Director OWCP v. Sun Ship Inc ( 1998 )

Opinions of the United
1998 Decisions States Court of Appeals
for the Third Circuit
7-29-1998
Director OWCP v. Sun Ship Inc
Precedential or Non-Precedential:
Docket 96-3648
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Recommended Citation
"Director OWCP v. Sun Ship Inc" (1998). 1998 Decisions. Paper 175.
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Filed July 29, 1998
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 96-3648
DIRECTOR, OFFICE OF WORKERS' COMPENSATION
PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,
Petitioner
v.
SUN SHIP, INC.
(GERTRUDE EHRENTRAUT, Claimant)
On Appeal From the Benefits Review Board,
United States Department of Labor
93-1600
Argued: December 1, 1997
Before: COWEN, McKEE & ROSENN, Circuit Judges
(Filed: July 29, 1998)
J. DAVITT MCATEER
Acting Solicitor of Labor
ALLEN H. FELDMAN
Associate Solicitor for Labor
Special Appellate
and Supreme Court Litigation
JOSHUA T. GILLELAN, II
Room S-4325
JUDITH D. HEIMLICH (ARGUED)
U.S. Department of Labor
Room N-2700
200 Constitution Ave., N.W.
Washington, D.C. 20210
Attorneys for Petitioner
JOHN P. DOGUM, Esq. (ARGUED)
Swartz, Campbell & Detweiler
1601 Market Street
34th Floor
Philadelphia, PA 19103
Attorney for Respondent
OPINION OF THE COURT
McKEE, Circuit Judge
We are asked to determine if the delay of the Board of
Revision and Review in reviewing a decision of an
administrative law judge deprived the Board of jurisdiction
under the facts of this appeal. We hold that it did, and that
the Board's delay caused the ALJ's decision to become a
final order that we now have jurisdiction to review. We
further hold that the ALJ erred in deciding that a maritime
employer is entitled to relief from the Special Fund
established under S 8(f) of the Longshore and Harbor
Workers' Compensation Act, 33 U.S.C. S 901, et seq.
("LHWCA") ("the Act"), where the employee's disability was
not manifest during the time of his employment.
Accordingly, we will reverse the decision of the ALJ.
2
I. BACKGROUND
Raymound Ehrentraut worked for Sun Ship, Inc. from
1938 until his retirement in 1981. Nine years after he
retired he was diagnosed with asbestosis resulting from his
years of work-related asbestos exposure while at Sun Ship.
The same month he was diagnosed, doctors discovered he
also had a work-related pulmonary malignancy.
Ehrentraut's asbestosis was a "pre-existing condition" that
had made diagnosis of the malignancy more difficult.
Ehrentraut eventually succumbed to the cancer and died
on July 15, 1990. Thereafter, his wife applied to Sun Ship
for death benefits under the Longshore and Harbor
Workers' Compensation Act.1
Sun Ship initially paid the requested benefits. However,
in 1992, after paying benefits for 104 weeks, Sun Ship
requested the Office of Workers' Compensation Programs to
provide the payments from the Special Fund established
under section 8(f) of the Act, 33 U.S.C. S 908(f). The
Director of the Office of Workers' Compensation Programs
denied Sun Ship's application. The Director concluded that
Sun Ship was not eligible for relief from the Special Fund
because Ehrentraut's pre-existing injury was not manifest
while he worked for Sun Ship. However, the case was
referred to an administrative law judge who overruled the
Director's decision. On April 15, 1993, the ALJ issued an
opinion declaring that Sun Ship was entitled to section 8(f)
relief under the 1984 amendments to the Act because
Ehrentraut's pre-existing condition was a long-latency
disease diagnosed after Ehrentraut's retirement. See ALJ at
3.
The Director filed a timely appeal to the Benefits Review
Board on May 13, 1993. However, the Board failed to
adjudicate the appeal for more than three years. Finally, on
September 12, 1996, the Board issued an order in which it
reversed the ALJ's ruling and remanded the case back to
the ALJ for further proceedings. The Director filed a Petition
for Review seeking a judicial determination that the ALJ's
order had become the final decision of the Board because
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1. Both parties agree that she is entitled to death benefits under 33
U.S.C. S 909.
