Newport News Shipbuilding & Dry Dock Co. v. Pounders ( 2003 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
NEWPORT NEWS SHIPBUILDING AND 
DRY DOCK COMPANY,
Petitioner,
v.
RANDALL L. POUNDERS, SR.;  No. 00-1321
DIRECTOR, OFFICE OF WORKERS’
COMPENSATION PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR,
Respondents.

On Petition for Review of an Order
of the Benefits Review Board.
(98-1573)
Argued: January 22, 2001
Decided: April 14, 2003
Before WIDENER and KING, Circuit Judges, and
David A. FABER, Chief United States District Judge for the
Southern District of West Virginia, sitting by designation.
Affirmed by published opinion. Chief Judge Faber wrote the opinion,
in which Judge King joined. Judge Widener wrote a concurring opin-
ion.
COUNSEL
ARGUED: Benjamin McMullan Mason, MASON, COWARDIN &
MASON, Newport News, Virginia, for Petitioner. Julia Mankata,
2 NEWPORT NEWS SHIPBUILDING v. POUNDERS
UNITED STATES DEPARTMENT OF LABOR, Washington, D.C.,
for Respondents. ON BRIEF: Jonathan H. Walker, Christopher R.
Hedrick, MASON, COWARDIN & MASON, Newport News, Vir-
ginia, for Petitioner. Henry L. Solano, Solicitor of Labor, Carol A.
De Deo, Associate Solicitor, Mark Reinhalter, Senior Appellate
Attorney, Laura J. Stomski, UNITED STATES DEPARTMENT OF
LABOR, Washington, D.C., for Respondent Director.
OPINION
FABER, Chief District Judge:
Newport News Shipbuilding and Dry Dock Company ("Newport
News") seeks reversal of a decision of the Benefits Review Board (the
"BRB") denying relief under section 8(f) of the Longshore and Har-
bor Workers’ Compensation Act, 33 U.S.C. §§ 901-950 ("LHWCA").
For the reasons discussed below, we affirm the decision of the BRB.
I.
In January 1997, Randall Pounders ("Pounders") was diagnosed
with asbestosis. A pulmonary function test revealed a fifteen percent
permanent partial whole person impairment as measured by the AMA
Guides to the Evaluation of Permanent Impairment, 4th ed. His
employer, Newport News, admits that he was exposed to asbestos
during his employment, but contends that he had a pre-existing lung
disease which materially and substantially contributed to his ultimate
disability.
As early as 1979, pulmonary function tests performed on Pounders
revealed restrictive lung disease. This condition continued to appear
on such tests conducted from 1980 through 1984. In 1996, Pounders
was diagnosed with diabetes, hypertension and pleural fibrosis.
Pounders retired on December 31, 1995, more than one year before
he was diagnosed with asbestosis.
On July 30, 1998, the Administrative Law Judge ("ALJ") filed his
original decision and order denying the § 8(f) claim of Newport
NEWPORT NEWS SHIPBUILDING v. POUNDERS 3
News. Almost one year later, on July 28, 1999, the BRB reversed and
remanded the case for further consideration in view of the standard
established in Director, OWCP v. Newport News Shipbuilding and
Dry Dock Co. (Carmines), 138 F.3d 134 (4th Cir. 1998). On reconsid-
eration, however, the BRB reversed itself and affirmed the original
decision of the ALJ.
II.
Section 8(f) of the LHWCA, 33 U.S.C. § 908(f), provides in part
as follows:
In . . . 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 substantially greater than that
which would have resulted from the subsequent injury
alone, the employer shall provide . . . compensation for one
hundred and four weeks only.
After the one hundred four-week period has passed, the Office of
Workers’ Compensation Programs ("OWCP"), which administers a
special fund for that purpose, is responsible for disability payments
under § 8(f).
An employer who seeks to limit liability for an employee’s perma-
nent partial disability under § 8(f) must establish three elements: (1)
that the ultimate disability is caused in part by a pre-existing partial
disability; (2) that the pre-existing disability was manifest to the
employer prior to the work-related injury; and (3) that the ultimate
disability materially and substantially exceeded the disability that
would have resulted from the work-related injury alone, in the
absence of the pre-existing condition. See Director, OWCP v. New-
port News Shipbuilding and Dry Dock Co. (Carmines), 138 F.3d 134,
138-39 (4th Cir. 1998). See also Director, OWCP v. Newport News
Shipbuilding and Dry Dock Co. (Harcum), 8 F.3d 175, 182-83 (4th
Cir. 1993), aff’d on other grounds, 514 U.S. 122 (1995).
