Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor v. Berkstresser, 89-1473

• Citation: 921 F.2d 306,287 U.S. App. D.C. 266
• Decision Date: 21 February 1991
• Docket Number: No. 89-1473,89-1473
• Parties: DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED STATES DEPARTMENT OF LABOR, Petitioner, v. Paul D. BERKSTRESSER, Respondent, Washington Metropolitan Area Transit Authority, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 306

921 F.2d 306

287 U.S.App.D.C. 266

DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS, UNITED

STATES DEPARTMENT OF LABOR, Petitioner, v. Paul D. BERKSTRESSER, Respondent, Washington Metropolitan Area Transit Authority, Intervenor.

No. 89-1473.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 5, 1990.

Decided Dec. 11, 1990.

As Amended Feb. 21, 1991.

Joshua T. Gillelan, II, Washington, D.C., for petitioner. Carol A. De Deo, Associate Solicitor, J. Michael O'Neill, Counsel, for Longshore, and Marianne Demetral Smith, Washington, D.C., Atty., Dept. of Labor, were on the brief, for petitioner. Janet R. Dunlop, Washington, D.C., also entered an appearance, for petitioner.

John F. Ward, Washington, D.C., for intervenor.

Robert B. Adams, Washington, D.C., entered an appearance, for respondent.

Before WALD, Chief Judge, D.H. GINSBURG and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Chief Judge WALD.

WALD, Chief Judge:

The Director of the Office of Workers' Compensation Programs seeks review of an Order of the Benefits Review Board on two grounds. First, the Director contends that the Board erred in reversing the determination of an administrative law judge ("ALJ") that intervenor-employer Washington Metropolitan Area Transit Authority ("WMATA") was not eligible for relief under the so-called "second-injury" provision of the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. Sec. 908(f). Second, the Director challenges the Board's affirmance of the ALJ's determination that claimant Berkstresser was not eligible for permanent total disability benefits between the time of his maximum medical improvement and the demonstration of available appropriate employment. Upon review of the record and the relevant law, we reverse the Board's order and remand for further proceedings.

I. BACKGROUND

Paul Berkstresser was injured in a car accident in 1973; X-rays and an attendant medical evaluation prepared at that time reported a "minimal degree of degenerati[on] of [the] lower lumbar spine." This condition was asymptomatic; indeed, several years later, Berkstresser had apparently forgotten about the injury. On January 11, 1978, Berkstresser was injured again, this time by a fall on the job; his injury prevented him from returning to his position as a bus driver for intervenor-employer WMATA.

Berkstresser then filed a claim against WMATA for disability benefits under the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. Secs. 901 et seq. ¹ The ALJ held a hearing; two of his determinations are at issue here. First, the ALJ found that WMATA's liability for benefits was not limited by Sec. 8(f) of the Longshore Act. Section 8(f), set forth in the margin, ² limits employer liability in cases in which an employee with a pre-existing disability suffers an additional injury. ³ To qualify for Sec. 8(f) relief, an employer must make a three-part showing (i) that the employee had a pre-existing partial disability, (ii) that this partial disability was manifest to the employer, and (iii) that it rendered the second injury more serious than it otherwise would have been. See, e.g., Director, Office of Workers' Compensation Programs v. Potomac Electric Power Co., 607 F.2d 1378, 1382 (D.C.Cir.1979). Reviewing Berkstresser's claim, the ALJ found that as of 1978 Berkstresser did have a pre-existing permanent partial disability; that, however, Berkstresser's underlying condition was not manifest to WMATA based on the 1973 medical evidence; and that the pre-existing disability contributed to the severity of the second injury. Accordingly, the ALJ concluded that, because WMATA had failed to fulfill the "manifest" requirement, it was not eligible for Sec. 8(f) relief.

The ALJ also determined that Berkstresser was eligible for temporary total disability benefits from the date of his second injury (January 11, 1978) until the date of his "maximum medical improvement" (August 4, 1978) and for permanent partial disability benefits thereafter. This determination was based on the ALJ's judgment that WMATA had "show[n] that realistic job opportunities were available" at the time of Berkstresser's maximum medical improvement.

On review, the Benefits Review Board vacated the ALJ's finding of Sec. 8(f) ineligibility, holding that the ALJ applied the wrong legal standard of "manifestness." The Board contended that

the medical records of the pre-existing condition do not necessarily have to indicate its severity in order for it to be manifest or objectively determinable. Where knowledge of claimant's prior back injury could be obtained from existing medical records, the Board has held that the injury was manifest.