3
the Board had not acted within the required time frame.
The Director's petition asks us to reverse the ALJ's decision
and hold that Sun Ship is not entitled to shift the
responsibility for these benefits to the Special Fund.
II. STANDARD OF REVIEW
We exercise plenary review over both the jurisdictional
issue and the substantive issue raised by this appeal
because both present questions of law. Director, Office of
Workers' Compensation v. Barnes and Tucker Co., 969 F.2d
1524, 1527 (3d Cir. 1992); cf. Sea-Land Service, Inc. v.
Rock, 953 F.2d 56, 59 (3d Cir. 1992). Before addressing the
substance of the Director's petition, we must first resolve
the issue of our jurisdiction.
For the reasons that follow, we conclude that we have
jurisdiction to review the ALJ's decision as the Board's final
order. We hold that the ALJ erred in concluding that Sun
Ship is entitled to shift liability to the Special Fund that
Congress created under section 8(f) of the Act.
III. JURISDICTION
Ordinarily, the Board's remand to the ALJ would be an
interlocutory order and we would therefore have no
jurisdiction to review it. However, the Department of Labor
Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat.
1321 (the "Appropriations Act") provides that any ALJ
decision in a LHWCA case that has been
pending a review by the Benefits Review Board for
more than one year shall, if not acted upon by the
Board before September 12, 1996, be considered
affirmed by the Benefits Review Board on that date,
and shall be considered the final order of the Board for
purposes of obtaining a review in the United States
courts of appeals.
100 Stat. 1321-219 (emphasis added). Here, the Board
issued its order on September 12, 1996. Sun Ship argues
that is consistent with the requirements of the
Appropriations Act. The Director responds that "before"
4
does not mean "on" and that the Board's September 12,
1996 decision is therefore a nullity.
It is axiomatic that our interpretation of any statute
begins with the language of the statute. Consumer Prod.
Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108
(1980). If the language is ambiguous, we look to legislative
history to determine congressional intent. Adams Fruit Co.,
Inc. v. Barrett, 494 U.S. 638, 642 (1990). In addition, we
will sometimes defer to a permissible interpretation of a
statute by an appropriate agency. However, we will do so
only when the statute does not directly speak to the issue
and congressional intent cannot be gleaned from the text of
the statute, or its legislative history. Only then, should the
"question for the court [become] whether the agency's
answer is based on a permissible construction of the
statute." Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 843 (1984). When legislation
speaks directly to a particular issue, it is that congressional
expression, not a contradictory agency interpretation,
which controls. See, e.g., Rubin v. United States, 449 U.S.
424, 430 (1981).
Here, it is clear that the Board's decision is void if it did
not comply with the Appropriations Act. We would then
have jurisdiction under the Appropriations Act to review the
ALJ's decision. However, Sun Ship argues that the Board
obviously interpreted the Appropriations Act as allowing it
to issue orders on September 12, 1996 because the Board
issued several opinions on that day that had been pending
for over a year. Sun Ship then relies upon Chevron to argue
that we must defer to the Board's interpretation.2 However,
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2. According to Sun Ship, the Board obviously interpreted the
Appropriations Act as allowing it to act on September 12, and we must
defer to that interpretation under Chevron. Chevron does state that a
court should refrain from "substituting its own construction of a
statutory provision for a reasonable interpretation made by the
administrator of an agency," 467 U.S. at 844, however, we have not
previously directly addressed the issue of the amount of deference owed
the Director concerning the interpretation of the LHWCA. In Cort v.
Director, Office of Workers' Compensation Programs, 996 F.2d 1549,
1551-52 (3d Cir. 1993), we recognized a division of authority among the
5
Sun Ship's position ignores the well-settled rule that we do
not defer to the Board's interpretation of statutes. See
Commonwealth of Pennsylvania v. United States Dep't of
Health & Human Serv., 80 F.3d 796, 809 (3d Cir. 1996)
(citing Sharondale Corp. v. Ross, 42 F.3d 993 (6th Cir.