The LHWCA sets out the applicable standard of review for this
case in § 921(b)(3). When under review by the BRB, the ALJ’s fac-
4 NEWPORT NEWS SHIPBUILDING v. POUNDERS
tual findings are deemed conclusive "if supported by substantial evi-
dence in the record considered as a whole." 33 U.S.C. § 921(b)(3).
This court has held that substantial evidence is "more than a scintilla
but less than a preponderance." Elliott v. Adm’r, Animal & Plant
Health Inspection Serv., 990 F.2d 140, 144 (4th Cir. 1993). Addition-
ally, as stated in Newport News Shipbuilding & Dry Dock Co. v.
Tann, 841 F.2d 540, 543 (4th Cir. 1988), the ALJ’s findings "may not
be disregarded on the basis that other inferences might have been
more reasonable." Rather, "deference must be given the fact-finder’s
inferences and credibility assessments, and we have emphasized the
scope of review of ALJ findings is limited." Id. Legal determinations
are reviewed de novo. This includes the standard by which the ALJ
determines entitlement to § 8(f) relief. See Carmines, 138 F.3d at 141.
III.
There is no disagreement in this case that the first two conditions
necessary for relief under § 8(f) are met. The parties agree that
Pounders had a pre-existing disability. The second element, manifes-
tation, is not required in cases where the worker suffers from a post-
retirement occupational disease, as is the case with Pounders. The
sole issue involves the weight of the evidence with regard to the third
requirement, commonly referred to as the "contribution" element.
To satisfy the contribution element in this case, Newport News
relied upon the parties’ stipulation that Pounders has a fifteen percent
permanent partial disability, which is attributed to both his pre-
existing disability and his work-related asbestosis, and the opinion of
James Reid, a company doctor, who stated that if Pounders had only
the work-related asbestosis, his impairment rating would be at least
fifteen percent less.1 Dr. Reid explained his conclusion and the basis
for it as follows:
Mr. Pounders’ AMA rating and disability are not caused by
his alleged asbestosis alone, but rather his AMA rating and
1
Two other doctors reviewed the records and signed off on a form indi-
cating they agreed with Dr. Reid’s opinion. Neither examined Pounders.
The ALJ, correctly in our view, gave little weight to these assessments.
J.A. at 40.
NEWPORT NEWS SHIPBUILDING v. POUNDERS 5
disability are materially and substantially contributed to, and
materially and substantially hastened by his pre-existing
pleural fibrosis/restrictive lung disease and hypertensive car-
diovascular disease-diabetes. Since the 1980’s, hypertension
has been known to reduce pulmonary function. This is
hardly surprising since the blood in the vascular system
enters the lungs, and oxygen is transferred to the blood from
the lungs. A January, 1995 article in Chest, a leading medi-
cal journal, based on a grant from the National Heart, Lung
and Blood Institute of NIH, documents the effect of hyper-
tension on pulmonary function. Hypertension, which Mr.
Pounders had, causes a three percent (3%) drop in the FEVI
and a three percent (3%) drop in the FVC. On average, each
one percent (1%) drop in FEVI or FVC results in a one per-
cent (1%) increase in the AMA rating. Of course, the more
longstanding or severe the cardiovascular condition, the
greater the drop in FEVI/FVC and hence the greater the
increase in the AMA rating. Mr. Pounders’ Shipyard pulmo-
nary function tests as early as 1979 showed a 10% AMA
rating disability. Thus, if Mr. Pounders merely had asbesto-
sis, without his pre-existing disabilities, his AMA rating
would be a least 15% less.
J.A. at 18.
The BRB concluded that the evidence of contribution fell short of
the standard for § 8(f) relief established by this court in Carmines.
Carmines was exposed to asbestos at the Newport News facility over
a thirty-year period. See Carmines, 138 F.3d at 137. He was diag-
nosed with pulmonary asbestosis in 1990 and deemed to have a
twenty-five percent to thirty percent impairment of the whole person.
