Louis Dreyfus Corp v. DOWCP , 125 F.3d 884 ( 1997 )

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
_________________
No. 96-60769
(Summary Calendar)
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LOUIS DREYFUS CORPORATION; NATIONAL UNION FIRE
INSURANCE COMPANY OF PITTSBURGH, PA,
Petitioners,
versus
DIRECTOR, OFFICE OF WORKER’S COMPENSATION
PROGRAMS, U.S. DEPARTMENT OF LABOR,
Respondent.
On Petition for Review of a Final Order
from the Benefits Review Board,
United States Department of Labor
September 12, 1997
Before DAVIS, EMILIO M. GARZA, and STEWART, Circuit Judges.
PER CURIAM:
Louis Dreyfus Corporation (“Dreyfus”) and National Union Fire
Insurance Company of Pittsburgh, Pa. (“National Union”) sought
special fund relief under the Longshore and Harbor Workers’
Compensation Act after an employee with a pre-existing back problem
was injured on the job. An administrative law judge (“ALJ”) found
that there was insufficient evidence to show that the employee’s
cumulative disability was made materially and substantially worse
by his pre-existing injury; accordingly, the ALJ found that Dreyfus
and National Union were not entitled to special fund relief. The
Benefits Review Board affirmed the ALJ’s ruling. Finding no error,
we affirm the Board’s decision.
Larry Millet injured his lower back while working for Dreyfus.
The injury required surgery in 1991 and resulted in a permanent,
ten-percent partial disability. Millet again injured his back in
May 1992, while shoveling grain into Dreyfus’s grain elevator.
Millet’s doctor diagnosed his injury as failed back syndrome,
determined that his recovery reached its zenith on November 4,
1994, and concluded that Millet was left with a permanent, fifteen-
percent partial disability.
Millet brought a claim against Dreyfus and its insurance
carrier, National Union, for recovery of compensation benefits and
medical expenses under the Longshore and Harbor Workers’
Compensation Act (“LHWCA”), 33 U.S.C. § 901 et seq. Dreyfus and
National Union denied liability for the compensation benefits and
medical expenses, but asserted that, if they were found liable,
they were entitled to special fund relief under 33 U.S.C. § 908(f).
After a formal hearing, the ALJ found that Millet was
permanently, partially disabled and awarded compensation benefits
to Millet for temporary, total disability from May 1992, through
November 1994, and for permanent, partial disability commencing
November 1994. The ALJ also found that Dreyfus and National Union
were not entitled to special fund relief because they failed to
establish that Millet’s pre-existing back condition materially and
substantially contributed to the disability arising from his 1992
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injury. Dreyfus and National Union appealed to the United States
Department of Labor’s Benefits Review Board (“BRB” or “Board”),
which subsequently affirmed the decision of the ALJ. Dreyfus and
National Union timely appealed to this court asserting that the ALJ
and the Board erred in not finding substantial evidence in the
record that Millet’s disability met the necessary requirements for
special fund relief.
When reviewing orders of the BRB, our role is limited to
considering errors of law and ensuring that the Board reviewed the
ALJ’s findings of fact for substantial evidence. Boland Marine &
Mfg. Co. v. Rihner, 41 F.3d 997, 1003 (5th Cir. 1995).
Substantial evidence in this context is more than a mere
scintilla. Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71
S. Ct. 456, 459, 95 L. Ed. 456 (1951). It means “such relevant
evidence as a reasonable mind might accept as adequate to support
a conclusion.” Id. In our review, we may not substitute our
judgment for that of the ALJ, nor may we reweigh or reappraise the
evidence. Boland Marine, 41 F.3d at 1003. However, we must
independently review the record to determine whether there was
substantial evidence supporting the ALJ’s factual findings.
Avondale Shipyards, Inc. v. Vinson, 623 F.2d 1117, 1119 n.1 (5th
Cir. 1980).
