UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 1999
(Argued: May 30, 2000 Decided: September
21, 2000 )
Docket No. 99-4175
UNIVERSAL MARITIME SERVICE CORPORATION,
LOUIS SPITALIERI, and DIRECTOR,
OFFICE OF WORKERS' COMPENSATION PROGRAMS,
Before PARKER and KATZMANN, Circuit
Judges, and BRIEANT, District Judge*.
Petition by employer, supported
by the Director, Office of Workers' Compensation Programs, to
review a final order of the Benefits Review Board established
under the Longshore and Harbor Workers' Compensation Act, 33
U.S.C. §§ 901-50. Order reversed.
Lawrence P. Postol,
Seyfarth, Shaw, Fairweather &
* Hon. Charles L. Brieant, Judge
United States District Court for the Southern District of New
York, sitting by designation.
Philip J. Rooney
Israel, Adler, Ronca & Gucciardo
New York, N.Y.
for Respondent Spitalieri.
Andrew D. Auerbach, Attorney
Office of the Solicitor
U.S. Department of Labor
Henry L. Solano, Solicitor
Carol A. De Deo, Associate Solicitor
Mark Reinhalter, Senior Attorney
for Respondent Director of Workers'
Brieant, District Judge
Petitioner Universal Maritime Service
Corporation (the "Employer") seeks review of a final
order of the Benefits Review Board (the "Board") established
under the Longshore and Harbor Workers' Compensation Act, 33
U.S.C. §§ 901-50 (the "Act," or "LHWCA"),
issued October 7, 1999, which terminated the temporary total
disability payments of Respondent employee Louis Spitalieri ("Claimant")
but declined to allow the employer a credit for overpayment against
a schedule award for a partial permanent hearing loss arising
out of the same injury. The Board opinion en banc with
two Administrative Appeals Judges dissenting is reported in 33
BRBS 164, 1999 WL 1021572 (DOL Ben. Rev. Bd. Oct. 7, 1999).
The Issue Presented
Is an employer who paid a claimant
Workers' Compensation benefits for a temporary total disability
during a period after he recovered from his injuries and became
capable of returning to his usual employment entitled to a credit
for such overpayment to be applied to a schedule award for a
permanent partial binaural hearing loss of 6.9% arising out of
the same accident? The Administrative Law Judge answered the
question in the affirmative. The Board reversed as a matter of
law, holding that "termination" of benefits is not
a "decrease," and 33 U.S.C. § 922, by negative
implication, prohibited a set-off. We have jurisdiction under
33 U.S.C. § 921(b)(3). We reverse.
On April 10, 1992, while working
as a longshoreman at the Employer's facility at Red Hook in Brooklyn,
New York, Claimant was injured when a U- shaped box he was in
was flipped by a crane, and he was thrown to the ground. On November
15, 1993, Administrative Law Judge Robert S. Amery found that
as of that date and since the accident, Claimant had a temporary
total disability, which had not yet reached maximum medical improvement.
Specifically, he had head, neck, back and left leg injuries,
in addition to a partial hearing loss and psychiatric problems,
all caused by the April 10, 1992 injury. The Administrative Law
Judge awarded compensation, declining to find a permanent disability.
The Employer paid the weekly award of two-thirds of the Claimant's
average weekly wage at the time of the injury, as required by
Thereafter, on July 10, 1996, armed
with four days of surveillance videotapes, Employer, while still
paying benefits, filed a modification request based on a change
of condition, namely that Claimant had reached maximum medical
improvement and was no longer disabled. A full hearing was held
before Administrative Law Judge Paul H. Teitler, who issued his
findings and conclusions on January 15, 1998. He found that a
change of condition had been established by the employer, that
Claimant had reached maximum medical improvement on August 31,
and was not temporarily totally disabled after that date, and
was able to return to his usual employment. The Administrative
Law Judge concluded that Claimant was not eligible for continuing
benefits and that the Employer was entitled to a credit for benefits
paid since the date of maximum medical improvement. He noted
that, "By virtue of finding a change in conditions had occurred
and Claimant was no longer entitled to benefits, it was not necessary
to address whether a mistake in fact occurred. However, such
an analysis would have yielded the same result based upon the
newly submitted evidence." Joint Appendix at 67.
Administrative Law Judge Teitler
ordered that the Employer was "entitled to a credit for
payments made to Claimant from the date of maximum medical improvement."
By a decision and order on reconsideration issued February 6,
1998, the Administrative Law Judge awarded a scheduled disability
to Claimant, against that credit, not disputed by the Employer,
for a permanent partial binaural hearing loss of 6.9 percent,
arising out of the same April 10, 1992 accident, computed at
$7,465.00, and held that, "[t]his award shall be offset
by any credit that the Employer may have accrued [as a result
of overpayment for the temporary total disability]." Joint
Appendix at 40.
