Director OWCP v. Sun Ship Inc

Opinions of the United

1998 Decisions States Court of Appeals

for the Third Circuit

7-29-1998

Director OWCP v. Sun Ship Inc

Precedential or Non-Precedential:

Docket 96-3648

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1998

Recommended Citation

"Director OWCP v. Sun Ship Inc" (1998). 1998 Decisions. Paper 175.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/175

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 1998 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Filed July 29, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 96-3648

DIRECTOR, OFFICE OF WORKERS' COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,

Petitioner

v.

SUN SHIP, INC.

(GERTRUDE EHRENTRAUT, Claimant)

On Appeal From the Benefits Review Board,

United States Department of Labor

93-1600

Argued: December 1, 1997

Before: COWEN, McKEE & ROSENN, Circuit Judges

(Filed: July 29, 1998)

J. DAVITT MCATEER

Acting Solicitor of Labor

ALLEN H. FELDMAN

Associate Solicitor for Labor

Special Appellate

and Supreme Court Litigation

JOSHUA T. GILLELAN, II

Room S-4325

JUDITH D. HEIMLICH (ARGUED)

U.S. Department of Labor

Room N-2700

200 Constitution Ave., N.W.

Washington, D.C. 20210

Attorneys for Petitioner

JOHN P. DOGUM, Esq. (ARGUED)

Swartz, Campbell & Detweiler

1601 Market Street

34th Floor

Philadelphia, PA 19103

Attorney for Respondent

OPINION OF THE COURT

McKEE, Circuit Judge

We are asked to determine if the delay of the Board of

Revision and Review in reviewing a decision of an

administrative law judge deprived the Board of jurisdiction

under the facts of this appeal. We hold that it did, and that

the Board's delay caused the ALJ's decision to become a

final order that we now have jurisdiction to review. We

further hold that the ALJ erred in deciding that a maritime

employer is entitled to relief from the Special Fund

established under S 8(f) of the Longshore and Harbor

Workers' Compensation Act, 33 U.S.C. S 901, et seq.

("LHWCA") ("the Act"), where the employee's disability was

not manifest during the time of his employment.

Accordingly, we will reverse the decision of the ALJ.

2

I. BACKGROUND

Raymound Ehrentraut worked for Sun Ship, Inc. from

1938 until his retirement in 1981. Nine years after he

retired he was diagnosed with asbestosis resulting from his

years of work-related asbestos exposure while at Sun Ship.

The same month he was diagnosed, doctors discovered he

also had a work-related pulmonary malignancy.

Ehrentraut's asbestosis was a "pre-existing condition" that

had made diagnosis of the malignancy more difficult.

Ehrentraut eventually succumbed to the cancer and died

on July 15, 1990. Thereafter, his wife applied to Sun Ship

for death benefits under the Longshore and Harbor

Workers' Compensation Act.1

Sun Ship initially paid the requested benefits. However,

in 1992, after paying benefits for 104 weeks, Sun Ship

requested the Office of Workers' Compensation Programs to

provide the payments from the Special Fund established

under section 8(f) of the Act, 33 U.S.C. S 908(f). The

Director of the Office of Workers' Compensation Programs

denied Sun Ship's application. The Director concluded that

Sun Ship was not eligible for relief from the Special Fund

because Ehrentraut's pre-existing injury was not manifest

while he worked for Sun Ship. However, the case was

referred to an administrative law judge who overruled the

Director's decision. On April 15, 1993, the ALJ issued an

opinion declaring that Sun Ship was entitled to section 8(f)

relief under the 1984 amendments to the Act because

Ehrentraut's pre-existing condition was a long-latency

disease diagnosed after Ehrentraut's retirement. See ALJ at

3.

The Director filed a timely appeal to the Benefits Review

Board on May 13, 1993. However, the Board failed to

adjudicate the appeal for more than three years. Finally, on

September 12, 1996, the Board issued an order in which it

reversed the ALJ's ruling and remanded the case back to

the ALJ for further proceedings. The Director filed a Petition

for Review seeking a judicial determination that the ALJ's

order had become the final decision of the Board because

_________________________________________________________________

1. Both parties agree that she is entitled to death benefits under 33

U.S.C. S 909.

