978 F.2d 750 (1st Cir. 1992), 92-1337, Liberty Mut. Ins. Co. v. Commercial Union Ins. Co.

Docket Nº:92-1337.
Citation:978 F.2d 750
Party Name:LIBERTY MUTUAL INSURANCE COMPANY, Petitioner, v. COMMERCIAL UNION INSURANCE COMPANY, et al., Respondents.
Case Date:October 28, 1992
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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Page 750

978 F.2d 750 (1st Cir. 1992)

LIBERTY MUTUAL INSURANCE COMPANY, Petitioner,

v.

COMMERCIAL UNION INSURANCE COMPANY, et al., Respondents.

No. 92-1337.

United States Court of Appeals, First Circuit

October 28, 1992

Heard Sept. 10, 1992.

Page 751

Stephen Hessert, with whom Patricia A. Lerwick and Norman, Hanson & DeTroy, Portland, Me., were on brief, for petitioner.

Allan M. Muir, with whom Kevin M. Gillis and Richardson & Troubh, Portland, Me., were on brief, for respondent Commercial Union Ins. Co.

Laura J. Stomski, Attorney, with whom Marshall J. Breger, Sol. of Labor, Carol A. De Deo, Associate Sol., and Janet R. Dunlop, Washington, D.C., Counsel for Longshore, were on brief, for federal respondent.

Before SELYA, Circuit Judge, ALDRICH, Senior Circuit Judge, and BOYLE, [*] District Judge.

SELYA, Circuit Judge.

This doubleheader of a case presents not one, but two, interrelated questions. Both questions involve the nexus between occupational disease and the Longshore and Harbor Workers' Compensation Act (LHWCA), 33 U.S.C. §§ 901-950 (1988). First, we must decide whether, as between successive insurance carriers, the primary obligation to provide LHWCA benefits is triggered by a worker's disability or by his awareness of the potential for disability. Second, we must decide whether, as between successive insurance carriers, the date of disablement is the date on which a worker's long-latency disease is first diagnosed or the date on which he first experiences a decrease in earning capacity. For the reasons that follow, we conclude that congressional intent and administrative convenience are best realized by a system in which, for LHWCA purposes, liability for the effects of an occupational disease falls upon the last responsible insurer on the date of disability, as determined by the date of decreased earning capacity.

I.

Background

The underlying facts are not seriously disputed. The claimant, Frederick Libby, worked for Bath Iron Works Corporation (BIW) from 1941 until 1985. Throughout, he faced exposure to asbestos. In December of 1980, Libby learned that he had contracted asbestosis. He remained on the job, doing his regular work, until February 13, 1985, when his physician advised him to quit work. He never returned. From then on, he was totally disabled and entitled to LHWCA benefits.

In December 1980, Commercial Union Insurance Company (CUI) was on the risk. Soon thereafter, BIW purchased replacement coverage from Liberty Mutual Insurance Company (Liberty). Liberty's policy took effect on March 1, 1981. Libby filed his claim for disability benefits pursuant to 33 U.S.C. § 919(a) on April 10, 1985. Liberty was still the carrier of record. An Administrative Law Judge (ALJ) found Libby's claim compensable and, rejecting Liberty's effort to lay the onus of payment at CUI's doorstep, held Liberty responsible for benefits. The Benefits Review Board (Board) affirmed. Liberty now petitions for judicial review. 1 See 33 U.S.C. § 921(c). We dismiss the petition.

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II.

Analysis

A.

When Does Carrier Liability Attach?

The threshold issue here is whether, in respect to occupational diseases, the date of disablement or the date of awareness of potential disablement determines which of two responsible carriers is liable for LHWCA benefits. 2 Although the question is new to us, other courts have grappled with offshoots of it. The seminal case is Travelers Ins. Co. v. Cardillo, 225 F.2d 137 (2d Cir.), cert. denied, 350 U.S. 913, 76 S.Ct. 196, 100 L.Ed. 800 (1955). With regard to successive employers, Cardillo held that:

the employer during the last employment in which the claimant was exposed to injurious stimuli, prior to the date upon which the claimant became aware of the fact that he was suffering from an occupational disease arising naturally out of his employment, should be liable for the full amount of the award.

