Newport News Shipbuilding & Dry Dock Co. v. Pounders

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NEWPORT NEWS SHIPBUILDING AND 

DRY DOCK COMPANY,

Petitioner,

v.

RANDALL L. POUNDERS, SR.;  No. 00-1321

DIRECTOR, OFFICE OF WORKERS’

COMPENSATION PROGRAMS, UNITED

STATES DEPARTMENT OF LABOR,

Respondents.



On Petition for Review of an Order

of the Benefits Review Board.

(98-1573)

Argued: January 22, 2001

Decided: April 14, 2003

Before WIDENER and KING, Circuit Judges, and

David A. FABER, Chief United States District Judge for the

Southern District of West Virginia, sitting by designation.

Affirmed by published opinion. Chief Judge Faber wrote the opinion,

in which Judge King joined. Judge Widener wrote a concurring opin-

ion.

COUNSEL

ARGUED: Benjamin McMullan Mason, MASON, COWARDIN &

MASON, Newport News, Virginia, for Petitioner. Julia Mankata,

2 NEWPORT NEWS SHIPBUILDING v. POUNDERS

UNITED STATES DEPARTMENT OF LABOR, Washington, D.C.,

for Respondents. ON BRIEF: Jonathan H. Walker, Christopher R.

Hedrick, MASON, COWARDIN & MASON, Newport News, Vir-

ginia, for Petitioner. Henry L. Solano, Solicitor of Labor, Carol A.

De Deo, Associate Solicitor, Mark Reinhalter, Senior Appellate

Attorney, Laura J. Stomski, UNITED STATES DEPARTMENT OF

LABOR, Washington, D.C., for Respondent Director.

OPINION

FABER, Chief District Judge:

Newport News Shipbuilding and Dry Dock Company ("Newport

News") seeks reversal of a decision of the Benefits Review Board (the

"BRB") denying relief under section 8(f) of the Longshore and Har-

bor Workers’ Compensation Act, 33 U.S.C. §§ 901-950 ("LHWCA").

For the reasons discussed below, we affirm the decision of the BRB.

I.

In January 1997, Randall Pounders ("Pounders") was diagnosed

with asbestosis. A pulmonary function test revealed a fifteen percent

permanent partial whole person impairment as measured by the AMA

Guides to the Evaluation of Permanent Impairment, 4th ed. His

employer, Newport News, admits that he was exposed to asbestos

during his employment, but contends that he had a pre-existing lung

disease which materially and substantially contributed to his ultimate

disability.

As early as 1979, pulmonary function tests performed on Pounders

revealed restrictive lung disease. This condition continued to appear

on such tests conducted from 1980 through 1984. In 1996, Pounders

was diagnosed with diabetes, hypertension and pleural fibrosis.

Pounders retired on December 31, 1995, more than one year before

he was diagnosed with asbestosis.

On July 30, 1998, the Administrative Law Judge ("ALJ") filed his

original decision and order denying the § 8(f) claim of Newport

NEWPORT NEWS SHIPBUILDING v. POUNDERS 3

News. Almost one year later, on July 28, 1999, the BRB reversed and

remanded the case for further consideration in view of the standard

established in Director, OWCP v. Newport News Shipbuilding and

Dry Dock Co. (Carmines), 138 F.3d 134 (4th Cir. 1998). On reconsid-

eration, however, the BRB reversed itself and affirmed the original

decision of the ALJ.

II.

Section 8(f) of the LHWCA, 33 U.S.C. § 908(f), provides in part

as follows:

In . . . cases in which the employee has a permanent partial

disability, found not to be due solely to that injury, and such

disability is materially and substantially greater than that

which would have resulted from the subsequent injury

alone, the employer shall provide . . . compensation for one

hundred and four weeks only.

After the one hundred four-week period has passed, the Office of

Workers’ Compensation Programs ("OWCP"), which administers a

special fund for that purpose, is responsible for disability payments

under § 8(f).

An employer who seeks to limit liability for an employee’s perma-

nent partial disability under § 8(f) must establish three elements: (1)

that the ultimate disability is caused in part by a pre-existing partial

disability; (2) that the pre-existing disability was manifest to the

employer prior to the work-related injury; and (3) that the ultimate

disability materially and substantially exceeded the disability that

would have resulted from the work-related injury alone, in the

absence of the pre-existing condition. See Director, OWCP v. New-

port News Shipbuilding and Dry Dock Co. (Carmines), 138 F.3d 134,

138-39 (4th Cir. 1998). See also Director, OWCP v. Newport News

Shipbuilding and Dry Dock Co. (Harcum), 8 F.3d 175, 182-83 (4th

Cir. 1993), aff’d on other grounds, 514 U.S. 122 (1995).

