DOWCP v. Newport News Shipbld ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
DIRECTOR, OFFICE OF WORKERS'
COMPENSATION PROGRAMS, UNITED
STATES DEPARTMENT OF LABOR,
Petitioner,
v. No. 97-2099
NEWPORT NEWS SHIPBUILDING AND
DRY DOCK COMPANY; SAMUEL
DILLARD,
Respondents.
On Petition for Review of an Order
of the Benefits Review Board.
(BRB No. 96-731)
Argued: October 26, 1998
Decided: October 12, 2000
Before WIDENER, LUTTIG, and WILLIAMS, Circuit Judges.
_________________________________________________________________
Petition granted and case remanded with instructions by published
opinion. Judge Widener wrote the opinion, in which Judge Luttig and
Judge Williams joined.
_________________________________________________________________
COUNSEL
ARGUED: Laura Jessica Stomski, Office of the Solicitor, UNITED
STATES DEPARTMENT OF LABOR, Washington, D.C., for Peti-
tioner. Benjamin McMullan Mason, MASON & MASON, Newport
News, Virginia, for Respondents. ON BRIEF: Marvin Krislov, Dep-
uty Solicitor for National Operations, Carol A. De Deo, Associate
Solicitor for Employment Benefits, Samuel J. Oshinsky, Counsel for
Longshore, Office of the Solicitor, UNITED STATES DEPART-
MENT OF LABOR, Washington, D.C., for Petitioner.
_________________________________________________________________
OPINION
WIDENER, Circuit Judge:
This case arises from a claim for benefits under the Longshore and
Harbor Workers' Compensation Act, 33 U.S.C. § 901 et seq. (the
Act). The Director of the Office of Workers' Compensation Pro-
grams, United States Department of Labor, appeals the Benefits
Review Board's affirmance of an administrative law judge's (ALJ)
determination to grant Newport News Shipbuilding and Dry Dock
Company special fund relief under § 8(f) and§ 44 of the Act, 33
U.S.C. § 908(f) and § 944. Section 908(f) is commonly called § 8(f).
For the reasons stated below, we grant the petition for review and
remand this case for further proceedings consistent with this opinion.
On October 30, 1987, Samuel Dillard, a Newport News employee,
sustained a work-related back injury that resulted in permanent partial
disability. Several years later, Dillard filed for permanent disability
benefits from Newport News. On October 14, 1994 while Dillard's
claim for benefits was pending before the district director, Newport
News filed a timely § 8(f) claim requesting relief from full disability
payments to Dillard. Section 8(f) entitles an employer to limit par-
tially its responsibility for benefits due to an employee if the
employer can demonstrate that the employee suffered a permanent
partial disability, the pre-existing disability was manifest to the
employer when it hired the employee, and the pre-existing disability
contributed to the permanent total disability caused by the work
related injury. See Director, Office of Workers' Compensation Pro-
grams v. Newport News Shipbuilding & Dry Dock Co. , 676 F.2d 110,
114 (4th Cir. 1982); cf. Director, Office of Workers' Compensation
Programs v. Newport News Shipbuilding & Dry Dock Co. , 134 F.3d
1241, 1243 (4th Cir. 1998). If the employer's § 8(f) claim is success-
2
ful, then the employer is only responsible for 104 weeks of compensa-
tion. See 33 U.S.C. § 908(f)(1). The remainder of a claimant's
workers' compensation benefits are paid from a special fund estab-
lished under the Act. See 33 U.S.C. § 944.
Newport News based its § 8(f) claim on Dillard's pre-existing hear-
ing loss and left-foot injury. The district director denied Newport
News' § 8(f) application, and the matter was referred to an ALJ. On
March 14, 1995, a formal hearing was held before the ALJ to resolve
the issues of Dillard's entitlement to permanent disability benefits and
Newport News' right to § 8(f) relief. Subsequent to this formal hear-
ing Newport News filed a medical report and asserted, for the first
time, that entitlement to § 8(f) relief was also based on Dillard's pre-
existing back condition in addition to his hearing loss and foot injury.
