Equitable Equipment Co., Inc. v. Hardy

• Decision Date: 09 September 1977
• Docket Number: No. 76-2643,76-2643
• Citation: 558 F.2d 1192
• Parties: EQUITABLE EQUIPMENT COMPANY, INC. and Employers Insurance of Wausau, Petitioners, v. George W. HARDY and Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1192

558 F.2d 1192

EQUITABLE EQUIPMENT COMPANY, INC. and Employers Insurance of Wausau, Petitioners, v. George W. HARDY and Director, Office of Workers' Compensation Programs, United States Department of Labor, Respondents.

No. 76-2643.

United States Court of Appeals Fifth Circuit.

Sept. 9, 1977.

Wood Brown, III, New Orleans, La., for petitioners.

Robert J. Mack, Velma P. O'Neal, Hammond, La., for George W. Hardy.

William J. Kilberg, Sol. of Labor, U. S. Dept. of Labor, Laurie M. Streeter, Associate Sol., Harry L. Sheinfeld, Atty., Washington D.C., for respondents.

On Petition for Review of an Order of the Benefits Review Board (Louisiana case).

Before WISDOM, GEE and FAY, Circuit Judges.

FAY, Circuit Judge:

The Benefits Review Board, United States Department of Labor, affirmed the decision and order of the administrative law judge which awarded compensation and medical benefits under the Longshoremen's and Harbor Workers' Compensation Act, as amended, 33 U.S.C. § 901 et seq. (the Act), and held Sections 8(f) and 44 of the Act, 33 U.S.C. §§ 908(f) and 944, inapplicable to the facts of this case. Petitioners do not contest the award of compensation or benefits to the injured employee, but contend that the Board erred as a matter of law in rejecting the applicability of Sections 8(f) and 44. We agree with petitioners and therefore grant the petition for review and set the Board's order aside. ¹

George Hardy was injured on May 3, 1973 in the course of his employment with petitioner, Equitable Equipment Company. As a result of this accident, he was obliged to undergo substantial back surgery which, in conjunction with his pre-existing condition, left him permanently and totally disabled. Mr. Hardy's pre-existing condition was described by the doctors testifying in this cause as a "pseudoarthrosis" or false fusion of the joints in Hardy's back, an impairment which, according to the doctors' testimony, existed prior to the May 3rd accident and which materially and substantially affected his present condition. ² The administrative law judge found, however, that Hardy was performing all the duties of his employment as a first class shipfitter, including lifting heavy objects, stooping and climbing. Based on this finding, the administrative law judge concluded that the employee's pre-existing back impairment was neither manifest nor disabling as required for application of Sections 8(f) and 44 of the Act. ³

The pertinent part of Section 8(f) of the Act, 33 U.S.C. § 908(f) provides: ⁴(f) Injury increasing disability: (1) 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 . . . . In all . . . cases of total permanent disability or of death, found not to be due solely to that injury, of an employee having an existing permanent partial disability, the employer shall provide . . . compensation payments or death benefits for one hundred and four weeks only. . . .

(2) After cessation of the payments for the period of weeks provided for herein, the employee or his survivor entitled to benefits shall be paid the remainder of the compensation that would be due out of the special fund established in Section 944 of this title (§ 44 of the Act).

This Section is often referred to as the "second injury," "subsequent injury," or "special fund" provision because it provides an exception to the general rule that an employer takes an employee as he finds him, ⁵ restricting the employer's liability under workmen's compensation laws to that portion of the disability which resulted from the recent or "second" injury. When an employee who was already inflicted with a permanent disability at the time he was hired suffers a compensable injury while working for the employer, pursuant to Section 8(f), this employer is only responsible for 104 weeks of compensation, ⁶ with the balance of compensation determined to be due the employee to be paid out of the federally created and administered special fund. ⁷ Thus, in order to trigger the application of the statute, the critical words are "an employee having an existing permanent partial disability."

The standard by which we review administrative decisions under this Act is to reverse only if there is an error of law or when a finding of fact is unsupported by substantial evidence on the record considered as a whole. O'Leary v. Brown-Pacific-Maxon, Inc., 340 U.S. 504, 508, 71 S.Ct. 470, 95 L.Ed. 483 (1951); Presley v. Tinsley Maintenance Service, 529 F.2d 433 (5th Cir. 1976); Offshore Food Service, Inc. v. Benefits Review Board,524 F.2d 1136 (5th Cir. 1975); 1972 U.S. Code Cong. & Admin.News pp. 4698, 4709; 33 U.S.C. § 921(b)(3) and (c).

