154 F.3d 1052 (9th Cir. 1998), 96-70874, Matulic v. Director, Office of Workers Compensation Programs

Docket Nº:96-70874.
Citation:154 F.3d 1052
Party Name:98 Daily Journal D.A.R. 9693 Sam D. MATULIC, Petitioner, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS; Jones Stevedoring Co., Respondent.
Case Date:September 08, 1998
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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154 F.3d 1052 (9th Cir. 1998)

98 Daily Journal D.A.R. 9693

Sam D. MATULIC, Petitioner,



Stevedoring Co., Respondent.

No. 96-70874.

United States Court of Appeals, Ninth Circuit

September 8, 1998

Argued and Submitted April 6, 1998.

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[Copyrighted Material Omitted]

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Mary Alice Theiler, Theiler, Douglas, Drachler & McKee, Seattle, WA, for petitioner.

Robert H. Madden, Madden & Crockett, Seattle, WA, for respondent.

Petition for Review of an Order of the Benefits Review Board. OWCP No. 14-009322.

Before: HUG, Chief Judge, REINHARDT, Circuit Judge, and REED, [*] District Judge.

Opinion by Judge REINHARDT; Dissent by Judge REED.

REINHARDT, Circuit Judge:

Sam D. Matulic injured his left arm while employed by Jones Stevedoring Company in Seattle, Washington. Objecting to the method used to calculate the amount of his permanent partial disability benefits under the Longshore and Harbor Workers' Compensation

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Act ("LHWCA"), 33 U.S.C. § 901-50, he petitions for review of a decision of the Administrative Law Judge ("ALJ"). He also seeks review of the ALJ's denial of a penalty award, interest, and attorney's fees. We have jurisdiction under 33 U.S.C. § 921(c).


Matulic began working as a longshoreman in 1963 and was based at the Port of Los Angeles until December 1988 when he moved to Seattle and began working for Jones Stevedoring Company. On September 13, 1989, he suffered a serious injury to his left elbow while on-the-job. He received treatment at the hospital and was unable to return to work until December 8. Jones Stevedoring voluntarily paid Matulic temporary total disability at the rate of $536.24 per week for the period of his recovery.

Matulic applied for permanent partial disability. During the preliminary negotiations in December 1990, the parties disagreed over the extent of Matulic's disability. They agreed to submit the matter to the Office of Workers Compensation Programs ("OWCP"). On June 24, 1991, without conducting an informal conference, the OWCP issued a written recommendation as to the extent of Matulic's disability and the amount of his average weekly wage. Despite the continuing requests of the parties, the informal conference was never held and the OWCP did not issue a final Compensation Order. In October 1993, the parties appeared before the ALJ.

On December 23, 1993, the ALJ issued an order with the following findings of fact and conclusions of law: 1) Matulic suffered a 5% permanent partial disability; 2) his average weekly wage was $834.05, resulting in a weekly compensation rate of $556.03; 3) Matulic was not entitled to § 914(e) penalties; 4) Matulic was not entitled to attorney's fees; 5) Matulic was not entitled to interest; and 6) Matulic was entitled to reimbursement of medically-related travel expenses. Matulic appealed the ALJ's decision to the Benefits Review Board. Because the Board failed to act within one year, the decision is deemed automatically affirmed under Public Law No. 104-134, 110 Stat. 1321-219 (1996). We now consider Matulic's petition for review.


In cases in which the decision of the Administrative Law Judge is deemed affirmed by operation of Public Law No. 104-134, we review the decision for errors of law and for failure to adhere to the substantial evidence standard. See Jones Stevedoring Co. v. Director, OWCP, 133 F.3d 683, 687 (9th Cir.1997). In doing so, we recognize the "beneficent purposes and humanitarian nature of the Act." Randall v. Comfort Control, Inc., 725 F.2d 791, 796 (D.C.Cir.1984). "All doubts are to be construed in favor of the employee in accordance with the remedial purposes of the [LHWCA]." Odom Constr. Co. v. United States Dept. of Labor, 622 F.2d 110, 115 (5th Cir.1980). As a final preliminary point, we note that, while Jones Stevedoring was not named as a party in Matulic's Petition for Review, it is a proper party and has standing to oppose Matulic's appeal. See 33 U.S.C. § 921(c); see also, Ingalls Shipbuilding, Inc. v. Director, OWCP, 519 U.S. 248, 117 S.Ct. 796, 804, 136 L.Ed.2d 736 (1997).