1994)); cf. Elliot Coal Mining v. Director, Office of Workers'
Compensation, 17 F.3d 616, 627-28 (3d Cir. 1994).
Moreover, here, the Board's interpretation is contrary to the
express language of the Appropriations Act. Accordingly, we
will not defer as Sun Ship urges.
Sun Ship also contends that the Appropriations Act,
taken as a whole, is ambiguous, and that this "ambiguity"
requires us to look beyond the plain meaning of the
language to determine Congress' true intent. Sun Ship
attempts to create ambiguity by referring to other
provisions in the Appropriations Act that allow for action
"after September 12[th]," or "beginning September 13th,"
rather than "before September 12th." For example, the
statute provides that:
. . . no funds made available by this Act may be used
by the Secretary of Labor after September 12, 1996 to
review a decision under the [LHWCA] that has been
appealed and that has been pending before the
Benefits Review Board for more than 12 months,
except as otherwise specified herein . . . beginning on
September 13, 1996, the Benefits Review Board shall
make a decision on appeal of a decision under the
[LHWCA] no later than 1 year after the date the appeal
to the Benefits Review Board was filed.
110 Stat. 1321. (emphasis added).
_________________________________________________________________
circuit courts of appeals concerning the amount of deference afforded the
Director, but we did not reach the issue. In Barnes & Tucker, we held
that we "owed . . . deference to the Director, not to the Board, for the
Director makes policy." Id. at 1527. However, both Barnes & Tucker and
Elliot Coal Mining v. Director, Office of Workers' Compensation Programs,
17 F.3d 616, 626 (3d Cir. 1994) stand for the well established
proposition that we "will not defer to an interpretation in an adversarial
proceeding that strains the ``plain and natural meaning of words'."
Barnes & Tucker, 969 F.2d at 1527.
6
Such language does not render the Appropriations Act
either ambiguous, or contradictory. The Act did not prevent
the Board from acting on all matters on September 12th.
Rather, the Board was merely prohibited from acting on
September 12 to decide or dispose of matters that had then
been pending for a year or more. This did not prevent the
Board from deciding cases on September 12, 1996 that had
been pending for less than one year as of that date.
Similarly, beginning on September 13, 1996, the
Appropriations Act established a one year cut-off date
within which the Board had to resolve cases pending before
it. Neither provision requires us to interpret "before"
September 12, to mean "on or before" September 12, as
Sun Ship urges. When "before" is used as a preposition, it
refers to "an event or act preceding in time or earlier than,
or previously to, the time mentioned." Blacks Law
Dictionary, 154-55 (6th ed. 1990). References to "after
September 12th" only address the disbursal of funds.
It is difficult to imagine how Congress could have more
clearly established the Board's deadline for acting.
Congress decreed that the Board must act "before
September 12th." In United States v. Locke, 471 U.S. 84,
93-96 (1985), the Court held that a statutory requirement
to act "prior to December 31" plainly meant that action had
to be undertaken before that date and not on it. The same
is true here.3
On September 12, 1996 this case had been pending
before the Benefits Review Board for more than three years.
The Board failed to act before September 12, and its
subsequent decision on September 12 is, therefore, a
nullity under the Act. That conclusion is required by the
language of the statute, and we have been directed to
nothing in the legislative history that would suggest a
different result. Thus, a contrary interpretation of the
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3. In Finkle v. Gulf & Western Mfg. Co., 744 F.2d 1015 (3d Cir. 1984), in
a quite different context, we interpreted the phrase"prior to a certain
date." We held that language providing a specific date by which action is
required is "unequivocal and establishes an enforceable renewal
deadline." Id. at 1019. Although we were concerned with the provisions
of an option contract, our analysis there is nevertheless helpful to our
analysis of the meaning of the statute we interpret here.
7
Appropriations Act would have the effect of amending it to
read "on or before September 12, 1996." Any such change
must originate in Congress, not here. Accordingly, the
Board's purported remand was a nullity, and the ALJ's
grant of section 8(f) relief to Sun Ship became a final order
that we can now review.
