899-900
(1979) (§ 8(f) was raised at the first hearing but then withdrawn when ALJ indicated the
case would be bifurcated and § 8(f) issue would be reached at a later date).
3) A Section 8(f) request could not have properly been before the ALJ at the first
hearing. Washington Soc'y for the Blind v. Allison, 919 F.2d 763, 768 (D.C. Cir. 1990)
(In a pre-1972 hearing, claimant was awarded permanent partial benefits. At
that time, § 8(f) relief was only available for permanent total disability. In the late 1970's when
claimant sought (but was denied) permanent total disability--the employer's request for §
8(f) was granted. The court reasoned that since only a change in claimant's status could
have provided an occasion for a request for § 8(f) relief, employer did not waive § 8(f)
relief by failing to assert it in 1969.).
4) After raising Section 8(f) initially, it
was unnecessary for employer to raise it at "every turn in the proceedings." Reynolds v. Cooper Stevedoring Co.,
25 BRBS 174, 177, 179 (1991) (employer timely and properly raised § 8(f)
in pre-hearing statement and in every proceeding where it was in issue thereafter).
Modification may not be used to circumvent the rule that Section 8(f) relief is waived if not properly
raised at the first opportunity. Dykes v. Jacksonville Shipyards, 13 BRBS 75, 76 (1981). Where
permanency was raised for the first time in a modification proceeding, however, a request for Section 8(f)
relief in that proceeding was timely. Moore v. Washington Metro. Area Transit Auth., 23 BRBS 49, 51-54
(1989).
The Board has held that modification may only
be used in "compelling circumstances," and where
the interests of justice outweigh the need for finality in judicial decision-making. Burke v. San Leandro
Boat Works, 18 BRBS 44 (1986) (employer's failure to produce evidence of a pre-existing disability at
the first hearing was viewed as a lack of diligence and as such could not be the basis for a modification
because there were not compelling circumstances to support modification); Price v. Cactus Int'l, 15 BRBS
360, 363 (1983), aff'd, 733 F.2d 903 (5th Cir. 1984) (Table).
It is unclear whether a "waived" claim may be revived through modification. Verderane v.
Jacksonville Shipyards, 772 F.2d 775, 780, 17 BRBS 154 (CRT) (11th Cir. 1985)
(court noted the controversy regarding the waiver issue and found that even
assuming waiver did not bar modification,
employer's evidence did not meet § 22 requirements). SeeAmerican Bridge Div., U.S. Steel Corp. v.
Director, OWCP, 679 F.2d 81, 83 n.6, 14 BRBS 923 (5th Cir. 1982).
In a case where the waiver of Section 8(f) relief
was not properly raised, employer was allowed to pursue Section 8(f) after
satisfying the grounds for modification, without "compelling circumstances" or
"interest of justice" analyses. Director, OWCP v. Edward Minte Co., 803 F.2d 731, 735, 19 BRBS 27
(CRT) (D.C. Cir. 1986).
8.7.9.6The Effect of Settlements and Stipulations
Current Law: Post-1984 Amendments
Section 8(i)(4) of the LHWCA provides:
The special fund shall not be liable
for reimbursement of any sums paid or payable to an employee or any beneficiary
under [a § 8(i)]
settlement, or otherwise voluntarily paid prior to such settlement
by the employer or carrier, or both.
33 U.S.C.A. § 908(i)(4).
Settlements and Section 8(f) Relief
The Board has interpreted this amendment to preclude employer from seeking post-settlement
Section 8(f) relief after the date Section 8(i)(4) was enacted, or in a case pending at the time of enactment.
Brady v. J. Young & Co., 17 BRBS 47, 52 (1985), aff'donrecon., 18 BRBS 167, 170, 171 n.5 (1985)
(seealsoByrd v. ADDSCO,
27 BRBS 253 (1993) (joint stipulations treated as § 8(i) settlements were
vacated where the Director did not participate, explicitly or constructively;
remanded for ALJ to adjudicate Section 8(f) claims).
[ED. NOTE: A careful reading of the ALJ's opinion in Byrd indicates that there was an
adjudication of the compensation issue in Byrd and that only the issue of medical benefits was
intended to be settled. Byrd v. Alabama Dry Dock and Shipbuilding Corp.,
(Docket No. 91-LHC-262)(1991)(Unpublished). The parties (claimant and self-insured
employer) filed a "Joint Stipulation
of Suggested Findings of Fact and Conclusions of Law" which was supplemented by a filing entitled
"Joint Submission of Evidence and Joint Waiver of Formal Hearing." Both filings
showed service upon the Regional Solicitor and the District Director. No formal
objections were filed. The ALJ
adopted the stipulations, findings of fact and conclusions of law. The joint
stipulation also contained an agreement to settle the claimant's claim for future
medical benefits. This agreement
was treated as a Section 8(i) settlement agreement. (Medicals can be settled
without settling compensation.)]