I. Calculation of Matulic's Average Weekly Wage

Matulic challenges the ALJ's method of calculating his "average weekly wage" at the time of the injury. Under the LHWCA, that average weekly wage is the key component used to determine Matulic's earning capacity, and therefore the amount of his benefits award. 33 U.S.C. § 910. 1 Section 910 of the Act sets forth three formulas for determining "average annual earnings," all using the 365 days preceding the injury as the measuring year. 33 U.S.C. § 910(a)-(c). 2

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That figure is then divided by fifty-two to arrive at the average weekly wage. 33 U.S.C. § 910(d). At issue is whether Matulic's average annual earnings, and thus his average weekly wage, should have been calculated under § 910(a) or § 910(c). Matulic contends that the ALJ erred by employing the latter statutory provision rather than the former. He points out that § 910(a) is the presumptively proper method for calculating average weekly wage and must be employed unless it would be unfair or unreasonable to do so. Matulic asserts that in his case it would be neither unfair nor unreasonable to use the presumptively proper method. Jones Stevedoring disagrees, arguing that the ALJ was correct to employ § 910(c) because, in its view, Matulic would receive an unfairly high rate of compensation were § 910(a) deemed applicable.

Section 910(a) applies in cases in which the injured claimant "worked in the employment in which he was working at the time of the injury ... during substantially the whole of the year immediately preceding his injury." 33 U.S.C. § 910(a). Only if §§ 910(a) and (b) cannot "reasonably and fairly be applied" may the ALJ turn to § 910(c). 33 U.S.C. § 910(c). Under the method prescribed in § 910(a), average weekly wage is calculated by: 1) dividing the total earnings of the claimant during the fifty-two weeks preceding the injury by the number of days actually worked; 2) multiplying that figure by either 260 or 300, depending on whether the claimant worked a five- or six-day week (in this case, five); and 3) dividing that figure by fifty-two. See 33 U.S.C. §§ 910(a) and 910(d). By comparison, § 910(c), which serves as a "catch-all" provision if neither §§ 910(a) nor 910(b) applies, allows the ALJ to consider not only the claimant's previous earnings, but also earnings of employees in the same or similar class as the claimant and other employment by which the claimant may have generated income. See 33 U.S.C. § 910(c). Section 910(c) does not prescribe a fixed formula but requires the ALJ to establish a figure that "shall reasonably represent the annual earning capacity" of the claimant. 33 U.S.C. § 910(c). Under § 910(a), Matulic's average weekly wage was $1018.94; under § 910(c), it was determined by the ALJ to be $834.05.

The ALJ's decision to apply § 910(c) was based on his conclusion that Matulic would be overcompensated if his average weekly wage were calculated under § 910(a). The ALJ found that Matulic earned a total of $43,370.81 in the fifty-two weeks preceding his injury and that, during that year, he worked only 213 of the 260 possible working days. Noting that Matulic's annual earnings would be calculated at $52,941.20 if § 910(a) were applied, the ALJ found that § 910(a) would overestimate his annual earnings by treating him as if he had worked throughout the entire year when he had actually worked only 82% of the total possible working days in the measuring year. Citing our decision in Duncanson-Harrelson Co. v. Director, OWCP, 686 F.2d 1336 (9th Cir.1982), vacated

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on other grounds, 462 U.S. 1101, 103 S.Ct. 2446, 77 L.Ed.2d 1329 (1983), the ALJ concluded that the prospect of excessive compensation was a sufficient basis for finding that § 910(a) could not reasonably or fairly be applied.

We adopt the factual findings of the ALJ but conclude, as a matter of law, that § 910(a) could be reasonably and fairly applied in Matulic's case, even though his earning capacity would be based on an assumption that he would ordinarily work a number of days more than he worked during the measuring year. We do so buttressed by the knowledge that some "overcompensation" is built into the system institutionally. After giving due weight to the purposes and goals of the Act, we conclude that the ALJ's failure to apply § 910(a) was contrary to law.

As we have previously recognized:

When Congress amended section 910 of the Act in 1948 to reflect the five-day work week, it undoubtedly was aware that virtually no one in the country works every working day of every work week; there are many reasons including illness, vacations, strikes, unemployment, family emergencies, etc. We can infer that Congress knew that both subsections (a) and (b) would result in some overcompensation, but retained the 260-day factor for administrative convenience.

Duncanson-Harrelson, 686 F.2d at 1342. Due to the fixed formula Congress adopted under § 910(a), in most benefits cases there will be a degree of inaccuracy in the estimation of the worker's earning capacity-ordinarily the error will favor the worker and ordinarily there will be some overcompensation, at least in theory, although in other respects the statutory formula may benefit the employer. 3 Flexibility and the resolution of doubts in favor of the worker is the rule rather than rigid mathematical certainty.

The key to determining an injured worker's average weekly wage is the requirement that § 910(a) shall apply unless it would be unreasonable or unfair to do so. See 33 U.S.C. § 910(c). The statute sets a high threshold and requires the...

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