IV. DISCUSSION
A. The Special Fund Under S 8(f)
Section 8(f) of the Act provides that when an employee
with a pre-existing condition suffers an on-the-job injury or
is afflicted with a work-related disease which, in
combination with the pre-existing condition,4 causes a more
severe, permanent disability, the employer can apply to the
Director for relief from disability payments after the
employer has made such payments to the employee for 104
weeks. See 33 U.S.C. S 908(f)(1).
The relevant text of the statute reads as follows:
In any case in which an employee having an existing
permanent partial disability suffers injury, the
employer shall provide compensation for such disability
as is found to be attributable to that injury based upon
the average weekly wages of the employee at the time
of the injury. If following an injury falling within the
provisions of subsection (c)(1)-(20) of this section, the
employee is totally and permanently disabled, and the
disability is found not to be due solely to that injury,
the employer shall provide compensation for the
applicable prescribed period of weeks provided for in
that section for the subsequent injury, or for one
hundred and four weeks, whichever is the greater . . . .
In all other cases in which the employee has a
permanent partial disability, found not to be due solely
to that injury, and such disability is materially and
_________________________________________________________________
4. There is no requirement that the pre-existing condition be work-
related. Lawson v. Suwanee Fruit & Steamship Co., 336 U.S. 198, 204
(1949).
8
substantially greater than that which would have
resulted from the subsequent injury alone, the
employer shall provide in addition to compensation
under subsections (b) and (e) of this section,
compensation for one hundred and four weeks only.
33 U.S.C. S 908(f)(1).
The Special Fund was established in 1927 with the
enactment of the LHWCA. It was created by 33 U.S.C.
S 944, and was intended to spread liability for injuries
sustained by employees with pre-existing conditions equally
among all employers in the maritime industry.5
The Special Fund was originally enacted . . . to fund
expenditures [where] an employee received an injury
which alone caused only permanent partial disability,
but resulted in the employee's permanent disability
when combined with a previous disability, the employer
had to provide compensation for the disability caused
by the second or subsequent injury . . . .[T]he employee
would be paid the remainder of his compensation for
permanent total disability out of the Special Fund . . .
Smith, The Special Fund Under The Longshore And Harbor
Workers' Compensation Act, 11 Mar. Law 71 (1986). The
LHWCA was enacted "in response to a series of Supreme
Court decisions that invalidated prior attempts to cover
maritime workers under existing state compensation
structures." Bath Iron Works Corp. v. Director, Office of
Workers' Compensation, 136 F.3d 34, 40 (1st Cir. 1998).
Those decisions resulted in a situation where the last
employer was liable for injuries that became totally
disabling only as a result of preexisting injuries for which
the last employer had no responsibility, and over which, it
had no control. The Supreme Court discussed this situation
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5. Contribution to the Special Fund is mandatory for all maritime
industry employers. Annual assessments are determined using the ratio
of the employer's compensation payments under the LHWCA to the total
compensation paid by all employers under the LHWCA. 33 U.S.C.
S 944(c)(2); see also Lawrence P. Postol, The Federal Solution to
Occupational Disease Claims -- The Longshore Act and Federal Program
21 Tort & Inc. L.J. 199, 229-30 (1996) (explaining how formula is
utilized).
9
in Lawson v. Suwanee Fruit & S. S. Co., and the modern
interpretation of section 8(f) can be traced directly to that
decision. In Lawson, an employee had lost the sight of one
eye in an accident not connected to the maritime industry.
He was later hired by a steamship company and thereafter
injured in a work related accident that took the sight of the
other eye leaving him totally blind, and permanently
disabled. However, since the total disability did not result
solely from maritime employment, an issue arose as to the
scope of the maritime employer's liability for the total
disability. The Court defined the issue as follows: "should
the employer or the second injury fund6 . . . be liable for the
balance of payments to equal compensation for total
disability?" Id.