3

the Board had not acted within the required time frame.

The Director's petition asks us to reverse the ALJ's decision

and hold that Sun Ship is not entitled to shift the

responsibility for these benefits to the Special Fund.

II. STANDARD OF REVIEW

We exercise plenary review over both the jurisdictional

issue and the substantive issue raised by this appeal

because both present questions of law. Director, Office of

Workers' Compensation v. Barnes and Tucker Co., 969 F.2d

1524, 1527 (3d Cir. 1992); cf. Sea-Land Service, Inc. v.

Rock, 953 F.2d 56, 59 (3d Cir. 1992). Before addressing the

substance of the Director's petition, we must first resolve

the issue of our jurisdiction.

For the reasons that follow, we conclude that we have

jurisdiction to review the ALJ's decision as the Board's final

order. We hold that the ALJ erred in concluding that Sun

Ship is entitled to shift liability to the Special Fund that

Congress created under section 8(f) of the Act.

III. JURISDICTION

Ordinarily, the Board's remand to the ALJ would be an

interlocutory order and we would therefore have no

jurisdiction to review it. However, the Department of Labor

Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat.

1321 (the "Appropriations Act") provides that any ALJ

decision in a LHWCA case that has been

pending a review by the Benefits Review Board for

more than one year shall, if not acted upon by the

Board before September 12, 1996, be considered

affirmed by the Benefits Review Board on that date,

and shall be considered the final order of the Board for

purposes of obtaining a review in the United States

courts of appeals.

100 Stat. 1321-219 (emphasis added). Here, the Board

issued its order on September 12, 1996. Sun Ship argues

that is consistent with the requirements of the

Appropriations Act. The Director responds that "before"

4

does not mean "on" and that the Board's September 12,

1996 decision is therefore a nullity.

It is axiomatic that our interpretation of any statute

begins with the language of the statute. Consumer Prod.

Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108

(1980). If the language is ambiguous, we look to legislative

history to determine congressional intent. Adams Fruit Co.,

Inc. v. Barrett, 494 U.S. 638, 642 (1990). In addition, we

will sometimes defer to a permissible interpretation of a

statute by an appropriate agency. However, we will do so

only when the statute does not directly speak to the issue

and congressional intent cannot be gleaned from the text of

the statute, or its legislative history. Only then, should the

"question for the court [become] whether the agency's

answer is based on a permissible construction of the

statute." Chevron, U.S.A., Inc. v. Natural Resources Defense

Council, Inc., 467 U.S. 837, 843 (1984). When legislation

speaks directly to a particular issue, it is that congressional

expression, not a contradictory agency interpretation,

which controls. See, e.g., Rubin v. United States, 449 U.S.

424, 430 (1981).

Here, it is clear that the Board's decision is void if it did

not comply with the Appropriations Act. We would then

have jurisdiction under the Appropriations Act to review the

ALJ's decision. However, Sun Ship argues that the Board

obviously interpreted the Appropriations Act as allowing it

to issue orders on September 12, 1996 because the Board

issued several opinions on that day that had been pending

for over a year. Sun Ship then relies upon Chevron to argue

that we must defer to the Board's interpretation.2 However,

_________________________________________________________________

2. According to Sun Ship, the Board obviously interpreted the

Appropriations Act as allowing it to act on September 12, and we must

defer to that interpretation under Chevron. Chevron does state that a

court should refrain from "substituting its own construction of a

statutory provision for a reasonable interpretation made by the

administrator of an agency," 467 U.S. at 844, however, we have not

previously directly addressed the issue of the amount of deference owed

the Director concerning the interpretation of the LHWCA. In Cort v.

Director, Office of Workers' Compensation Programs, 996 F.2d 1549,

1551-52 (3d Cir. 1993), we recognized a division of authority among the

5

Sun Ship's position ignores the well-settled rule that we do

not defer to the Board's interpretation of statutes. See

Commonwealth of Pennsylvania v. United States Dep't of

Health & Human Serv., 80 F.3d 796, 809 (3d Cir. 1996)

(citing Sharondale Corp. v. Ross, 42 F.3d 993 (6th Cir.

