DOWCP v. Newport News Shipbld ( 1998 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR,
Petitioner,
No. 96-2626
v.
NEWPORT NEWS SHIPBUILDING AND
DRY DOCK COMPANY; EDITH ELLIOT,
Respondents.
On Petition for Review of an Order
of the Benefits Review Board.
(95-1949)
Argued: December 1, 1997
Decided: January 28, 1998
Before LUTTIG, WILLIAMS, and MOTZ, Circuit Judges.
_________________________________________________________________
Remanded by published opinion. Judge Motz wrote the opinion, in
which Judge Luttig and Judge Williams joined as to part IV. Judge
Williams wrote an opinion concurring in the judgment, in which
Judge Luttig joined.
_________________________________________________________________
COUNSEL
ARGUED: Arthur F. Rosenfeld, UNITED STATES DEPARTMENT
OF LABOR, Washington, D.C., for Petitioner. James Melvin Mes-
nard, SEYFARTH, SHAW, FAIRWEATHER & GERALDSON,
Washington, D.C., for Respondents. ON BRIEF: J. Davitt McAteer,
Acting Solicitor of Labor, Carol A. DeDeo, Associate Solicitor,
UNITED STATES DEPARTMENT OF LABOR, Washington, D.C.,
for Petitioner.
_________________________________________________________________
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
The Director of the Office of Workers' Compensation Programs,
United States Department of Labor, seeks review of a determination
by an administrative law judge (ALJ), granting Newport News Ship-
building and Dry Dock Company special fund relief under § 8(f) and
§ 44 of the Longshore and Harbor Workers' Compensation Act, 33
U.S.C.A. § 908(f) and § 944 (West 1986 & Supp. 1997) (the Act).
Because the ALJ failed to make the findings necessary to grant New-
port News' application for special fund relief, we remand to the ALJ
for further proceedings consistent with this opinion.
I.
On July 8, 1988, Edith Elliot, a Newport News employee, sustained
injuries to her left knee and thigh while at work. An orthopedic sur-
geon treated Elliot for her injuries and rated her as having a 5% per-
manent partial disability. Newport News voluntarily paid Elliot
workers' compensation benefits for this permanent partial disability.
Several years later, Elliot filed for additional compensation from
Newport News, contending she was permanently and totally, as
opposed to partially, disabled due to the injuries she sustained on July
8, 1988. At that time, Newport News requested relief under § 8(f) of
the Act, 33 U.S.C.A. § 908(f). This provision entitles an employer to
be relieved from responsibility for some of the benefits due an
employee if the employer can demonstrate that (1) the employee suf-
fered a permanent partial disability at the time she became employed
with the employer, (2) the pre-existing disability was manifest to the
employer when it hired the employee and (3) the pre-existing disabil-
ity contributed to the permanent total disability caused by the work-
2
related injury. See, e.g., Director, Office of Workers' Compensation
Programs v. Newport News Shipbuilding & Dry Dock Co. , 676 F.2d
110, 114 (4th Cir. 1982). When an employer succeeds on a § 8(f)
claim, the employer is only responsible for 104 weeks of compensa-
tion. See 33 U.S.C.A. § 908(f)(1). A claimant receives the remainder
of her workers' compensation benefits from a special fund established
under the Act. See 33 U.S.C.A. § 944.
In petitioning for § 8(f) relief, Newport News claimed that at the
time Elliot was hired, she suffered from a hearing loss of which the
company had knowledge and which permanently and partially dis-
abled her. The company further asserted that this hearing loss contrib-
uted to Elliot's permanent total disability caused by her July 1988
work-related injury. The district director denied Newport News'
§ 8(f) application. Newport News appealed to the ALJ. The Director
asserts, and Newport News does not contest, that the day before the
scheduled ALJ hearing, Newport News changed the grounds for its
§ 8(f) application: the company submitted a letter from a physician
opining that Elliot's pre-existing disability was a chronic back condi-
tion sustained during a car accident prior to Elliot's employment with
Newport News, not the hearing loss that Newport News had earlier
claimed.
At the ALJ hearing, the Director asserted the "absolute defense"
against special fund liability provided under the statute when an
employer fails to present his application for § 8(f) relief to the district
director. The Director contended that Newport News' initial applica-
tion for § 8(f) relief based on one ground-- Elliot's hearing loss (the
only application submitted to the district director)-- did not consti-
tute "present[ation]" of the employer's application for § 8(f) relief
based on an entirely different ground -- Elliot's back condition. The
Director maintained that to overcome the special fund's absolute
defense to an untimely 8(f) claim, Newport News had to demonstrate
that it "could not have reasonably anticipated prior to consideration
of the claim by the district director" the special fund's liability for
§ 8(f) relief based on Elliot's back injury. 33 U.S.C.A. § 908(f). The
ALJ rejected the Director's legal argument. The ALJ reasoned that
Newport News' initial timely filing for § 8(f) relief before the district
director on one ground permitted it to seek § 8(f) relief before the
ALJ on an entirely different ground, without demonstrating that it
3
"could not have reasonably anticipated" the new ground at the time
of the initial filing.
