Chavez v. Director, Office of Workers Compensation Programs

• Decision Date: 15 April 1992
• Docket Number: Nos. 90-70687,90-70692,s. 90-70687
• Citation: 961 F.2d 1409
• Parties: Prudencio CHAVEZ, Petitioner, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS; United States Department of Labor; Todd Shipyards Corporation; Aetna Casualty and Surety Company, Respondents. TODD SHIPYARDS CORPORATION; Aetna Casualty and Surety Company, Petitioners, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS; Prudencio P. Chavez, Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1409

961 F.2d 1409

Prudencio CHAVEZ, Petitioner, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS; United

States Department of Labor; Todd Shipyards

Corporation; Aetna Casualty and Surety

Company, Respondents.

TODD SHIPYARDS CORPORATION; Aetna Casualty and Surety Company, Petitioners, v. DIRECTOR, OFFICE OF WORKERS COMPENSATION PROGRAMS;

Prudencio P. Chavez, Respondents.

Nos. 90-70687, 90-70692.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Feb. 12, 1992.

Decided April 15, 1992.

Daniel F. Valenzuela, Yvonne A. Greve, Samuelsen, Gonzalez, Valenzuela & Sorkow, San Pedro, Cal., for appellants.

Diane L. Middleton, Yvette A. Boehnke, Law Offices of Diane L. Middleton, San Pedro, Cal., for claimant-appellee.

Janet R. Dunlop, Samuel J. Oshinsky, U.S. Dept. of Labor, Office of the Sol., Washington, D.C., for respondent, Director, Office of Workers' Compensation Programs.

Joshua T. Gillelan, Deputy Atty. Gen., U.S. Dept. of Justice, Washington, D.C., argued for respondents-petitioners.

Petitioner for Review of an Order of the Benefits Review Board.

Before: SCHROEDER, REINHARDT, and KLEINFELD, Circuit Judges.

REINHARDT, Circuit Judge:

This is a most complicated case. It is not one in which the question is whether the claimant is entitled to compensation--that question has already been decided. Instead, the question is whether the employer, Todd Shipyards, is entitled to recompense should the worker, Prudencio Chavez, recover in tort for some of his injuries. In addition, issues have arisen, regarding whether Chavez has waived his right to workers' compensation payments from Todd and whether the dispute regarding set-off is ripe for agency consideration, that threaten to terminate the proceeding prematurely. We will address these issues sequentially, after a brief review of the facts.

The Facts

During Chavez's employment with Todd from 1954 to 1980, he was exposed to asbestos, dust, smoke, fumes, and high levels of noise. In January of 1980, Chavez left his job with Todd because of his inability to perform his work duties due to both asbestosis and hypertension. Chavez filed a claim for permanent total disability compensation under the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. § 901 et seq. Chavez's claim was heard by Administrative Law Judge John Evans. Judge Evans awarded Chavez permanent total disability benefits finding the combined cause to be both hypertension and asbestosis.

Judge Evans also found that Todd was entitled to Section 8(f) relief. Section 8(f) of the LHWCA provides that if total permanent disability is caused by an injury combined with a pre-existing condition, the employer pays only 104 weeks of compensation. Thereafter, the compensation payments are made by the Special Fund. 33 U.S.C. § 908(f). Section 8(f) relief is available if (1) the claimant had an existing permanent partial disability which (2) contributed to his permanent total disability, and (3) the existing permanent partial disability was manifest to the employer prior to the injury that is the basis for the compensation claim. Director, OWCP v. Cargill, Inc., 709 F.2d 616, 619 (9th Cir.1983). There is no requirement that the pre-existing disability arise from a work-place injury, and the first injury may occur either prior to, or in the course of, the employment relationship during which the total disability arose. See Lawson v. Suwanee Fruit & S.S. Co., 336 U.S. 198, 69 S.Ct. 503, 93 L.Ed. 611 (1949). Judge Evans found that all three of the 8(f) conditions were met. However, although the opinion seems to suggest that hypertension, and not asbestosis, caused the preexisting partial disability, there is no specific finding to that effect; nor did the ALJ specify whether the hypertension, the asbestosis, or both were work-place related. Finally, the ALJ did not determine the extent to which the total disability was attributable to each of the contributory causes. The only question before Judge Evans was whether Chavez was totally disabled, and he found that Chavez was, based upon the combined effects of hypertension and asbestosis. Judge Evans did not decide and was not called upon to decide the extent to which each of the two diseases contributed to the disability, or were work related. In any event, Todd has paid permanent and total disability benefits to Chavez for 104 weeks and the Special Fund has paid his benefits since that time.