The LHWCA sets out the applicable standard of review for this

case in § 921(b)(3). When under review by the BRB, the ALJ’s fac-

4 NEWPORT NEWS SHIPBUILDING v. POUNDERS

tual findings are deemed conclusive "if supported by substantial evi-

dence in the record considered as a whole." 33 U.S.C. § 921(b)(3).

This court has held that substantial evidence is "more than a scintilla

but less than a preponderance." Elliott v. Adm’r, Animal & Plant

Health Inspection Serv., 990 F.2d 140, 144 (4th Cir. 1993). Addition-

ally, as stated in Newport News Shipbuilding & Dry Dock Co. v.

Tann, 841 F.2d 540, 543 (4th Cir. 1988), the ALJ’s findings "may not

be disregarded on the basis that other inferences might have been

more reasonable." Rather, "deference must be given the fact-finder’s

inferences and credibility assessments, and we have emphasized the

scope of review of ALJ findings is limited." Id. Legal determinations

are reviewed de novo. This includes the standard by which the ALJ

determines entitlement to § 8(f) relief. See Carmines, 138 F.3d at 141.

III.

There is no disagreement in this case that the first two conditions

necessary for relief under § 8(f) are met. The parties agree that

Pounders had a pre-existing disability. The second element, manifes-

tation, is not required in cases where the worker suffers from a post-

retirement occupational disease, as is the case with Pounders. The

sole issue involves the weight of the evidence with regard to the third

requirement, commonly referred to as the "contribution" element.

To satisfy the contribution element in this case, Newport News

relied upon the parties’ stipulation that Pounders has a fifteen percent

permanent partial disability, which is attributed to both his pre-

existing disability and his work-related asbestosis, and the opinion of

James Reid, a company doctor, who stated that if Pounders had only

the work-related asbestosis, his impairment rating would be at least

fifteen percent less.1 Dr. Reid explained his conclusion and the basis

for it as follows:

Mr. Pounders’ AMA rating and disability are not caused by

his alleged asbestosis alone, but rather his AMA rating and

1

Two other doctors reviewed the records and signed off on a form indi-

cating they agreed with Dr. Reid’s opinion. Neither examined Pounders.

The ALJ, correctly in our view, gave little weight to these assessments.

J.A. at 40.

NEWPORT NEWS SHIPBUILDING v. POUNDERS 5

disability are materially and substantially contributed to, and

materially and substantially hastened by his pre-existing

pleural fibrosis/restrictive lung disease and hypertensive car-

diovascular disease-diabetes. Since the 1980’s, hypertension

has been known to reduce pulmonary function. This is

hardly surprising since the blood in the vascular system

enters the lungs, and oxygen is transferred to the blood from

the lungs. A January, 1995 article in Chest, a leading medi-

cal journal, based on a grant from the National Heart, Lung

and Blood Institute of NIH, documents the effect of hyper-

tension on pulmonary function. Hypertension, which Mr.

Pounders had, causes a three percent (3%) drop in the FEVI

and a three percent (3%) drop in the FVC. On average, each

one percent (1%) drop in FEVI or FVC results in a one per-

cent (1%) increase in the AMA rating. Of course, the more

longstanding or severe the cardiovascular condition, the

greater the drop in FEVI/FVC and hence the greater the

increase in the AMA rating. Mr. Pounders’ Shipyard pulmo-

nary function tests as early as 1979 showed a 10% AMA

rating disability. Thus, if Mr. Pounders merely had asbesto-

sis, without his pre-existing disabilities, his AMA rating

would be a least 15% less.

J.A. at 18.

The BRB concluded that the evidence of contribution fell short of

the standard for § 8(f) relief established by this court in Carmines.

Carmines was exposed to asbestos at the Newport News facility over

a thirty-year period. See Carmines, 138 F.3d at 137. He was diag-

nosed with pulmonary asbestosis in 1990 and deemed to have a

twenty-five percent to thirty percent impairment of the whole person.

See id. He also had substantial pre-existing scarring of the lungs due

to pleurisy. See id. at 139. Dr. Hall, a company physician for Newport

News, opined on the basis of old x-rays that Carmines’ pre-existing

disability accounted for about eighteen percentage points of the total

disability, which was twenty-eight percent. See id. at 140. He con-

cluded that Carmines’ asbestosis accounted for the difference — ten

percent. See id.