Claimant appealed to the Benefits
Review Board. By a panel decision issued February 23, 1999, reported
at 33 BRBS 6, 1999 WL 1021572, at *2 (DOL Ben. Rev. Bd. Oct.
7, 1999), the Board affirmed the determination of the Administrative
Law Judge that Claimant was no longer disabled, corrected the
date of maximum medical improvement as noted above, and, in light
of its construction and application of the relevant statute,
33 U.S.C. § 922, discussed below, held that the Administrative
Law Judge had erred as a matter of law in granting the Employer
a credit for the overpaid benefits against the scheduled award
for the hearing loss. This decision became the subject of a Decision
and Order on Reconsideration en banc before the entire
membership of the Benefits Review Board, which issued the Decision
and Order of October 7, 1999, which is before this Court for
review on this appeal. By that decision, with two Administrative
Appeals Judges dissenting, the Board held that "[s]ince
the decision on modification terminated plaintiff's temporary
total disability benefits, and did not decrease them, and as
the plain language of [33 U.S.C. § 922] prohibits an order
on modification from affecting compensation previously paid,
the termination cannot be effective prior to the date of the
decision on modification." 33 BRBS 164, 1999 WL 1021572,
The relevant provision of the statute
is as follows:
§ 922. Modification of awards
Upon his own initiative, or upon
the application of any party in interest . . . on the ground
of a change in conditions or because of a mistake in a determination
of fact by the deputy commissioner, the deputy commissioner may,
at any time prior to one year after the date of the last payment
of compensation, whether or not a compensation order has been
issued, or at any time prior to one year after the rejection
of a claim, review a compensation case . . . [and] issue a new
compensation order which may terminate, continue, reinstate,
increase, or decrease such compensation, or award compensation.
Such new order shall not affect any compensation previously paid,
except that an award increasing the compensation rate may be
made effective from the date of the injury, and if any part of
the compensation due or to become due is unpaid, an award decreasing
the compensation rate may be effective from the date of the injury,
and any payment made prior thereto in excess of such decreased
rate shall be deducted from any unpaid compensation, in such
manner and by such method as may be determined by the deputy
commissioner with the approval of the Secretary. This section
does not authorize the modification of settlements.
The powers vested in the Deputy
Commissioner are now vested in the District Director. See 20
C.F.R. § 701.301(a)(7). Administrative Law Judges have been
authorized to adjudicate disputes under the act.
The majority of the Board, sitting
en banc, concluded that termination of benefits was not
a "decrease" within the meaning of the section, and
therefore the termination of compensation could not be made effective
prior to the date of the Administrative Law Judge's order.
This appeal presents the issue of
whether under 33 U.S.C. § 922 an employer who overpaid a
claimant who was feigning temporary total disability is nevertheless
liable to pay additional compensation for a permanent partial
hearing loss resulting from the same injury. Our review is limited
to errors of law. The findings of fact in this case are supported
by substantial evidence; no party to this appeal claims otherwise.
The petition for review presents a question of law which we review
de novo. See Voris v. Eikel, 346
U.S. 328, 333-34 (1953); Sealand Terminals, Inc. v. Gasparic,
7 F.3d 321, 323 (2d Cir. 1993). When a statute is ambiguous,
the administrative construction of statutory terms by the Respondent
Director of the Office of Workers' Compensation Programs, if
reasonable and consistent with Congressional intent, is entitled
to deference. See Chevron, U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 842-45 & nn.9, 11
(1984); Rasmussen v. General Dynamics Corp., 993 F.2d
1014, 1016 (2d Cir. 1993); Director, Office of Workers' Compensation
Programs v. General Dynamics Corporation ("Bergeron"),
982 F.2d 790, 793-94 (2d Cir. 1992). The Board's construction
is entitled to no special deference. See Rasmussen, 993
F.2d at 1016.
We conclude that the Director's
construction of § 922 in this case is reasonable and consistent
with the statutory structure and purpose and accordingly is entitled
to the deference ordinarily afforded to the official charged
by Congress with the responsibility for administering a benefits
program. See Bergeron, 982 F.2d 790 at 793-95.
We find that the Board's "insistence on what seems to us
a `narrowly technical and impractical construction,'" Metropolitan
Stevedore Co. v. Rambo, 515 U.S. 291, 297 (1995), of the
term "decrease" is inconsistent with the purpose of
The Director's practical construction
of § 922 of the statute authorizes the result reached in
this case by Administrative Law Judge Teitler and supported in
this Court by the Director. The statute grants to an Administrative
Law Judge when reviewing a compensation order in a § 922
modification proceeding involving either a change in conditions
or a mistake of fact the power to "issue a new compensation
order which may terminate, continue, reinstate, increase or decrease
such compensation." Id. The words in this statutory
series are intended to and do comprise all possible responses
to a claim of change in conditions or mistake of fact. The statute
goes on to provide that a new order issued in such a situation
"shall not affect any compensation previously paid."