The LHWCA is a federal workers’ compensation statute that
establishes disability benefits for maritime workers injured on the
job. Ceres Marine Terminal v. Director, OWCP, No. 96-60716, 1997
WL 398728, at *1 (5th Cir. July 31, 1997). Under general workers’
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compensation law, employers are liable for the full costs of a
worker’s disability, even if the disability is the result of both
a pre-existing impairment and a current employment injury; this is
known as the “aggravation rule.” See id.; Strachan Shipping Co. v.
Nash, 782 F.2d 513, 517 (5th Cir. 1986) (en banc).
Because the aggravation rule threatens employers with greater
liability for injuries to employees with pre-existing medical
conditions, Congress passed section 908(f) of the LHWCA. Section
908(f) limits the amount of workers’ compensation for which an
employer is responsible. The section provides that, where an
employee had an “existing permanent partial disability” that
contributed to the current injury, the employer is only responsible
for the first 104 weeks of the injured employee’s compensation. 33
U.S.C. § 908(f). After that 104 weeks, the employee is paid from
a “second injury fund” or “special fund,” financed by members of
the industries covered by the LHWCA. 33 U.S.C. § 944.
To be entitled to special fund relief under § 908(f) in cases
such as this one, in which the employee is permanently, partially
disabled, the employer must establish that the employee seeking
compensation had: (1) an “existing permanent partial disability”
before the employment injury; (2) that the permanent, partial
disability was “manifest” to the employer; (3) that the current
disability is not due solely to the employment injury; and (4) that
the current permanent, partial disability “is materially and
substantially greater than that which would have resulted from the
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subsequent injury alone.”1 Two R Drilling Co. v. Director, OWCP,
894 F.2d 748, 750 (5th Cir. 1990); 33 U.S.C. § 908(f)(1). These
requirements assure that employers receive special fund relief only
where the employer would be responsible for the marginal increase
in liability caused by the claimant’s pre-existing condition. Id.
It is uncontested that Dreyfus has met its burden of proving
the first two requirements of the test for special fund relief. In
addition, although the ALJ did not articulate the third
requirement, the Board noted that the deposition testimony provided
by Dreyfus’s physicians supports a finding that Millet’s present
condition is related to a combination of his two back injuries.
The only issue on appeal, therefore, is whether Dreyfus proved that
Millet’s cumulative disability was “materially and substantially
greater” as a result of his pre-existing disability. The employer
bears the burden of persuading the factfinder that the disability
was exacerbated by the pre-existing condition. See Director, OWCP
v. Cargill, Inc., 709 F.2d 616, 619 (9th Cir. 1983) (en banc);
Director, OWCP v. Newport Shipbuilding and Dry Dock Co., 676 F.2d
110, 115 (4th Cir. 1982).
1
The ALJ, in reliance on a Ninth Circuit opinion, invoked
a three-part test that eliminated the third requirement and
rephrased the fourth requirement to read “such pre-existing
disability, in combination with the subsequent work injury,
contributes to a greater degree of permanent disability than that
which would result from the second injury alone.” See Director,
OWCP v. Campbell Indus., Inc., 678 F.2d 836, 839-40 (9th Cir.
1982), cert. denied, 459 U.S. 1104, 103 S. Ct. 726, 74 L. Ed. 2d
951 (1983), overruled on other grounds by Director, OWCP v.
Cargill, Inc., 709 F.2d 616, 619 (9th Cir. 1983) (en banc). We
apply the four-part standard of the Fifth Circuit, established in
Two R Drilling Co. v. Director, OWCP, 894 F.2d 748, 750 (5th Cir.
1990).
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Dreyfus and National Union contend that sufficient evidence
exists in the record for the court to conclude that the cumulative
disability was materially and substantially greater due to Millet’s
pre-existing disability. In support of their position, they point
to deposition testimony from a neurosurgeon, a neurologist, and an
orthopedic surgeon. Upon examination of the record, however, we
find that the physicians’ testimony shows only that Millet’s
disability is “basically related to both” injuries. There is no
testimony that his disability is materially or substantially
greater as a result of his first injury than it would have been had
he sustained the second injury alone.