See id. He also had substantial pre-existing scarring of the lungs due
to pleurisy. See id. at 139. Dr. Hall, a company physician for Newport
News, opined on the basis of old x-rays that Carmines’ pre-existing
disability accounted for about eighteen percentage points of the total
disability, which was twenty-eight percent. See id. at 140. He con-
cluded that Carmines’ asbestosis accounted for the difference — ten
percent. See id.This court determined in Carmines that Dr. Hall’s evidence was
insufficient to meet the contribution requirement and show the claim-
6 NEWPORT NEWS SHIPBUILDING v. POUNDERS
ant’s total disability to be materially and substantially greater than the
disability resulting from the work-related condition alone. See Car-
mines, 138 F.3d at 134, 142 (4th Cir. 1998). The court pointed out
that Carmines’ asbestosis standing alone could account for all of his
disability. See id. at 143. In the absence of expert evaluation of the
degree of disability covered by the asbestosis separate and apart from
the impact of the pre-existing condition, the court said, there was no
basis for a comparison which would reveal whether the prior injury
materially and substantially contributed to the total impairment. See
id. at 143-44. To satisfy the third requirement under § 8(f), the court
held that, "an employer must quantify the type and extent of the dis-
ability that the claimant would have suffered without the pre-existing
condition." Id. at 139. It is not enough, as Dr. Hall did in Carmines,
to simply calculate the total current disability and subtract from it the
disability resulting from the pre-existing condition.
In weighing any application for § 8(f) relief the court is faced with
competing policy goals. The purpose of § 8(f) is to encourage reem-
ployment of handicapped workers. See Lawson v. Suwanee Fruit &
S.S. Co., 336 U.S. 198, 201 (1949). If employers were charged with
the entire cost of second injuries under the LHWCA, there would be
a powerful disincentive to hire the handicapped. On the other hand,
employers should be held responsible for the full cost of injuries and
illnesses which occur on their watch and should not be permitted
lightly to transfer such burdens to the special fund.
The problem is exacerbated by the fact that the adversarial system
breaks down to a degree with regard to § 8(f) claims. The evidentiary
hearing in such cases may involve only the employer and the claim-
ant. The claimant seeks to be compensated for his work-related condi-
tion. He probably does not care whether he is paid out of the general
fund, with its higher cost to his employer, or out of the special § 8(f)
fund. The employer, on the other hand, operates under a significant
financial incentive to throw as many cases as it can into the special
fund. It is only after the initial hearing is concluded that the Director,
OWCP — the person with the interest in protecting the integrity of
the special fund — enters the picture. The record made at the original
hearing may as a consequence be tilted in favor of § 8(f) relief. The
problem is complicated by the fact that medical evidence relating to
the contribution requirement is frequently provided by company doc-
NEWPORT NEWS SHIPBUILDING v. POUNDERS 7
tors. Human nature as it is, company doctors, however honest, are
likely to give the close calls to those who pay their salaries.
In this context, the rigorous standard of Carmines makes good
sense and is supported by cases from other circuits. In Sealand Termi-
nals, Inc. v. Gasparic, 7 F.3d 321, 323 (2d Cir. 1993) (per curiam),
the court held that § 8(f) relief is precluded unless the evidence estab-
lishes that the work-related injury alone would not have caused the
workers’ total disability. The United States Court of Appeals for the
First Circuit, in Director, OWCP v. Bath Iron Works Corp., 129 F.3d
45 (1st Cir. 1997), followed this court’s opinion in Harcum, and held
that, to justify § 8(f) relief, an employer must show the degree of dis-
ability attributable to the work-related injury alone, "so that this
amount may be compared to the total percentage of the partial disabil-
ity for which coverage under the LHWCA is sought." 129 F.3d at 51;
see also Two "R" Drilling Co., Inc. v. Director, OWCP, 894 F.2d 748(5th Cir. 1990).
Applying the Carmines standard here, we find the evidence insuffi-
cient to support § 8(f) relief. We agree with the BRB that Dr. Reid’s
methodology fails to satisfy Carmines. Dr. Reid concluded that
Pounders’ asbestosis, without the pre-existing condition, would result
in an AMA rating of at least fifteen percent less than the rating which
results from the two conditions combined. He thus places the degree
of disability from the asbestosis alone at less than the total disability.
He gets there, however, by using a methodology strikingly similar to
the discredited "subtraction" method employed by Dr. Hall in Car-
mines. Dr. Reid begins with the normal impact of hypertension on
breathing and reduces the amount of the total disability to account for
this. He does not, as Carmines requires, make an assessment of the
impact of the asbestosis standing alone.2 In the absence of such an
assessment, the evidence fails to satisfy the Carmines test.
2
Judge Smith of the BRB, in his concurring opinion below, points out
the difficulty which confronts a doctor called upon to make the assess-
ment required by Carmines in a case involving successive lung diseases.