Newport News does not contest that it asserted Dillard's back condi-
tion as a new ground for § 8(f) relief following the district director's
consideration of the claim and the formal hearing before the ALJ.
In response to Newport News' assertion of Dillard's back condition
as a ground for § 8(f) relief, the Director filed a post-hearing brief in
which it raised what is called the "absolute defense" against special
fund liability. The absolute defense applies when an employer fails to
present its claim for § 8(f) relief to the district director. See 33 U.S.C.
§ 908(f)(3). The Director argued that Newport News was statutorily
required to present all grounds for § 8(f) relief to the district director
and that Newport News could not subsequently supplement its appli-
cation with alternative grounds for relief. The Director further main-
tained that to defeat the absolute defense to an untimely § 8(f) claim,
Newport News had the burden of demonstrating that when it initially
filed its claim with the district director it could not have reasonably
anticipated the special fund's liability for § 8(f) relief based on Dil-
lard's back injury. The ALJ rejected the Director's legal argument
and held that Newport News could add a new ground for § 8(f) relief
after the district director considered the claim. The ALJ then found
that Dillard's pre-existing back injury contributed to his compensable
disability, thus Dillard's back condition, the late-asserted ground,
served as the sole basis for § 8(f) relief, the ALJ having determined
that, for lack of qualifying proof, the ankle injury and loss of hearing
did not legally contribute to the disability.
3
The Director appealed to the Review Board, which affirmed the
ALJ's determination that Newport News could amend its § 8(f) claim
to include a new, alternative ground for relief after the district director
considered the claim. The Director then filed this appeal. We consider
the specific question of whether Newport News can amend its original
§ 8(f) claim based on Dillard's pre-existing hearing loss and foot
injury to include a new ground for relief based on Dillard's pre-
existing back condition subsequent to the district director's consider-
ation of the claim.
Section 8(f) details the procedures that regulate the application pro-
cess 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 pre-
sented 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 the 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. § 908(f)(3). The implementing regulations also state:
(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.
4
20 C.F.R. § 702.321(b)(1), (3). The language of both the Act and the
regulations creates an absolute defense against§ 8(f) relief when an
employer fails to present a complete § 8(f) claim to the district direc-
tor, "unless the employer could not have reasonably anticipated the
liability of the special fund" before the district director considered the
claim.
This court recently considered the application of the absolute
defense in the context of determining whether Newport News could
make a wholesale substitution of one ground for§ 8(f) relief for
another subsequent to the district director's consideration of the
claim. See Newport News, 134 F.3d 1241. We held that when New-
port News substituted the new ground for relief before the ALJ, "the
ALJ was obligated to credit the Director's absolute defense unless the
ALJ found that Newport News could not have reasonably anticipated
the liability of the fund on late-asserted ground at the time the
employer filed its § 8(f) claim before the district director." See New-
port News, 134 F.3d at 1245. We now confront the analogous ques-
tion of whether Newport News can add a late-asserted ground for
relief rather than whether it can substitute a new ground altogether.
The statutory language of § 8(f) states that"any request . . . for
apportionment of liability to the special fund . . . and a statement of
the grounds therefore, shall be presented to the[district director] prior
to consideration of the claim by the [district director]." 33 U.S.C.
§ 908(f)(3). This language requires that an employer present its
grounds for relief to the district director before the district director
considers the claim. The provision ensures that the district director
will have a full and fair opportunity to defend the fund from a § 8(f)
claim. If promiscuous amendments were freely allowed the district
director would never be able to defend adequately the fund against
claims because employers could continually amend their claims to
include new grounds for relief that the district director never had the
opportunity to consider. Section 8(f)'s requirement that an employer
submit a statement of the grounds for relief to the district director
would be rendered meaningless if an employer could unqualifiedly
and subsequently amend its § 8(f) claim after the district director orig-
inally considered it.
Here, Newport News filed its original § 8(f) claim with the district
director based on Dillard's pre-existing hearing loss and foot injury.