The Court noted the problems caused by earlier decisions
holding the last employer fully responsible for the effects of
a second injury although total disability only resulted from
the combined effect of the latter injury and a preexisting
condition. In particular, the Court noted the prior decision
of the Oklahoma Supreme Court in Nease v. Hughes Stone
Co., 114 Okl. 170 (Okla. 1925), where the second employer
had been held liable "for total compensation for loss of the
second eye." Lawson, 336 U.S. at 203. The Court noted
that
[a]fter the decision . . . thousands of one-eyed, one-
legged, one-armed, one-handed men in the State of
Oklahoma [lost their jobs] and [could] not get
employment. . . . The decision displaced between seven
and eight thousand men in less than 30 days in
Oklahoma.
Id. (internal quotation marks omitted). See also Bath Iron
Works, 136 F.3d at 41 (quoting Lawson). At the time
Lawson was decided, S 8(f) provided
that 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 disability, the employer shall provide
_________________________________________________________________
6. The "Special Fund" under section 8(f) of the Act is often referred to
as
the "second injury fund."
10
compensation only for the disability caused by the
subsequent injury: Provided, however, that . . . after the
cessation of the payments for the prescribed period of
weeks, the employee shall be paid the remainder of the
compensation that would be due for permanent total
disability. . . . out of the special fund.
Id. at 200. The Court held that this "second injury
provision" served a double purpose. "It protects the
employer who has hired, say, a one-eyed worker who goes
and loses his other eye and becomes a total disability." Id.
at 202. However, it "also protects the worker with one eye
from being denied employment on account of his being an
extra risk. Now, . . . it is possible to protect both the
employer and to protect the one-eyed employee also." Id.
See also Bath Iron Works Corp., 136 F.3d at 40 (1st Cir.
1998). The Court concluded that the protection of the Act
could not have been intended only when the first disability
resulted from a covered occupation. If the Act were so
limited, the employers would still be reluctant to hire
workers with pre-existing injuries. The problem was not the
source of the pre-existing injury, but the fact that the
worker who came to an employer with a disability posed a
greater risk of becoming totally disabled while working for
the subsequent employer. The Court in Lawson held that
Congress had to intend "previous disability" as used in the
Act to include a disability in fact, whether or not it occurred
under circumstances covered by the LHWCA. Thus, it was
necessary to allow the employer relief from the special fund
even though the pre-existing injury was not related to an
occupation covered by the LHWCA.
Since Lawson, courts have interpreted the LHWCA in a
manner that is consistent with the public policy of
preventing discrimination against employees with pre-
existing injuries. We have stated that "the underlying
congressional purpose in creating the special fund was to
encourage the employment of partially disabled persons."
Director, Office of Workers' Compensation v. Universal
Terminal & Stevedoring Corp., 575 F.2d 452, 456 (3d Cir.
1978).7 Moreover, the congressional committee reports for
_________________________________________________________________
7. Several courts of appeals have held that the purpose is only to prevent
discrimination. See C.G. Willis, Inc. v. Director, Office of Workers'
11
the 1972 amendments to the LHWCA specifically affirm
that section 8(f) relief is intended to "encourage the
employment of handicapped workers." H.R. Rep. No. 1411,
92nd Cong., 2nd Sess. 8 (1972).
Congress initially created only two conditions precedent
to section 8(f) relief. An employee had to have a preexisting
partial disability, and that disability had to combine with a
subsequent work injury to create a permanent, total
disability. See 33 U.S.C. S 908(f)(1). However, the strong
anti-discrimination policy endemic to the LHWCA gave rise
to a third condition. That judicially created condition
precedent to section 8(f) is known as the "manifestation
requirement." This is the condition that is at the center of
the instant dispute.
B. The Manifestation Requirement
The "manifestation requirement" arose because of the
public policy against discrimination that has been read into
the Act since Lawson. Courts have reasoned that an
employer can not discriminate if it does not know of a pre-
existing injury. Therefore, courts have required that the
pre-existing injury be manifest in order to afford the
employer relief from the special fund. However, courts were
aware that at least two further problems could exasperate
rather than ameliorate the problem that the law was trying
to remedy. First, proving such knowledge is very difficult.