Id. at 145. The court devised a similar test with regard to successive insurance carriers:

the carrier who last insured the "liable" employer during claimant's tenure of employment, prior to the date claimant became aware of the fact that he was suffering from an occupational disease arising naturally out of his employment, should be held responsible for the discharge of the duties and obligations of the "liable" employer.

Id. The parties agree that Cardillo is the beacon by which we must steer. But, they are at loggerheads over the direction that Cardillo's principles portend for the current controversy.

Liberty seizes upon the Cardillo court's statement of the "last responsible employer" rule, quoted supra p. 752, and argues that the question before us stands decided: because Libby's condition was diagnosed in 1980, he necessarily "became aware" of his occupational disease at that time and, hence, liability should fall upon CUI. We find this argument overly simplistic. Statements in judicial opinions cannot be wrested free of their factual moorings. Cardillo involved a case of hearing loss in which the worker's awareness of the disease and his actual disablement coincided. The Cardillo court's language must, therefore, be read in this context. It cannot be applied blindly to cases in which awareness and diminished earning capacity occur at separate times.

Once we apply truth in labelling and treat the question as open, rather than as a matter of stare decisis, it becomes evident that Liberty's reliance on Cardillo as unswerving authority for an all-encompassing awareness test is as shaky as a shack built upon the shifting sands. Imposing liability based upon the date of disability rather than the date of awareness when the two dates do not coincide better serves the doctrinal impetus behind Cardillo. After all, the last responsible employer rule, and its eponymous offspring, the last responsible insurer rule, derive from an acknowledged need to minimize the obstacles confronting efforts at precise apportionment of liability in the LHWCA context. As we explain below, judicial and legislative recognition of this need, together with other pertinent considerations, converge to support a formulation

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of the last insurer rule that assigns liability based upon the date of disability rather than the date of awareness.

1. Medical and Administrative Obstacles. Deficiencies in medical knowledge create choppy seas for a system in which awareness, as opposed to disability, determines carrier liability. As the Cardillo court explained in connection with its articulation of the rules governing the liability of employers and their insurers:

The nature of occupational diseases and the dearth of medical certainty with respect to ... [their] evolution, make it exceedingly difficult, if not practically impossible, to correlate the progression of the disease with specific points in time or specific industrial experiences.

Cardillo, 225 F.2d at 144. This same uncertainty strongly suggests that the time of actual disability, rather than the time of awareness, should govern application of the last insurer rule. If awareness were to be more than a hollow slogan, it would have to signify an affected worker's knowledge that a particular disease would lead to his disablement during his career. To reach this point, a physician would have to make not only a diagnosis but also a fairly exact prediction as to how the disease would progress in an individual case. This is treacherous, highly speculative terrain.

In contrast, the question of when a worker becomes disabled, while complicated, depends largely upon a medical diagnosis of an existing condition. No crystal ball is needed inasmuch as no prediction of future events is entailed. Because there is, on average, much less room for legal wrangling over the backward-looking, one-part question of when a worker became disabled than over the forward-looking, two-part question of when, and if, a worker will become disabled, a rule emphasizing the former datum more closely coheres with the principles motivating the last responsible employer rule. Or, looked at from another angle, if uncertainty with respect to the past progression of a disease is enough of a consideration to influence how liability rules should be shaped, as Cardillo suggests, 225 F.2d at 144-45, there is no sound reason why the far greater uncertainty associated with predictions of the future course, progression, and eventual severity of a disease is not entitled to comparable weight.

Then, too, the subjective nature of Liberty's proposed "awareness" test presents an array of epistemic difficulties. As the Court has noted in a different context, "[t]here are special costs to 'subjective' inquiries." Harlow v. Fitzgerald, 457 U.S. 800, 816, 102 S.Ct. 2727, 2737, 73 L.Ed.2d 396 (1982). Dispute and delay will almost always surround attempts to answer the essentially subjective inquiry into when a worker first became aware that he had contracted a particular disease. In contradistinction, a last insurer rule based upon date of disability readily lends itself to objective means of proof, encounters fewer factual obstacles, and more smoothly implements the LHWCA. Hinging the test on the more easily verifiable and objective issue of disablement will, therefore, result in a marked lessening of administrative difficulties. 3

2. Congressional Intent. Another persuasive rationale for adopting this...

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