Louis Dreyfus Corp v. DOWCP

125 F.3d 884

• Court: Court of Appeals for the Fifth Circuit
• Decided: October 8, 1997
• Docket: 96-60769
• Status: Published

Opinion

UNITED STATES COURT OF APPEALS FIFTH CIRCUIT

_________________

No. 96-60769 (Summary Calendar) _________________

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

-2- 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’

-3- 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

-4- 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).

-5- 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

-6- 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.

-7- 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

-8- 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.

-9-