KEVIN KEENAN, Petitioner,
v.
DIRECTOR FOR the BENEFITS REVIEW BOARD; Director, Office of Workers Compensation Programs; U.S. Department of Labor; Eagle Marine Services, Respondents.
No. 03-70442.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted November 4, 2004.
Filed December 21, 2004.
James M. McAdams, Pierry, Moorhead, McAdams & Shenoi, LLP, Wilmington, CA, for the petitioner.
Cindy Gutierrez (Argued), Daniel F. Valenzuela (On the Briefs), Samuelson, Gonzalez, Valenzuela & Brown, San Pedro, CA, for the respondents.
On Petition for Review of an Order of the Benefits Review Board.
Before: GOODWIN, FISHER, and TALLMAN, Circuit Judges.
GOODWIN, Circuit Judge.
This appeal presents the following questions: (1) whether petitioner's shoulder impairment should be compensated as a scheduled disability of the arm under 33 U.S.C. § 908(c)(1); (2) in the alternative, whether he is entitled to unscheduled compensation under 33 U.S.C. § 908(c)(21) on the ground that his shoulder injury prevented him from accepting a more lucrative foreman's position; and (3) whether, if neither form of compensation is granted, petitioner is entitled to a de minimis award under 33 U.S.C. § 908(c)(21). We hold that petitioner is entitled to neither scheduled nor unscheduled recovery, but that he is entitled to a de minimis award to pre serve the possibility of a modified award should his earnings fall below pre-injury levels.
I. FACTS
Kevin Keenan, then employed as a longshoreman for Eagle Marine Services, suffered a right shoulder injury on January 21, 1988. He underwent two surgeries, experiencing a period 17131 of temporary total disability and reaching maximum medical improvement on November 28, 1990. Residual symptoms and partial impairment persist, requiring Keenan to desist from heavy or repetitive overhead work and making it difficult for him to perform strength related activities, especially above chest level. Still, Keenan initially returned to work as a longshoreman, working under medical restrictions, until he was able to secure a mostly clerical position with Eagle, which he continues to hold. Keenan earns significantly more in his new position as a Marine Clerk than he did as a longshoreman, and has no physical trouble performing the job. None of these facts — the nature and cause of the injury, the subsequent periods of disability and medical treatment, Keenan's employment history and earnings since the injury — are presently in dispute. Indeed, the only fact that remains in dispute is the probability of future changes in Keenan's economic position.
II. ADMINISTRATIVE HISTORY
The dispute arose with respect to Keenan's claim for continuing disability benefits beyond the November 28, 1990 maximum medical improvement point. Keenan argues that he is entitled to receive scheduled benefits from Eagle for permanent partial disability to his arm under 33 U.S.C. § 908(c)(1), or alternatively, that he is entitled to unscheduled benefits for permanent partial disability as defined by his economic losses under 33 U.S.C. § 908(c)(21). In her original decision, the Administrative Law Judge ("ALJ") determined that Keenan's shoulder injury was unscheduled and thus compensable only under 33 U.S.C. § 908(c)(21). She then found that since Keenan suffered no loss in post-injury earning capacity, he was not entitled to unscheduled benefits either. Finally, she awarded Keenan a de minimis award of $1/week, as well as medical benefits pursuant to 33 U.S.C. § 907 and attorneys' fees and expenses.