Accordingly, courts credited the employer with knowledge of
a preexisting condition which could have been discovered in
an employee's medical records even if the employer did not
actually know.
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Compensation Programs, 31 F.3d 1112, 1115 (11th Cir. 1994); others
hold that the purpose is encouraging maritime employers to hire
disabled persons. See Newport News Shipbuilding & Dry Dock Co. v.
Harris, 934 F.2d 548, 552 (4th Cir. 1991); Todd Pacific Shipyards Corp.
v. Director, Office of Workers' Compensation Programs, 913 F.2d 1426,
1429 (9th Cir. 1990). Still others refer to both preventing discrimination
and encouraging employers to hire disabled persons. See American
Bridge Div., U.S. Steel Corp. v. Director, Office of Workers' Compensation
Programs, 679 F.2d 81, 82 n.3 (5th Cir. 1982).
12
[s]trong policy considerations dictate that only those
employers who hire the handicapped with knowledge of
their disabilities qualify for limited liability. . . . In view
of the difficulty of proving actual knowledge . . . the test
is ordinarily an objective one. Conditions that are
latent rather than manifest to a prospective employer
do not qualify as S 8(f) disabilities.
Atlantic & Gulf Stevedores, Inc. v. Director, Office of Workers'
Compensation, 542 F.2d 602, 608 (3d Cir. 1976). Allowing
an employer to establish manifestation by way of
constructive knowledge also addressed the concern that the
policy of protecting employees would result in employers
subjecting certain employees to exacting physical
examinations for fear of not learning of a preexisting
condition and becoming ineligible for section 8(f) relief. It is
the availability of knowledge, rather than actual knowledge
of the condition, that is relevant to determining
manifestation. See Universal Terminal & Stevedoring Corp.,
575 F.2d at 456-57; cf. American Mut. Ins. Co. Of Boston v.
Jones, 426 F.2d 1263 (D.C.Cir. 1970). Thus, an employer
who demonstrates that it could readily have discovered the
disability by looking at the employee's medical records is
entitled to S 8(f) relief. Universal Terminal & Stevedoring
Corp., 575 F.2d at 457. See, e.g., Bunge Corp. v. Director,
Office of Workers' Compensation, 951 F.2d 1109, 1111 (9th
Cir. 1991) ("An employer need not have actual knowledge of
an employee's condition. If the condition is readily
discoverable from the employee's medical record in the
possession of the employer, knowledge of the condition is
imputed to the employer."). Against this background, the
vast majority of courts of appeals that have addressed the
issue have agreed that an employee's disability must be
manifest to the employer before the employer can seek relief
from the special fund.8 The manifestation requirement is
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8. See C.G. Willis, Inc. v. Director, Office of Workers' Compensation
Programs, 31 F.3d 1112, 1115 (11th Cir. 1994); Sealand Terminals, Inc.
v. Gasparic, 7 F.3d 321, 323-24 (2nd Cir. 1993); Two "R" Drilling Co.,
Inc.
v. Director, Office of Workers' Compensation Programs, 894 F.2d 748, 750
(5th Cir. 1990); Lambert's Point Docks, Inc. v. Harris, 718 F.2d 644, 648
(4th Cir. 1983); Director, Office of Workers' Compensation Programs v.
Cargill, Inc., 709 F.2d 616, 619 (9th Cir. 1983) (en banc); General
13
now widely accepted and was incorporated into the 1984
amendments to the LHWCA through regulations
promulgated under that Act. See 20 C.F.R.S 702.321(a)
(1988).9
Here, the Director denied Sun Ship's S 8(f) application
because "no evidence [was] submitted to show that
[Ehrentraut] had a manifest pre-existing permanent
disability prior to his retirement from work in 1981. . . ."
See Joint Appendix at 52; ALJ Op. at 2. However, Sun Ship
raises an interesting issue of first impression in this circuit.
It argues that the 1984 amendments to the LHWCA
eliminated the manifestation requirement where, as here,
the preexisting injury does not become manifest until after
the employee retires. The ALJ accepted this argument and
reversed the ruling of the Director.
