Todd Shipyards Corporation Aetna Casualty & Surety Co. v. Director, Office of Workers Compensation Programs Prudencio Chavez

139 F.3d 1309, 98 Daily Journal DAR 3297, 98 Cal. Daily Op. Serv. 2378, 1998 A.M.C. 1535, 1998 U.S. App. LEXIS 6479
CourtCourt of Appeals for the Ninth Circuit
DecidedApril 1, 1998
Docket96-70954
StatusPublished
Cited by4 cases

This text of 139 F.3d 1309 (Todd Shipyards Corporation Aetna Casualty & Surety Co. v. Director, Office of Workers Compensation Programs Prudencio Chavez) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Todd Shipyards Corporation Aetna Casualty & Surety Co. v. Director, Office of Workers Compensation Programs Prudencio Chavez, 139 F.3d 1309, 98 Daily Journal DAR 3297, 98 Cal. Daily Op. Serv. 2378, 1998 A.M.C. 1535, 1998 U.S. App. LEXIS 6479 (9th Cir. 1998).

Opinion

BRUNETTI, Circuit Judge:

Appellant Todd Shipyards Corporation (“Todd”) formerly employed elaimant/appel-lee Prudencio Chavez (“Chavez”). During and as a result of that employment, Chavez developed both hypertension and asbestosis. Chavez was awarded total disability compensation under the Longshore and Harbor Workers’ Compensation Act (“the Act”), 33 U.S.C. § 901 et seq. The only issue before the court today is whether Todd is entitled to recompense for some of the injuries. Specifically, Todd petitions for review of the June 30, 1993 decision of the Benefits Review Board (“BRB”) and the January 13, 1994 decision and order on remand from Administrative Law (“ALJ”) Judge Lasky, finding that Todd was not entitled to credit for Chavez’s asbestos related third party settlements pursuant to the Act. We have jurisdiction, 33 U.S.C. § 921(c), and deny the petition for review.

FACTS

Chavez worked at Todd from 1964 to 1980 where he was exposed to asbestos, dust, smoke, fumes, and high levels of noise. He left in January, 1980, unable to perform his job due to asbestosis and hypertension. On June 10, 1981, Administrative Law Judge (“ALJ”) Evans awarded Chavez permanent and total disability benefits under the Act. ALJ Evans did not determine whether the asbestosis and hypertension were work related or how much each of the two diseases contributed to Chavez’s disability.

Chavez filed a civil suit against various asbestos manufacturers, suppliers, and distributors seeking civil recovery for his asbestosis. In 1986, Todd attempted to terminate Chavez’s compensation rights alleging that Chavez failed to get Todd’s approval before entering into third party settlements in violation of § 33(g) of the Act. ALJ Lasky held a hearing on this matter and on August 16, 1986, he found that Chavez had not entered into settlement with any third party defendant and therefore was not barred from receiving compensation under § 33(g). He also rejected Chavez’s proposed apportionment of any prospective third party proceeds holding that apportionment was unavailable under the Act to reduce an employer’s credit. Finally, ALJ Lasky found that the credit issue was ripe for resolution.

The Benefits Review Board upheld ALJ Lasky’s determination that Chavez had not entered into any settlements but reversed on the ripeness issue.

On appeal to the Ninth Circuit, the court found that the credit apportionment issue was indeed ripe for review, but remanded to the BRB to determine the issue. The court further affirmed ALJ Lasky’s findings that no settlement was entered into. See Chavez v. Director, OWCP, 961 F.2d 1409 (9th Cir.1992).

June 30, 1993, on remand, the BRB held that Todd’s entitlement to any credit hinged on the answer to two factual questions: (1) which disability was the basis of Chavez’s claim under the Act, and (2) whether each of Chavez’s disabilities was work-related. The BRB remanded to the ALJ for these determinations.

On remand, ALJ Lasky received evidence from both parties and reviewed the underlying record before ALJ Evans. January 13, 1994, ALJ Lasky concluded that Chavez’s hypertension was the result of exposure to noise and stress while working in the shipyards. He stated that both diseases were separate work-related disabilities. Further, he concluded that Chavez’s total disability was seventy-five percent attributable to hypertension and twenty-five percent attributable to asbestosis. Accordingly, pursuant to the BRB mandate, ALJ Lasky denied Todd any credit under § 33(f) as against any prospective third party asbestosis recoveries because Chavez’s permanent disability claim could have been premised entirely on hypertension. In the present appeal, Todd petitions the Ninth Circuit for review of this decision.

ANALYSIS

The Longshore and Harbor Workers’ Compensation Act provides the statutory *1312 mechanism by which longshore and harbor workers are entitled to compensation for work-related injuries. Under the Act, when third party recovery is attained for the injury which is the basis of the compensation claim under the Act, the injured party is entitled to retain proceeds in excess of the compensation to which he is entitled under the act. See 33 U.S.C. § 933(f). We review ALJ decisions to determine whether factual findings made are supported by “substantial evidence” and to correct any errors of law. Under the substantial evidence standard, ALJ findings must be accepted when they are supported by substantial evidence. Substantial evidence means “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Lockheed Shipbuilding v. Director, OWCP, 951 F.2d 1143, 1144-45 (9th Cir.1991) (internal quotation omitted).

In this case, the ALJ relied on two related legal theories, the aggravation rule and the credit doctrine, to reach his finding that Todd was not entitled to set-off for any prospective third party proceeds received by Chavez. As a preliminary matter, under the aggravation rule, an employer is required to pay compensation for the totality of claimant’s disability regardless of the cause of the original disability with which the work-related disability combined. See, e.g., Independent Stevedore Company v. O’Leary, 357 F.2d 812, 814-15 (9th Cir.1966); Strachan Shipping Co. v. Nash, 782 F.2d 513, 517 (5th Cir.1986) (en banc). The record here shows that Chavez was disabled due to both his asbestosis and his hypertension. It is beyond question that Chavez’s asbestosis was the result of his work environment. Additionally, there is substantial evidence that the hypertension was aggravated by the work environment. Accordingly, Todd was properly required to compensate Chavez for the totality of the disability.

The credit doctrine was created by the BRB to limit the aggravation rule for the express purpose of avoiding double recoveries. It provides for set-off such that “an employer is not liable for any portion of an employee’s disability for which the employee has actually received compensation.” Strachan Shipping Co., 782 F.2d at 515, 518-19.

The case before the court today questions the limits of the credit doctrine. Specifically, whether the employer is entitled to recompense for the amount an employee receives from a third party for an injury, i.e. asbestosis, when the employee’s compensable disability is the result of two distinct injuries, i.e. asbestosis and hypertension.

A court may adopt the head of an agency’s rational interpretation of the statute they enforce. Chevron v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct.

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139 F.3d 1309, 98 Daily Journal DAR 3297, 98 Cal. Daily Op. Serv. 2378, 1998 A.M.C. 1535, 1998 U.S. App. LEXIS 6479, Counsel Stack Legal Research, https://law.counselstack.com/opinion/todd-shipyards-corporation-aetna-casualty-surety-co-v-director-office-ca9-1998.