Bath Iron Works v. Director, Wkrs. Comp

Opinion

USCA1 Opinion

                 United States Court of Appeals

                      For the First Circuit

                       ____________________


No. 98-2010



                     BATH IRON WORKS, ET AL.,



                           Petitioners,



                                v.



                  HAROLD J. BROWN, JR., ET AL.,

                                

                           Respondents.

                     

                       ____________________

                

  PETITION FOR REVIEW OF A DECISION OF THE BENEFITS REVIEW BOARD

                       ____________________



                              Before



                      Stahl, Circuit Judge,

             John R. Gibson, Senior Circuit Judge,

                   and Lynch, Circuit Judge.

                                

                       ____________________


Kevin M. Gillis, with whom Troubh, Heisler & Piampiano, P.A.

was on brief, for petitioners.

  G. William Higbee, with whom McTeague, Higbee, MacAdam, Case,

Cohen & Whitney, PA was on brief, for respondent Harold J. Brown.

  Stephen Hessert, with whom Norman, Hanson & DeTroy was on

brief, for respondent Liberty Mutual Insurance Company.

  Laura J. Stomski, with whom Henry L. Solano, Solicitor of

Labor, Carol A. De Deo, Associate Solicitor for Employee Benefits,

and Samuel J. Oshinsky, Counsel for Longshore, were on brief, for

respondent Director, Office of Workers' Compensation Programs, U.S.

Department of Labor.


____________________



                        October 8, 1999

                       ____________________  LYNCH, Circuit Judge. Harold J. Brown, Jr., now nearly 78

years old, worked at shipbuilding facilities owned by the Bath Iron

Works (BIW) for 43 years, from 1941 to 1984. Until 1978 he worked

at the BIW shipyard in Bath, Maine, a facility covered by the

Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C.

 901 et seq. From 1978 to 1984, he worked at BIW's Hardings plant,

a facility the Benefits Review Board (BRB) determined was not

covered by the Act. 

  Brown obtained an award of benefits under the Act for hearing

loss, an occupational disease resulting from years of exposure to

loud noises. He received a lump sum payment in 1986; his present

interest in this case is in continuing health coverage for his

disability, and more specifically, that BIW's insurer pay for

hearing aids as needed. BIW has two insurers involved: Commercial

Union Insurance Companies, which provided coverage from January 1,

1963 to February 28, 1981, and Liberty Mutual Insurance Company,

which provided coverage from March 1, 1981 to August 31, 1986.

Liberty Mutual paid the lump sum award and looks to Commercial

Union for reimbursement. Commercial Union, to its credit, has

informed us that it will reimburse Liberty Mutual if the order

awarding benefits is upheld. This petition for review by BIW and

Commercial Union concerns whether Brown should have received

benefits under the Act.



                               I

  This case has consumed more than 16 years. The original claim

for compensation was filed on July 22, 1983, and the matter has

been before three different Administrative Law Judges (ALJs) and

has been to the BRB four times. The basic attack mounted by

Commercial Union and BIW is that the second ALJ found, on

substantial evidence, that Brown failed to produce credible

evidence of any hearing loss during the covered period at the

shipyard and that the BRB was not free to disturb that ruling.

Brown disagrees with the second ALJ's conclusion. He argues that

the first ALJ found, on substantial evidence, both exposure to loud

noise and hearing loss during the covered period and that the BRB's

order should be affirmed. Commercial Union agrees that there was

such exposure and says that while there was substantial evidence to

support a finding of hearing loss during the covered period, no

such finding was in fact made and that therefore the second ALJ's

finding was the controlling one.

  This court reviews the BRB's decision on legal issues de novo

and determines whether the Board adhered to the "substantial

evidence" standard when it reviewed the ALJ's factual findings. See

Barker v. United States Dep't of Labor, 138 F.3d 431, 434 (1st Cir.

1998).

  We decide this case on the grounds argued by Brown: the first

ALJ found that Brown had adduced evidence sufficient to make out a

prima facie case as to his hearing loss during his employment at

the shipyard and, consequently, to invoke the presumption of

liability in 33 U.S.C.  920(a). The employer did not rebut the

presumption, and the BRB correctly determined that substantial

evidence supported the first ALJ's determination. An explanation of

our reasoning benefits from a description, shortened and focused,

of the protracted prior proceedings.