We are convinced that Section 8(f) should be read
literally in considering disability from post-retirement
occupational diseases. Only in this way can Congress'
intent in passing the 1984 amendments be carried out.
To establish entitlement to relief from the special fund
for a post-retirement occupational disease, therefore,
the employer need only show that there is an existing
permanent partial disability combined with the same
and contributed to the resulting permanent total
disability. In such cases the manifestation requirement
will not be applied.
ALJ Op. at 3 (internal quotation marks omitted).
_________________________________________________________________
Dynamics Corp. v. Sacchetti, 681 F.2d 37, 39-40 (1st Cir. 1982); Director,
Office of Workers' Compensation Programs v. Brandt Airflex Corp., 645
F.2d 1053, 1058 (D.C.Cir. 1981); Universal Terminal & Stevedoring Corp.,
575 F.2d at 456; Duluth, M. & I. R. Ry. Co. v. United States Dep't Of
Labor, 553 F.2d 1144, 1151 (8th Cir. 1977). But see American Ship Bldg.
Co. v. Director, Office of Workers' Compensation Programs, 865 F.2d 727,
731-32 (6th Cir. 1989) (expressly declining to incorporate manifest
requirement for S 8(f) relief).
9. The regulations require that the applicant forS 8(f) limitation of
liability must file an application with the district director containing
"(iii)
the basis for the assertion that the pre-existing condition relied upon
was manifest in the employer. . . ." 20 C.F.R. S 702.321(a)(1).
14
Accordingly, we must determine what effect, if any, those
amendments had on the operation of the manifestation
requirement.
C. The 1984 amendments
Until 1984, no provision of the LHWCA enabled a
maritime worker to collect disability payments for post-
retirement occupational diseases. Congress rectified this in
1984 by amending the LHWCA to provide workers with
disability coverage for post-retirement long-latency
occupational diseases.10 See Longshore and Harbor
Workers' Compensation Act Amendments of 1984, Pub. L.
No. 98-426, 98 Stat. 1639 (1984). However, nothing in the
1984 amendments suggests a congressional intent to alter
the requirements for qualifying for S 8(f) relief. Cf. Bath Iron
Works Corp., 126 F.3d at 40. ("We can find nothing in the
text of the Amendments, nor its legislative history, to
suggest that Congress intended to alter the application of
the manifestation requirement to requests for special
relief."). Absent statutory language to the contrary, we must
conclude that the congressional intent to extend relief did
not include relaxing the manifestation requirement to allow
employers' relief from the special fund under circumstances
that would not previously have entitled them to such relief.
The legislative history of the 1984 amendments clearly
indicates a congressional desire to expand employer liability
for post-retirement occupational disease, but it does not
reflect a desire to allow employers to shift liability for such
disability payments to S 8(f) when an employer unwittingly
hires an individual whose work-related diseases were
asymptomatic, and undocumented. Moreover, relevant
portions of the House and Senate Committee reports
concerning the 1984 LHWCA amendments suggest a
congressional intention to maintain the manifestation
requirement. The Senate Report states:
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10. Here, Ehrentraut's asbestosis and his malignancy were both
sustained while he worked at Sun Ship. However, that does not alter our
inquiry under S 8(f). Director, Office of Workers' Compensation Programs
v. Sun Shipbuilding & Dry Dock Co., 600 F.2d 440, 443 (3d Cir. 1979).
15
Section 8(f) of the act was designed to encourage
employers to hire and retain disabled workers by
distributing much of the additional cost of industrial
injury attributable to pre-existing permanent
disabilities among all employers and carriers subject to
the act. An employer able to demonstrate actual, or in
some cases, constructive knowledge that an injured
worker had a permanent disability which pre-dated a
compensable injury is often able to shift to the Special
Fund the responsibility for paying a very substantial
portion of the amounts payable to the worker. . . . The
goals of section 8(f) remain valid.
S. Rep. No. 98-81, at 34 (1983) (emphasis added). This
report expressly reaffirms the congressional commitment to
the manifestation requirement and also serves to clarify any
questions concerning the purpose of S 8(f) relief.
