Court of Appeals
For the First
BATH IRON WORKS CORPORATION,
DIRECTOR, OFFICE OF WORKERS
UNITED STATES DEPARTMENT
DONALD E. HUTCHINS,
ON PETITION FOR REVIEW OF
OF THE BENEFITS REVIEW BOARD
Selya, Circuit Judge,
Coffin and Campbell, Senior
Stephen Hessert for petitioner.
G. William Higbee, with whom James G. Fongemie was
on brief, for intervenor.
Richard F. van Antwerp, with whom Thomas R. Kelley was
on brief, for Birmingham Fire Insurance Company.
COFFIN, Senior Circuit Judge. Donald Hutchins, an employee for Bath Iron
Works (BIW), was awarded medical benefits in 1991 because of
a work-related injury stemming from exposure to asbestos dust
and other pulmonary irritants. Birmingham Fire Insurance Company
(Birmingham) was ruled to be the responsible carrier. Four years
later, Hutchins sought and obtained full disability benefits.
At that time, an Administrative Law Judge (ALJ) found that Hutchins
had been exposed to additional irritants while BIW was self-insured
and therefore shifted responsibility for his payments to BIW.
The Benefits Review Board of the Department of Labor (the Board)
upheld the decision. The company challenges that ruling, arguing,
interalia, that the ALJ exceeded the scope of his authority
in re-assigning the liability and that the record fails to support
a finding of new toxic exposure. We affirm the Board's decision.
Hutchins worked as a pipefitter
for BIW from 1964 until 1988, when he transferred to the company's
planning office because of breathing problems.(1)
He filed a claim under the Longshore and Harbor Workers' Compensation
Act (LHWCA), 33 U.S.C. §§ 901-950, alleging a gradual
injury resulting from continuing exposure to asbestos and other
toxic chemicals. After proceedings before an ALJ and appeals
to the Board, he was found to have multiple, work-related lung
diseases and was awarded medical benefits. Although BIW had become
self-insured just after Hutchins' transfer to the planning department
in 1988, there was no evidence presented during the original
proceedings that he was exposed to harmful stimuli in his new
position. As a result, Birmingham, which had insured BIW during
the most recent period of harmful exposure, was assigned full
responsibility for Hutchins' payments. See Liberty
Mut. Ins. Co. v. Commercial Union Ins. Co., 978 F.2d
750, 751 (lst Cir. 1992)(liability for the effects of an occupational
disease falls upon the "last responsible insurer").
Hutchins' health continued to deteriorate,
forcing his retirement in May 1995. Shortly thereafter, he filed
a claim seeking modification of the earlier benefits award to
include disability payments in addition to medical benefits.
See 33 U.S.C. § 922 (providing for modification).
Based on a deposition of Hutchins taken in September 1995, Birmingham
took the position that Hutchins had continued to be exposed to
airborne irritants at BIW after he moved to the planning department
and that this exposure triggered the disability. Birmingham contended
that BIW, now self-insured, should inherit the responsibility
for Hutchins' compensation as the last responsible insurer.
Birmingham focused in particular
on an incident that occurred near the planning office blueprint
room on March 15, 1995. According to Hutchins, as he passed by
the room, he inhaled a substance that nearly caused him to pass
out and required him to receive oxygen. He filled out a company
"statement of injury," and was out of work for about
two weeks following the episode. Hutchins also testified that
he experienced breathing problems in early 1995 because of "a
problem . . . with the air conditioning" that caused exhaust
fumes to come into his work area.
BIW argued, however, that the earlier
ALJ decision conclusively established that Hutchins was last
exposed to toxins during Birmingham's period of coverage. It
pointed out that Hutchins did not assert a new injury in his
request for increased benefits, but simply requested additional
compensation based on the change in his condition to total disability.
Moreover, BIW asserted that the medical reports in the record
failed to support an aggravation or new injury that would warrant
a change in liability. The company maintained that Hutchins'
disability resulted from a natural progression of his previously
diagnosed lung diseases and that responsibility for compensating
him should remain with Birmingham.
The ALJ - not the same one who had
presided over the earlier proceedings - sided with Birmingham,
finding that Hutchins had experienced additional exposure to
"injurious pulmonary stimuli at the shipyard up to and including
at least that acute exacerbation on March 15, 1995," when
BIW was self-insured. Accordingly, the judge modified the original
ruling by awarding Hutchins permanent total disability benefits
and shifting responsibility for payments to BIW. The Board affirmed,
and this appeal followed. BIW continues to assert both procedural
and substantive challenges to the ruling.