This court determined in Carmines that Dr. Hall’s evidence was

insufficient to meet the contribution requirement and show the claim-

6 NEWPORT NEWS SHIPBUILDING v. POUNDERS

ant’s total disability to be materially and substantially greater than the

disability resulting from the work-related condition alone. See Car-

mines, 138 F.3d at 134, 142 (4th Cir. 1998). The court pointed out

that Carmines’ asbestosis standing alone could account for all of his

disability. See id. at 143. In the absence of expert evaluation of the

degree of disability covered by the asbestosis separate and apart from

the impact of the pre-existing condition, the court said, there was no

basis for a comparison which would reveal whether the prior injury

materially and substantially contributed to the total impairment. See

id. at 143-44. To satisfy the third requirement under § 8(f), the court

held that, "an employer must quantify the type and extent of the dis-

ability that the claimant would have suffered without the pre-existing

condition." Id. at 139. It is not enough, as Dr. Hall did in Carmines,

to simply calculate the total current disability and subtract from it the

disability resulting from the pre-existing condition.

In weighing any application for § 8(f) relief the court is faced with

competing policy goals. The purpose of § 8(f) is to encourage reem-

ployment of handicapped workers. See Lawson v. Suwanee Fruit &

S.S. Co., 336 U.S. 198, 201 (1949). If employers were charged with

the entire cost of second injuries under the LHWCA, there would be

a powerful disincentive to hire the handicapped. On the other hand,

employers should be held responsible for the full cost of injuries and

illnesses which occur on their watch and should not be permitted

lightly to transfer such burdens to the special fund.

The problem is exacerbated by the fact that the adversarial system

breaks down to a degree with regard to § 8(f) claims. The evidentiary

hearing in such cases may involve only the employer and the claim-

ant. The claimant seeks to be compensated for his work-related condi-

tion. He probably does not care whether he is paid out of the general

fund, with its higher cost to his employer, or out of the special § 8(f)

fund. The employer, on the other hand, operates under a significant

financial incentive to throw as many cases as it can into the special

fund. It is only after the initial hearing is concluded that the Director,

OWCP — the person with the interest in protecting the integrity of

the special fund — enters the picture. The record made at the original

hearing may as a consequence be tilted in favor of § 8(f) relief. The

problem is complicated by the fact that medical evidence relating to

the contribution requirement is frequently provided by company doc-

NEWPORT NEWS SHIPBUILDING v. POUNDERS 7

tors. Human nature as it is, company doctors, however honest, are

likely to give the close calls to those who pay their salaries.

In this context, the rigorous standard of Carmines makes good

sense and is supported by cases from other circuits. In Sealand Termi-

nals, Inc. v. Gasparic, 7 F.3d 321, 323 (2d Cir. 1993) (per curiam),

the court held that § 8(f) relief is precluded unless the evidence estab-

lishes that the work-related injury alone would not have caused the

workers’ total disability. The United States Court of Appeals for the

First Circuit, in Director, OWCP v. Bath Iron Works Corp., 129 F.3d

45 (1st Cir. 1997), followed this court’s opinion in Harcum, and held

that, to justify § 8(f) relief, an employer must show the degree of dis-

ability attributable to the work-related injury alone, "so that this

amount may be compared to the total percentage of the partial disabil-

ity for which coverage under the LHWCA is sought." 129 F.3d at 51;

see also Two "R" Drilling Co., Inc. v. Director, OWCP, 894 F.2d 748

(5th Cir. 1990).

Applying the Carmines standard here, we find the evidence insuffi-

cient to support § 8(f) relief. We agree with the BRB that Dr. Reid’s

methodology fails to satisfy Carmines. Dr. Reid concluded that

Pounders’ asbestosis, without the pre-existing condition, would result

in an AMA rating of at least fifteen percent less than the rating which

results from the two conditions combined. He thus places the degree

of disability from the asbestosis alone at less than the total disability.

He gets there, however, by using a methodology strikingly similar to

the discredited "subtraction" method employed by Dr. Hall in Car-

mines. Dr. Reid begins with the normal impact of hypertension on

breathing and reduces the amount of the total disability to account for

this. He does not, as Carmines requires, make an assessment of the

impact of the asbestosis standing alone.2 In the absence of such an

assessment, the evidence fails to satisfy the Carmines test.

2

Judge Smith of the BRB, in his concurring opinion below, points out

the difficulty which confronts a doctor called upon to make the assess-

ment required by Carmines in a case involving successive lung diseases.