Both parties appealed to the Benefits Review Board ("the Board"). The Board affirmed all of the ALJ's determinations, save the de minimis award, remanding that decision for reconsideration under the intervening decision in Rambo v. Director, OWCP,
III. DISCUSSION
The Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901 et seq., provides for compensation for permanent partial disabilities resulting from both "scheduled" and "unscheduled" injuries. Disabilities resulting from scheduled injuries are compensated at the rate of 2/3 of average weekly wages at the time of injury for a specified number of weeks, regardless of post-injury earning capacity. Meanwhile, disabilities resulting from unscheduled injuries are compensated at the rate of 2/3 of the difference between average weekly wages at the time of injury and post-injury earning capacity, for as long as the disability should last, which is to say in the case of permanent disabilities, indefinitely. The general principle is that the Act should be construed broadly and liberally in light of its purpose of compensating disabled workers, eschewing interpretive nitpicking at the expense of the injured employee. Voris v. Eikel,
However, one form of recovery invokes a mechanical formula and the other employs a fact-dependent test; thus, the rule that is the more beneficent in one case may turn out to be less beneficent in another. Indeed, the Supreme Court has acknowledged that the interaction of the schedule and the economic loss formula can produce results that are "incongruous" and even "unfair," and that this in turn poses a dilemma for the courts. Pepco,
We review the Board's decision "for errors of law and adherence to the substantial evidence standard," and should "respect the Board's interpretation of the statute where that interpretation is reasonable and reflects the policy underlying the statute." Sestich v. Long Beach Container Terminal,
1. Benefits to compensate a scheduled injury under 33 U.S.C. § 908(c)(1)
The question whether Keenan is entitled to scheduled recovery turns on whether his injury qualifies as a partial loss of an arm under § 908(c)(1). The Act provides:
(c) Permanent partial disability: In case of disability partial in character but permanent in quality the compensation shall be 66 2/3 per centum of the average weekly wages, which shall be in addition to compensation for temporary total disability or temporary partial disability paid in accordance with subdivision (b) or subdivision (e) of this section, respectively, and shall be paid to the employee, as follows:
(1) Arm lost, three hundred and twelve weeks' compensation.
...
33 U.S.C. § 908. Keenan makes two arguments in support of his claim that his injury should be compensated under § 908(c)(1). First, he argues that the resultant impairment in the use of his arm below the shoulder entitles him to recovery under the meaning of "arm lost." Second, he argues that the shoulder injury itself qualifies as an injury to the arm, insofar as the shoulder is a part of the arm within the meaning of the Act.
As to the first argument, it is relatively well-settled, despite some ambiguity in the statutory language, that an injury to Body Part X resulting in a functional impairment to Body Part Y will be classified according to X and not according to Y under the schedule. Our Circuit was the first to articulate this "situs of the injury" rule, in Long v. Director, OWCP,
The situs of the injury rule establishes that Keenan cannot recover for his shoulder injury under the schedule on the basis of resultant impairment to his lower arm. However, it does not answer the question whether the shoulder should be considered part of the arm. Keenan asks us to reach this question here.
Keenan's second assertion, that the shoulder is a part of the arm under the meaning of the Act, effectively requires this Court to reject a line of cases holding that a shoulder injury is unscheduled. No Ninth Circuit decision has explicitly held that the shoulder is, or is not, part of the arm for the purposes of § 908(c)(1). Other circuits that have considered how to classify shoulder injuries under the Act have held that they are per se unscheduled, without deciding that the shoulder is not a part of the arm. See Pool,
2. Benefits to compensate an unscheduled injury under 33 U.S.C. § 908(c)(21)
Keenan argues that he should collect § 908(c)(21) benefits according to a hypothetical damages formula, under which the employer must compensate him for the difference between his actual economic position and his hypothetical economic position, which he would have enjoyed but for the injury. However, the statutory formula contemplates wages at time of injury, rather than projected present wages, as the relevant baseline for comparison to actual present earning capacity. 33 U.S.C. § 908(c)(21). Our Circuit recently made explicit this relatively straightforward reading of the statute, ratifying the rule expressed in a number of earlier Board decisions, by holding that under the Act:
disability is not defined, as it would be under the tort system, as the inability to earn hypothetical wages that the worker could have earned if he had not been injured. Rather, disability is defined under the Act as the difference between the employee's pre-injury average weekly wages and his post-injury wage-earning capacity.
