ISSUE: Modification Under Section 22

Jack_crop 72dpiI recently referred to a case which involved modification under section 22 of the Longshore Act (33 U.S.C. 922).  In this case, the federal Fifth Circuit Court of Appeals confirmed that modification of a final Award may be available for a mistake of fact, not only based on new evidence, but on evidence that was available at the time of the original hearing and Compensation Order.

I’d like to take another look at section 22.  Once again, it states:

“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 (ALJ), the (ALJ) 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.”

Section 22 modification provides the only means for changing a final decision.  It is very liberally interpreted to favor accuracy over finality.  A prominent commentator states that section 22 provides, “perhaps the most permissive ‘mistake’ reopening rule on record”.

We know that to obtain modification based on a mistake of fact a party does not need new evidence.  It may present evidence that was available at the time of the first hearing.

Section 22 also liberally permits modification based on “change in conditions”, or changed circumstances.  This most frequently involves changes in the claimant’s medical or economic condition, wage earning capacity, or ability to work.  It potentially covers a wide range of circumstances and events subsequent to the Award.  Here are just a few of many possibilities.

Scenario One – based on surveillance video and a functional capacity evaluation, the employer believes that a totally disabled claimant receiving benefits pursuant to an order is no longer totally disabled.  The employer requests modification under section 22 based on a labor market survey.  The employer is seeking to change the award from total disability to partial disability based on the claimant’s ability to work.

The employer presents evidence of a wage earning capacity based on its evidence of suitable alternate employment, i.e., realistically available jobs within the geographic area where the claimant resides which he is capable of performing considering his age, education, work experience and physical restriction, which he could secure if he diligently tried.

Scenario Two – a claimant has a compensation order awarding a scheduled award based on a 15% permanent loss of use of the left leg.  Within one year of the payment of the scheduled award in a lump sum, the claimant writes a letter to the U.S. Department of Labor’s District Director requesting additional compensation.  He presents a medical report showing deterioration in his medical condition.  He is non-specifically claiming either a larger scheduled award or total disability.

This letter will very likely be considered as a request for modification under section 22.

Scenario Three – a claimant is receiving benefits pursuant to a compensation order awarding permanent partial disability based on a loss of wage earning capacity.  The employer believes that the claimant’s earning capacity has increased due to additional skills, training, and experience that he has acquired since the Award was issued in his case.  The employer requests modification based on a change in condition, i.e., a higher wage earning capacity.

Note:  Increased earnings due strictly to COLA’s or seniority raises will probably not be considered as an increase in the worker’s earning capacity.

Essentially, modification can be requested based on changed conditions in a variety of situations, seeking to change total disability to partial, or partial disability to total, or to increase or decrease wage earning capacity, or to modify in any other way an otherwise final compensation order, including an order denying benefits.

Miscellaneous considerations relating to section 22:

Modification must be requested prior to one year from the last payment of compensation under a compensation order, or one year from the denial of a claim.

If a claim is denied then the time to request modification begins to run on the date that the order becomes final, at the conclusion of the appellate process.

Payment of medical benefits under section 7(a) does not constitute the payment of “compensation” for purposes of the section 22 time limit.

Section 22 cannot be used to correct legal mistakes or errors in strategy.  Legal errors may only be challenged by a timely motion for reconsideration or by appeal.

A lump sum settlement under section 8(i) cannot be modified under section 22 once the compensation order approving the settlement is final.

As the Fifth Circuit acknowledged, there is the potential for abuse here for both parties.

For example, successive modification petitions may be filed as long as each one is filed within 1 year of the rejection of the previous claim.  Once a party requests modification it is entitled to the same procedures available in an original claim, including a de novo hearing before an Administrative Law Judge, review by the Benefits Review Board, and an appeal to the federal Court of Appeals.  The employer must defend each request for modification.

New evidence is not required.  Modification may be based on further reflection of the evidence initially submitted, or by the introduction of evidence available but not presented at the time of the original adjudication.

Clearly there is the potential for an interminable series of modification requests under a provision that strongly emphasizes accuracy over finality.

While the potential is there, there does not seem to have been widespread abuse of the modification provision.

John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance and Financial Management, and the Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

ISSUE: Part Three

Jack_crop 72dpiThis is the conclusion of a brief review of some interesting Longshore Act and Jones Act cases that were decided in calendar year 2014.

William C. Skye v. Maersk Line, 11th Circuit, 5/15/14

This is a Jones Act case for damages for injury allegedly resulting from overwork and an erratic sleep schedule.  The claimant suffered from left ventricular hypertrophy, which his doctor attributed to long work hours and lack of sleep.  The plaintiff claimed that he was negligently saddled with excessive hours and arduous duties to the point that he was overworked.  He testified that he regularly worked as Chief Mate for 90 to 105 hours per week.

At the trial at the federal district court the jury found in favor of the plaintiff and awarded substantial damages, but the Eleventh Circuit Court of Appeals reversed and rendered judgment in favor of Maersk.

The appeals court’s decision was based on the principle that an injury caused by work related stress is not compensable under the Jones Act, since the Jones Act only concerns injuries caused by physical perils pursuant to Consolidated Railcorp v. Gottshall,  512 U.S. 532 (1994), a Supreme Court decision in a case arising under the Federal Employers Liability Act.

The physical damage due to work related stress in this case was not caused by a physical peril, since the damage was not caused by physical impact either directly or within the “zone of danger”.  A work schedule is not a physical peril.

