Universal Maritime v. Moore ( 1997 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNIVERSAL MARITIME CORPORATION,
Petitioner,
v.
FRANK MOORE; DIRECTOR, OFFICE OF
No. 96-2612
WORKERS' COMPENSATION PROGRAM;
UNITED STATES DEPARTMENT OF
LABOR,
Respondents.
On Petition for Review of an Order
of the Benefits Review Board.
(95-575)
Argued: June 5, 1997
Decided: September 16, 1997
Before WIDENER and NIEMEYER, Circuit Judges, and
MICHAEL, Senior United States District Judge for the
Western District of Virginia, sitting by designation.
_________________________________________________________________
Vacated and remanded by published opinion. Judge Niemeyer wrote
the opinion, in which Judge Widener and Senior Judge Michael
joined.
_________________________________________________________________
COUNSEL
ARGUED: Stephen Edward Darling, SINKLER & BOYD, P.A.,
Charleston, South Carolina, for Petitioner. Ralph R. Lorberbaum,
ZIPPERER & LORBERBAUM, P.C., Savannah, Georgia, for
Respondent Moore; Mark A. Reinhalter, Office of the Solicitor,
UNITED STATES DEPARTMENT OF LABOR, Washington, D.C.,
for Respondent Director. ON BRIEF: J. Davitt McAteer, Acting
Solicitor of Labor, Carol A. De Deo, Associate Solicitor, Laura J.
Stomski, Office of the Solicitor, UNITED STATES DEPARTMENT
OF LABOR, Washington, D.C., for Respondent Director.
_________________________________________________________________
OPINION
NIEMEYER, Circuit Judge:
On appeal of an award to Frank Moore of benefits under the Long-
shore and Harbor Workers' Compensation Act, 33 U.S.C. § 901 et
seq., for permanent total disability, we reverse and remand because
we conclude that (1) the Administrative Law Judge ("ALJ") erred as
a matter of law in applying the statutory presumption under 33 U.S.C.
§ 920(a) to presume that Moore's back pain was caused by a work-
related accident; (2) the ALJ erred in finding permanent total disabil-
ity without any medical evidence of maximum improvement with
respect to Moore's back problem; (3) the ALJ erred as a matter of law
in refusing to credit a vocational survey on the ground that Moore's
employer failed to interview potential employers in the community
offering alternative jobs; and (4) the ALJ failed to follow 33 U.S.C.
§ 910 in computing Moore's average weekly wage. We reject the
employer's other assignments of error and affirm the ALJ's rulings
refusing to admit a surveillance videotape and finding that the
employer's application for relief from the special fund under 33
U.S.C. § 908(f) was forfeited, although we affirm the latter ruling for
reasons other than those given by the ALJ.
I
On November 18, 1991, Frank Moore fell from a ladder when it
slipped, and he struck his knee on the floor, injuring it. At the time,
Moore was working as a container repairman for Universal Maritime
Corporation in Mt. Pleasant, South Carolina. Two months after the
fall, Moore filed a workers' compensation claim for temporary total
disability caused by injury to his "right leg and right knee joint."
2
Moore was a longtime employee who had completed the eighth
grade and had reading and mathematical skills at the third grade level.
He had worked for years as a self-trained repairman of large contain-
ers used for shipping. His job involved kneeling, crouching, and
climbing, as well as strenuous lifting of at least up to 50 pounds. Prior
to his November 1991 fall from the ladder, Moore had complained of
back pain and had suffered injuries to his ribs, left hand and left knee.
Even though he has a documented reduction of function in his left
knee, he had been able to perform his job as a container repairman.
Following his November 1991 fall, Moore was treated by Dr. How-
ard Brilliant, an orthopedist who had regularly treated Moore for vari-
ous ailments. When Moore's right knee did not respond to treatment,
Dr. Brilliant performed arthroscopic surgery on the knee on March 2,
1992, removing loose debris from the joint. Dr. Brilliant believed his
surgery to have secured all of the improvement to Moore's knee that
was then available. But because Moore continued to complain of pain
and to miss work, at Universal Maritime's urging, Moore was exam-
ined by Dr. Bright McConnell, a knee specialist. Dr. McConnell per-
formed a second surgery on October 22, 1992 to repair a tear in the
meniscus. This second surgery appeared to improve Moore's knee
condition, which reached maximum improvement, in Dr. McCon-
nell's opinion, in January 1993. Dr. McConnell concluded that Moore
had suffered a permanent 15% impairment in his right knee as the
combined result of the injury and of degenerative arthritis. He noted
that this impairment would require some work restrictions. Dr. Bril-
liant, on the other hand, gave an opinion that Moore was totally and
permanently disabled as of March 1992, when Dr. Brilliant performed
the arthroscopic knee surgery.