Sestich,
Keenan does not succeed in distinguishing this case by asserting that his foregone opportunity, unlike Sestich's, is "actual" and not "theoretical." Indeed, the Sestich court made quite clear that "we will not quarrel with Sestich's factual assumption." Sestich,
3. De minimis award under 33 U.S.C. § 908(c)(21)
The Supreme Court, in Rambo II, has clearly endorsed the concept of nominal compensation in cases where the worker suffers a permanent physical disability, but has not yet suffered an economic loss, as the only means of honoring
the Act's mandate to account for the future effects of disability in fashioning an award, since those effects would not be reflected in the current award and the 1-year statute of limitations for modification after denial of compensation would foreclose responding to such effects on a wait-and-see basis as they might arise.
The test for nominal compensation is that "there is significant potential that the injury will cause diminished capacity under future conditions" in cases where current earnings exceed pre-injury earnings, thus presently precluding § 908(c)(21) recovery.
Because there is no evidence in the record of the modification proceedings showing that Rambo's physical condition has improved to the point of full recovery, the parties' earlier stipulation of permanent partial disability at least raises the possibility that Rambo's ability to earn will decline in the event he loses his current employment as a crane operator. The ALJ's order altogether terminating benefits must therefore be vacated ...
Id. at 140,
Yet, the ALJ's second decision contravened just this instruction, by concluding that Keenan's few additional years of employment as a Marine Clerk obviated any need to conduct a de minimis inquiry. If there is a chance of future changed circumstances which, together with the continuing effects of Keenan's injury, create a "significant potential" of future depressed earning capacity, then Keenan is entitled to the possibility of a future modified award under Rambo II. That eventuality would come about were Keenan to lose his clerical position due to changed market conditions and find himself on the open market for a longshoreman job, which his physical impairment very possibly would not allow him to perform. This concern, indeed, was acknowledged by the ALJ herself in her original decision, which found that changing market conditions, free trade concerns, and other factors created sufficient doubt to justify a de minimis award. While Keenan was not employed as a Marine Clerk at that time, many of the findings — e.g., the likely future market share of the Port, Keenan's work restrictions, and permanent partial disability involving shoulder and arm — apply equally to the present state of affairs. In fact, the ALJ did not withdraw any of her earlier findings; she found only that the additional passage of time outweighed them. However, unless the passage of time has directly removed one of the relevant factors — for example, if some of Keenan's work restrictions were removed, or if market conditions changed for the better — the logic of the Rambo II test dictates that the mere fact that Keenan is earning above pre-injury levels cannot obviate the basis of the de minimis award.
Were Keenan to now lose his clerical position, at least a decade will have passed since he worked as a longshore man, further increasing the chances of economic loss. Most importantly, it is factually uncontroverted that Keenan's injury is both permanent and substantial. The absence of economic loss thus far does not reflect an underlying absence of loss in physical function. The significance of the injury is a substantial factor in the "significant potential of diminished capacity" test articulated by Rambo II. For the foregoing reasons, we elect to follow the conservative "wait and see" approach recommended by Rambo II and reverse the Board's denial of the de minimis award.
IV. CONCLUSION
We affirm the Board's denial of scheduled and unscheduled benefits and reverse the denial of the de minimis award, remanding for a determination of the relevant facts under Rambo II. In light of this holding, we also reverse the Board's denial of attorneys' fees and remand to the ALJ to resolve the fee question in accordance with her reconsideration of the de minimis award.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
Notes:
Notes
InGrimes, the employer sought to classify the employee's injury as scheduled, since scheduled recovery would have been substantially less than the unscheduled recovery the Board ordered, thus illustrating the "incongruous" interaction of the sections of the Act discussed supra.
TALLMAN, Circuit Judge, concurring in part and dissenting in part.
I dissent solely from the court's reversal of the Benefits Review Board's ("Board") appropriate denial of a de minimis award. In granting a de minimis award to Keenan, the court adopts a standard so low that it is difficult to imagine an applicant who will not qualify for compensation if at some point in his prior employment he sustained an injury which might impair his ability to return to that position in the future. Why stop there? The same logic compels the conclusion, rejected by the entire panel, that Keenan should also be compensated because his shoulder injury precluded him from advancement to a foreman's position.