Berkstresser v. WMATA, 16 Ben.Rev.Bd.Serv. 231, 235 (1984). The Board affirmed the ALJ's assessment of the date of the commencement of Berkstresser's permanent partial disability as the date of maximum medical improvement, stating that

[i]t was reasonable [for the ALJ] to conclude that claimant became partially rather than totally disabled once he reached maximum medical improvement and no longer received treatment, regardless of the date the employer first presented evidence of available alternative employment.

16 Ben.Rev.Bd.Serv. at 234.

On remand, the ALJ clarified that he had in fact found that Berkstresser did not suffer from a disability or degenerative condition in 1973 and that the Board's suggestion that he had found a disability of unknown severity was incorrect. The Board again reversed, ruling that, in the initial hearing, the ALJ had already determined Berkstresser to have a pre-existing disability, ⁴ that that disability was manifest, and accordingly that WMATA was entitled to a Sec. 8(f) limitation on liability. 22 Ben.Rev.Bd.Serv. 280 (1989). The Director petitions for review of the Board's Order.

II. ANALYSIS

A. Section 8(f) and the "Manifest" Requirement

We consider in turn the appropriate legal standard and the application of that standard to the facts of this case.

1. The Appropriate Legal Standard

The Director contends that, under the Sec. 8(f) "manifest" requirement, "what must be manifest to the employer is the existence of a permanent partial disability, i.e., a serious condition that actually impairs the employee." Brief of Director, Office of Workers' Compensation Programs at 36. This contention, however, is inconsistent both with prior judicial interpretations of Sec. 8(f) and with Congress' intent in enacting that section.

As we have previously held,

the term "disability" in new Sec. 8(f) can be an economic disability under Sec. 8(c)(21) or one of the scheduled losses specified in Sec. 8(c)(1)-(20), but it is not limited to those cases alone. "Disability" under new Sec. 8(f) is necessarily of sufficient breadth to encompass those cases, like that before us, wherein the employee had such a serious physical disability in fact that a cautious employer would have been motivated to discharge the handicapped employee because of a greatly increased risk of employment-related accident and compensation liability.

C & P Telephone Co. v. Director, Office of Workers' Compensation Programs, 564 F.2d 503, 513 (D.C.Cir.1977). This broad definition of "disability" governs the manifest requirement under Sec. 8(f). When the evidence shows that such a "disability" was objectively apparent, the "manifest" requirement has been met. Thus, contrary to the Director's contention, the manifest condition need not be "a serious condition that actually impairs the employee" at the time of hiring or retention; an asymptomatic disability may be sufficient to motivate an employment decision and fulfill the "manifest" requirement.

This interpretation of the manifest requirement is well-supported by Congress' intent in enacting Sec. 8(f); the primary purpose of Sec. 8(f) is to prevent and reduce employment discrimination based on the risk of disability-related liability.

Many employers have an inaccurate impression regarding the liabilities for work[er's] compensation when they employ handicapped workers. [They believe] that an employer is subjected to burdensome compensation costs where a handicapped worker receives an injury.... [Section 8(f) ] makes clear that the employer's responsibility for the subsequent or second injury is limited....

S.Rep. No. 92-1125, 92d Cong., 2d Sess. 7 (1972), U.S.Code Cong. & Admin.News 1972, p. 4698; see also Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 69 S.Ct. 503, 93 L.Ed. 611 (1949). Accordingly, the proper touchstone for the manifest requirement is not whether the underlying disabling condition "actually impairs the employee" but whether the condition puts the employer on notice of greatly increased liability and thus creates a risk of discrimination. Given developments in diagnostic techniques and technology, an employer might anticipate increased liability and terminate (or refuse to hire) a worker even though the worker's disabling condition does not, as of yet, impair him.

We reaffirm, therefore, that the appropriate legal standard for manifestation requires a showing of objective evidence of a serious disabling condition that would motivate the "cautious employer ... to discharge the [ ] employee because of a greatly increased risk" of liability. C & P Telephone, 564 F.2d at 513. This is the legal standard employed by the ALJ and articulated by the Board; and accordingly, that aspect of the Board's Order is affirmed.

2. The Scope of the Legal Standard as Applied

WMATA and the Board maintain that the 1973 X-rays and medical report which document Berkstresser's condition of "minimal degenerati[on]" were, as a matter of law, sufficient to fulfill the "manifest" requirement under Sec. 8(f), and that the ALJ erred in not so finding. We find the Board's application of the relevant legal standard to be overbroad and contrary to the statutory purpose of Sec. 8(f).

Berkstresser's medical condition, the ALJ found, was "usual[ ] in p...