Moore never returned to work after his second surgery, citing
among other things the combination of the impairments in both knees,
his need to wear a knee brace on the injured right knee, and his need
to use a cane for balance.
At his hearing for workers' compensation, Moore presented evi-
dence not only of his knee injury, but also of back problems which
limited his ability to bend and lift. While the effects of Moore's back
problem were adequately documented at the hearing, evidence regard-
ing its nature and origin was sparse and confusing. Moore had a his-
3
tory of low back pain predating the 1991 fall from the ladder. But in
a report dated January 1992, only two months after the fall, examin-
ing physician Dr. Warren specifically noted that Moore "does not
complain of back pain." By the summer of 1992, some eight months
after the accident, a first report of back pain was made by Dr. McCon-
nell, who had performed the second surgery on Moore's knee, report-
ing that Moore "is complaining of some low back discomfort with
pain down the lateral aspect of his right side and right lower leg." And
on November 6, 1992, almost a year after the fall, Dr. Brilliant first
reported a complaint from Moore of back pain, noting"since he was
here last he had developed back pain."
At the hearing before the ALJ, Moore testified that when he woke
up one day in November 1992, about a year after the fall, he experi-
enced serious pain in his back:
I couldn't move and I did manage to get up out of the bed
and make it, and get in my automobile and go to the hospital
to find out what was going on because I had never had that
pain before and I never was drawn up in a knot like that.
Elsewhere in his testimony, Moore acknowledged that he had also
suffered back pain as a result of an earlier injury that preceded the
1991 fall. Medical records relating to that fact showed that within the
month before the fall Moore complained of pain in his back. At
another point during the hearing, Moore testified that after his fall,
both his knee and his back were "bothering him" and that he had been
"complaining about my back ever since I had the injury. No one has
ever done anything about my back." This testimony replaced his pre-
hearing statement that the back pain was a result of gait changes
caused by the knee injury, a theory which would make the back pain
secondary and not a direct result of the fall. No medical records pro-
vided support for the gait-change theory in any case, nor did any med-
ical professional express any opinion as to the cause of the back pain,
although Dr. Brilliant did state that Moore was suffering from arthritis
of the back subsequent to his accident. Finally, medical records
expressed no opinion as to the prognosis for Moore's back pain,
including whether the condition had reached its maximum improve-
ment.
4
In his opinion awarding benefits for permanent total disability
under § 8(a) of the Longshore and Harbor Workers' Compensation
Act, the ALJ stated that:
The medical reports of Dr. Brilliant as well as claimant's
complaints and symptoms of pain established that his right
knee and back injuries could have been caused by the
November 18, 1991 work related accident, and thus, under
§ 20(a), it is presumed that claimant's right knee and back
injuries were caused by the November, 1991 accident.
(Emphasis added). The ALJ also concluded that Universal Maritime
had not rebutted the § 20(a) presumption of causation because "the
reports of Dr. McConnell and Dr. Shutte are given less weight than
those of Dr. Brilliant."
In finding permanent total disability, the ALJ determined that
Moore was incapable of returning to his prior job and rejected evi-
dence that suitable alternative work was available in the community
because the employer had not adequately considered the limitations
on Moore as a result of the pre-existing reduction of function in his
left knee and his poor education and it had not contacted the prospec-
tive alternative employers to determine the full requirements for the
available jobs. The ALJ rejected the employer's evidence of job
descriptions taken from the Dictionary of Occupational Titles, pub-
lished by the Department of Labor.
The decision of the ALJ was affirmed by the Benefits Review
Board by operation of law, pursuant to the Omnibus Consolidated
Rescissions and Appropriations Act of 1996, Pub. L. No. 104-134,
§ 101(d), 110 Stat. 1321, 1321-29 (1996), providing that certain deci-
sions pending before the Benefits Review Board for more than one
year are to be considered affirmed for purposes of seeking judicial
review. This appeal followed.