The ALJ originally found that Newport News failed to prove that
Elliot's back injury contributed to her permanent disability. After
Newport News moved for reconsideration, the ALJ permitted New-
port News to depose Elliot's treating physician for a second time. On
the basis of this deposition, the ALJ reversed himself, finding New-
port News entitled to § 8(f) relief because Elliot's back injury contrib-
uted to her total disability. The Director appealed the ALJ's decision
to the Benefits Review Board. When the Board failed to rule on the
ALJ's determination within twelve months, the ALJ's decision was
affirmed by operation of law. See Pub.L.No. 104-134, tit. I, § 101(d),
110 Stat. 1321-219 (1996).
The Director then filed this appeal. He does not challenge the
ALJ's determination on the merits. Rather, the Director confines his
appeal to the procedural questions stemming from Newport News'
failure to file a timely request for § 8(f) relief on the basis of Elliot's
back injury.
II.
Section 8(f) provides the procedure to be followed when an
employer requests relief from the special fund:
Any request . . . for apportionment of liability to the special
fund . . . and a statement of grounds therefore, shall be pres-
ented to the [district director] prior to the consideration of
the claim by the [district director]. 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 a 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.A. § 908(f)(3) (emphasis added). The implementing regula-
tions further provide:
4
(1) A request for section 8(f) relief should be made as soon
as the permanency of the claimant's condition becomes
known or is an issue in dispute. . . .
(3) . . . [f]ailure to submit a fully documented application by
the date established by the district director shall be an abso-
lute defense to the liability of the special fund. .. . The fail-
ure of an employer to present a timely and fully documented
application 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)(1), (3).
The Act and regulations therefore establish that an employer's fail-
ure to present a § 8(f) claim to the district director provides the spe-
cial fund an "absolute defense" against § 8(f) relief "unless the
employer could not have reasonably anticipated the liability of the
special fund" before the district director considered the claim.
The ALJ concluded that the special fund was not entitled to the
absolute defense in this case because the employer's assertion of a
§ 8(f) claim on one ground -- hearing loss-- sufficed to establish a
§ 8(f) claim on another ground -- back injury. The ALJ reasoned:
It is true that failure to present a request for 8(f) relief to the
[district director] prior to consideration of the claim by that
officer constitutes an absolute defense to the special funds
[sic] liability. However, the act is silent on whether the
employer can change theories in mid stream. . . .
[I] agree with the Employer that to limit an employer to its
original theory for section 8(f) relief would unfairly and
unreasonably nullify the discovery tool in any case involv-
ing section 8(f) relief. Therefore, absent existing case law to
the contrary, I decline to extend the language of section
8(f)(3) to prohibit a change in theory once the application
has been filed.
5
The Director contends that the ALJ's ruling constituted legal error.
Specifically, the Director maintains that when an employer files a
§ 8(f) application before the district director on one ground, and then
asserts before the ALJ an entirely new ground for§ 8(f) relief, the
employer must demonstrate that, with respect to the new ground, it
could not "have reasonably anticipated the liability of the special
fund" before the district director considered the claim. 33 U.S.C.A.
§ 908(f)(3).
III.
The plain language of § 8(f) does not squarely address the question
of whether an employer's request to the district director for § 8(f)
relief on one basis entitles the employer to assert a new ground for
§ 8(f) relief before the ALJ, without any showing that the employer
could not earlier have reasonably anticipated the liability of the fund
on the new ground. To be sure, § 8(f) does state that "[a]ny request
. . . for apportionment of liability to the special fund . . . and a state-
ment of the grounds therefore, shall be presented to the [district direc-
tor] prior to the consideration of the claim by the [district director]."
(Emphasis added.) But the statute does not expressly provide that
once an employer files a § 8(f) application, complete with grounds for
the claim, the employer is prohibited -- without satisfactory explana-
tion -- from later changing the grounds of its claim and resting on
grounds wholly different than those asserted in the original applica-
tion.
If "Congress has not addressed the precise question at issue," which
would, of course, end the inquiry, we look to the Director's interpreta-
tion of the Act for guidance, provided that it is"based on a permissi-
ble construction of the statute." Newport News Shipbuilding and Dry
Dock Co. v. Howard, 904 F.2d 206, 209 (4th Cir. 1990). As long as
the Director's interpretation does not contravene the Act, we "may not
substitute [our] own construction of a statutory provision for a reason-
able one made by an agency." Id.; see also Zapata Haynie Corp. v.
Barnard, 933 F.2d 256, 258 (4th Cir. 1991) (we should adopt the
Director's interpretation "unless it is unreasonable or contrary to Con-
gressional intent"). In this case, the Director's interpretation both
comports with Congressional intent and makes good sense.
6
As to Congressional intent, we note that, prior to 1984, § 8(f) con-
tained no explicit restrictions on the time for raising a claim for relief.
See Universal Maritime Corp. v. Moore, 126 F.3d 256, 266 (4th Cir.
