New Haven Terminal Corp. v. Lake, Docket No. 01-4005.

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: John M. Walker, Jr.
• Citation: 337 F.3d 261
• Parties: NEW HAVEN TERMINAL CORP., and Liberty Mutual Insurance Co., Petitioners, v. Richard LAKE and Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor, Respondents.
• Decision Date: 21 July 2003
• Docket Number: Docket No. 01-4005.

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337 F.3d 261 NEW HAVEN TERMINAL CORP., and Liberty Mutual Insurance Co., Petitioners,
v.
Richard LAKE and Director, Office of Workers' Compensation Programs, U.S. Dept. of Labor, Respondents. Docket No. 01-4005. United States Court of Appeals, Second Circuit. Argued December 6, 2002. Decided July 21, 2003.

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Thomas C. Fitzhugh, III (Matthew H. Ammerman, on the brief), Fitzhugh & Elliott, P.C., Houston, TX, for Petitioners.

David A. Kelly, Montstream & May, Glastonbury, CT, for Respondent Richard Lake.

Joshua T. Gillelan, II, U.S. Dept. of Labor, Washington, D.C., for Respondent OWCP.

Before: WALKER, Chief Judge, OAKES and RAGGI, Circuit Judges.

JOHN M. WALKER, JR., Chief Judge.

Petitioners New Haven Terminal Corp. ("New Haven Terminal") and its insurer, Liberty Mutual Insurance Co., appeal from the judgment of the Benefits Review Board of the United States Department of Labor ("BRB") that reversed in part the decision of the administrative law judge("ALJ") and granted workers' compensation benefits to respondent Richard Lake. After the ALJ had approved a settlement between Lake and New Haven Terminal's successor, Logistec of Connecticut, Inc. ("Logistec"), to compensate Lake for lost wages due to a 1997 injury, the ALJ reviewed Lake's claims against New Haven Terminal for lost wages due to a 1993 injury, which he claimed left him permanently partially disabled.

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The ALJ found that New Haven Terminal owed Lake compensation from 1993 to 1997, but not after 1997, because Lake's current disabilities are due to the injury he suffered in 1997 while working for Logistec. To the extent that the 1997 injury may have aggravated the 1993 injury, the ALJ explained that under the "aggravation rule," the employer at the time of the latter injury is liable for the entire resulting disability, and thus Logistec, and not New Haven Terminal, was liable for any disability after the 1997 injury.

The BRB reversed the ALJ's decision to terminate New Haven Terminal's liability after 1997. We vacate the decisions below with respect to post-1997 compensation and remand for the ALJ to review the settlement and to determine New Haven Terminal's liability for Lake's disability post-1997.

I. BACKGROUND

On February 17, 1993, Lake injured his back while he was working for New Haven Terminal as a longshoreman. He returned to work on February 1, 1994, as a field checker and light-duty laborer with lower weekly earnings. Sometime in 1996, Logistec assumed control of the operations of the New Haven and Bridgeport docks. On November 25, 1997, Lake had a physical altercation with his supervisor Marty Romano during a work-related argument and suffered a second back injury. The ALJ's decision portrays Romano as the aggressor, which neither party disputes. As of September 2000, Lake still was unable to work, and the record does not reveal when, if at all, he resumed working and at what wages.

Lake claimed disability and medical benefits against New Haven Terminal and Logistec under the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901-950. On June 8, 1999, Lake settled his claims with Logistec for $30,000 in compensation and $8,059.47 for attorney's fees and expenses. The settlement was premised upon a weekly wage of $629.32 before Lake's 1997 injury. The ALJ approved the settlement on July 7, 1999.

On August 2, 1999, the ALJ found New Haven Terminal liable for Lake's lost earnings between 1993 and 1997, but not thereafter. The parties had stipulated that Lake had been earning $782.82 per week before the 1993 injury, and the ALJ found that Lake's post-injury wage earning capacity was $489.79. There is no explanation in the record for the discrepancy between Lake's stipulated post-1993-injury wage earning capacity of $489.79 and the settlement's premised weekly wage of $629.32 before the 1997 injury. The difference between the stipulated pre-injury weekly wage ($782.82) and the post-injury weekly wage ($489.79) was $293.03. Under the LHWCA, a claimant suffering a permanent partial disability is compensated at a rate of two-thirds of the pre-injury and post-injury difference, which in this case was $195.35 (correcting the ALJ's math error). 33 U.S.C. § 908(c)(21); 33 U.S.C. § 908(h). The ALJ granted compensation for both Lake's temporary total and permanent total disability in the months after the 1993 injury, and his permanent partial disability from February 1, 1994, when he returned to work, to November 24, 1997, the date of the second injury.