II
Universal Maritime's chief complaint about the Board's decision
centers on the manner in which the ALJ considered Moore's back
5
pain to conclude that Moore was totally and permanently disabled.
Universal Maritime contends that the ALJ gave virtually conclusive
weight to the presumption afforded by § 20(a) of the Longshore and
Harbor Workers' Compensation Act (hereinafter "the Act"), 33
U.S.C. § 920(a), that Moore's back claim came within the provisions
of the Act and therefore failed to make the necessary factual determi-
nations about whether the back pain was caused by Moore's fall in
November 1991 from the ladder.
The ALJ relied on evidence of back pain first reported approxi-
mately eight months after Moore's accident and on Moore's testi-
mony that he had been experiencing back pain since the date of the
accident. The ALJ concluded that because the back injury "could have
been caused by the November, 1991 work related accident" that
injury "is presumed to have been caused" by the 1991 accident. After
summarizing some of the employer's evidence that cast doubt about
the cause of Moore's back pain -- relating to Moore's credibility and
the absence of any contemporaneous reports of pain-- the ALJ con-
cluded that the evidence was "insufficient to rebut the § 20(a) pre-
sumption of causation." Accordingly, the ALJ continued to consider
the presumption as evidence, weighing it against the employer's evi-
dence: "The employer has not met its burden of rebutting the § 20(a)
presumption of causation as the reports of Dr. McConnell and Dr.
Shutte are given less weight than those of Dr. Brilliant." Before
addressing Universal Maritime's argument, it will be useful to review
the nature and scope of the statutory presumption created by the Act.
Section 20(a) of the Act, 33 U.S.C. § 920(a), provides in pertinent
part, "In any proceeding for the enforcement of a claim for compensa-
tion under this chapter it shall be presumed, in the absence of substan-
tial evidence to the contrary . . . that the claim comes within the
provisions of this chapter." The presumption is a broad one, and
advances the facility with which claims are to be treated to further the
Act's purpose of compensating injured workers regardless of fault.
But that procedural facilitating device is not a substitute for substan-
tive evidence which an injured worker must present to be entitled to
compensation. See U.S. Industries/Federal Sheet Metal, Inc. v. Direc-
tor, OWCP, 455 U.S. 608, 614 n.7 (1982) ("As Professor Larson
warns, ``[n]o amount of informality can alter the elementary require-
6
ment that the claimant allege and prove the substance of all essential
elements in his case'").
In order for the presumption to apply, a claim must be made that
brings an injury within the outer scope of the Act. As the Court in
U.S. Industries stated, "A prima facie ``claim for compensation,' to
which the statutory presumption refers, must at least allege an injury
that arose in the course of employment as well as out of employ-
ment." 455 U.S. at 615. Thus, an employee seeking to have the bene-
fit of the statutory presumption must first allege (1) an injury or death
(2) that arose out of and in the course of (3) his maritime employ-
ment. To this claim attaches a presumption of coverage by the Act,
shifting the burden of proceeding further to the employer. While the
presumption thus facilitates the presentation of a claim, it provides
"no substitute for the allegations necessary to state a prima facie
case." Id. at 616.
If an employer does not offer substantial evidence to rebut the pre-
sumption, it is true that the presumption provided by § 20 will entitle
a claimant to compensation. See Del Vecchio v. Bowers, 296 U.S.
280, 284-85 (1935). When the employer, however, does offer evi-
dence sufficient to justify denial of a claim, the statutory presumption
"falls out of the case" and does not remain as evidence that is weighed
in finding facts. Id. at 286. Rather the issues then must be resolved
only on the evidence in the case. As the Supreme Court explained in
Del Vecchio:
If the employer alone adduces evidence which tends to sup-
port the theory [contrary to the presumption], the case must
be decided upon that evidence. Where the claimant offers
substantial evidence in opposition, . . . the issue must be
resolved upon the whole body of proof pro and con; and if
it permits an inference either way upon the question. . ., the
Deputy Commissioner and he alone is empowered to draw
the inference; his decision as to the weight of the evidence
may not be disturbed by the court.
Id. at 286-87. Thus, the statutory presumption created by 33 U.S.C.