Likewise, the House Committee report states:
Section 8(f) was intended to encourage employers to
hire disabled workers and permits such employers to
distribute among all employers subject to the Act,
much of the cost of compensating such a worker
should the worker . . . suffer a subsequent injury.
H.R. Rep. No. 98-570, pt. 1, at 20 (1983), reprinted in 1984
U.S.C.C.A.N. 2734, 2753. While this report does not
address the manifestation issue, it states that special fund
relief is intended to encourage employers to hire disabled
workers. The ALJ based his interpretation of the 1984
amendments upon the reasoning of the Court of Appeals for
the Fourth Circuit in Harris. However, we are not
persuaded by the analysis in Harris.
D. Newport News Shipbuilding & Dry Dock Co.
v. Harris
In Harris, the court reasoned that Congress intended to
save maritime employers money when it enacted the 1984
amendments. The court looked to the legislative history of
the 1984 amendments and concluded that "the
amendments as a whole are intended to reduce the cost of
Longshore coverage for employers in the covered industries
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in a manner which will disturb, to the most limited extent
possible, the rights and benefits which the Longshore Act
provides." Id. at 551. (internal quotation marks omitted).
However, the court recognized that this was not Congress'
only objective. "Additionally, the amendments relating to
post-retirement occupational diseases are meant to insure
that long-latency occupational disease claimants do not
continue to encounter the severe procedural hurdles which
the Longshore Act has presented in the past." Id. (internal
quotation marks omitted). The court then reasoned that
extending the manifestation requirement to the new
category of benefits being conferred would be contrary to
Congress' purpose in amending the LHWCA. The court
concluded: "[w]hen these goals are considered in concert, it
is clear that Congress meant for the 1984 amendments to
insure that those suffering from long-latency occupational
diseases receive benefits adequate to their needs without
greatly increasing the cost of these benefits to the
immediate employer by spreading the risk throughout the
industry and defraying the increased costs by contributions
to the fund." Id. The court added that there "is no
suggestion that the relevant . . . amendments are intended
. . . to encourage the hiring or continued employment of the
handicapped." Id. Thus, the court held that the 1984
enactment did not extend the manifestation requirement to
the new category of post retirement disability coverage
afforded under those amendments.
The ALJ concluded that, under Harris, the manifestation
requirement for pre-existing disabilities does not apply
when total disability comes about as a result of a long-
latency period post-retirement occupational disease. We
disagree. First, we doubt that the employers' increased
exposure was driven by, or intended to be circumscribed
by, a countervailing policy of saving employers' money.
Neither the text of the amendments, their legislative
history, nor the substantial body of appellate decisions
interpreting the Act suggest that we should ameliorate the
greater exposure inherent in the amendments by reading
the manifestation requirement out of the Act. Second, we
do not understand how Congress could have sought to
"disturb, to the most limited extent possible, the rights and
benefits which the Longshore Act provides" as the Harris
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court stated, while eliminating the manifestation
requirement that has been a prerequisite to relief from the
special fund almost since its creation more than 70 years
ago.
Had Congress wanted to expand liability only on the
condition that the almost universally accepted
manifestation requirement be eliminated, it could certainly
have said so. A departure from the longstanding
requirement of manifestation should emanate from the
statute's text, not its ethers. Sun Ship was not aware of any
risk from a pre-existing injury or condition when it hired
Ehrentraut, and we fail to see why it should now be entitled
to relief under section 8(f). We conclude that the more
cogent analysis, and the better reasoned approach, is that
set forth by the Court of Appeals for the First Circuit in
Bath Iron Works Corp. We will not assume that Congress
intended to effect a change in such a longstanding
provision of the law by relying upon inference and
jurisprudential deductions. Accordingly, we find the ALJ's
reliance upon Harris misplaced.
V. CONCLUSION
For the reasons set forth above, we conclude that Sun
Ship is not entitled to shift liability to the Special Fund
under S 8(f), and the decision of the ALJ will be reversed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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