Id. This statutory direction is modified by two exceptions:
if the compensation rate is increased, the new order may be made
"effective from the date of the injury," thus permitting
a claimant to receive increased compensation for past periods
of disability. Id. The other exception, stated in the
same sentence, reads "and if any part of the compensation
due or to become due is unpaid an award decreasing the compensation
rate may be made effective from the date of injury and any payment
made prior thereto in excess of such decreased rate shall be
deducted from any unpaid compensation . . . ." Id.
This exception permits offset against unpaid compensation,
even though the statute has been construed to forbid an employer
from recovering back compensation which has previously been paid.
SeeLennon v. Waterfront Transport, 20 F.3d 658, 661 (5th
Cir. 1994) (employer not entitled to recoup overpaid benefits
under LHWCA, and employer's right to due process not violated
In this case, the Administrative
Law Judge found, as modified by the Board, that Claimant was
no longer temporarily totally disabled and could return to his
former employment on February 21, 1996. The Employer had paid
for temporary total disability through January 20, 1998, at $540.99
per week, amounting to approximately $54,000.00 to which he was
not entitled. The Administrative Law Judge also found that arising
out of the same accident, Claimant was entitled to a schedule
award of $7,465.00 for his permanent partial hearing loss.
We hold that the statute authorizes
this latter amount to be set off against the excess payment of
approximately $54,000. We agree with Petitioner and the Director
that the exception for a "decrease" in the second sentence
of § 922 should be read to include a decrease to zero, i.e.,
a termination of benefits. By the same token, we would read "increase"
to include modification orders which "award" compensation.
We do not believe that a "termination" of benefits
is somehow different from a "reduction" of benefits,
in this case, to zero. Therefore we reject as unreasonable the
effort of the Board to find a negative implication in the statute
to the effect that the provisions applicable to a decrease do
not extend to a termination.
To hold otherwise would counter
normal English usage and have no relation to the statutory purpose,
which is to compensate employees an amount fixed under the statute
for their injuries, and to cease payment when circumstances so
require. See Rambo, 515 U.S. at 298 (purpose of
the LHWCA is "to compensate employees . . . for wage-earning
capacity lost because of injury[.] [W]here that wage-earning
capacity has been . . . restored, or improved, the basis for
compensation changes and the statutory scheme allows for modification.")
Where the literal application of statutory language "will
produce a result demonstrably at odds with the intentions of
its drafters, . . . it is the intention of the legislators, rather
than the strict language, that controls." See Tomka v.
Seiler Corp., 66 F.3d 1295, 1313-14 (2d Cir. 1995). Thus,
refusal to apply a credit for overpayment of an unscheduled award
against a schedule award arising out of the same accident has
no basis in common sense or in the statute.
We also hold that the modification
of Claimant's award on the ground of a change in conditions may
be made effective from the date of that change in conditions
on February 21, 1996, the date when Claimant was no longer temporarily
totally disabled. Although Section 922 states that a decrease
in the compensation rate may be made effective "from the
date of the injury," we hold that the statute grants an
Administrative Law Judge the broad authority to make a modification
effective from the date when an injury occurred and any date
after the injury when a change in conditions occurs. By granting
the ALJ the authority to modify an award on the ground of a change
in conditions, the statute authorizes the ALJ to modify an award
as of a date subsequent to the initial injury. We see no reason
to conclude that the award increases and decreases permitted
under the exceptions must be made from the specific date of injury
or not at all. Such a narrow interpretation would limit award
increases and decreases that affect compensation previously paid
to those based on mistakes in determinations of fact, and render
the change in conditions language inapplicable to the exceptions.
In the absence of any indication that this was the intention
of the legislators, we do not adopt such a limiting interpretation.
We conclude instead that the statutory grant of authority to
the Administrative Law Judge to make modifications to compensation
awards includes the authority to make modifications effective
from any date after the injury where there is a change in condition.
See, e.g., Lussier v. Runyon, 50 F.3d 1103, 1108 (1st
Cir. 1995) (grant of greater power logically includes grant of
lesser power); American Hospital Assoc. v. Bowen, 834
F.2d 1037, 1052 (D.C. Cir. 1987) (same).
Claimant appears to argue, relying
on Jarka Corp. v. Hughes, 299 F.2d 534, 536-37 (2d Cir.
1962), that the exceptions in § 922 apply to mistakes of
fact but not to changes in condition, and therefore that no retroactive
modification may be made in this case based on a change in condition.