§ 920 functions similarly to the presumption created by Rule 301 of
the Federal Rules of Evidence and the proof scheme under Title VII
7
of the Civil Rights Act of 1964 as described in Texas Dep't of Com-
munity Affairs v. Burdine, 450 U.S. 248 (1981). See U.S. Industries,
455 U.S. at 612 n.5.
In the case before us, Moore testified that he experienced back pain
immediately after the accident in November 1991. Even though it
may appear incredible in light of Moore's other testimony, his pre-
hearing statement to Dr. Warren that he was not experiencing back
pain, and the absence of any complaint to his other doctors, the ALJ
was entitled to credit Moore's testimony that the back pain resulted
from the accident itself. Because of this testimony establishing a
prima facie case, Moore's claim was properly given the benefit of the
presumption created by 33 U.S.C. § 920(a). But the ALJ then ignored
the legal import of evidence rebutting this presumption. Once evi-
dence is presented that could support a finding against Moore, the
presumption falls out of the case, and the ALJ is required to weigh
only the evidence, not the presumption itself. The ALJ, however, con-
tinued to treat the presumption as substantive evidence and, in doing
so, erred.
The employer's rebuttal evidence would undoubtedly support a
finding that Moore's back pain was not caused by the accident. As the
ALJ observed, "Dr. Brilliant's post-accident medical records indicate
no sign of back complaints until [a year after the accident]." More-
over, Dr. Warren affirmatively reported two months after the accident
that Moore "does not complain of back pain." Indeed, no medical
report refers to any back pain until more than one-half year after the
accident when Dr. McConnell first refers to Moore's complaint of
"some low back discomfort." While the evidence indicating the
absence of any back pain complaint for six to eight months after the
accident and the affirmative statement of Dr. Warren placed causation
squarely at issue, there is also evidence in the record that Moore had
experienced back problems prior to the accident to which any later
back pain could have been attributed. All of this evidence is sufficient
to justify a factfinder to conclude that the back pain was not caused
by the accident but rather by either a pre-existing condition or a sub-
sequent unrelated deterioration. While substantial evidence requires
"more than a mere scintilla," it is only "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion."
Richardson v. Perales, 402 U.S. 389, 401 (1971) (quoting
8
Consolidated Edison v. NLRB, 305 U.S. 197, 229 (1938)). Under this
standard, the evidence that Universal Maritime presented casting
doubt on the causative link between Moore's November 1991 fall and
his subsequent back pain was sufficient as a matter of law to cause
the statutory presumption afforded by 33 U.S.C.§ 920(a) to drop
from the case. See Del Vecchio, 296 U.S. at 286. The ALJ was then
left with the task of weighing the evidence in the record. Rather than
doing that, the ALJ continued to weigh the employer's evidence
against the weight of the presumption as if the presumption were evi-
dence.
Accordingly, it is necessary to remand the case to permit the ALJ
to apply the statutory presumption in the proper manner.
III
Universal Maritime also contends that Moore failed to introduce
evidence sufficient to find permanent disability as a result of his back
pain. In order to make a finding of permanent disability, there must
be substantial evidence that the condition alleged to be disabling has
reached maximum medical improvement. See SGS Control Serv. v.
Director, OWCP, 86 F.3d 438, 443-44 (5th Cir. 1996); Director,
OWCP v. Berkstresser, 921 F.2d 306, 312 (D.C. Cir. 1991). Although
there was evidence of maximum improvement with regard to Moore's
knee, there was no opinion from any source as to the prognosis for
Moore's back condition. Thus, the ALJ also erred in finding total and
permanent disability based in part on the limitations of Moore's func-
tional ability caused by his back.
IV
Universal Maritime contends that the ALJ abused his discretion in
excluding from evidence at the hearing a surveillance videotape of
Moore which Universal Maritime sought to introduce even though it
had not included the tape on its pre-hearing list of exhibits. Universal
Maritime noted that the tape did not exist before the weekend preced-
ing the Monday hearing so that it could not have included the tape on
a pre-hearing list.
9
Evidentiary matters at hearings under the Longshore and Harbor
Workers' Compensation Act are governed by 29 C.F.R.§ 18.103,
which states in relevant part:
Error may not be predicated upon a ruling which admits or
excludes evidence unless a substantial right of the party is
affected and . . . [i]n case the ruling is one excluding evi-
dence, the substance of the evidence was made known to the
judge by offer or was apparent from the context within
which questions were asked.