Chavez also filed a civil suit against various asbestos manufacturers, suppliers, and distributors. Chavez was represented in the third-party suit by Roman Silberfeld ("Silberfeld") of the firm of Simke, Chodos, Silberfeld & Stoll ("Simke"). Two of the defendants in this third-party action were Keene Corporation and Keene Building Products Corporation ("Keene") and Armstrong World Industries, Inc. formerly known as Armstrong Cork Company ("Armstrong"). Chavez's claims were consolidated with numerous similar actions against the defendants brought by other plaintiffs, and his case, by chance, served as the eponymous action. On August 16, 1983, a Good Faith Settlement Order was filed in the Superior Court of California purportedly approving a "good faith settlement" between Keene and asbestos plaintiffs, including Chavez. On June 5, 1984, a Notice of Order purportedly approving a "good faith settlement" between Armstrong and Chavez was filed in the Superior Court of California.

On June 19, 1986, a hearing was held before Administrative Law Judge Henry Lasky to determine whether such Good Faith Settlement Orders served to terminate Chavez's right to compensation under Section 33(g) of the LHWCA because Chavez failed to get Todd's approval before entering into a third-party settlement. Additionally, the hearing was held to determine whether Todd was entitled to a full or partial lien on any proceeds of the third-party litigation based on the LHWCA payments it had made and the percentage of Chavez's total disability attributable to asbestosis.

At the June 19 hearing, the Keene and Armstrong Good Faith Settlement Orders were entered into evidence. ALJ Lasky allowed testimony by Chavez that he had never received any settlement proceeds or signed any releases from any asbestos company. Silberfeld testified that, as Chavez's asbestos attorney, he had never agreed to any settlement with Keene or Armstrong and that Chavez's name was mistakenly included in the Good Faith Settlement Orders because Chavez was the "lead plaintiff" in the Simke asbestos cases. Additionally, ALJ Lasky admitted declarations by Neil H. Brown ("Brown"), representing Armstrong, and Catherine Hunt Ruddy ("Ruddy"), representing Keene, into evidence. These declarations stated that Chavez's case had not been settled. The notice and order were on the stationary of Armstrong's and Keene's attorney's, not Chavez's, and do not include any signature or approval lines filled in by Chavez or his attorney. The order lists six pages of plaintiffs' names. Todd objected to the admission of the testimonial evidence of Chavez and Silberfeld and the declarations of Brown and Ruddy based on the parol evidence rule. ALJ Lasky, however, allowed the evidence.

Also at the hearing before ALJ Lasky, Dr. Dahlgren, Chavez's treating physician testified that Chavez's disability was 75% due to hypertension and 25% due to asbestosis. Chavez claims that because of such apportionment, Todd should only be reimbursed for 25% of its compensation payments to Chavez. ALJ Lasky decided the issue in favor of Todd, holding that apportionment was not appropriate and that Todd was entitled to full reimbursement for its compensation payments.

On appeal to the Benefits Review Board of the Department of Labor ("BRB"), the Board held that the ALJ properly admitted the extrinsic evidence because it was not used to attack the state court judgment, but to aid in determining the existence vel non of an actual settlement in Chavez's own case. The Board also found that there was substantial evidence supporting the ALJ's finding that no settlement occurred between Chavez and the asbestos defendants. Finally, the Board held that the issue of set-off was not ripe because no third-party settlement existed. The Board, therefore, vacated the part of the ALJ's decision relating to the apportionment question.

Settlement

Todd argues that Chavez entered into a settlement with some of the asbestos manufacturers and that this bars him from receiving compensation under § 33(g)(1) of the LHWCA. The ALJ rejected this claim because he found that no settlement existed between Chavez and any third-party asbestos company. The BRB affirmed. The BRB must affirm the findings of the ALJ if there is substantial evidence in the record to support his findings. Todd Shipyards Corp. v. Black, 717 F.2d 1280, 1284 (9th Cir.1983), cert. denied, 466 U.S. 937, 104 S.Ct. 1910, 80 L.Ed.2d 459 (1984). We review the BRB's decision for errors of law and adherence to the substantial evidence standard. Bumble Bee Seafoods v. Director, OWCP, 629 F.2d 1327, 1329 (9th Cir.1980).

Here, it is clear that substantial evidence does support the ALJ's finding. First, there is no evidence of any actual settlement agreement executed by the parties. Second, Chavez testified that he had not received any settlement amounts from any asbestos company. Third, Silberfeld testified that he had not agreed to any settlements on behalf of Chavez and that any checks received were returned to the proper parties. Fourth, both Brown and Ruddy declared that no settlement agreement had been reached with respect to Chavez and that they were not aware of any releases signed by Chavez. This evidence is more than enough to support Judge Lasky's finding that no settlement existed and that Chavez was not barred from compensation under Section 33(g) of the LHWCA.

Todd asserts two legal errors as the basis for reversal of the BRB. First, it claims that the collateral estoppel effect of...