Our review of the Board's decision
is limited to legal issues, including the question of "whether
the Board adhered to the 'substantial evidence' standard when
it reviewed the ALJ's factual findings." Bath Iron Works
v. Brown, 194 F.3d 1, 3 (lst Cir. 1999); Bath Iron
Works v. White, 584 F.2d 569, 573-74 (lst Cir. 1978).
II. Procedural Issues
Hutchins initiated the second, disability,
phase of his LHWCA case by filing a claim for compensation in
August 1995. In it, he identified the "date of injury"
as May 19, 1988, the date established in the first proceeding
by the ALJ who awarded Hutchins medical benefits. BIW maintains
that, because no new injury was alleged, the only question before
the ALJ was whether the earlier award should be modified upward
to compensate Hutchins for the change in his condition to total
disability. In the company's view, there was no basis for reconsidering
the previous judgment that Birmingham was the insurer responsible
for Hutchins' benefits. BIW argues (1) that the company was unfairly
ambushed by the unexpected scope of the proceedings, (2) that
the ALJ lacked authority to re-allocate responsibility, and (3)
that the ALJ applied an incorrect legal standard in determining
liability. We find the company's arguments unpersuasive on each
of these issues.
We previously have taken a pragmatic view of notice requirements
under the LHWCA in light of the "liberal construction"
enjoyed by the statute. See Bath Iron Works v.
Director (Jones), 193 F.3d 27, 31 (lst Cir. 1999).
In Jones, we deemed inconsequential the lack of a new
injury claim under § 913 of the LHWCA where the employee's
letter seeking modification of benefits and the modification
proceedings themselves provided timely notice that he was asserting
a new injury claim. Id.(2)
Similarly here, BIW knew the salient
facts from early on: that Hutchins had completed a "statement
of injury" form following the March 15, 1995 print room
episode and that Birmingham sought to cast off responsibility
for Hutchins' payments based on new harmful exposures while BIW
was self-insured.(3) The only
significant gap was that BIW had no notice of, and did not participate
in, Hutchins' deposition in the fall of 1995. Any disadvantage
was subsequently remedied, however, when BIW received a transcript
of the deposition and was able to cross-examine Hutchins at the
hearing before the ALJ. Indeed, the ALJ expressed a willingness
to offer additional access to Hutchins before closing the record
if BIW argued that it was necessary. In these circumstances,
we see no unfairness in the ALJ's and Board's consideration of
whether liability for Hutchins' payments should shift to BIW.
Scope of Authority. BIW maintains that, even if the company
received adequate notice, the ALJ lacked the authority to re-assign
liability for Hutchins' benefits in a § 22 modification
proceeding, see 33 U.S.C. § 922, whose purpose it
asserts is limited to exploring whether an employee's compensation
should be changed to reflect changes in his health or other circumstances.
The company argues that, pursuant to principles of res judicata,
the ALJ was bound by the prior administrative determination that
Birmingham was the responsible carrier. Our Jones case,
193 F.3d at 29-31, dispenses with this assertion as well. There,
as here, the ALJ confronted a claim of new injury in a modification
proceeding, such injury was found, and the responsible carrier
consequently changed from an insurance company to BIW as a self-insured
That decision was not aberrational.
It is well established that traditional notions of res judicata
do not govern § 22 modification proceedings, which may be
brought whenever "'changed conditions or a mistake in a
determination of fact makes such modification desirable in order
to render justice under the act,'" O'Keeffe v. Aerojet-General
Shipyards, Inc., 404 U.S. 254, 255 (1971) (per curiam) (quoting
S. Rep. No. 588, 73d Cong., 2d Sess., 3-4 (1934); H.R. Rep. No.
1244, 73d Cong., 2d Sess., 4 (1934)); see also
Banks v. Chicago Grain Trimmers Ass'n, 390 U.S.