                               II

  On July 22, 1983, Brown filed a Claim for Compensation with

the Office of Workers' Compensation, U.S. Department of Labor.

Since Brown and BIW could not agree on a settlement, the dispute

went before an ALJ of the Department of Labor. On June 11, 1986,

after the only evidentiary hearing held in this matter, ALJ Glennon

awarded Brown benefits for a 39.6% binaural hearing loss based on

expert testimony and audiograms taken in 1955, 1967, and 1983. The

ALJ also held that the Hardings facility was a covered situs under

the Act and that Liberty Mutual, as the carrier at the time of the

last exposure, was liable for payment of the benefits. Liberty

Mutual appealed this decision to the BRB. On July 31, 1989, the BRB

reversed the ALJ. The Board determined that the Hardings facility

was not a covered situs under the Act and, therefore, the date of

last covered exposure was April 17, 1978, when Brown last worked at

the Bath facility. Consequently, the carrier responsible for

Brown's benefits was Commercial Union. The Board also decided that

"[a]ggravation of a covered injury occurring after termination of

covered longshore employment is not compensable under the Act,"

under Leach v. Thompson's Dairy, Inc., 13 Ben. Rev. Bd. Serv. (MB)

231 (1981). The BRB "remand[ed] the case for the ALJ to determine

the extent of claimant's work-related hearing loss from 1941 until

claimant transferred to the Hardings facility."

  On February 21, 1990, a second ALJ (Shatz) found that the only

reliable audiogram was conducted in 1983 (finding the audiograms

done in 1955 and 1967 were unreliable), and that the 1983 audiogram

could not be relied upon as an indicator of Brown's hearing loss in

1978 since Brown was exposed to loud noises at the Hardings plant

after that date. Therefore, the second ALJ concluded, Brown "ha[d]

not sustained his burden of proof by credible evidence that he

sustained a hearing loss prior to being transferred in 1978 from

the Employer's shipyard to the Hardings facility." As a result, the

ALJ denied Brown's claim. Brown appealed ALJ Shatz's ruling and, on

June 16, 1992, the BRB reversed. Relying on cases it had decided

since the first appeal, and contrary to its earlier holding that

aggravation of a covered injury at a later non-covered site is not

compensable, the Board held that Brown, as a matter of law, was

entitled to compensation for his hearing loss as measured in 1983,

because "the last covered employer is liable for an occupational

disease regardless of subsequent exposure in non-covered

employment." Brown's claim was re-instated. Upon reconsideration,

the Board reaffirmed this holding. 

  The BRB remanded the case to a third ALJ (Karst) to determine

Brown's average applicable weekly wage. This the ALJ did on July

21, 1997, and BIW and Commercial Union appealed again to the BRB,

which, on August 13, 1998, upheld the ALJ in all respects.



                              III

  The first ALJ had to decide the initial question of

compensability and he decided it in Brown's favor. In order for an

injury to be covered by the Act, the claimant must initially make

out a prima facie case. That is, a claimant "must at least allege

an injury that arose in the course of employment as well as out of

employment." U.S. Indus./Fed. Sheet Metal, Inc. v. Director, OWCP,

455 U.S. 608, 615 (1982); see also Susoeff v. San Francisco

Stevedoring Co., 19 Ben. Rev. Bd. Serv. (MB) 149, 151 (1986)

(claimant must make a prima facie showing that he or she "sustained

physical harm and that conditions existed at work which could have

caused the harm"); cf. Ramey v. Stevedoring Servs. of Am., 134 F.3d

954, 959 (9th Cir. 1998) (relying on Susoeff).

  There was substantial evidence to support the finding of

compensability, as Commercial Union concedes. Brown worked at the

shipyard as a shipfitter, surrounded by the din of chipping,

riveting, sirens, and hammering. He testified that he noticed loss

of hearing years earlier, during the period he worked at the

shipyard. That testimony was not rebutted. He had three audiograms

done, two in 1955 and one in 1967. Each showed that he suffered

some hearing loss, although, oddly, the later one showed less

hearing loss than the earlier ones. Brown's testimony before Judge

Glennon indicates that an audiogram was done in 1967 or before,

after Brown noticed hearing loss. Brown testified that, as a result

of a ringing in his ears he went to First Aid at the shipyard and

had a hearing test done. He was told by the shipyard's medical

department that the hearing loss was a hazard of the job and not

much could be done about it. The medical testimony before the first

ALJ also supports the conclusion that Brown had work-related

hearing loss as a result of his employment at the Bath shipyard.