Courts review with deference the Board's decision for "errors of law and adherence to the substantial evidence standard." Deweert v. Stevedoring Servs. of America,
Under Metropolitan Stevedore Co. v. Rambo,
The ALJ considered Keenan's disability and determined that he did not show a significant possibility of future loss of wage-earning capacity, finding that:
With his years of union service and seniority, his continuous, stable and varied longshore jobs over the years, [Keenan] is well-positioned as to future longshore/stevedore and market conditions so that on overall consideration of the evidence on the injury, his limitations, his education, age, experience and future factors which may affect his capacity to earn wages in his disabled condition, it cannot be held there is a significant possibility of a future wage capacity loss or diminished earnings capacity.
The Board also specifically noted that the ALJ found that Keenan's "current physical restrictions are only prophylactic in nature and that he has not seen a doctor for his shoulder injury since 1990." These findings are reasonable and amply supported by evidence in the record.
The unrefuted facts before the court are that Keenan earns significantly more money in his post-injury job than he did in his pre-injury job; he has had over ten years of steady post-injury work since reaching his maximum recovery; he is protected by union seniority; he has a college degree; and he has had no injury-related incidents since his injury. Other than the undisputed fact that the injury occurred and that Keenan testified that "it gets worse as time goes by," there is no significant evidence of any potential for future diminished earning capacity. Keenan has therefore failed to meet his preponderance of the evidence burden and we should defer to the Board's decision.
The approach adopted here by the court ignores in substance the Supreme Court's express language "emphasiz[ing] that the probability of a future decline is a matter of proof; it is not to be assumed pro forma as an administrative convenience in the run of cases." Rambo II,
Second, the court implies that Rambo II requires that any one suffering from permanent partial disability necessarily qualifies for a de minimis award. Maj. Op. at 1046 ("The existence of a permanent partial disability, moreover, is a crucial factor in the inquiry."). I agree that a permanent partial disability is crucial because a claimant is not even eligible for § 908(c)(21) benefits unless they have such a disability. I do not agree, however, that such a disability is also a "crucial factor" in determining whether there is a "significant potential" for future diminished wage-earning capacity — the disability is the prerequisite to trigger the "significant potential" inquiry in the first place. There must be factors that contribute to a showing of "significant potential" for the court to consider other than just the existence of the injury itself. But instead of deferring to the ALJ's consideration of these other factors, the court here implies that a claimant is presumed to meet the "significant potential" test if he shows that he has a permanent partial disability.
Third, I do not agree that "it is factually uncontroverted that Keenan's injury is both permanent and substantial." Maj. Op. at 1047. The record is silent as to how substantial Keenan's injury and his loss of physical function is at this time. The ALJ and the Board reasonably determined that his current physical restrictions were prophylactic and that he had not seen a doctor for his injury in over a decade. The ALJ correctly found that Keenan's injury was "not a physical impairment which standing alone is significant" and took this into account when determining that he did not qualify for a de minimis benefit. Keenan has introduced no evidence to refute these findings and it is not our place to make alternative findings when no evidence was adduced to support them.
Perhaps in an effort to supplement Keenan's weak showing, the court points out that the loss of physical function is not adequately reflected in the absence of economic loss. Maj. Op. at 1047. The court may understandably wish to compensate Keenan for the physical injury itself but the Longshore and Harbor Workers' Compensation Act is not a remedy for "physical injury as such, but for economic harm to the injured worker from decreased ability to earn wages." Rambo II,
The Board determination is supported by substantial evidence, is not contrary to the law, and we should defer to its findings. Keenan has failed to meet his burden of showing substantial potential of his income falling below his pre-injury wages on the basis of his old injury. I respectfully dissent from the court's unwillingness to affirm in its entirety the Board's denial of Keenan's claims.