This argument is without merit. The language in Jarka
does not affect our interpretation of the statute because it
is dicta and it does not address the issue we are concerned with
here. Jarka addressed an inconsistency in a deputy commissioner's
order where the deputy commissioner dated a modification to the
date of injury, but called it a modification for a change of
condition. This Court stated:
[T]he distinction within [§
922] between change in condition and mistake of fact only makes
sense if the language speaking of retroactivity to the date of
the injury is limited to modifications based upon mistake of
fact. . . . In any case where a Deputy Commissioner would modify
a prior award retroactively to the date of injury because he
evaluates the claimant's condition differently, it necessarily
follows that he believes that the prior determination of condition
was incorrect and based upon a mistake of fact, and he cannot
be making the new order because of a change of condition.
passage does not relate to the instant case because we are concerned
here with a change of condition, not a mistake of fact. The passage
states the logical conclusion that an award modified to the date
of the injury must depend upon a mistake of fact. Here, the award
was not modified to the date of injury, but rather to a subsequent
date, because it was based on a change of condition.
In McCord v. Cephas, 532
F.2d 1377 (D.C. Cir. 1976), the Court of Appeals for the District
of Columbia Circuit indicated that it was within the discretion
of the ALJ to make his decision retroactive from the date of
the ALJ's decision. See id. at 1381 ("the question
[on remand] remains whether the decision should be retrospective,
freeing the petitioner McCord of all liability, or prospective
only from the date that such decision shall have been rendered,
thus preserving entitlement in decedent's dependents to benefits
up to that time"). We likewise conclude that the ALJ had
the discretion to modify the prior award and make the modification
retroactive from the date of the ALJ's decision, to the date
of Claimant's partial recovery. To give the modification retroactive
effect, we also conclude, for the reasons stated above, that
the excess payment made after Claimant's recovery from his temporary
total disability may offset the award made for Claimant's permanent
partial disability. McCord, which held that "under
the terms of [§ 922], it is within the discretion of the
Administrative Law Judge, subject to review by the Board, to
determine whether according retroactive effect to a correcting
order will "render justice under the act," demonstrates
the true intention of the statute-to "render justice."
532 F.2d 1377 at 1381. To construe the statute so as to not permit
a credit for retroactive termination of benefits would fail to
render justice, especially where, as here, the overpayment is
tinged with fraud on the part of Claimant.
Section 922 of the LHWCA was amended
in 1934, when the exceptions clause was added, as well as the
provision for modification "because of a mistake in determination
of fact." Act of May 26, 1934, Ch. 354 § 5, 48 Stat.
806, 807. Both the House and Senate Committees reporting the
legislation advised that "the amendment also permits an
increase or decrease in the compensation under a modifying award
when changed conditions or a mistake in a determination of fact
makes such modification desirable in order to render justice
under the Act, such modifying award to date from the time of
the accident." S. Rep. No. 73-588, at 3-4 (1934); H.R. Rep.
No. 73-1244, at 4 (1934). The statute was amended again in 1938.
Act of June 25, 1938, Ch. 685, § 10, 52 Stat. 1167. This
amendment permitted review of a case at any time prior to one
year after the rejection of a claim, and authorized the award
of compensation. Amendments of a purely formal nature were made
to the Act in 1984. Section 922, however, has remained unchanged
since 1938. The Director represents that it has "not been
the source of controversy or misunderstanding" and that
the Board's interpretation of the statute in this case is "contrary
to longstanding actual implementation of the provision."
Director Br. at 18; cf. McCord, 532 F.2d 1377.
We agree with the Director that
there is nothing in the legislative history of the statute which
justifies the narrow construction placed on it by the Board in
this case that "decrease" under the statute does not
include a termination of benefits. In Metropolitan Stevedore
Co. v. Rambo, 515 U.S. at 291, the Supreme Court rejected
an attempt to narrow the authority afforded an ALJ by the statute.
Where an ALJ has broad authority to "terminate, continue,
reinstate, increase or decrease such compensation, or award compensation,"
33 U.S.C. § 922, the interpretation as put forth by the
Board's decision would give the statutory language "impractical
construction." Rambo, 515 U.S. at 298. The authority
of an ALJ to modify existing orders based on mistakes in fact
or changes in condition under § 922 is broad. See
O'Keeffe v. Aerojet-General Shipyards, Inc. 404 U.S. 254,
255-56 (1971); Banks v. Chicago Grain Trimmers Ass'n Inc.,
390 U.S. 459, 464-65 (1968); Rambo, 515 U.S. at 291. We
conclude that the power to give credit to an employer for overpayment
where there has been a termination of benefits falls under this
Accordingly, the order appealed
from is reversed. The award of counsel fees to Claimant is vacated.
The Board on review changed
this date to February 21, 1996. Neither side seeks to review