The difficulty of making the assessment in isolated cases, however, does

not compel us to adopt a different rule.

8 NEWPORT NEWS SHIPBUILDING v. POUNDERS

Accordingly, the decision of the BRB is

AFFIRMED.

WIDENER, Circuit Judge, concurring:

I.

While the differences between the earlier permanent partial disabil-

ity and the subsequent work-related disability are so marked in the

Ward case that I think the Harcum-Carmines rule should have no pre-

cedential application in that case, the facts in the case at hand are so

similar to Carmines in the measurement of disability by the AMA

tables, as required by statute, 33 U.S.C. § 904(c)(23), that they require

the result the majority obtains as a matter of circuit precedent, and for

that reason alone, I concur in the result. I respectfully disassociate

myself from the opinion of the majority with respect to company doc-

tors.

II.

Whether we agree with Coke, that reason is the life of the law, or

with Holmes, that the life of the law is experience, the Harcum-

Carmines rule, in my opinion, follows neither. The statute 33 U.S.C.

§ 908(f) requires both a pre-existing "permanent partial disability" to

which must be added a "subsequent injury" which is work-related, or

else the statute has no application. Carmines requires a quantification

of the subsequent injury without reference to the earlier injury, a con-

dition which never existed. So we are requiring physicians to answer

a purely hypothetical question based on facts which never existed.

Carmines forbids a physician from giving an opinion as to the differ-

ence between two known quantities, the earlier and subsequent dis-

abilities, but requires a physician to express an opinion as to

differences between a known quantity, the subsequent disability, and

an unknown earlier disability. In my opinion, this is a not tenable, as

Judge Smith points out in his administrative concurrence.

III.

Left to my own devices, I would decide the case on the reasoning

in the concurring administrative opinion in this case of Judge Smith,

NEWPORT NEWS SHIPBUILDING v. POUNDERS 9

an administrative appeals judge, which I earnestly commend to the

court and copy in full below:

SMITH, Administrative Appeals Judge, concurring:

I concur in the result reached by my colleagues. I write sep-

arately to express my uncertainty as to how an employer can

satisfy the contribution requirement in a Section 8(c)(23)

case in a manner which meets the expectations of the Fourth

Circuit. In a case where the award is based solely on the per-

centage of permanent impairment, it places a great burden

on a doctor to examine a claimant and rate, with certainty,

his loss due to his work-related injury without regard to his

condition as a whole, which includes his pre-existing condi-

tion, and without reliance on percentages.

In this case, the Board stated that calculation of the percent

of impairment caused by the pre-existing disability merely

requires the computation of 15 percent of the 15 percent

overall rating (15 percent of 15 percent equals 2.25 percent.

This resulted in claimant’s pre-existing disability being at

least a 2.25 percent impairment. Subtracting 2.25 percent

from the overall 15 percent impairment results in an impair-

ment rating for the asbestosis alone of 12.75 percent. There-

fore, the Board concluded that the administrative law judge

had enough information to make the comparison between

claimant’s disability with and without the pre-existing dis-

ability (15 percent versus 12.75 percent). Pounders, slip op.

at 3. Since claimant’s entitlement is governed by Section

8(c)(23), his compensation award is based on his percentage

of impairment alone.1 Under Section 8(c)(23), quantifying

1

Section 8(c)(23) is an exception to the rule that disability

under the Act rests on an economic foundation. Section 2(10) of

the Act states:

"Disability" means incapacity because of injury to earn the

wages which the employee was receiving at the time of

injury in the same or any other employment; but such term

shall mean permanent impairment, determined (to the extent

10 NEWPORT NEWS SHIPBUILDING v. POUNDERS

the percentages is equivalent to quantifying the disability,

and the record contains evidence of claimant’s percentages

of impairment both before and after his work-related injury.

The Board thus reasoned that the record contained sufficient

information to permit a comparison between claimant’s ulti-

mate degree of disability and the degree of disability he

would sustain without the pre-existing disability.

