2013, Part I

Blue stairs
This time last year I observed that, “2012 was an interesting year for those who follow jurisprudence under the Longshore Act.  Several cases were decided at the U.S. Supreme Court, several old questions received presumably final answers, and several perennial issues received new attention.”

I discussed the U.S. Supreme Court decisions in:

1)       Pacific Operators Offshore, LLP v. Valladolid, (1/12) – an Outer Continental Shelf Lands Act (OCSLA) case in which the Court ruled that an injury does not actually have to occur on the outer continental shelf of the U.S. (OCS) to be covered by the OCSLA.  The injury can occur anywhere.  The test for coverage is that there must be a substantial nexus between the injury and the employer’s extractive operations on the OCS.

2)      Dana Roberts v. Sea-Land Services, Inc.; Kemper Insurance Company; Director, Office of Workers’ Compensation Programs, (3/12) – in which the Court decided that the phrase “newly awarded compensation” in section 6(c) of the Longshore Act means the time at which the injured worker is first entitled to compensation rather than the date of a formal compensation order.  The distinction is important because the date that benefits are “newly awarded” determines the applicable maximum weekly benefit rate.

3)      Fane Lozman v. The City of Riviera Beach FL, (oral argument 10/12, decision 01/13) – in which the Court devised a new vessel status test based on whether or not, in the eyes of a reasonable observer, the floating structure is practically designed or capable of serving as a means of transportation for people or things over water.

I also mentioned several important Federal Circuit Courts of Appeals’ decisions:

1)       Keller Foundation/Case Foundation, et al. v. Joseph Tracy, et al., (09/12) – in which the Ninth Circuit held that foreign territorial waters and their adjoining ports and land areas are not “navigable waters of the United States” as that phrase is used in the Longshore Act.

2)      Price v. Stevedoring Services of America, Inc., (09/12) – in which the Ninth Circuit held that interest on past due compensation under the Longshore Act should be calculated on a compound rather than on a simple basis, and that the U.S. Department of Labor’s Benefits Review Board is no longer due so called Chevron level deference in the Ninth Circuit.

3)      Bernard D. Boroski v. Dyncorp International; Insurance Company of the State of Pennsylvania/AIG Worldsource; Director, Office of Workers’ Compensation Programs, (10/12) – in which the Eleventh Circuit, following the Supreme Court’s holding in the Roberts decision, held that the phrase “currently receiving” in section 6(c) has the same meaning as “newly awarded” i.e., based on the date of first entitlement.

4)      Ceres Gulf, Inc. v. Director, Office of Workers’ Compensation Programs; Norris Plaisance, Sr., (06/12) – in which the Fifth Circuit issued an employer friendly decision in a hearing loss case, dealing with the Aggravation Rule, the evidentiary burden for rebutting the Section 20(a) presumption of causation, and the admissibility and evaluation of expert medical testimony.

The year 2013 has not been quite as “interesting” with regard to high profile Longshore Act cases.  There was nothing at the U.S. Supreme Court; there were, however, some noteworthy cases.  For example,

1)      Gary D. Schwirse v. Director, Office of Workers’ Compensation Programs; Marine Terminals Corporation; Signal Mutual Indemnity Association, Ltd.; and ILWU-PMA Welfare Plan, (7/13) – this was a fascinating case coming out of the Ninth Circuit involving the section 3(c) defense and the section 20(c) presumption, and a very unconventional theory of causation proposed by the claimant.

Section 3(c) (33 U.S.C. 903(c)) states, “No compensation shall be payable if the injury was occasioned solely by the intoxication of the employee ….”

Section 20(c) (33 U.S.C. 920(c)) provides that in the absence of substantial evidence to the contrary it shall be presumed, “That the injury was not occasioned solely by the intoxication of the injured employee. “

So the injured worker has a presumption in his favor, and a high burden of proof for the employer to show sole cause.  But if the employer can offer substantial evidence rebutting the section 20(c) presumption, it has a section 3(c) defense to the claim if it can prove by a preponderance of the evidence that the injury was occasioned (caused) solely by the intoxication of the injured employee.