459, 465 (1968); Jessee v. Director, OWCP, 5 F.3d
723, 725 (4th Cir. 1993) ("[T]he 'principle of finality'
just does not apply to Longshore Act . . . claims as it does
in ordinary lawsuits."). The ALJ in considering the record
of Hutchins' medical and employment history thus had broad discretion
to revisit issues already decided and, if appropriate, "to
correct mistakes of fact, whether demonstrated by wholly new
evidence, cumulative evidence, or merely further reflection on
the evidence initially submitted." O'Keeffe, 404
U.S. at 256. As the Board concluded:
Given the broad scope of modification
proceedings, the administrative law judge made no error in considering
all issues related to the cause, nature, and extent of claimant's
disability, which claimant asserted was the result of a change
in claimant's condition. His authority under Section 22 necessarily
includes determining which entity should be held liable for claimant's
Board Opinion at 4.(4)
Standard of Liability. BIW also argues that, in shifting responsibility
from Birmingham to BIW for Hutchins' benefits, the ALJ and Board
misapplied the law governing the allocation of liability in occupational
disease cases. A brief review of the relevant principles is a
necessary prerequisite to our discussion of BIW's contentions.
The seminal case addressing the
assignment of responsibility among several potentially liable
employers and insurance carriers is the Second Circuit's Travelers
Insurance Co. v. Cardillo, 225 F.2d 137 (2d Cir. 1955).
The Cardillo rule states 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 . . . and . . . 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 . . . .
at 145. We have adopted a modified version of this "last
injurious exposure" and "last insurer" rule, holding
that the date of disability, rather than the date of awareness
of disease, is the key to determining the responsible insurer.
Liberty Mut., 978 F.2d at 756.(5)
The importance of the onset of disability
also is reflected in provisions of the LHWCA. Before 1984, an
employee's awareness of a relationship between "the injury
or death," on the one hand, and the employment, on the other
hand, started the running of the 30-day statutory period for
filing claim notices, and claims had to be filed within a year
after awareness of "the relationship between the injury
or death and the employment." Id. at 754; 33 U.S.C.
§§ 912(a), 913(a). Under amendments adopted in 1984,
the triggering date for claims for compensation for occupational
disease now is the time when "the employee or claimant becomes
aware . . . of the relationship between the employment, the disease,
and the death or disability." 33 U.S.C. §§ 910(i);
912(a); 913(b)(2). We previously have observed that this change
meant "that Congress identified onset of disability - not
occurrence of an injury or awareness of an occupational disease
- as the critical factor in filing LHWCA claims." Liberty
Mut., 978 F.2d at 754 & n.5.
One other principle is at play.
Under the so-called "two injury" or "aggravation
rule," when an employment injury aggravates, accelerates,
or combines with a pre-existing condition to result in a disability,
the entire resulting disability is compensable by the insurer
liable for the "new" or "aggravating" injury.
Foundation Constructors, Inc. v. Director, 950
F.2d 621, 624 (9th Cir. 1991); see also Jones,
193 F.3d at 30-31. If, however, the disability resulted from
the natural progression of the prior injury and would have occurred
notwithstanding the subsequent injury, then the prior employer
(and its insurer) are responsible. Foundation Constructors,
950 F.2d at 624. This rule is really nothing more than a variation
of the last employer rule, and is similarly "designed to
determine whether a subsequent employer bore all the liability
for disabilities caused by more than one employer," Id.
at 623. Although there is some question whether the aggravation
rule applies to occupational disease cases, compare id.
at 623-24 (opining that it does not), with Jones,
193 F.3d at 31 (assuming applicability of aggravation rule to
occupational injury), it often would be superseded in such cases
in any event. Under the "last injurious exposure rule,"
any exposure to harmful stimuli during an insurer's coverage
period will lead to liability if the employee becomes disabled
during that period by an exposure-caused injury, even if the
most recent exposure was not the primary or triggering cause
for the disability. See Cardillo, 225 F.2d at 145.
Thus, unlike the typical two-injury/aggravation case, in an occupational
disease case like this one involving environmental irritants,
the insurer on the risk at the time a new injury triggers disability
may not defend against liability by arguing that exposures occurring
before its coverage period inevitably would have led to the disability.(6)
BIW asserts that the ALJ erred in
applying the aggravation rule in this case to find that continuing
exposures resulted in a new, compensable injury for which BIW
was responsible. It takes the view that, in occupational disease
cases, only the "last injurious exposure" rule is applicable,
and that once a "last carrier" has been designated
as responsible - as Birmingham had been in the earlier proceeding
- subsequent exposures are irrelevant in determining liability.
BIW insists that, "by definition, there cannot be another
'last' employer" (and accompanying last carrier). Brief
at 14 (emphasis in original).
Even if BIW were correct about the
inapplicability of the aggravation rule, its argument would be
flawed by the assumption that the original ALJ's decision provided
a final resolution to the "last carrier" question.