The difficulty of making the assessment in isolated cases, however, does
not compel us to adopt a different rule.
8 NEWPORT NEWS SHIPBUILDING v. POUNDERS
Accordingly, the decision of the BRB is
AFFIRMED.
WIDENER, Circuit Judge, concurring:
I.
While the differences between the earlier permanent partial disabil-
ity and the subsequent work-related disability are so marked in the
Ward case that I think the Harcum-Carmines rule should have no pre-
cedential application in that case, the facts in the case at hand are so
similar to Carmines in the measurement of disability by the AMA
tables, as required by statute, 33 U.S.C. § 904(c)(23), that they require
the result the majority obtains as a matter of circuit precedent, and for
that reason alone, I concur in the result. I respectfully disassociate
myself from the opinion of the majority with respect to company doc-
tors.
II.
Whether we agree with Coke, that reason is the life of the law, or
with Holmes, that the life of the law is experience, the Harcum-
Carmines rule, in my opinion, follows neither. The statute 33 U.S.C.
§ 908(f) requires both a pre-existing "permanent partial disability" to
which must be added a "subsequent injury" which is work-related, or
else the statute has no application. Carmines requires a quantification
of the subsequent injury without reference to the earlier injury, a con-
dition which never existed. So we are requiring physicians to answer
a purely hypothetical question based on facts which never existed.
Carmines forbids a physician from giving an opinion as to the differ-
ence between two known quantities, the earlier and subsequent dis-
abilities, but requires a physician to express an opinion as to
differences between a known quantity, the subsequent disability, and
an unknown earlier disability. In my opinion, this is a not tenable, as
Judge Smith points out in his administrative concurrence.
III.
Left to my own devices, I would decide the case on the reasoning
in the concurring administrative opinion in this case of Judge Smith,
NEWPORT NEWS SHIPBUILDING v. POUNDERS 9
an administrative appeals judge, which I earnestly commend to the
court and copy in full below:
SMITH, Administrative Appeals Judge, concurring:
I concur in the result reached by my colleagues. I write sep-
arately to express my uncertainty as to how an employer can
satisfy the contribution requirement in a Section 8(c)(23)
case in a manner which meets the expectations of the Fourth
Circuit. In a case where the award is based solely on the per-
centage of permanent impairment, it places a great burden
on a doctor to examine a claimant and rate, with certainty,
his loss due to his work-related injury without regard to his
condition as a whole, which includes his pre-existing condi-
tion, and without reliance on percentages.
In this case, the Board stated that calculation of the percent
of impairment caused by the pre-existing disability merely
requires the computation of 15 percent of the 15 percent
overall rating (15 percent of 15 percent equals 2.25 percent.
This resulted in claimant’s pre-existing disability being at
least a 2.25 percent impairment. Subtracting 2.25 percent
from the overall 15 percent impairment results in an impair-
ment rating for the asbestosis alone of 12.75 percent. There-
fore, the Board concluded that the administrative law judge
had enough information to make the comparison between
claimant’s disability with and without the pre-existing dis-
ability (15 percent versus 12.75 percent). Pounders, slip op.
at 3. Since claimant’s entitlement is governed by Section
8(c)(23), his compensation award is based on his percentage
of impairment alone.1 Under Section 8(c)(23), quantifying
1
Section 8(c)(23) is an exception to the rule that disability
under the Act rests on an economic foundation. Section 2(10) of
the Act states:
"Disability" means incapacity because of injury to earn the
wages which the employee was receiving at the time of
injury in the same or any other employment; but such term
shall mean permanent impairment, determined (to the extent
10 NEWPORT NEWS SHIPBUILDING v. POUNDERS
the percentages is equivalent to quantifying the disability,
and the record contains evidence of claimant’s percentages
of impairment both before and after his work-related injury.
The Board thus reasoned that the record contained sufficient
information to permit a comparison between claimant’s ulti-
mate degree of disability and the degree of disability he
would sustain without the pre-existing disability.