In Strike v. S.J. Groves and Sons, 31 BRBS 183 (1997), aff'dmem. subnom. S.J.
Groves & Sons v. Director, OWCP, 166 F.3d 1206 (3d Cir. 1998) (Table), a Section 8(i) settlement case, the
Board expanded on the rational in Brady. Liability for the Special Fund is directly tied into the employer's
liability following the outcome of a trial. The basis for this liability revolves around the issues of nature and
extent of liability, average weekly wage, and causation. As a result these issues must be litigated in order
for the Fund to be responsible, as the case law recognizes that the Fund should only be liable where all
ambiguity has been resolved by a fact finder. The Board went on to state that unlike the absolute defense
of Section 8(f)(3), the Director is not required to take direct action to oppose the settlement under
Section 8(i)(4). As a matter of law, Section 8(i)(4) voids settlement provisions either reserving or setting
liability on the Fund.
In Cochran v. Matson Terminals, Inc., 33 BRBS 187 (1999), the Board found that where an
Section 8(i) settlement is entered into, no Section 8(f) relief is allowed. In Cochran the Board rejected the
employer's argument that Strike applies only where Section 8(f) is requested after the settlement is
approved. In Cochran, the simultaneous submission of a settlement agreement and the stipulations and
exhibits in support of the employer's claim for Section 8(f) relief foreclosed the ALJ's consideration of the
request for Section 8(f) relief. There is no mechanism in the LHWCA to permit the tolling of the 30 day
automatic approval period while the ALJ adjudicates a claim for Section 8(f) relief. Cochran at 191.
Stipulations and Section 8(f) Relief
Often an employer/carrier and claimant (the private parties) reach an agreement on all issues
between themselves, with the sole remaining issue being whether the employer/carrier is entitled to Section
8(f) relief. Handled properly, there may be a finding of fact as to both these stipulations and Section 8(f)
relief.
In the Pre-1984 Amendments case of Brady
v. J Young & Company, 16 BRBS 31(ALJ) (1983),
the ALJ had found that after approving a Section 8(i) settlement, the employer was free to pursue Section
8(f) relief and the Trust Fund was ordered to reimburse the employer for all sums paid to the claimant under
the approved settlement. Section 8(i)(4) was enacted to specifically overturn Brady. According to H.R.
CONF. Rep. No. 1027, 98th cong., 2d Sess. 28, reprinted in 1984
U.S.C.C.A.N. 2783-2787, Section 8(i)(4) was enacted in 1984 in order to prevent
employers from seeking relief from the Special Fund after
reaching a settlement with a claimant in a case that otherwise would be assigned
to the Fund. Specifically, the report stated, "A settlement shall operate as
a release from further liability as to the employer and carrier. The fund,
furthermore, shall not be liable for the reimbursement of the costs of any
settlement or
for the costs of any voluntary payments of compensation made by the employer
prior to a settlement. This provision is intended specifically to overturn
the [ALJ's] decision in Brady v. J.
Young & Company, 16
BRBS 31 (ALJ) (1983)."
After the
1984 Amendments, there developed a method of maneuvering around the letter
of Section 8(i)(4) by either remanding any matters which had "settled" or by
allowing the private parties to enter into stipulations between themselves
with only the Section 8(f) issue remaining for trial. Different
locales developed their own methods and preferences for addressing this situation.
Subsequently, the case law developed making it clear that the private parties cannot bind the
Special Fund absent the Director's agreement to the stipulations. Brady
v. J. Young & Company, 17
BRBS 46 (1985), aff'donrecon, 18 BRBS 167 (1985); Director
v. Coos Head Lumber & Plywood Co.
(Ibarra),194 F.3d 1032 (9th Cir. (1999), originallyunpublished at 156 F. 1236 (9th Cir. 1998)(table); E.
P. Paup Company v. Director, OWCP (McDougall), 999 F.2d 1341 (9th Cir. 1993) (agreements between
an employer and a claimant that affect the liability of the special fund cannot be used against Director who
is the only party with a real interest in protecting the financial integrity of the special fund); Younger v.