1994)); cf. Elliot Coal Mining v. Director, Office of Workers'

Compensation, 17 F.3d 616, 627-28 (3d Cir. 1994).

Moreover, here, the Board's interpretation is contrary to the

express language of the Appropriations Act. Accordingly, we

will not defer as Sun Ship urges.

Sun Ship also contends that the Appropriations Act,

taken as a whole, is ambiguous, and that this "ambiguity"

requires us to look beyond the plain meaning of the

language to determine Congress' true intent. Sun Ship

attempts to create ambiguity by referring to other

provisions in the Appropriations Act that allow for action

"after September 12[th]," or "beginning September 13th,"

rather than "before September 12th." For example, the

statute provides that:

. . . no funds made available by this Act may be used

by the Secretary of Labor after September 12, 1996 to

review a decision under the [LHWCA] that has been

appealed and that has been pending before the

Benefits Review Board for more than 12 months,

except as otherwise specified herein . . . beginning on

September 13, 1996, the Benefits Review Board shall

make a decision on appeal of a decision under the

[LHWCA] no later than 1 year after the date the appeal

to the Benefits Review Board was filed.

110 Stat. 1321. (emphasis added).

_________________________________________________________________

circuit courts of appeals concerning the amount of deference afforded the

Director, but we did not reach the issue. In Barnes & Tucker, we held

that we "owed . . . deference to the Director, not to the Board, for the

Director makes policy." Id. at 1527. However, both Barnes & Tucker and

Elliot Coal Mining v. Director, Office of Workers' Compensation Programs,

17 F.3d 616, 626 (3d Cir. 1994) stand for the well established

proposition that we "will not defer to an interpretation in an adversarial

proceeding that strains the `plain and natural meaning of words'."

Barnes & Tucker, 969 F.2d at 1527.

6

Such language does not render the Appropriations Act

either ambiguous, or contradictory. The Act did not prevent

the Board from acting on all matters on September 12th.

Rather, the Board was merely prohibited from acting on

September 12 to decide or dispose of matters that had then

been pending for a year or more. This did not prevent the

Board from deciding cases on September 12, 1996 that had

been pending for less than one year as of that date.

Similarly, beginning on September 13, 1996, the

Appropriations Act established a one year cut-off date

within which the Board had to resolve cases pending before

it. Neither provision requires us to interpret "before"

September 12, to mean "on or before" September 12, as

Sun Ship urges. When "before" is used as a preposition, it

refers to "an event or act preceding in time or earlier than,

or previously to, the time mentioned." Blacks Law

Dictionary, 154-55 (6th ed. 1990). References to "after

September 12th" only address the disbursal of funds.

It is difficult to imagine how Congress could have more

clearly established the Board's deadline for acting.

Congress decreed that the Board must act "before

September 12th." In United States v. Locke, 471 U.S. 84,

93-96 (1985), the Court held that a statutory requirement

to act "prior to December 31" plainly meant that action had

to be undertaken before that date and not on it. The same

is true here.3

On September 12, 1996 this case had been pending

before the Benefits Review Board for more than three years.

The Board failed to act before September 12, and its

subsequent decision on September 12 is, therefore, a

nullity under the Act. That conclusion is required by the

language of the statute, and we have been directed to

nothing in the legislative history that would suggest a

different result. Thus, a contrary interpretation of the

_________________________________________________________________

3. In Finkle v. Gulf & Western Mfg. Co., 744 F.2d 1015 (3d Cir. 1984), in

a quite different context, we interpreted the phrase"prior to a certain

date." We held that language providing a specific date by which action is

required is "unequivocal and establishes an enforceable renewal

deadline." Id. at 1019. Although we were concerned with the provisions

of an option contract, our analysis there is nevertheless helpful to our

analysis of the meaning of the statute we interpret here.

7

Appropriations Act would have the effect of amending it to

read "on or before September 12, 1996." Any such change

must originate in Congress, not here. Accordingly, the

Board's purported remand was a nullity, and the ALJ's

grant of section 8(f) relief to Sun Ship became a final order

that we can now review.