This is sufficient to establish a prima facie case under the Act.

  Once Brown made out his prima facie case, there was a

presumption of liability. See 33 U.S.C.  920(a) ("In any

proceeding for the enforcement of a claim for compensation under

this chapter it shall be presumed, in the absence of substantial

evidence to the contrary -- (a) That the claimant comes within the

provisions of this chapter.").

  BIW could have rebutted this presumption in Brown's favor "by

showing that exposure to injurious stimuli did not cause the harm"

or "that [Brown] was exposed to injurious stimuli while performing

work covered under the [LHWCA] for a subsequent employer." Avondale

Indus. Inc. v. Director, OWCP, 977 F.2d 186, 190 (5th Cir. 1992)

(quoting Susoeff, 19 Ben. Rev. Bd. Serv. at 151) (internal

quotation marks omitted); see also General Ship Serv. v. Director,

OWCP, 938 F.2d 960, 961 (9th Cir. 1991) (applying Susoeff). BIW had

to produce "substantial evidence" to support such a showing. See

Sprague v. Director, OWCP, 688 F.2d 862, 865 (1st Cir. 1982)

(quoting  920(a)). "Substantial evidence" means "such relevant

evidence as a reasonable mind might accept as adequate to support

a conclusion." Id. (citations and internal quotation marks

omitted). If the presumption had been rebutted by BIW, it would

have fallen out of the case, and Brown would have had to establish

his burden based on the record as a whole. See Del Vecchio v.

Bowers, 296 U.S. 280, 286-87 (1935); accord Sprague, 688 F.2d at

865. If, based on the record as a whole, the evidence had been

evenly balanced between Brown and BIW, Brown would have lost. See

Director, OWCP v. Greenwich Collieries, 512 U.S. 267, 281 (1994).

  Here, however, the presumption was not rebutted, and so Brown

was properly awarded compensation. See Bath Iron Works Corp. v.

Director, OWCP, 109 F.3d 53, 56 (1st Cir. 1997). The first ALJ

ruled (incorrectly, the BRB later said) that both of the BIW

facilities where Brown worked were covered facilities; thus, his

focus was not primarily on whether the injury was caused or

aggravated at the shipyard or at the Hardings facility or both. But

his opinion did determine both implicitly and explicitly that there

was compensability for the period of employment at the shipyard.

The ALJ viewed both insurers as potentially liable and visited the

liability on Liberty Mutual because it was the last carrier (during

the Hardings facility employment) and had not shown that there was

no exposure to noise at Hardings.

  The BRB understood the issues of compensability and overall

liability of the shipyard to have already been resolved: "[I]t is

undisputed that claimant's hearing loss is related to occupational

noise exposure during claimant's employment . . . from 1941 to

1984." Indeed, the issue remanded to the second ALJ was to

determine the extent of liability by determining "the extent of

claimant's work-related hearing loss from 1941 until claimant

transferred to the Hardings facility." The second ALJ did not have

the issue of compensability before him and, unsurprisingly, his

opinion does not even refer to  920(a). Thus, the issue of

compensability was decided in Brown's favor and against the

shipyard by the first ALJ, was affirmed by the BRB, is supported by

substantial evidence, and is affirmed here.

  There is one other party to this case and one other argument

raised. The Director, Office of Workers' Compensation Programs,

U.S. Department of Labor, argues that this case should turn on an

extension of the well accepted "last employer rule." This extension

has been called the "last covered employer" or "last maritime

employer" rule. See Junius C. McElveen, Jr. & Lawrence P. Postol,

Compensating Occupational Disease Victims Under the Longshoremen's

and Harbor Workers' Compensation Act, 32 Am. U. L. Rev. 717, 761-62

(1983). 