The Board maintains that an existing permanent partial disability requires the employee to be disabled in an economic sense, that is, disability implies a condition which actually or presumptively ⁸ reduces the employee's wage earning capacity. ⁹ The Board further contends, and various courts have held, that the disability must be "manifest" to the employer (rather than "latent") in order for such disability to qualify under Section 8(f). ¹⁰

The leading case, Lawson v. Suwannee Fruit & Steamship Co., 336 U.S. 198, 69 S.Ct. 503, 93 L.Ed. 611 (1949), discussed the disability requirement in light of the origin and purpose of the special fund provision. The facts concerned a man who had previously lost the sight in one eye through causes unrelated to his employment. A subsequent injury in the course of his employment deprived the man of the use of his second eye. The argument advanced was that the second-injury provision in Section 8(f) was intended to apply only to situations where the first or pre-existing disability was the result of an occupational injury, in accordance with the definition of disability in Section 2(10) of the Act, 33 U.S.C. § 902(10). ¹¹ The Supreme Court, acknowledging that the purpose of Section 8(f) was to encourage the hiring of handicapped workers and to protect employers who hired handicapped workers, held that "previous disability" ¹² meant disability in fact, not necessarily disability as required for compensation purposes. Thus, in Lawson, the employer was held liable only for the permanent partial disability resulting from the loss of one eye, with the remaining compensation due for permanent total disability (loss of sight in both eyes) payable out of the special fund.

It appears to this Court that utilizing Section 8(f) in the instant case would be in harmony with the discussion in Lawson and with the language and purpose of the statute. We do not see any requirement that the disability be an economic one. If Section 8(f) is intended to prevent discrimination against handicapped workers, as indeed it is, then it would seem that a man with a bad back is handicapped in the "market place" just as much as a man with one eye. Certainly job opportunities are limited for a person with any kind of serious physical impairment, and it is often difficult if not impossible for such a person to retain employment once a prospective employer is aware of the person's impairment. Even if the applicant is hired, his inferior condition does not disappear.

In adopting this position, we follow the Third Circuit which has recently held that an existing disability need not be an economic one. In the companion cases, Atlantic & Gulf Stevedores, Inc. v. Director, Office of Workers' Compensation Programs, United States Department of Labor, 542 F.2d 602 (3rd Cir. 1976) ¹³ and Nacirema Operating Co., Inc. v. Benefits Review Board, United States Dept. of Labor, 538 F.2d 73 (3rd Cir. 1976), ¹⁴ the court of appeals held that Section 8(f) and the special fund are applicable when a prior condition, known (manifest) to the employer, is determined to have contributed to the subsequent injury. After reviewing the legislative history of the statute and determining that the 1972 amendment did not change the non-technical Section 8(f) concept of disability explained in Lawson, ¹⁵ the court opined that requiring an economic disability would defeat the purpose of Section 8(f):

Indeed, that section would be transformed into a veritable Catch-22. Any employer who in reliance on § 8(f) hired a disabled person would immediately lose the statutory limitation on his liability, since upon hiring a handicapped worker any preexisting economic disability would terminate. The result is, of course, absurd, and is inconsistent with the policy objectives discussed in the Lawson case. 542 F.2d 602, 609. ¹⁶

We are cognizant that the definition of "existing disability" we adopt today conflicts with other courts' interpretation of the phrase. For example, one case discussed and rejected in Atlantic & Gulf Stevedores, was American Mutual Ins. Co. of Boston v. Jones, 138 U.S.App.D.C. 269, 426 F.2d 1263 (1970), where the court sustained the award of disability compensation to a mentally deficient man who suffered an injury to his hand. Relying on the statutory definition provided in Section 2(10) of the Act, ¹⁷ the court held that disability is an economic and not a medical concept, stating that

(e)ven a relatively minor injury must lead to a finding of total disability if it prevents the employee from engaging in the only type of gainful employment for which he is qualified. Id. at 1266. ¹⁸

The court found the evidence of economic disability overwhelming and affirmed the award of compensation. The court also concluded, "not without some hesitation," that Section 8(f) did not pertain to the facts of that case since the man's mental deficiency was not manifest to the employer at the time of his employment.

With respect to the Section 8(f) argument presented in Duluth, Messabi and Iron Range Railway Co. v. United States Dept. of Labor, 553 F.2d 1144 (8th Cir. 1977), the court acknowledged but did not decide the...