But the Schwirse case presented a truly unconventional twist on the issue of causation.  The injured worker fell over a railing onto a concrete surface while “relieving himself”.  At the hospital, testing revealed acute alcohol intoxication (.25 blood alcohol level (!)) and the presence of cannabis.  After two go arounds, the Administrative Law Judge found that the employer had rebutted the presumption and had established that intoxication was the sole cause of the injury and denied benefits.  The Benefits Review Board affirmed the denial.

The case went on appeal to the Ninth Circuit with the argument, as I understand it, that the intoxication may have caused the fall, but the injury was caused by landing on the concrete.  Therefore the section 3(c) defense did not apply since by the literal reading of the statute the “injury” must be occasioned solely by intoxication.

I know.  You can’t make this stuff up.

In the event, the case was ably defended, and the maritime community averted a sharp turn into some very bad law, which would have stood the whole notion of causation on its head, as it were.  The Ninth Circuit denied the claimant’s petition for review.

2)      Marine Repair Services, Inc.; Signal Mutual Indemnity Association, Ltd. v. Christopher E. Fifer; Director, Office of Workers’ Compensation Programs, (05/13) – in this Fourth Circuit case the issue was whether the employer had met its burden of showing Suitable Alternate Employment (SAE), which in this case meant evidence of jobs paying more than the claimant’s post injury job at his family’s restaurant.

The injured worker suffered injuries that prevented him from returning to his pre-injury job.  He eventually began working at his family’s restaurant, earning $20,800 per year.  The employer had presented a case for suitable alternate employment in jobs paying from $28,000 to $40,000 per year.

The Department of Labor’s Administrative Law Judge found that the job in the family restaurant constituted the worker’s wage earning capacity and awarded permanent partial disability benefits on that basis.  This was affirmed by the Benefits Review Board, which found that in making its case the employer “did not provide all of the job duties or assess the jobs’ suitability in terms of all of the claimant’s restrictions” for the higher paying jobs.

On appeal, the Court of Appeals carefully reviewed the record, including the claimant’s testimony, and found that the Administrative Law Judge had erred because he made findings of fact as to the claimant’s physical limitations which were unsupported by substantial evidence in the record, and that he had imposed an improper legal burden on the employer by requiring it to address limitations that were not supported in the evidentiary record.

The Court’s careful analysis of the record in this case rewarded the strong case presented by the employer.

3)      Joseph Petitt v. Sause Brothers; SeaBright Insurance Company; and Director, Office of Workers’ Compensation Programs, (09/13) – a Ninth Circuit case in which the issue was whether scheduled wage increases unrelated to the merits of a worker’s performance constitute an increase in the worker’s wage earning capacity or merely a general increase in wages.  The Administrative Law Judge and the Benefits Review Board had found that the pay increases were reflective of an increased wage earning capacity.

This was the first time that the Ninth Circuit had to decide whether so called “seniority” pay increases, “are more akin to a general wage increase than to a merit based raise in wages, and therefore should not be calculated into (the worker’s) wage earning capacity.”

The injured worker in this case could not return to his job as a welder, but did obtain a job as an electronics assembler.  In this job, the employer paid workers an automatic $ .25 per hour pay increase every three months up to a maximum pay rate.  The employer factored these increases into the worker’s wage earning capacity and lowered the ongoing permanent partial compensation rate accordingly.  The worker objected.

So, as a result of this decision, in the Ninth Circuit, “seniority” raises not accompanied by any increase in productivity, skill, or responsibility are not indicative of an increased wage earning capacity.

This case could have gone either way.  The increases did not reflect an increase in the claimant’s “suitability” for alternate employment, but they did increase the amount of money he was earning in actual alternate employment with that particular employer in that particular job.

I guess the difference might be that someone walking in off the street as a new hire would be paid the same starting pay that the claimant had started at, so there’s your wage earning capacity.

I’ve run out of space, so I’ll have to continue the calendar year 2013 discussion next time in Part Two.


John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.


Related Topics

Aggravation Rule, Federal Circuit Court Cases, Hearing Loss, Intoxication, Navigable Waters, Outer Continental Shelf Lands Act (OCSLA), Summary, Vessel