5
Newport News did not raise Dillard's pre-existing back condition as
a ground for relief until after the formal hearing before the ALJ.
When Newport News amended its complaint to include the new
ground, "the ALJ was obligated to credit the Director's absolute
defense unless the ALJ found that Newport News could not have rea-
sonably anticipated the liability of the fund on the late-asserted
ground at the time the employer filed its § 8(f) claim before the dis-
trict director." Newport News, 134 F.3d at 1245. Rather than credit the
absolute defense, however, the ALJ erroneously determined, as a mat-
ter of law, that Newport News could amend its § 8(f) claim to include
an entirely new ground for relief that the district director did not con-
sider.
In making this decision, the ALJ stated that "to limit an employer
to its original theory for section 8(f) relief would unfairly and unrea-
sonably nullify the discovery tool in any case involving section 8(f)
relief." Therefore, the ALJ concluded:
Employer [Newport News] asserts, and the Director does
not dispute, that Employer was unaware of critical informa-
tion concerning Claimant's [Dillard] prior back injuries
before referral of the matter to the Office of Administrative
Law Judges for discovery and hearing . . . . Therefore, I find
that the absolute defense is not available to the Director to
defeat the Employer's section 8(f) claim as it relates to pre-
existing back injuries.*
The ALJ's conclusion that Newport News was unaware of critical
information, however, is not tantamount to a finding under § 8(f) that
Newport News could not have reasonably anticipated Dillard's back
condition as a ground for relief. Because the ALJ did not credit the
absolute defense in the first place, he did not consider whether New-
port News "could not have reasonably anticipated the liability of the
_________________________________________________________________
*The ALJ relied on Elliott v. Newport News Shipbuilding and Dry
Dock Co., 29 BRBS 31 (ALJ)(1994) in deciding that Newport News
could add a new ground for relief. We subsequently reversed the Elliott
decision in Newport News, 134 F.3d at 1245 as discussed above. Our
decision in Newport News had not yet been published at the time of the
ALJ's decision to deny the absolute defense.
6
special fund" based upon the evidence including medical reports that
it possessed regarding Dillard's back injury at the time it filed the
§ 8(f) claim with the district director. In fact, the ALJ's opinion does
not mention the language of § 8(f)(3) at all.
On appeal, the Review Board affirmed the ALJ's ruling. In its
opinion, the Review Board stated:
The administrative law judge in effect found that the
employer's claim for Section 8(f) relief based in claimant's
pre-existing back injuries was not barred pursuant to Section
8(f)(3) because the employer could not have reasonably
anticipated the liability of the Special Fund with regard to
these injuries because it was unaware of critical information
concerning claimant's prior back injuries prior to referral of
the case to the Office of Administrative Law Judges.
By the statement just above, the Review Board attributed findings to
the ALJ that the ALJ himself never made regarding Newport News'
claim. In denying the Director's assertion of the absolute defense the
ALJ failed to consider whether Newport News could have reasonably
anticipated the special fund's liability; an issue that arises once the
ALJ reaches the initial conclusion that the absolute defense applies.
Whatever its powers on review, the Board cannot supply in lieu of
what the ALJ did not find, what he intended to find, or what he "in
effect" found, rather it must deal with stated findings or the absence
thereof.
Because the ALJ denied the Director's absolute defense, he never
made the required finding as to whether Newport News could have
reasonably anticipated the liability of the special fund as to Dillard's
back injury. Therefore, we must remand as "[o]nly an ALJ has the
power to make the factual findings, assess the credibility of the rele-
vant witnesses, and resolve any inconsistencies in the evidence neces-
sary 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." Newport News, 134 F.3d at 1246.
Because the ALJ failed to credit the Director's assertion of the
absolute defense in § 8(f)(3), and the Review Board affirmed without
7
the necessary factual findings before it, we grant the petition for
review, vacate the order reviewed, and remand this case to the Board
for further proceedings consistent with this opinion.
PETITION GRANTED AND CASE
REMANDED WITH INSTRUCTIONS
8