A BAD PRECEDENT
Pacific Ship Repair
and Fabrication Inc. v. Director, Office of Workers’ Compensation Programs;
Deborah Benge. Ninth Circuit July 24,
2012.
The
Ninth Circuit, in what can only be described in acceptable words as an
“unfortunate” decision, determined that surgery many years after maximum
medical improvement changes a “permanent disability” to a “temporary
disability” under the Longshore and Harbor Workers' Compensation Act.
Since
the employer had been granted second injury fund relief, the change to
temporary disability required the employer to pay compensation until the
claimant was fully recovered from the surgery.
Thereafter, permanent disability payments were resumed by the fund.
The
court noted that its review dealt only with the nature of the disability,
temporary or permanent. It affirmed the
Benefits Review Board’s affirmance of the Administrative Law Judge’s decision
to this effect, and endorsed as “reasonable” the Director’s longstanding
decision supporting the result.
What
the court, and evidently the Director, (smarting no doubt from the whipping he
received from the Supreme Court in the Harcum
case, and so confining himself to “protecting the Special Fund), failed to
consider was the effect this case had on the claimant.
The
claimant was injured on June 15, 1999.
Her average weekly wage was determined (on remand from the BRB) to be
$681.85. From October 20, 1999, she had
a residual wage earning capacity of $539.00.
She reached maximum medical improvement on January 6, 2000. The employer was ordered to pay 104 weeks of
compensation with the Special Fund paying thereafter.
Thus
the claimant was awarded:
Temporary
Total Disability 06/16/1999 –
10/19/1999 @ $454.57
Temporary
Partial Disability 10/20/1999 –
01/06/2000 @ $
95.23
Permanent
Partial Disability 01/07/2000 and
continuing @ $ 95.23
So
far so good.
On
October 7, 2007 the claimant had surgery, from which she recovered on June 30,
2008. After that she had no wage earning
capacity. She petitioned for
modification of the prior award. The
Judge awarded:
Temporary
Total Disability 10/07/2007 –
06/30/2008 @ $454.57
Permanent
Total Disability 07/01/2006 and
continuing @ $454.57
A
claimant who is permanently totally disabled is entitled to an annual increase
in compensation at the same rate as the increase in the National Average Weekly
Wage. A claimant with a permanent
partial disability is not, because all jobs are assumed to increase at the same
rate. The difference between average
weekly wage and the residual earning capacity from which the permanent partial
rate is calculated would therefore remain constant. In computing the residual earning capacity
determined at the time of maximum medical improvement is discounted downward
using the same method, to ensure that the difference is computed using numbers
valid at the time of disability.
When
the Administrative Law Judge interrupted the flow of permanent partial disability
payments on October 7, 2007, reinterpreting “permanent” to mean “temporary”
temporarily, he awarded benefits based on the compensation rate established in
June 1999. Once the case reverted to the
Special Fund on July 1, 2007 permanent total disability payments continued at
that rate.
If
the claimant had been permanently totally disabled from January 2000, her rate
at the time of surgery would have been $605, since she would have received the
annual increases. Clearly this is the
rate she should have received when her earning capacity dropped to zero. Neither the court nor the Director addresses
this point. The court states in its
second paragraph: “The label we affix does not affect whether the disabled
employee is entitled to disability benefits; instead it determines who pays the
benefits – either the employer or the special workers’ compensation fund”.
This
formulation allows the court to ignore the amount due to the claimant. To the claimant’s detriment. The claimant is now set to receive as total
disability only 75% of her real disability.
Let us hope that someone with standing sets about remedying this
anomaly. Immediately.