IV. DISCUSSION

A. The Special Fund Under S 8(f)

Section 8(f) of the Act provides that when an employee

with a pre-existing condition suffers an on-the-job injury or

is afflicted with a work-related disease which, in

combination with the pre-existing condition,4 causes a more

severe, permanent disability, the employer can apply to the

Director for relief from disability payments after the

employer has made such payments to the employee for 104

weeks. See 33 U.S.C. S 908(f)(1).

The relevant text of the statute reads as follows:

In any case in which an employee having an existing

permanent partial disability suffers injury, the

employer shall provide compensation for such disability

as is found to be attributable to that injury based upon

the average weekly wages of the employee at the time

of the injury. If following an injury falling within the

provisions of subsection (c)(1)-(20) of this section, the

employee is totally and permanently disabled, and the

disability is found not to be due solely to that injury,

the employer shall provide compensation for the

applicable prescribed period of weeks provided for in

that section for the subsequent injury, or for one

hundred and four weeks, whichever is the greater . . . .

In all other 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

_________________________________________________________________

4. There is no requirement that the pre-existing condition be work-

related. Lawson v. Suwanee Fruit & Steamship Co., 336 U.S. 198, 204

(1949).

8

substantially greater than that which would have

resulted from the subsequent injury alone, the

employer shall provide in addition to compensation

under subsections (b) and (e) of this section,

compensation for one hundred and four weeks only.

33 U.S.C. S 908(f)(1).

The Special Fund was established in 1927 with the

enactment of the LHWCA. It was created by 33 U.S.C.

S 944, and was intended to spread liability for injuries

sustained by employees with pre-existing conditions equally

among all employers in the maritime industry.5

The Special Fund was originally enacted . . . to fund

expenditures [where] an employee received an injury

which alone caused only permanent partial disability,

but resulted in the employee's permanent disability

when combined with a previous disability, the employer

had to provide compensation for the disability caused

by the second or subsequent injury . . . .[T]he employee

would be paid the remainder of his compensation for

permanent total disability out of the Special Fund . . .

Smith, The Special Fund Under The Longshore And Harbor

Workers' Compensation Act, 11 Mar. Law 71 (1986). The

LHWCA was enacted "in response to a series of Supreme

Court decisions that invalidated prior attempts to cover

maritime workers under existing state compensation

structures." Bath Iron Works Corp. v. Director, Office of

Workers' Compensation, 136 F.3d 34, 40 (1st Cir. 1998).

Those decisions resulted in a situation where the last

employer was liable for injuries that became totally

disabling only as a result of preexisting injuries for which

the last employer had no responsibility, and over which, it

had no control. The Supreme Court discussed this situation

_________________________________________________________________

5. Contribution to the Special Fund is mandatory for all maritime

industry employers. Annual assessments are determined using the ratio

of the employer's compensation payments under the LHWCA to the total

compensation paid by all employers under the LHWCA. 33 U.S.C.

S 944(c)(2); see also Lawrence P. Postol, The Federal Solution to

Occupational Disease Claims -- The Longshore Act and Federal Program

21 Tort & Inc. L.J. 199, 229-30 (1996) (explaining how formula is

utilized).

9

in Lawson v. Suwanee Fruit & S. S. Co., and the modern

interpretation of section 8(f) can be traced directly to that

decision. In Lawson, an employee had lost the sight of one

eye in an accident not connected to the maritime industry.

He was later hired by a steamship company and thereafter

injured in a work related accident that took the sight of the

other eye leaving him totally blind, and permanently

disabled. However, since the total disability did not result

solely from maritime employment, an issue arose as to the

scope of the maritime employer's liability for the total

disability. The Court defined the issue as follows: "should

the employer or the second injury fund6 . . . be liable for the

balance of payments to equal compensation for total

disability?" Id.