As the majority opinion points out, the Fourth Circuit disap-
proved this method of determining whether the claimant’s
disability is due solely to the work injury and whether the
pre-existing disability materially and substantially worsened
the ultimate disability. Director, OWCP v. Newport News
Shipbuilding & Dry Dock Co. [Carmines], 138 F.3d 134, 32
BRBS 48(CRT) (4th Cir. 1998). Although the Fourth Circuit
stated in Carmines that the seriousness of a pre-existing
condition could be irrelevant to a claimant’s overall disabil-
ity, as the work-related injury alone could give rise to the
compensable disability, the examples it used to explain this
conclusion were dissimilar to the case before it, and they are
dissimilar to the instant case as well. For instance, the Car-
mines court stated that if an employee with a paralyzed leg
were to have the leg amputated due to a work-related injury,
the employee would be no worse off than he was before,
that is, he would have a paralyzed leg-stump instead of a
paralyzed leg. In either case, he would not have use of the
leg. Thus, Section 8(f) relief would not be available to the
covered thereby) under the guides to the evaluation of per-
manent impairment promulgated and modified from time to
time by the American Medical Association, in the case of an
individual whose claim is described in section 910(d)(2) of
this title.
33 U.S.C. § 902(10) (emphasis added): Section 10(d)(2) pro-
vides an average weekly wage for employees retired on the
date of awareness in occupational disease cases, and Section
8(c)(23), 33 U.S.C. § 908(c)(23), provides that benefits for
such individuals are computed using the percentage of per-
manent impairment.
NEWPORT NEWS SHIPBUILDING v. POUNDERS 11
employer because it could not establish that the pre-existing
paralysis made the ultimate disability "materially and sub-
stantially greater." Carmines, 138 F.3d at 139, 32 BRBS at
51(CRT). Further, the court addressed Director, OWCP v.
Luccitelli, 964 F.2d 1303, 26 BRBS 1(CRT) (2d Cir. 1992),
wherein the claimant had a pre-existing disability to his
right knee and suffered a work-related injury to his left
knee. Carmines, 138 F.3d at 139, 143, 32 BRBS at 51,
55(CRT. The Fourth Circuit noted that the Luccitelli court
stated that the existence of the pre-existing condition alone
was insufficient to entitle employer to Section 8(f) relief as
claimant’s work-related injury was itself totally disabling.
Neither Carmines nor the instant case, however, involves
injuries resulting in economic disability or weighing the rel-
ative contributions of injuries to different body parts to the
whole disability.2 Rather, they involve the relative contribu-
tions of two lung conditions where the ultimate disability is
compensated pursuant to Section 8(c)(23) based on physical
impairment alone.3 In this instance, quantification of the
impairment is the sole measure of disability. 33 U.S.C.
§§ 902(10), 908(c)(23); see n. 2, supra. If, using the per-
centages from Carmines, a credible physician states that
claimant’s compensable respiratory impairment is 28 per-
cent, and breaks this down further by stating that 18 percent-
age points of this impairment is due to the pre-existing
condition and 10 percentage points is due to the work injury,
the administrative law judge should be entitled to conclude
that the disability, here a respiratory condition compensable
2
Moreover, in Luccitelli, the claimant had a permanent total
disability and the question of whether his ultimate disability was
made "materially and substantially greater" by his pre-existing
condition did not arise. 33 U.S.C. § 908(f)(1); Luccitelli, 964
F.2d at 1303, 26 BRBS at 1(CRT).
3
But see Louis Dreyfus Corp. v. Director, OWCP, 125 F.3d
884, 31 BRBS 141(CRT) (5th Cir. 1997) (previous rating insuf-
ficient by itself to show contribution where evidence established
that ultimate disability may not have been made "materially and
substantially greater" by the pre-existing condition).
12 NEWPORT NEWS SHIPBUILDING v. POUNDERS
based solely on a percentage of respiratory impairment, is
not due solely to the work injury.4 The "degree of disability"
due to the work-related injury alone, as required by the Car-
mines court, is readily apparent from the percentages. The
court’s statement that, under the facts of that case, or the
instant case, the claimant could be just as "disabled," that is,
impaired within the meaning of the American Medical
Association Guides to the Evaluation of Permanent Impair-
ment, see 33 U.S.C. § 902(10), with or without the pre-
existing disability, is not tenable.5
ROY P. SMITH
Administrative Appeals Judge
4
The administrative law judge, of course, also would have
to determine if the ultimate disability is materially and substan-
tially greater because of the pre-existing disability.
5
This is especially true because in order to be entitled to
Section 8(f) relief in a case where the claimant is compensated
pursuant to Section 8(c)(23) for a respiratory impairment, the
pre-existing disability must be a condition that compromises res-
piratory function. Director, OWCP, v. Bath Iron Works Corp.,
129 F.3d 45, 31 BRBS 155(CRT) (1st Cir. 1997); Adams v. New-
port News Shipbuilding & Dry Dock Co., 22 BRBS 78 (1989).