Washington Metropolitan Area Transit Authority, 16 BRBS 360 (1984)(settlement agreement between
employer and claimant which affects the liability of Special Fund is not binding on the Fund absent the
participation of Director); Erickson v. Crowley Maritime Corp, 14 BRBS 218 (1981)(employer and
claimant may not stipulate to Section 8(f) applicability without the acquiescence of the Director; Director
shall be given the opportunity to either consent to the application of Section 8(f) or to submit evidence on
this issue); Collins v. Northrop Corp., 12 BRBS 949 (1980)(holding private parties may not agree to facts
affecting application of Section 8(f) in a settlement agreement; also indicates, ALJ should not merely accept
stipulations, but rather should take evidence regarding crucial issues or make necessary findings.)
As noted in Collins v. Northrop Corp, 12 BRBS 949 (1980), the claimant and employer's
argument that they can unilaterally stipulate to the liability of the Special Fund as well as to facts which
impact upon Section 8(f) applicability was unacceptable. The Board, in Collins, explained that allowing
such a practice would provide the claimant with an advantage in the negotiations and place the Director in
an untenable position. As the Board pointed out in Azzolino v. Marine Terminals Corp., 9 BRBS 566, 569
(1978),
If the claimant is not entitled to compensation under the Act or if there are valid defenses
to all or part of the claim, it is not the purpose of Section 8(f) to facilitate claimant's
bargaining against employer's vaild [sic] defenses or to provide claimant with a strategic
advantage by shifting to the Director the burden of asserting employer's defenses.
In Azzolino,
the first case to address the issue at hand, the Board first found that a claimant
is not a proper party to assert a claim against the Special Fund under Section
8(f). Next the Board addressed
the practical aspects involved and noted that the Director had arrived at the
hearing expecting only to have to raise the usual arguments concerning the
applicability of Section 8(f) and was not prepared to assert the
employer's defenses to liability which would affect the liability of the Special
Fund or to participate in litigation to determine the extent of the claimant's
disability. "Indeed, the evidence concerning those issues
was most likely in the hands of employer who, having reached an agreement with
claimant, no longer was concerned with pursuing or producing evidence on the
issues." Id.
In the recent unreported case of Brown v. Brady-Hamilton Stevedore,
(BRB Nos. 98-0599 and 98-0599A) (Jan. 21, 1999) (Unreported), the Board cited
29 C.F.R. § 18.51 for the proposition that the
Director, as representative of the Special Fund, could not be bound by stipulations
to which he was not a party. Brown was a Section 22 Modification case in which the Board held that since the Special Fund
had previously assumed liability for the payment of claimant's permanent partial disability benefits, its rights
and liabilities were necessarily affected by resolution of the issues presented by the Section 22 request and
therefore, the modification petition could not be decided on the basis of stipulations without the participation
of the Director.
The wording of 29 C.F.R. § 18.51 itself is noteworthy:
Stipulations. The parties may by stipulation in writing at any stage of the proceeding, or
orally made at hearing, agree upon any pertinent facts in the proceeding. It is desirable that
the facts be thus agreed upon so far as and whenever practicable. Stipulations may be
received in evidence at a hearing or prior thereto, and when received, shall be binding on
the parties thereto. (Emphasis added.)
First, the
use of the word "may" indicates that the ALJ is not bound to accept stipulations
but rather has discretion to accept or reject them. Second, stipulations are
only binding on the parties that enter into the
stipulations. Thus, from a reading of the regulation itself, one can argue
that if only the private parties enter into the stipulations, and they are
accepted by the ALJ, only they are bound.
There are several cases wherein the Director, through inaction, has been bound by the stipulations
agreed to by the private parties, i.e., the employer/carrier and claimant. In the recent Ninth Circuit case
of Ibarra, the ALJ found that the employer was entitled to Section 8(f) relief after the private parties had
entered into stipulations. However, significant, in Ibarra, the ALJ did not simply rely on the stipulations
of the private parties; he based his findings on substantial evidence. Furthermore, he invited the
Director to submit evidence and proposed findings but the Director elected not to do so. In
approving the ALJ's actions in Ibarra, the Ninth Circuit stated:
The stipulation did not bind the Director, however, and he was free to introduce evidence
to the contrary before the ALJ. His election not to offer any evidence or suggest any
inference from the evidence that would be contrary to the stipulation waived his right to
challenge the ALJ's determination subsequently....The Director was on notice that his
failure to appear would constitute a waiver.
Ibarra at 1032-33.
In making the above observation, the Ninth Circuit cited the case of Duncanson-Harrelson Co.
v. Director, OWCP, 644 F.2d 827, 832 (9th Cir. 1981)
for the proposition that "...[I]n the abscence of
exceptional circumstances, a reviewing court will refuse to consider contentions
not presented before the administrative proceedings at the appropriate time."