As we have discussed, the responsible insurer is the one covering
the risk at the last time the employee was exposed to harmful
stimuli "prior to the date the claimant became disabled"
by his employment-related occupational disease. Liberty Mut.,
978 F.2d at 756 (emphasis added). The first ALJ's ruling addressed
Hutchins' claim that he had experienced an occupational injury
and was entitled to medical benefits; Hutchins continued to work
until 1995, when he first sought compensation for disability.
Because disability is "the critical factor" in assigning
carrier liability, id., the "last carrier" for
purposes of disability payments may not be the same "last
carrier" responsible for medical benefits. Id. at
753 n.3; 754-55 & n.6. Thus, if Hutchins continued to be
exposed to harmful airborne substances after BIW became self-insured,
and if his lung condition became disabling during that time period,
the "last carrier" rule would impose liability on BIW.
The timing of Hutchins' disability
was addressed in the administrative proceedings only in the context
of the employer's eligibility for relief under § 8 of the
LHWCA, 33 U.S.C. § 908(f), which limits an employer's liability
for disability benefits to 104 weeks in certain "second
injury" cases.(7) The ALJ
ruled that BIW qualified for such relief, finding, inter
alia, that Hutchins' earlier exposures "resulted
in a permanent partial disability and loss of pulmonary function
in 1984 and 1988." That finding, however, does not determine
the date of disability for purposes of the last carrier rule.
In Liberty Mutual, we held that the date of disability
fixing liability among successive insurers under the LHWCA is
"the date of decreased earning capacity," 978 F.2d
at 759; see also 33 U.S.C. § 902(10) (defining
disablement under the LHWCA, in part, as the "incapacity
because of injury to earn the wages which the employee was receiving
at the time of injury in the same or any other employment").
Although BIW now argues that Hutchins' transfer from pipefitting
work to the planning department is evidence of diminished earning
capacity, there is no support for such an inference in the record.
To the contrary, the Board explicitly noted in its decision that
Hutchins had filed his request for modified benefits "based
on a change in his condition from having no loss in wage-earning
capacity based on a suitable job in the planning office to permanent
total disability based on his inability to continue performing
this job." Board Opinion at 4. Cf. White,
584 F.2d at 572 (employee transferred from job as skilled pipecoverer
to unskilled position in machine shop).
In these circumstances, the inquiry
required under the "aggravation" approach for assigning
carrier liability would be superfluous. Because Hutchins' lung
condition did not become disabling for purposes of carrier liability
until 1995, while BIW was self-insured, the shift in liability
to BIW turns not on whether any harmful exposures during its
coverage period amounted to a new or aggravating injury, but
only on whether any such exposures occurred at all. If so, BIW
would be responsible as the carrier on the risk during the last
period of injurious exposure before Hutchins became disabled
by lung disease.
We thus turn to the question of
whether the record supports the administrative findings that
such exposures did occur. SeeWhite, 584 F.2d at 573 ("[I]f
supported by the evidence, the inferences drawn by the administrative
law judge are conclusive.").
III. Evidence of Continuing,
The question at the heart of this
case is whether Hutchins continued to be exposed to harmful inhalants
after being assigned to the planning office. The ALJ found that
he had, pointing in particular to the reported episode near the
blueprint room on March 15, 1995, and also crediting Hutchins'
testimony that "bad air" permeated his work area in
early 1995 because of a problem with the ventilation system.
The Board described the ALJ's conclusions as follows:
Given claimant's testimony describing
additional exposure and the medical evidence depicting a highly
symptomatic condition affected by additional exposure, the administrative
law judge stated that he "simply cannot accept" employer's
assertion that claimant was not exposed to harmful stimuli after
it became self-insured in 1988. He concluded that claimant's
"exposure and inhalation of asbestos and other injurious
pulmonary stimuli at the shipyard up to and including at least
that acute exacerbation on March 15, 1995[,]" resulted in
his economic disability commencing May 31, 1995.
Board Opinion at 5. In concluding
that the evidence of record supported the ALJ's findings, the
Board noted the judge's reliance on the reports of Drs. Altman,
Teel and McArdle, which describe the progression of Hutchins'
condition and refer to the same post-1988 exposures to irritants
that Hutchins later addressed in his testimony. See supra
Although the ALJ's decision was
not inevitable, we are satisfied that the Board did not err in
determining that the decision was supported by substantial evidence.