The Court noted the problems caused by earlier decisions

holding the last employer fully responsible for the effects of

a second injury although total disability only resulted from

the combined effect of the latter injury and a preexisting

condition. In particular, the Court noted the prior decision

of the Oklahoma Supreme Court in Nease v. Hughes Stone

Co., 114 Okl. 170 (Okla. 1925), where the second employer

had been held liable "for total compensation for loss of the

second eye." Lawson, 336 U.S. at 203. The Court noted

that

[a]fter the decision . . . thousands of one-eyed, one-

legged, one-armed, one-handed men in the State of

Oklahoma [lost their jobs] and [could] not get

employment. . . . The decision displaced between seven

and eight thousand men in less than 30 days in

Oklahoma.

Id. (internal quotation marks omitted). See also Bath Iron

Works, 136 F.3d at 41 (quoting Lawson). At the time

Lawson was decided, S 8(f) provided

that if an employee receives an injury which of itself

would only cause permanent partial disability but

which, combined with a previous disability, does in fact

cause permanent disability, the employer shall provide

_________________________________________________________________

6. The "Special Fund" under section 8(f) of the Act is often referred to

as

the "second injury fund."

10

compensation only for the disability caused by the

subsequent injury: Provided, however, that . . . after the

cessation of the payments for the prescribed period of

weeks, the employee shall be paid the remainder of the

compensation that would be due for permanent total

disability. . . . out of the special fund.

Id. at 200. The Court held that this "second injury

provision" served a double purpose. "It protects the

employer who has hired, say, a one-eyed worker who goes

and loses his other eye and becomes a total disability." Id.

at 202. However, it "also protects the worker with one eye

from being denied employment on account of his being an

extra risk. Now, . . . it is possible to protect both the

employer and to protect the one-eyed employee also." Id.

See also Bath Iron Works Corp., 136 F.3d at 40 (1st Cir.

1998). The Court concluded that the protection of the Act

could not have been intended only when the first disability

resulted from a covered occupation. If the Act were so

limited, the employers would still be reluctant to hire

workers with pre-existing injuries. The problem was not the

source of the pre-existing injury, but the fact that the

worker who came to an employer with a disability posed a

greater risk of becoming totally disabled while working for

the subsequent employer. The Court in Lawson held that

Congress had to intend "previous disability" as used in the

Act to include a disability in fact, whether or not it occurred

under circumstances covered by the LHWCA. Thus, it was

necessary to allow the employer relief from the special fund

even though the pre-existing injury was not related to an

occupation covered by the LHWCA.

Since Lawson, courts have interpreted the LHWCA in a

manner that is consistent with the public policy of

preventing discrimination against employees with pre-

existing injuries. We have stated that "the underlying

congressional purpose in creating the special fund was to

encourage the employment of partially disabled persons."

Director, Office of Workers' Compensation v. Universal

Terminal & Stevedoring Corp., 575 F.2d 452, 456 (3d Cir.

1978).7 Moreover, the congressional committee reports for

_________________________________________________________________

7. Several courts of appeals have held that the purpose is only to prevent

discrimination. See C.G. Willis, Inc. v. Director, Office of Workers'

11

the 1972 amendments to the LHWCA specifically affirm

that section 8(f) relief is intended to "encourage the

employment of handicapped workers." H.R. Rep. No. 1411,

92nd Cong., 2nd Sess. 8 (1972).

Congress initially created only two conditions precedent

to section 8(f) relief. An employee had to have a preexisting

partial disability, and that disability had to combine with a

subsequent work injury to create a permanent, total

disability. See 33 U.S.C. S 908(f)(1). However, the strong

anti-discrimination policy endemic to the LHWCA gave rise

to a third condition. That judicially created condition

precedent to section 8(f) is known as the "manifestation

requirement." This is the condition that is at the center of

the instant dispute.

B. The Manifestation Requirement

The "manifestation requirement" arose because of the

public policy against discrimination that has been read into

the Act since Lawson. Courts have reasoned that an

employer can not discriminate if it does not know of a pre-

existing injury. Therefore, courts have required that the

pre-existing injury be manifest in order to afford the

employer relief from the special fund. However, courts were

aware that at least two further problems could exasperate

rather than ameliorate the problem that the law was trying

to remedy. First, proving such knowledge is very difficult.