1997) (discussing history of § 8(f) and amendments). Under this ear-
lier version of the law, employers would wait until the formal ALJ
hearing to raise 8(f) claims. Often employers asserted a claim for
§ 8(f) relief for the first time before the ALJ, where the claim would
go uncontested by the Director, who was not represented before the
ALJ and thus had no knowledge of the claim. Id. To afford the Direc-
tor the opportunity to "evaluate" claims at the outset and then "de-
fend" against special fund claims before the ALJ, Congress amended
§ 8(f) to require that claims be filed first with the district director. Id.;
see also 51 Fed. Reg. 4270, 4278 (Feb. 3, 1986). By mandating that
employers bring § 8(f) claims at the initial stage, Congress sought to
"end the practice of [employers] first raising the section 8(f) issue at
the ALJ level, where it could often go unnoticed and uncontested . . .
[by the district director]." 51 Fed. Reg. at 4278.1 The Director's inter-
pretation of the Act clearly accords with and furthers this intent.
This interpretation is also entirely reasonable. Congress established
§ 8(f)'s timing requirement to ensure that the district director had a
full and fair opportunity to defend the special fund from a § 8(f)
claim; this opportunity logically must entail defending against the
grounds for the claim. Indeed, the statute expressly provides that any
request for § 8(f) relief is to be accompanied by "a statement of
grounds therefore." When an employer files with the district director
an application for § 8(f) relief based on one ground, that application
is of little assistance to the district director in defending against the
employer's request for relief on a wholly unrelated ground.
_________________________________________________________________
1 Accordingly, the regulations implementing § 8(f) place the burden on
the employer to request § 8(f) relief "as soon as the permanency of the
claimant's condition becomes known or is an issue in dispute." 20 C.F.R.
§ 702.321 (b)(1) (emphasis added). "An employer is clearly obligated to
submit a claim when it knows that it has such a claim." Cajun Tubing
Testors, Inc. v. Hargrave, 951 F.2d 72, 74 (5th Cir. 1992). Importantly,
this rule "assure[s] that all factual issues are known and subject to litiga-
tion at the same time." Washington Soc'y for the Blind v. Allison, 919
F.2d 763, 768 n.34 (D.C. Cir. 1991) (internal quotations omitted).
7
IV.
Newport News filed a § 8(f) claim with the district director based
on Elliot's hearing loss, but it failed to do so with respect to Elliot's
back injury. Accordingly, when Newport News finally did raise its
§ 8(f) claim based on Elliot's back injury at the formal ALJ hearing,
the ALJ was obligated to credit the Director's absolute defense unless
the ALJ found that Newport News could not have reasonably antici-
pated the liability of the fund on late-asserted ground at the time the
employer filed its § 8(f) claim before the district director. The ALJ,
however, failed to make the required finding. Instead he determined,
erroneously, that as a matter of law an employer's timely filing of a
§ 8(f) claim on one ground permitted an employer at a later time to
change grounds and assert an entirely different basis for § 8(f) relief.
Because the ALJ never made the required finding, indeed he made
no findings relevant to this determination,2 we must remand. Only an
ALJ has the power to make the factual findings, assess the credibility
of the relevant witnesses, and resolve any inconsistencies in the evi-
dence necessary to determine if Newport News demonstrated that it
could not have "reasonably anticipated" the late-asserted ground for
§ 8(f) relief at the time the company initially filed its application with
the district director. See See v. Washington Metro. Transit Auth., 36
F.3d 375, 385 (4th Cir. 1994) (ALJ'S tasks of finding facts and mak-
ing credibility determinations are "exclusive" and "nondelegable");
Grizzle v. Pickands Mather & Co., 994 F.2d 1093, 1096 (4th Cir.
1993) ("[T]he ALJ has sole power to make credibility determinations
and resolve inconsistencies in the evidence.").
Because the ALJ grounded his decision to grant Newport News
special fund relief on an improper interpretation of the statute, rather
_________________________________________________________________
2 When confronted with the ALJ's lack of findings at oral argument,
Newport News contended that "implicit" in the ALJ's pronouncement is
a "finding" that Newport News could not have"reasonably anticipated"
Elliot's pre-existing back injury at the time it filed its § 8(f) claim based
on hearing loss with the district director. Examination of the ALJ's opin-
ion, however, demonstrates that this is not so. The ALJ offered no more
than the rationale quoted in text above and failed to address any of the
specific circumstances of this case.
8
than on required factual findings, we remand for further proceedings
consistent with this opinion.
REMANDED
WILLIAMS, Circuit Judge, concurring in the judgment:
I agree that the ALJ erred in holding, as a matter of law, that New-
port News' request for § 8(f) relief before the district director on one
ground permitted Newport News to request § 8(f) relief before the
ALJ on an entirely different ground. Accordingly, I concur in Part IV
of the Majority Opinion. I write separately, however, to express my
belief that that conclusion is compelled by the plain language of
§ 8(f). As a result, I do not agree with the analysis contained in Part
III of the Majority Opinion.
Judge Luttig joins in this opinion.
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