Notes from Dr. Teel refer to Hutchins' complaint in early March
1995 of poor ventilation in his office building, and Dr. Altman
also reported that Hutchins advised him in June 1991 that his
cough was exacerbated by conditions at work. A report in February
1992 from Dr. Teel showed that Hutchins was out of work for two
weeks in late 1991 and early 1992, and noted that he was still
"bothered by any environmental exposure to inhalants."
A BIW health record dated April 11, 1995 documents a telephone
call in which Hutchins said that "something in the building
bothers him, but he doesn't know what." That an acute episode
occurred on March 15, 1995 is well supported by the record, which
includes reports from BIW's employee health department, the company's
injury report, and reports from Dr. Teel and one of his associates
on office visits by Hutchins on March 20 and 23.
We recognize that this evidence
does not compel the conclusion reached by the ALJ on Hutchins'
continuing exposure to irritants, and that other evidence exists
to counter it. BIW's "medical encounter form" detailing
the March 15, 1995 episode, for example, reported that an investigation
of the area near the blueprint room turned up a five-gallon bucket
of floor finishing product, but it appeared "tightly sealed."
Another equivocal bit of evidence appeared in a June 1991 letter
from Dr. Altman to Dr. Teel, in which Dr. Altman observed that
Hutchins' recent increased coughing "reflects exposure either
in changing to his new office building or to the numerous pollens
that have been circulating this spring." It was the ALJ's
prerogative in the first instance, however, to draw inferences
and make credibility assessments, and we may not disturb his
judgment and the Board's endorsement of it so long as the findings
are adequately anchored in the record. See Pittman
Mech. Contractors, Inc. v. Director, OWCP, 35 F.3d
122, 127 (4th Cir. 1994) (ALJ's findings sometimes may not be
disregarded even if other inferences might have been more reasonable);
White, 584 F.2d at 573 ("that the facts permit diverse
inferences is immaterial"). We find that the record satisfies
this burden, and consequently affirm the judgment below.
Substantial evidence supports the
finding of the ALJ, affirmed by the Benefits Review Board, that
claimant Hutchins was exposed to harmful industrial irritants
during the time BIW was on the risk as a self-insured employer.
We further conclude that: (1) BIW had adequate notice of its
potential liability, (2) the issue of responsible carrier was
properly before the ALJ, and (3) the administrative decisions
utilized appropriate standards for assigning liability in occupational
disease cases. All prerequisites having been met, the ALJ and
Board properly shifted responsibility for Hutchins' benefits
from Birmingham to BIW.
The petition for review is denied.
1. Although there
is some discrepancy in the record as to the actual date of this
transfer, the date is not crucial to our analysis and we therefore
need not dwell on its accuracy.
2. We noted that
Jones' request for an increased benefit necessarily meant that
he was asserting either a new injury or aggravation of his prior
injury. 193 F.3d at 31.
3. The memorandum
of the Informal Conference held on December 12, 1996, nearly
a year before the administrative hearing, states that the parties
could not agree on the issue of "responsible carrier."
BIW and Birmingham were both represented at the conference.
4. BIW's attempt
to characterize the modification proceeding as a back door route
to retrying the case is off the mark. Judge DiNardi, the second
ALJ, relied heavily on relevant new evidence that had not been
available at the original hearing because it concerned Hutchins'
medical condition and work environment in the years since that
hearing. Cf. General Dynamics Corp. v. Director,
OWCP, 673 F.2d 23, 26 (lst Cir. 1982) (rejecting employer's
request to re-open proceedings to litigate a claim it failed
to raise earlier because of a legal misjudgment).
we adopted in Liberty Mutual a revised version only of
Cardillo's last responsible insurer rule because
-- as here -- the parties did not dispute that BIW was the liable
employer. 978 F.2d at 754 n.4.
6. As we discuss
below, the "last injurious exposure rule" is triggered
by the onset of disability. Use of the aggravation rule in the
occupational disease setting could make a difference when a first
injury results in a finding of partial disability and
an employee later seeks total disability benefits based
on new exposures. Such were the circumstances in Jones.
See 193 F.3d at 29 (first ALJ awarded permanent partial
disability benefits based on asbestosis and second ALJ found
new, aggravating injury from poor ventilation).
7. Benefits beyond
104 weeks are paid by a special fund, rather than the employer,
when the employee's total disability is traceable in part to
a prior injury that had caused a permanent partial disability.
33 U.S.C. § 908(f).