29 C.F.R. § 18.103(a)(2).
In this case, Universal Maritime did not mark the videotape for
identification, nor did it make a proffer of its contents. Rather it sim-
ply stated that the videotape was "material" and that it was the prod-
uct of a recent surveillance. Accordingly, we have nothing in the
record by which we can review the nature of the evidence excluded.
Even on appeal, Universal Maritime does not describe precisely what
the videotape would show, making it impossible for us to determine
whether its exclusion should be found to be plain error despite the
failure to make a proffer. See 29 C.F.R.§ 18.103(c). Accordingly, on
the record before us, we can find no abuse of discretion by the ALJ
in excluding the videotape from evidence.
V
Universal Maritime next challenges the ALJ's finding that Moore
is totally disabled.
To determine whether disability is partial or total involves a shift-
ing proof scheme. Once a claimant establishes that he is incapable of
returning to his prior employment, the burden shifts to the employer
to prove that the claimant is not totally disabled by presenting evi-
dence of other jobs that are available in the relevant geographic mar-
ket for which the claimant is physically and educationally qualified.
See Newport News Shipbuilding & Dry Dock Co. v. Tann, 841 F.2d
540, 542 (4th Cir. 1988).
10
In this case, the employer challenges first the substantiality of the
evidence supporting the ALJ's conclusion that Moore was incapable
of returning to his prior position as a container repairman. Although
the ALJ possibly relied in part on the evidence of Moore's back pain
to which he erroneously applied the § 920(a) presumption to establish
causation, even in the absence of that evidence we believe that there
is substantial evidence from which the ALJ could have concluded
that, as a result of the condition of both knees, Moore was incapable
of performing the bending and climbing required by his former work.
Universal Maritime's second argument, that the ALJ erred in refus-
ing to credit its survey of available alternative employment, is more
substantial. To meet its burden of demonstrating the availability of
alternative employment, Universal Maritime presented the testimony
of a vocational surveyor who derived a list of available positions from
want ads and listings in the local employment office. To flesh out the
physical and educational demands of each advertised position, the
expert relied on standard job descriptions found in the Dictionary of
Occupational Titles, published by the United States Department of
Labor. The ALJ rejected the validity of the survey, however, based
in part upon the vocational expert's failure to contact the prospective
employers to ascertain specifically their requirements for the listed
positions. Without other evidence of available alternative employ-
ment, the ALJ found Moore to be totally disabled.
Our precedents establish that to meet the burden of showing the
availability of alternative work, the employer need not contact pro-
spective employers to inform them of the qualifications and limita-
tions of the claimant and to determine if they would in fact consider
hiring the candidate for their position. See Newport News
Shipbuilding, 841 F.2d at 542; Trans-State Dredging v. Benefits
Review Board, 731 F.2d 199, 201 (4th Cir. 1984). But we have never
before determined whether the defendant employer must contact the
prospective employers in his survey to obtain their specific job
requirements before determining whether the claimant would be qual-
ified for such work.
Such a requirement, like that rejected in Newport News
Shipbuilding and Trans-State Dredging, would, we believe, substan-
tially increase the employer's burden without a commensurate bene-
11
fit. Although requiring such specific description might increase the
precision of vocational surveys, such precision is not necessary since
the claimant is able to correct any overbreadth in a survey by demon-
strating the failure of his good faith effort to secure employment. See
Newport News Shipbuilding, 841 F.2d at 542.
Accordingly, we hold that the employer may meet his burden of
responding to a total disability claim by demonstrating the availability
of specific jobs in a local market and by relying on standard occupa-
tional descriptions to fill out the qualifications for performing such
jobs. The employer need not contact the prospective employer for its
specific requirements in order to establish a valid vocational survey.
In adopting this rule, we impose a burden parallel to that required by
other compensation schemes such as Social Security Disability Insur-
ance and Railroad Retirement Act disability benefits, both of which
rely on standard occupational descriptions, including those provided
in the Dictionary of Occupational Titles. See 20 C.F.R.
§§ 404.1566(d)(1) & 220.131(d)(1).