Accordingly, courts credited the employer with knowledge of

a preexisting condition which could have been discovered in

an employee's medical records even if the employer did not

actually know.

_________________________________________________________________

Compensation Programs, 31 F.3d 1112, 1115 (11th Cir. 1994); others

hold that the purpose is encouraging maritime employers to hire

disabled persons. See Newport News Shipbuilding & Dry Dock Co. v.

Harris, 934 F.2d 548, 552 (4th Cir. 1991); Todd Pacific Shipyards Corp.

v. Director, Office of Workers' Compensation Programs, 913 F.2d 1426,

1429 (9th Cir. 1990). Still others refer to both preventing discrimination

and encouraging employers to hire disabled persons. See American

Bridge Div., U.S. Steel Corp. v. Director, Office of Workers' Compensation

Programs, 679 F.2d 81, 82 n.3 (5th Cir. 1982).

12

[s]trong policy considerations dictate that only those

employers who hire the handicapped with knowledge of

their disabilities qualify for limited liability. . . . In view

of the difficulty of proving actual knowledge . . . the test

is ordinarily an objective one. Conditions that are

latent rather than manifest to a prospective employer

do not qualify as S 8(f) disabilities.

Atlantic & Gulf Stevedores, Inc. v. Director, Office of Workers'

Compensation, 542 F.2d 602, 608 (3d Cir. 1976). Allowing

an employer to establish manifestation by way of

constructive knowledge also addressed the concern that the

policy of protecting employees would result in employers

subjecting certain employees to exacting physical

examinations for fear of not learning of a preexisting

condition and becoming ineligible for section 8(f) relief. It is

the availability of knowledge, rather than actual knowledge

of the condition, that is relevant to determining

manifestation. See Universal Terminal & Stevedoring Corp.,

575 F.2d at 456-57; cf. American Mut. Ins. Co. Of Boston v.

Jones, 426 F.2d 1263 (D.C.Cir. 1970). Thus, an employer

who demonstrates that it could readily have discovered the

disability by looking at the employee's medical records is

entitled to S 8(f) relief. Universal Terminal & Stevedoring

Corp., 575 F.2d at 457. See, e.g., Bunge Corp. v. Director,

Office of Workers' Compensation, 951 F.2d 1109, 1111 (9th

Cir. 1991) ("An employer need not have actual knowledge of

an employee's condition. If the condition is readily

discoverable from the employee's medical record in the

possession of the employer, knowledge of the condition is

imputed to the employer."). Against this background, the

vast majority of courts of appeals that have addressed the

issue have agreed that an employee's disability must be

manifest to the employer before the employer can seek relief

from the special fund.8 The manifestation requirement is

_________________________________________________________________

8. See C.G. Willis, Inc. v. Director, Office of Workers' Compensation

Programs, 31 F.3d 1112, 1115 (11th Cir. 1994); Sealand Terminals, Inc.

v. Gasparic, 7 F.3d 321, 323-24 (2nd Cir. 1993); Two "R" Drilling Co.,

Inc.

v. Director, Office of Workers' Compensation Programs, 894 F.2d 748, 750

(5th Cir. 1990); Lambert's Point Docks, Inc. v. Harris, 718 F.2d 644, 648

(4th Cir. 1983); Director, Office of Workers' Compensation Programs v.

Cargill, Inc., 709 F.2d 616, 619 (9th Cir. 1983) (en banc); General

13

now widely accepted and was incorporated into the 1984

amendments to the LHWCA through regulations

promulgated under that Act. See 20 C.F.R.S 702.321(a)

(1988).9

Here, the Director denied Sun Ship's S 8(f) application

because "no evidence [was] submitted to show that

[Ehrentraut] had a manifest pre-existing permanent

disability prior to his retirement from work in 1981. . . ."

See Joint Appendix at 52; ALJ Op. at 2. However, Sun Ship

raises an interesting issue of first impression in this circuit.

It argues that the 1984 amendments to the LHWCA

eliminated the manifestation requirement where, as here,

the preexisting injury does not become manifest until after

the employee retires. The ALJ accepted this argument and

reversed the ruling of the Director.