In Dickinson
v. Alabama Dry Dock & Shipbuilding Corp., 28 BRBS 84 (1993) a
letter signed by the Director, approving the amount of Special Fund relief
(Section 8(f) has been considered and approved
and will not be an issue at the formal hearing.") as well as notice of appearance
before the ALJ, was found to have signified the Director's approval of the
Special Fund's liability although the Director did not overtly
participate in the settlement. The Board found that the Director constructively
participated in the settlement process and gave approval of the disbursement
from the Special Fund consistent with the settlement
agreement. SeealsoPhelps v. Newport News Shipbuilding And Dry Dock Company, 16 BRBS 325
(1984) (where Director has been notified of the stipulations, or at the least does not allege improper notice,
but has not participated before the ALJ, stipulations between the employer and claimant regarding facts
which affect Section 8(f) may be accepted by the ALJ if the stipulations are supported by substantial
evidence in the record).
Noteworthy, in Phelps is the fact that in deciding the Section 8(f) issue, the ALJ had rejected some
of the private parties' stipulations and found that there was no credible evidence that the claimant suffered
any medical or economic disability as a result of the combination of his pre-existing impairments and work-related injury. Nevertheless, the ALJ found that the employer was still liable for payments of benefits based
upon the stipulations entered into with the claimant. The Board found that the ALJ erred when he led the
parties to believe that their stipulations would be accepted or, at the least, that the stipulations were
supported by substantial evidence. The Board found that the parties justifiably relied upon their stipulations
and had an insufficient opportunity to prepare for litigation.
In Nelson v. Stevedoring Services of America, (BRB No. 99-1056) (May 10, 2001)
(Unpublished), re-affirm'g, 34 BRBS 91 (2000), the Director was provided the opportunity to defend, and
in fact, conceded the liability of the Special Fund prior to the time that a settlement agreement was entered
into by the parties. The Board originally held that the purpose of Section 8(i)(4) had been satisfied and the
employer was entitled to Section 8(f) relief. In Nelson the
Director made his pre-hearing concession when he thought the case in chief
was going to be decided at hearing. Soon after the hearing began, the
proceedings turned into a settlement conference. Subsequently the ALJ approved
the settlement agreement and awarded Section 8(f) relief. The Board had found
that the Director was now precluded by equitable
estoppel from altering his position which he had consciously made and articulated
to the ALJ well before the time the Section 8(i) agreement was made. (The conditions
precedent for conceding the employer's
entitlement to Section 8(f) relief stated by the Director were met during the
ensuing "adjudication" of this
case.)
On Reconsideration,
the Director argued that the agreement was not a stipulation, but rather was
a settlement and therefore, the employer's settlement of its liability extinguished,
as a matter of law, the Special Fund's derivative liability pursuant to Section
8(i)(4). In re-affirming its original ruling, the Board
held that even if the ALJ's decision was an approval of a settlement (rather
than approval of stipulations), "the peculiar facts of this case nevertheless
support the [ALJ's] finding that Section 8(f) relief is appropriate."
[ED. NOTE: In Nelson,
the Board opined that an order based on stipulations accepted into the record
is subject to "normal standards of proof."]
In Gupton
v. Newport News Shipbuilding & Dry Dock Company, 33 BRB 94 (1999), the Board
has provided some guidance as to how the ALJ should proceed in the situation where an employer and
claimant are in agreement as to all issues between themselves, with the sole remaining issue being whether
the Employer is entitled to Section 8(f) relief.
At the hearing in Gupton, only the employer appeared and stated that all issues between the
employer and claimant had been resolved. However, no official had approved the parties' stipulations and
the employer did not have a copy to present to the ALJ for approval. The employer's post-hearing brief
was the only place that set out the alleged stipulations. The ALJ therefore stated that after he decided the
Section 8(f) issue, he would remand the case to the district director for issuance of a compensation order.
The Board vacated the ALJ's Order and remanded the matter to the ALJ.
The Board found it incumbent upon the ALJ to inquire fully into the underlying compensation claim
prior to addressing an employer's entitlement to Section 8(f) relief. When the district director transferred
Gupton to OALJ, there was clearly no agreement between the parties, based on the parties' pre-hearing
statements in the administrative file. Thus, the ALJ, according to the Board, should have required the
parties to submit their stipulations to him for approval and to obtain evidence necessary to resolve issues
on which the parties did not agree. Additionally, the Board found that the ALJ must deal with any
unresolved issues and not remand the matter to the district director
In Gupton, the Board found that the ALJ must make an underlying award before addressing
the Section 8(f) issue. Either the Director must agree to the private parties' (claimant and
employer/carrier) stipulations, or the ALJ must address all elements of entitlement based on the record
evidence before addressing Section 8(f).