VI
Universal Maritime also challenges the manner in which the ALJ
determined Moore's average weekly wage for purposes of awarding
compensation. The ALJ calculated Moore's average weekly wage by
taking his annual earnings for calendar year 1991 as reported on his
W-2 forms and dividing that number by 46, the number of weeks that
Moore worked in 1991 prior to his accident in mid-November. Moore
did not work for the remainder of the calendar year. The ALJ added
to this number the annual amount of container royalties, holiday, and
vacation pay for 1991, divided by the full 52 weeks of the year. Con-
tending that this method of calculation artificially inflated Moore's
average weekly wage, Universal Maritime argues instead that the ALJ
should have taken Moore's total salary not for calendar 1991 but for
the 52 week period preceding the accident and should have divided
this number by 52 weeks to determine the average weekly wage,
despite the fact that Moore was absent from work without earnings
during 9 of the 52 weeks preceding the accident.
We conclude that neither of the foregoing calculations conforms to
the method specified by § 10(a) of the Act, 33 U.S.C. § 910(a). Sec-
12
tion 10(a) states, "[i]f the injured employee shall have worked in the
employment in which he was working at the time of the injury . . .
during substantially the whole of the year immediately preceding his
injury, his average annual earnings shall consist of[a multiple of] the
average daily wage . . . which he shall have earned in such employ-
ment during the days when so employed." 33 U.S.C. § 910(a) (empha-
sis added). Thus, the proper inquiry requires the ALJ to determine the
total income earned by the claimant in the 52 weeks prior to the acci-
dent and to divide that sum by the actual number of days for which
the employee was paid to determine an average daily wage. This daily
wage must then be multiplied by 300 if the ALJ determines the claim-
ant to have worked a 6-day week, or by 260 if the claimant worked
a 5-day week, yielding the claimant's average yearly salary. See 33
U.S.C. § 910(a). Finally, this yearly number must be divided by 52 to
yield the average weekly wage. See 33 U.S.C.§ 910(d)(1); see also
Diosdado v. Newpark Shipbuilding & Repair, Inc., B.R.B. No. 96-
1585, 1997 WL 369949, at *6 (Ben. Rev. Bd. June 10, 1997).
Accordingly, if Moore is to be awarded compensation, the amount
must be calculated in accordance with 33 U.S.C.§ 910(a) and (d)(1).
VII
Finally, Universal Maritime contends that it is entitled to mitigation
of its future liability by recourse to the special injury liability fund,
established under 33 U.S.C. § 944 and administered under 33 U.S.C.
§ 908(f). Under § 908(f), an employer may mitigate the extent of its
liability for the payment of compensation by showing that the injury
for which it has responsibility under the Act would not have resulted
in total permanent disability but for the presence of a pre-existing
condition of which it was aware. See Director, OWCP v. Newport
News Shipbuilding & Dry Dock Co., 8 F.3d 175, 182 n.5 (4th Cir.
1993). If the employer meets this burden, his liability for compensa-
tion will be limited to the benefit payments which would be available
for the partial disability resulting from the work-related accident
alone, generally payable for the number of weeks specifically desig-
nated by statute in relation to that injury or for 104 weeks. See 33
U.S.C. § 908(f)(1). The remainder of the claimant's award, constitut-
ing the difference between the employer's portion and the award for
permanent total disability, will be paid from a statutory fund to which
the employer shall have contributed. See 33 U.S.C. § 908(f)(2).
13
Because Universal Maritime did not earlier assert a defense claiming
recourse to the special injury fund, thereby denying the Director of
OWCP the opportunity to defend the fund, the ALJ denied its post-
hearing request to consider the defense for the first time on motion
for reconsideration. Universal Maritime argues that this was error in
light of its efforts to preserve the claim before hearing and the condi-
tional nature of its defense of the case. The issue thus presented is
whether Universal Maritime forfeited its claim for§ 908(f) relief by
raising it for the first time in its motion for reconsideration.
Prior to 1984, § 8(f) of the Act, 33 U.S.C.§ 908(f), contained no
explicit restrictions on the time for raising a claim for relief under its
provisions. See Pub. L. No. 98-426, § 8(e)(5), 98 Stat. 1646 (amend-
ing 33 U.S.C. § 908(f) to add paragraph (f)(3)). Cases decided under
the pre-1984 version of § 8(f) nonetheless construed it as requiring
the claim for special fund apportionment to be raised at the first avail-
able opportunity, generally no later than the initial hearing before the
ALJ. See Brady-Hamilton Stevedore Co. v. Director, OWCP, 779
F.2d 512, 513-14 (9th Cir. 1985) (§ 8(f) relief must be sought at first
hearing before ALJ or be waived); Verderane v. Jacksonville Ship-
yards, Inc., 772 F.2d 775, 778-79 (11th Cir. 1985) (where § 8(f) relief
claim was not raised at first hearing before ALJ, right was waived and
employer could not raise it during proceedings before ALJ on remand
ordered by BRB to resolve discrete statutory coverage issue);
American Bridge Division v. Director, OWCP, 679 F.2d 81 (5th Cir.