We are convinced that Section 8(f) should be read

literally in considering disability from post-retirement

occupational diseases. Only in this way can Congress'

intent in passing the 1984 amendments be carried out.

To establish entitlement to relief from the special fund

for a post-retirement occupational disease, therefore,

the employer need only show that there is an existing

permanent partial disability combined with the same

and contributed to the resulting permanent total

disability. In such cases the manifestation requirement

will not be applied.

ALJ Op. at 3 (internal quotation marks omitted).

_________________________________________________________________

Dynamics Corp. v. Sacchetti, 681 F.2d 37, 39-40 (1st Cir. 1982); Director,

Office of Workers' Compensation Programs v. Brandt Airflex Corp., 645

F.2d 1053, 1058 (D.C.Cir. 1981); Universal Terminal & Stevedoring Corp.,

575 F.2d at 456; Duluth, M. & I. R. Ry. Co. v. United States Dep't Of

Labor, 553 F.2d 1144, 1151 (8th Cir. 1977). But see American Ship Bldg.

Co. v. Director, Office of Workers' Compensation Programs, 865 F.2d 727,

731-32 (6th Cir. 1989) (expressly declining to incorporate manifest

requirement for S 8(f) relief).

9. The regulations require that the applicant forS 8(f) limitation of

liability must file an application with the district director containing

"(iii)

the basis for the assertion that the pre-existing condition relied upon

was manifest in the employer. . . ." 20 C.F.R. S 702.321(a)(1).

14

Accordingly, we must determine what effect, if any, those

amendments had on the operation of the manifestation

requirement.

C. The 1984 amendments

Until 1984, no provision of the LHWCA enabled a

maritime worker to collect disability payments for post-

retirement occupational diseases. Congress rectified this in

1984 by amending the LHWCA to provide workers with

disability coverage for post-retirement long-latency

occupational diseases.10 See Longshore and Harbor

Workers' Compensation Act Amendments of 1984, Pub. L.

No. 98-426, 98 Stat. 1639 (1984). However, nothing in the

1984 amendments suggests a congressional intent to alter

the requirements for qualifying for S 8(f) relief. Cf. Bath Iron

Works Corp., 126 F.3d at 40. ("We can find nothing in the

text of the Amendments, nor its legislative history, to

suggest that Congress intended to alter the application of

the manifestation requirement to requests for special

relief."). Absent statutory language to the contrary, we must

conclude that the congressional intent to extend relief did

not include relaxing the manifestation requirement to allow

employers' relief from the special fund under circumstances

that would not previously have entitled them to such relief.

The legislative history of the 1984 amendments clearly

indicates a congressional desire to expand employer liability

for post-retirement occupational disease, but it does not

reflect a desire to allow employers to shift liability for such

disability payments to S 8(f) when an employer unwittingly

hires an individual whose work-related diseases were

asymptomatic, and undocumented. Moreover, relevant

portions of the House and Senate Committee reports

concerning the 1984 LHWCA amendments suggest a

congressional intention to maintain the manifestation

requirement. The Senate Report states:

_________________________________________________________________

10. Here, Ehrentraut's asbestosis and his malignancy were both

sustained while he worked at Sun Ship. However, that does not alter our

inquiry under S 8(f). Director, Office of Workers' Compensation Programs

v. Sun Shipbuilding & Dry Dock Co., 600 F.2d 440, 443 (3d Cir. 1979).

15

Section 8(f) of the act was designed to encourage

employers to hire and retain disabled workers by

distributing much of the additional cost of industrial

injury attributable to pre-existing permanent

disabilities among all employers and carriers subject to

the act. An employer able to demonstrate actual, or in

some cases, constructive knowledge that an injured

worker had a permanent disability which pre-dated a

compensable injury is often able to shift to the Special

Fund the responsibility for paying a very substantial

portion of the amounts payable to the worker. . . . The

goals of section 8(f) remain valid.