NOTE:  The claimant in this case demonstrated a physical injury, but the alleged cause of the injury was work related stress.  It seems harsh, but under the Jones Act there is no recovery for negligently inflicted physical injury unless the worker suffered a physical impact directly or was within the “zone of danger” of fear of a physical impact.

Island Operating Company, Inc.; Louisiana Workers’ Compensation Corporation v. Director, Office of Workers’ Compensation Programs; Martin B. Taylor, Jr., 5th Circuit, 12/20/13

This is a Longshore case involving the aggravation rule and modification under section 22 of the Longshore Act.

The aggravation issue was resolved simply; the claimant had pre-existing knee issues, aggravated by his work with the employer.  There was no specific traumatic injury that led to the claimant’s Longshore Act claim in 5/06, but working conditions that aggravated the pre-existing condition supplied the injury arising out of and in the course of employment.

The employer established suitable alternate employment, and commenced paying the claimant compensation for permanent partial disability based on a loss of wage earning capacity.

In 1/10, within the time limits allowed under section 22, the claimant filed a claim for modification of his Award, based on medical evidence showing a 25% impairment rating to each knee.  Modification was granted.  The ALJ modified the previous award to include a 25% scheduled award for each knee.

Section 22 states, “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 (ALJ), the (ALJ) 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.”

The employer appealed the modification Award to the Board, arguing that the medical evidence supporting the modification which added the scheduled awards had been available at the time of the original hearing, and if modification were granted under these circumstances there would be the potential for the endless re-litigation of issues.  The employer argued that modification based on a mistake in a determination of fact should be based only on new, previously unavailable evidence.

So, the issue was what constitutes “a mistake in a determination of fact” such that a prior judgment may be modified.

The Board stressed the principle that section 22 modification is intended to replace finality with accuracy and should be broadly applied.  It affirmed the modification, which was affirmed in turn at the Fifth Circuit.

NOTE:  A claimant may receive payment concurrently for an award of permanent partial disability based on a scheduled award (PPS) and an award of permanent partial disability based on a loss of wage earning capacity (PPL).   There is little in the Act by way of hard and fast rules covering concurrent payments for different types of disability, and each case has to be looked at individually.  An ALJ has discretion in designing awards.  The goal is to balance full compensation for injured workers while avoiding “double dipping”.   Here are some general provisions relating to concurrent awards in cases of permanent partial disability:

  • The combined rate for the two awards can be paid up to two-thirds of the worker’s average weekly wage in accordance with section 8(a), even if this exceeds the maximum weekly compensation rate for a single injury.
  • If necessary because of the limitation in the weekly payment allowable (to 2/3 of the worker’s AWW), the number of weeks for the scheduled award(s) may be increased to provide that the schedule is paid in full (more weeks at a lower rate to the full dollar amount of the award).
  • You can receive two (or more) scheduled awards for two (or more) separate injuries based on the same accident or for separate injuries or separate accidents. The awards run consecutively.

The appellate court acknowledged the employer’s concern about the potential for serial requests for modification under section 22, but advised by way of the familiar refrain, “the remedy lies with Congress and not with this court.”

So, once again it is confirmed that the modification provision in section 22 of the Longshore Act will be very liberally applied.

McBride v. Estis Well Service, LLC, 5th Circuit, 9/25/14

This Fifth Circuit en banc decision (reversing the decision of a three judge panel) is a welcome recent statement on the issue of what damages are recoverable by seamen or their personal representatives under the Jones Act and the general maritime law.

To say as the Court did that this issue is “the subject of national debate with no clear consensus” borders on understatement with a hint of irony.

Mix pecuniary losses, non-pecuniary losses, and punitive damages with the Jones Act, the general maritime law’s warranty of seaworthiness and maintenance and cure, throw in the Federal Employers Liability Act and the Death on the High Seas Act, and you can find jurisprudential support for just about any result you’re looking for with regard to recoverable damages.

To make a very long story shorter, now based on McBride in the Fifth Circuit (states of TX, LA, MS), damages under the Jones Act and the general maritime law’s warranty of seaworthiness are limited to “pecuniary damages”; in other words, no non-pecuniary and no punitive damages as controlled by Miles v. Apex Marine Corp., 498 U.S. 19 (1990).

Note:  “pecuniary losses” compensate for actual losses, and exclude “those losses which result from the deprivation of the society and companionship which are equally incapable of being defined by any recognized measure of value”, Michigan Central Railroad Co. v. Vreeland, 227 U.S. 59 (1913).  Examples of tort damages that are considered to be non-pecuniary include loss of consortium, loss of society, and grief.

Note:  In actions for maintenance and cure under the general maritime law, punitive damages may be available for the wanton and willful refusal to pay, based on Townsend v. Atlantic Sounding Company, 129 S. Ct. 2561 (2009).

So now there’s at least some clarity in the Fifth Circuit.  Seamen cannot recover punitive damages for Jones Act negligence or general maritime law unseaworthiness.

The Fifth Circuit’s decision traced a coherent path to its holding.  It goes through the Federal Employers Liability Act (FELA 1908) allowing pecuniary damages only, to the Supreme Court’s decision in Vreeland (1913) following and establishing the non-pecuniary damages bar in FELA, to the Jones Act’s incorporation of FELA’s ban on non-pecuniary damages (1920), and Death on the High Seas Act (DOHSA, 1920) bans on non-pecuniary damages, and the Supreme Court’s decision in Miles holding that in view of what Congress specifically allowed in the Jones Act and DOHSA (pecuniary damages only), it is not for the courts to expand by way of the general maritime law.

Note again:  The exception is the separate general maritime law action for maintenance and cure, where punitive damages may be available.

John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance and Financial Management, and the Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.