As the majority opinion points out, the Fourth Circuit disap-

proved this method of determining whether the claimant’s

disability is due solely to the work injury and whether the

pre-existing disability materially and substantially worsened

the ultimate disability. Director, OWCP v. Newport News

Shipbuilding & Dry Dock Co. [Carmines], 138 F.3d 134, 32

BRBS 48(CRT) (4th Cir. 1998). Although the Fourth Circuit

stated in Carmines that the seriousness of a pre-existing

condition could be irrelevant to a claimant’s overall disabil-

ity, as the work-related injury alone could give rise to the

compensable disability, the examples it used to explain this

conclusion were dissimilar to the case before it, and they are

dissimilar to the instant case as well. For instance, the Car-

mines court stated that if an employee with a paralyzed leg

were to have the leg amputated due to a work-related injury,

the employee would be no worse off than he was before,

that is, he would have a paralyzed leg-stump instead of a

paralyzed leg. In either case, he would not have use of the

leg. Thus, Section 8(f) relief would not be available to the

covered thereby) under the guides to the evaluation of per-

manent impairment promulgated and modified from time to

time by the American Medical Association, in the case of an

individual whose claim is described in section 910(d)(2) of

this title.

33 U.S.C. § 902(10) (emphasis added): Section 10(d)(2) pro-

vides an average weekly wage for employees retired on the

date of awareness in occupational disease cases, and Section

8(c)(23), 33 U.S.C. § 908(c)(23), provides that benefits for

such individuals are computed using the percentage of per-

manent impairment.

NEWPORT NEWS SHIPBUILDING v. POUNDERS 11

employer because it could not establish that the pre-existing

paralysis made the ultimate disability "materially and sub-

stantially greater." Carmines, 138 F.3d at 139, 32 BRBS at

51(CRT). Further, the court addressed Director, OWCP v.

Luccitelli, 964 F.2d 1303, 26 BRBS 1(CRT) (2d Cir. 1992),

wherein the claimant had a pre-existing disability to his

right knee and suffered a work-related injury to his left

knee. Carmines, 138 F.3d at 139, 143, 32 BRBS at 51,

55(CRT. The Fourth Circuit noted that the Luccitelli court

stated that the existence of the pre-existing condition alone

was insufficient to entitle employer to Section 8(f) relief as

claimant’s work-related injury was itself totally disabling.

Neither Carmines nor the instant case, however, involves

injuries resulting in economic disability or weighing the rel-

ative contributions of injuries to different body parts to the

whole disability.2 Rather, they involve the relative contribu-

tions of two lung conditions where the ultimate disability is

compensated pursuant to Section 8(c)(23) based on physical

impairment alone.3 In this instance, quantification of the

impairment is the sole measure of disability. 33 U.S.C.

§§ 902(10), 908(c)(23); see n. 2, supra. If, using the per-

centages from Carmines, a credible physician states that

claimant’s compensable respiratory impairment is 28 per-

cent, and breaks this down further by stating that 18 percent-

age points of this impairment is due to the pre-existing

condition and 10 percentage points is due to the work injury,

the administrative law judge should be entitled to conclude

that the disability, here a respiratory condition compensable

2

Moreover, in Luccitelli, the claimant had a permanent total

disability and the question of whether his ultimate disability was

made "materially and substantially greater" by his pre-existing

condition did not arise. 33 U.S.C. § 908(f)(1); Luccitelli, 964

F.2d at 1303, 26 BRBS at 1(CRT).

3

But see Louis Dreyfus Corp. v. Director, OWCP, 125 F.3d

884, 31 BRBS 141(CRT) (5th Cir. 1997) (previous rating insuf-

ficient by itself to show contribution where evidence established

that ultimate disability may not have been made "materially and

substantially greater" by the pre-existing condition).

12 NEWPORT NEWS SHIPBUILDING v. POUNDERS

based solely on a percentage of respiratory impairment, is

not due solely to the work injury.4 The "degree of disability"

due to the work-related injury alone, as required by the Car-

mines court, is readily apparent from the percentages. The

court’s statement that, under the facts of that case, or the

instant case, the claimant could be just as "disabled," that is,

impaired within the meaning of the American Medical

Association Guides to the Evaluation of Permanent Impair-

ment, see 33 U.S.C. § 902(10), with or without the pre-

existing disability, is not tenable.5

ROY P. SMITH

Administrative Appeals Judge

4

The administrative law judge, of course, also would have

to determine if the ultimate disability is materially and substan-

tially greater because of the pre-existing disability.

5

This is especially true because in order to be entitled to

Section 8(f) relief in a case where the claimant is compensated

pursuant to Section 8(c)(23) for a respiratory impairment, the

pre-existing disability must be a condition that compromises res-

piratory function. Director, OWCP, v. Bath Iron Works Corp.,

129 F.3d 45, 31 BRBS 155(CRT) (1st Cir. 1997); Adams v. New-

port News Shipbuilding & Dry Dock Co., 22 BRBS 78 (1989).