S. Rep. No. 98-81, at 34 (1983) (emphasis added). This

report expressly reaffirms the congressional commitment to

the manifestation requirement and also serves to clarify any

questions concerning the purpose of S 8(f) relief.

Likewise, the House Committee report states:

Section 8(f) was intended to encourage employers to

hire disabled workers and permits such employers to

distribute among all employers subject to the Act,

much of the cost of compensating such a worker

should the worker . . . suffer a subsequent injury.

H.R. Rep. No. 98-570, pt. 1, at 20 (1983), reprinted in 1984

U.S.C.C.A.N. 2734, 2753. While this report does not

address the manifestation issue, it states that special fund

relief is intended to encourage employers to hire disabled

workers. The ALJ based his interpretation of the 1984

amendments upon the reasoning of the Court of Appeals for

the Fourth Circuit in Harris. However, we are not

persuaded by the analysis in Harris.

D. Newport News Shipbuilding & Dry Dock Co.

v. Harris

In Harris, the court reasoned that Congress intended to

save maritime employers money when it enacted the 1984

amendments. The court looked to the legislative history of

the 1984 amendments and concluded that "the

amendments as a whole are intended to reduce the cost of

Longshore coverage for employers in the covered industries

16

in a manner which will disturb, to the most limited extent

possible, the rights and benefits which the Longshore Act

provides." Id. at 551. (internal quotation marks omitted).

However, the court recognized that this was not Congress'

only objective. "Additionally, the amendments relating to

post-retirement occupational diseases are meant to insure

that long-latency occupational disease claimants do not

continue to encounter the severe procedural hurdles which

the Longshore Act has presented in the past." Id. (internal

quotation marks omitted). The court then reasoned that

extending the manifestation requirement to the new

category of benefits being conferred would be contrary to

Congress' purpose in amending the LHWCA. The court

concluded: "[w]hen these goals are considered in concert, it

is clear that Congress meant for the 1984 amendments to

insure that those suffering from long-latency occupational

diseases receive benefits adequate to their needs without

greatly increasing the cost of these benefits to the

immediate employer by spreading the risk throughout the

industry and defraying the increased costs by contributions

to the fund." Id. The court added that there "is no

suggestion that the relevant . . . amendments are intended

. . . to encourage the hiring or continued employment of the

handicapped." Id. Thus, the court held that the 1984

enactment did not extend the manifestation requirement to

the new category of post retirement disability coverage

afforded under those amendments.

The ALJ concluded that, under Harris, the manifestation

requirement for pre-existing disabilities does not apply

when total disability comes about as a result of a long-

latency period post-retirement occupational disease. We

disagree. First, we doubt that the employers' increased

exposure was driven by, or intended to be circumscribed

by, a countervailing policy of saving employers' money.

Neither the text of the amendments, their legislative

history, nor the substantial body of appellate decisions

interpreting the Act suggest that we should ameliorate the

greater exposure inherent in the amendments by reading

the manifestation requirement out of the Act. Second, we

do not understand how Congress could have sought to

"disturb, to the most limited extent possible, the rights and

benefits which the Longshore Act provides" as the Harris

17

court stated, while eliminating the manifestation

requirement that has been a prerequisite to relief from the

special fund almost since its creation more than 70 years

ago.

Had Congress wanted to expand liability only on the

condition that the almost universally accepted

manifestation requirement be eliminated, it could certainly

have said so. A departure from the longstanding

requirement of manifestation should emanate from the

statute's text, not its ethers. Sun Ship was not aware of any

risk from a pre-existing injury or condition when it hired

Ehrentraut, and we fail to see why it should now be entitled

to relief under section 8(f). We conclude that the more

cogent analysis, and the better reasoned approach, is that

set forth by the Court of Appeals for the First Circuit in

Bath Iron Works Corp. We will not assume that Congress

intended to effect a change in such a longstanding

provision of the law by relying upon inference and

jurisprudential deductions. Accordingly, we find the ALJ's

reliance upon Harris misplaced.

V. CONCLUSION

For the reasons set forth above, we conclude that Sun

Ship is not entitled to shift liability to the Special Fund

under S 8(f), and the decision of the ALJ will be reversed.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

18