1982) (where employer had belatedly mentioned argument for § 8(f)
relief during informal proceedings before deputy commissioner but
neither listed it as issue for resolution by ALJ on pre-hearing form nor
raised it in actual hearing before ALJ, employer could not raise it for
first time on review of ALJ's award of total disability benefits).
Under the pre-1984 version of the law, the Director of OWCP, who
is charged with representing the special injury fund, was usually
unrepresented at the hearing before the ALJ, and thus, assertions of
entitlement to § 8(f) relief often went uncontradicted when raised for
the first time at the hearing. See 51 Fed. Reg. 4270, 4277-78 (Febru-
ary 3, 1986) (reviewing history of actions under prior 33 U.S.C.
§ 908(f) and legislative history of new § 908(f)(3)); cf. American
Bridge Division, 679 F.2d at 83 n.4 & n.5 (suggesting that when
§ 8(f) relief is raised for first time at hearing before ALJ, he should
14
suspend decision on that point and remand to deputy commissioner
for recommendation).
To remedy this problem, Congress amended § 8(f) in 1984 to
require that entitlement to § 8(f) relief be raised and documented ear-
lier, during informal proceedings before the deputy commissioner.
That section as amended and as here applicable states:
Any request . . . for apportionment of liability to the special
fund . . . for the payment of compensation benefits, and a
statement of the grounds therefore, 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 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). Regulations implementing this statute give
extensive directions for the filing of an application with the district
director during the informal portion of the claim process. See 20
C.F.R. § 702.321(b)(1) &(2); see generally 33 U.S.C. § 919 (explain-
ing claim procedure); 20 C.F.R. §§ 702.301-702.319. And when the
claim cannot be resolved without a formal hearing and is referred to
the Office of Administrative Law Judges ("OALJ") for a hearing, the
regulation provides with regard to an application for special fund
relief:
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. In all other cases, failure to submit a fully documented
application by the date established by the district director
shall be an absolute defense to the liability of the special
fund. This defense is an affirmative defense which must be
raised and pleaded by the Director. The absolute defense
will not be raised where permanency was not an issue before
15
the district director. In all other cases, where permanency
has been raised, the failure of an employer to submit a
timely and fully documented application for section 8(f)
relief shall not prevent the district director, at his/her discre-
tion, from considering the claim for compensation and trans-
mitting the case for formal hearing. The failure of an
employer to present a timely and fully documented applica-
tion for section 8(f) relief may be excused only 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(b)(3).
Universal Maritime takes the position that it is covered by the first
sentence of 702.321(b)(3) because there has never been a finding of
maximum medical improvement with regard to Moore's back and
because Moore did not claim permanent disability of any kind until
after the case had been referred to the OALJ. Universal Maritime thus
maintains that the ALJ erred in relying on 20 C.F.R.§ 702.321(b)(3)
to bar its belated attempt to raise § 8(f) entitlement because the regu-
lation makes the absolute defense an affirmative defense which must
be raised by the district director.
In this case, no such affirmative defense was raised since the
employer neither submitted an application for relief to the district
director nor actually raised the issue at the hearing before the ALJ.
The employer first sought to assert special fund liability in a petition
for reconsideration made after the ALJ awarded permanent total dis-
ability benefits. At that point, the ALJ rejected it as untimely. But
Universal Maritime also appears to contend that since it was not
barred by the affirmative defense provisions of the regulation and
because it gave notice purporting to reserve its right to later raise the
issue of § 8(f) liability prior to the hearing before the ALJ, it was
under no time restriction with regard to actually arguing its claim for
special fund liability, thereby entitling it to address the liability after
the ALJ awarded benefits for permanent and total disability.
The Director of the Office of Workers Compensation Programs
concedes, and we agree, that the ALJ erred in relying on 20 C.F.R.