To the contrary, the neurologist testified that Millet’s
ruptured disk could have occurred as a result of the second injury
alone. In addition, the neurosurgeon testified that Millet’s
injuries had not changed much from before the second injury to
after the second injury and that there had been no demonstrable
detrimental changes during that time. Based on the testimony
provided, it is possible that had Millet never injured his back in
the 1991 accident, the 1992 accident would still have resulted in
a disability of equal magnitude to that which he actually incurred.
Dreyfus has, therefore, failed to carry its burden of proving the
fourth requirement for special fund relief.
Dreyfus and National Union also argue that, because the record
shows that Millet had a ten-percent permanent, partial disability
prior to the 1992 accident and a physician testified that Millet
had a fifteen-percent permanent, partial disability after the 1992
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accident, there should be no question that his ultimate disability
is materially and substantially greater than that which would have
resulted from the second injury alone. The Fifth Circuit has
rejected the “common sense test,” which presumes that when a
claimant with a history of back problems suffers a work-related
injury to his back, the current disability is not due solely to the
employment injury. Two R Drilling, 894 F.2d at 750. This “common
sense” argument reads the third element of proof, that the current
disability not be due solely to the subsequent injury, out of the
test altogether. Id.; see also John T. Clark & Son of Md., Inc. v.
Benefits Review Bd., 621 F.2d 93, 95 n.2 (4th Cir. 1980) (“Where a
subsequent injury and its effects are alone sufficient to cause
permanent total disability the mere presence of a pre-existing
disability will not warrant contribution from the special fund.”).
There is simply no testimony in the record that the second injury
alone could not have caused the fifteen-percent disability.
Dreyfus’s argument that the exacerbating effects of the pre-
existing disability are intuitive is unavailing.2
Dreyfus and National Union also contend that, because the
2
As the ALJ noted, it appears that Dreyfus has articulated
the wrong standard for special fund relief. Dreyfus argues that
the second injury made the first injury materially and
substantially worse, rather than arguing that the cumulative
disability is worse as a result of the pre-existing disability.
When deposing the three physicians, Dreyfus asked whether Millet’s
disability is greater as a result of both injuries combined than it
would have been had the claimant not sustained the second injury.
The responses provided by the physicians do not adequately fulfill
the precise requirement that the cumulative disability be
materially and substantially greater as a result of the pre-
existing injury, a fact that, if substantiated, would satisfy
Dreyfus’s remaining requirement for special fund relief.
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Director did not offer any evidence in opposition to their request
for special fund relief at the formal hearing, the facts are
uncontroverted and they are entitled to relief. This argument also
misses the mark. As noted above, it has long been held that the
employer bears the burden of persuading the factfinder that the
disability was exacerbated by the pre-existing condition. See
Cargill, 709 F.2d at 619; Newport Shipbuilding, 676 F.2d at 115.
Placing the burden on the employer is the only practical way to
avoid unjust depletion of the second injury fund. Only the
Director has any real interest in protecting the fund against
unjustified claims, and the Director is rarely a party to the
original hearing before the ALJ. Newport Shipbuilding, 676 F.2d at
115. The employer, of course, will seek payments from the fund,
and the employee involved is interested only in being paid, not in
the source of payments. Id. at 114. The only practical way to
protect against unjustified payments is to place the burden on the
employer to show that the total disability arose in part from the
pre-existing condition; Dreyfus failed to meet this burden.
If Millet’s 1992 injury would have resulted in the same degree
of compensable disability, regardless of whether he had sustained
a pre-existing disability, then Dreyfus is not entitled to special
fund relief, because it incurred no additional compensation
liability by hiring and retaining a partially disabled employee.
Based on the testimony provided, the ALJ properly found that
he could not ascertain whether the cumulative disability was
materially and substantially worse as a result of the pre-existing
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disability, and that therefore Dreyfus and National Union are not
entitled to special fund relief. In addition, we find that the
Board properly reviewed the ALJ’s decision.
AFFIRMED.
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