  The original "last employer" rule stems from the 1955 Second

Circuit decision in Travelers Insurance Co. v. Cardillo, 225 F.2d

137 (2d Cir. 1955), and is concerned with allocation of liability

among employers and not with the question of compensability of the

claimant. In Cardillo, the court noted that:

    The most difficult question presented by these cases is not

  that of a claimant's right to recover but rather that of

  determining upon whom shall devolve the burden of paying the

  tariff imposed by this socially desirable legislation. The

  nature of occupational diseases and the dearth of medical

  certainty with respect to the time that is required for them

  to develop and the permanence and extent of the resultant

  injurious effects at different stages of the diseases'

  evolution, make it exceedingly difficult, if not practically

  impossible, to correlate the progression of the disease with

  specific points in time or specific industrial experiences.



Id. at 144. Since the Act does not provide a method for allocating

liability, the court fashioned the last employer rule in order to

do so. The rule states that: 

    the employer during the last employment in which the claimant

  was exposed to injurious stimuli, prior to the date upon which

  the claimant became aware of the fact that he was suffering

  from an occupational disease arising naturally out of his

  employment, [is] liable for the full amount of the award.



Id. at 145. 

  This rule was both consistent with congressional intent and

provided for administrative ease. The context in which the rule

arises is where it has already been determined that the claimant

has a right to recover, the issue is one of allocation, and the

last employer covered by the Act is the last employer. This court

utilized a version of a last employer rule in Liberty Mutual

Insurance Co. v. Commercial Union Insurance Co., 978 F.2d 750, 756

(1st Cir. 1992) (holding date of disability rather than date of

awareness of condition is key date for last employer rule). 

  The last employer rule fashioned by the Cardillo court is

based on the assumption that "all employers will be the last

employer a proportionate share of the time." Cordero v. Triple A

Mach. Shop, 580 F.2d 1331, 1336 (9th Cir. 1978). A more basic

premise, unstated in Cardillo, is that, under the last employer

rule, the employer assumes the risk when he hires an employee. This

is similar to the torts rule that a tortfeasor takes its "victims"

as it finds them. Consistent with this torts principle, one

commentary notes that, at least with regard to some types of

occupational injuries, an employer could discover an employee's

existing work related injury or illness "and could avoid or reduce

liability by protecting the employee from further exposure."

McElveen & Postol, supra, at 763.

  The Director wants the courts to extend this last employer

rule to impose liability on the last covered maritime employer

where there is later exposure at a non-covered employer, as here.

The "last maritime employer rule," unlike the "last employer rule,"

is driven by the fact that there is no jurisdiction over the last

employer because the last employer is not covered by the Act. See

id. at 762. Critics, however, have pointed out that such an

extension is contrary to the rationale for the last employer rule:

a last maritime or covered employer rule "undercut[s] the basic

rationale of the last employer rule, that each employer will be the

last employer a proportionate share of the time." McElveen &

Postol, supra, at 763. Furthermore, since the last maritime or

covered employer rule holds covered employers liable for exposures

that took place after their liability otherwise ended, "employers

are precluded from limiting their liability by adjusting their

conduct." Id. There is a difference between holding employers (and

their insurers) liable for injuries that took place before an

employee was hired and for those that took place after an employee

left covered employment.

  Nonetheless, there are policy arguments to be made to support

such an extension of an allocation rule in those situations where,

as here, the employee worked for the same employer throughout and

was simply transferred by the employer from a covered facility,

where he was exposed, to a non-covered facility. Otherwise, an

employer could seek to manipulate the system by transferring an

exposed employee from a covered to a non-covered facility. See

Fulks v. Avondale Shipyards, Inc., 10 Ben. Rev. Bd. Serv. (MB) 340,

345 (1979), aff'd, 637 F.2d 1008 (5th Cir. 1981); cf. Todd

Shipyards Corp. v. Black, 717 F.2d 1280, 1285 (9th Cir. 1983).

  This issue does not need to be resolved because we have upheld

the finding of compensability against BIW arising out of Brown's

1941 to 1978 employment at the shipyard, and Commercial Union

conceded at oral argument that, if Brown was entitled to

compensation under the Act, the extent of such compensation could

be based on the 1983 audiogram. Consequently, there is no need to

either decide a last maritime or covered employer issue or to

decide what deference, if any, we owe to the Director's views in

this case. Cf. Neely v. Benefits Rev. Bd., 139 F.3d 276, 281 (1st

Cir. 1998); Liberty Mut. Ins. Co., 978 F.2d at 757.

  We sustain the order of the BRB and deny the petition. Costs

are awarded to Brown.