16
§ 720.321 to hold that the request for § 8(f) relief was untimely filed.
As noted, the regulation makes this defense, while absolute, an affir-
mative defense, and such defense was never raised. Indeed, the dis-
trict director was not even a participant in the litigation at the time
that the employer attempted to raise § 8(f) liability. Furthermore,
under this circular regulation, it appears that if the exception to the
requirement of filing an application for § 8(f) relief with the district
director, embodied in the first sentence of the subsection, is met, the
regulation prohibits the director from attempting to raise the affirma-
tive defense of untimeliness. See 20 C.F.R.§ 702.321(b)(3) ("The
absolute defense will not be raised where permanency was not an
issue before the district director").
The Director contends, however, that notwithstanding the inappli-
cability of 20 C.F.R. § 720.321, Universal Maritime remains obli-
gated under § 8(f) to submit a documented application for § 8(f) relief
at the earliest time that it was aware of the claimant's alleged perma-
nent disability and the possibility of special fund relief. In this case,
therefore, the Director asserts that the employer had an obligation to
litigate the special fund's liability fully at the hearing before the ALJ
on the merits of Moore's claim.
As the legislative history summarized above indicates, the 1984
amendment to the Act was designed to advance to a point even earlier
in the claim process the employer's obligation to raise entitlement to
§ 8(f) relief. The earlier the entitlement was alleged, the better the
position of the district director to evaluate and controvert special fund
liability if it were not appropriate. Although the regulations promul-
gated under the 1984 amendments were designed to preserve the
availability of the relief in cases in which the issue of § 8(f) relief
could not be anticipated during the period of informal claim consider-
ation before the deputy commissioner -- cases in which there was
then no claim of permanency -- in general, they do not provide for
a bifurcated liability determination process. See 51 Fed. Reg. 4270,
4278-79 (Feb. 3, 1986) (rejecting suggestion of bifurcating process).
The Director thus has not construed the 1984 amendment and its reg-
ulations as doing away with the previously-established requirement
that special fund liability be both raised and documented at the earli-
est possible opportunity. Absent a clear congressional intent to the
contrary, we afford deference to a reasonable construction of the Act
17
by the Director because of his policy-making authority with regard to
the Act. See Pittman Mechanical Contractors, Inc. v. Director,
OWCP, 35 F.3d 122, 125 (4th Cir. 1994), and authorities collected
therein.
Universal Maritime presents no legitimate excuse for not present-
ing its § 8(f) claim at the hearing before the ALJ on the merits of
Moore's claim. On its Amended Pre-hearing Statement dated June 23,
1993, it "reserve[d] the right to pursue relief under § 908(f) of the Act
if the Court finds that the back injury claimed by Mr. Moore is related
to his job related accident." Again, on another Amended Pre-hearing
Statement dated October 28, 1993, it stated that it would "present for
resolution at formal hearing . . . [the issue of] 8(f) relief." Yet, at the
hearing it failed to make a § 8(f) claim or to raise the issue. We are
aware of no special circumstances compelling us to excuse this fail-
ure. It is true that in order to have raised and argued the issue before
the ALJ, Universal Maritime would have been required to make an
argument which was conditional and in part contradictory to its posi-
tion on the merits of Moore's claim, since it did not concede that
Moore in fact had suffered any permanent, totally disabling injury at
all. But in civil litigation, parties regularly argue alternative and con-
tradictory theories, and that requirement was expressly accepted in the
promulgation of the regulations. See 51 Fed. Reg. 4270, 4278 (Feb.
3, 1986); Verderane, 772 F.2d at 778-79; American Bridge Division,
679 F.2d at 83; Fed. R. Civ. P. 8(e)(2). Indeed, the continuing obliga-
tion to raise and argue § 8(f) liability at the first possible opportunity
is indicated in 33 U.S.C. § 908(f)(3) itself which excuses the failure
to file only where the issue could not reasonably be anticipated "prior
to the issuance of a compensation order."
Accordingly, we conclude that the ALJ did not err in concluding
that Universal Maritime forfeited its § 8(f) claim by its failure to raise
the issue at the initial hearing before the ALJ on the merits of
Moore's claim.
VIII
In summary, we vacate the Board's order affirming the ALJ's
award of permanent total disability benefits to Moore and remand the
case for further proceedings consistent with this opinion.
VACATED AND REMANDED
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