The ALJ ruled that New Haven Terminal was not liable after November 24, 1997, because Lake's present disability "is due solely to his November 25, 1997 physical altercation and confrontation with his supervisor." Lake v. New Haven Terminal Corp., 1998-LHC-2649, OWCP No. 1-33110, at 43 (Aug. 2, 1999). The ALJ first explained that the altercation was "an intervening

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cause which is attributable only to [Lake's] own subsequent conduct and which broke the chain of causality between [Lake's] 1993 injury and his present condition." Id. at 51. This conclusion incorporated elements of fault and contributory negligence as a basis for rejecting Lake's claim. Second, the ALJ found that Lake "had completely recovered" from the 1993 injury when the 1997 injury occurred. Id. at 52. Third, the ALJ also found, somewhat inconsistently, that the second injury aggravated the first, and he ruled that under the "aggravation rule," to the extent Lake suffered an injury that aggravated a pre-existing condition, Lake may collect benefits for the total resulting injury only from the last employer, Logistec. See id. at 52 (citing Found. Constructors v. Dir., Office of Workers' Comp. Programs, 950 F.2d 621, 624 (9th Cir.1991)). Thus the ALJ exonerated New Haven Terminal from any liability based upon the 1997 injury.

The BRB reversed the ALJ's holding to the extent that it exempted New Haven Terminal from liability after November 24, 1997, and extended that liability indefinitely for Lake's permanent partial disability. See Lake v. New Haven Terminal Corp., BRB No. 99-1253, at 5 (Sept. 8, 2000). First, the BRB ruled that the defense of intervening cause applies only to non-work-related events following an initial work injury, and that the LHWCA specifically excludes the consideration of fault in assessing the cause of the injury. Id. at 4 (citing 33 U.S.C. § 904(b) ("Compensation shall be payable irrespective of fault as a cause for the injury.")). Second, the BRB found "no evidence of record" to support the ALJ's finding that Lake's back injury had resolved before the 1997 injury or that the second injury "permanently exacerbated" the first, and thus held that New Haven Terminal continued to be liable for the effects of the first injury. Id. at 5. Third, the BRB rejected the ALJ's application of the aggravation rule to place liability on Logistec, but did not address the question of whether a first employer may invoke the aggravation rule as a defense. Id. at 3. New Haven Terminal appeals from the BRB ruling.

II. DISCUSSION

On appeal, New Haven Terminal argues that 1) the ALJ's finding that Lake had completely recovered from the 1993 injury was supported by substantial evidence; 2) under the aggravation rule, the last employer is liable for the entire disability post-1997 and thus this liability falls on Logistec and not New Haven Terminal; and 3) the Logistec settlement adequately compensated Lake for the entire disability resulting from the 1997 injury.

A. Standard of Review

We review the BRB decision de novo for errors of law, and we uphold an administrative law judge's findings of fact if they are supported by substantial evidence. Blanding v. Dir., OWCP, 186 F.3d 232, 235 (2d Cir.1999); see also O'Keeffe v. Smith, Hinchman and Grylls Assoc., 380 U.S. 359, 362, 85 S.Ct. 1012, 13 L.Ed.2d 895 (1965). Substantial evidence is such evidence that a reasonable mind might accept as adequate to support a factual conclusion. Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971).

B. Evidence of Recovery from the 1993 Injury

New Haven Terminal argues that the BRB erred in rejecting the ALJ's conclusion that Lake had recovered completely from his 1993 back injury before the 1997 back injury, and that therefore New Haven Terminal was not liable for the

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effects of the latter injury. We agree with the BRB that there was no substantial evidence supporting the ALJ's finding of complete recovery.

The ALJ relied primarily on Lake's failure to seek further medical treatment for his back between 1994 and November 1997. Although this conduct may raise some doubt about the severity of Lake's disability, it does not disprove its continued existence. It is as plausible that Lake simply adhered to his health restrictions in order to avoid pain and discomfort, and did not need further treatment. New Haven Terminal's further argument, that Lake was able to perform all of his assigned duties, is equally weak. When Lake returned to work after the injury in 1994, he switched from longshoreman, a position which required repeated heavy lifting, to field checker, a less demanding job that was tailored to accommodate his back problems. Lake's performance of these duties suggests no more than that the new position accommodated his disability, not that the disability resolved.

The ALJ's findings drew heavily upon a 1998 medical evaluation by Dr. Michael Saffir, to whom Lake was referred by Signal Mutual Insurance, Logistec's insurer. That evaluation, however, offers no support for the claim that Lake fully recovered from his back problems before 1997. Dr. Saffir noted Lake's "significant history of back pain and left sciatica," and suggested that the 1997 incident "could aggravate a lumbar strain and possibly subacute underlying radiculopathy." The ALJ points to Dr. Saffir's statement that Lake "recovered...