Ninth Circuit: “Permanent” is Not Forever

Claimant suffered a neck and back injury while working for employer.  This new injury overlaid pre-existing back and neck injuries.  Once Claimant reached maximum medical improvement, the parties stipulated that she could not return to her previous position and that she was permanently partially disabled.  Based on the preexisting disability, permanent partial disability payments were made by the Second Injury Fund pursuant to Section 8(f) of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

Years later, Claimant’s medical condition deteriorated to the point that she needed surgery.  She could not return to work after the surgery, and was rendered totally disabled.  The issue that arose was whether Claimant was permanently or temporarily disabled in the “period of recuperation or healing” following Claimant’s surgery.  If she was temporarily disabled, then Employer had to pay benefits during the recuperation period; but if Claimant was permanently disabled, then the Second Injury Fund had to pay benefits.

The Ninth Circuit determined that Claimant was temporarily disabled.  Although Claimant was previously determined to be permanently disabled, nothing in the LHWCA prevents a permanently disabled claimant from regressing into a temporary disability status.  Changed circumstances over time can require a permanency reassessment.

If strictly construed and limited to the facts of the case, the Ninth Circuit’s decision is acceptable.  Invasive surgeries require recuperation.  But there are problems with the Ninth Circuit’s decision, such as the court’s misunderstanding of the LHWCA’s disability classification scheme.  Whether a disability is permanent or temporary depends on whether a claimant reaches maximum medical improvement (or when normal and natural healing is no longer likely).  And whether the disability is total or partial depends on the availability of suitable alternative employment.  Yet, in dicta, the Ninth Circuit makes this statement: “Assuming [Claimant’s] underlying partial permanent disability was not expected to improve due to the surgery, [the Benefits Review Board’s Leech opinion] supports the determination that [Claimant] was temporarily totally disabled under the Longshore Act because [Claimant] lost all wage-earning capacity.”  This sounds more like permanent total disability than temporary total disability…and if Claimant was permanently disabled, then the Second Injury Fund, and not the employer, should be paying benefits.

The Director’s stated position in this controversy is also noteworthy.  According to the Ninth Circuit, the Director “focuses on the potential for improvement of a condition…as the decisive factor in determining whether a disability should be categorized as temporary….”  The “initiation of a healing period serves as a ‘reset’ button for a disability previously-determined to be permanent.”  This position could create problems in the absence of clear guidelines.  When is there a new potential for improvement?  Only after surgery?  Or will noninvasive procedures, physical therapy or even tweaks in medication management regimes lead to a “potential for improvement”?  The Ninth Circuit attempted to answer the question when it stated that “[p]eriods of healing related to a flareup, relapse, surgery, or other major treatment could all lead to a new and unknown maximum medical improvement point based on the vicissitudes of the individual’s responsiveness to medical treatment.”  Unfortunately, this leads to yet another question: could a positive individual response to even minor treatment “reset” the disability determination if there is a “potential” for improvement?

Hopefully future courts will limit the application of Pacific Ship Repair to the Ninth Circuit’s express holding that, “under the Longshore Act, a prior finding of partial permanent disability does not preclude a later finding of temporary disability for the same underlying injury during a period of recovery following surgery.”  This holding should be limited to the facts of the case, and it should only apply when a post-permanency surgery has taken place.

Pacific Ship Repair and Fabrication, Inc. v. Dir., OWCP, — F.3d —– (9th Cir. 2012).

Note: The Director’s Brief is not yet posted on the Solicitor of Labor’s SOL Briefs webpage, but we will be interested to read it once posted.  Perhaps the Director’s Brief will identify when a “potential for improvement” is achieved.

Vessel Inspection Within Limits of Discovery Order

Plaintiff was allegedly exposed to toxic gas and suffered a resultant injury while working aboard Employer’s vessel.  He filed suit against his employer under the Jones Act and general maritime law for maintenance and cure, unseaworthiness and negligence.

The trial was continued because the parties advised the Court that additional time was needed to conduct discovery.  The Court allowed the parties the opportunity to conduct further limited discovery and depositions.

Plaintiff filed a Motion to Compel Vessel Inspection, seeking to have its toxicologist and chemist examine the vessel.  The motion was granted by the magistrate judge, and defendant Employer filed an objection to the Magistrate’s ruling.

Defendant argued that the inspection would constitute improper modification of the Court’s scheduling order and was outside the limited discovery permitted by the Court.  It indicated that Plaintiff failed to explain the importance of the inspection, and also alleged that it would suffer prejudice if Plaintiff’s experts inspected the vessel.

The Court found that the Magistrate’s ruling was neither clearly erroneous nor contrary to the law.  It held that it did not constitute a modification of the scheduling order, and that Defendant agreed to additional discovery and an opportunity to amend expert reports.  Finally, the Court found that Defendant would not suffer prejudice as a result of the Order.  The Court denied Defendant’s Objection to the Magistrate’s Ruling to Compel Vessel Inspection.

White v. Florida Marine Transporters, 2012 WL 1995798 (E.D. La., June 4, 2012).

Update: Petitioner Briefs for “Lozman v. City of Riviera Beach” are Online at SCOTUSBlog

Earlier this year, the Supreme Court granted certiorari in what will undoubtedly be the year’s most important maritime opinion.  In Lozman v. City of Riviera Beach, Florida, the Court will answer “[w]hether a floating structure that is indefinitely moored, receives power and other utilities from shore, and is not intended to be used in maritime transportation or commerce constitutes a ‘vessel’ under 1 U.S.C. Sec. 3, thus triggering federal maritime jurisdiction.”  Petitioner Fane Lozman’s Brief has been filed, as has Amicus Briefs in support of Petitioner.  This entry addresses the arguments lodged in those Briefs, which are posted on SCOTUSBlog.  (NavWaters will do a follow-up article once Respondent’s Brief and supporting Amicus Briefs are posted online.)

Brief for Fane Lozman:

Indefinitely moored floating structures are extensions of land, not “vessels.”  A structure’s “purpose” is defined by its design and function.  A vessel’s purpose is to carry people or things over water, and it is designed for such.  An indefinitely moored floating structure lacks any such purpose.   The “purposive approach” was not abrogated by the Supreme Court, like the lower court claimed.  Just the opposite.  In Stewart v. Dutra Construction Co. the Court “stressed . . . that transportation must be one of the purposes of a structure for it to qualify as a vessel.”  Finally, principles of federalism will suffer if admiralty jurisdiction is extended to moored floating structures that function as extensions of land.

Amicus Brief for the United States:

The ability to float does not make a structure a “vessel.”  Instead, the purpose or function of the structure must be analyzed to determine “whether it is practically capable of being used for marine transportation.”  This inquiry should focus on objective criteria, and not the owner’s subjective intention.  Objectively, when “a floating structure’s function is to remain stationary near the shore, it is often not practically capable of being used for maritime transportation.”

Amicus Brief for the Seattle Floating Home Assoc. and Floating Homes Assoc. of Sausalio:

In this interesting Brief, Amici “describe the design and purpose of floating homes, their structural limitations, and the nature of the communities that comprise them.”  Floating homes are stationary residences that lack means of self-propulsion and are attached to land-based moorage facilities.  Utilities are provided via connections with land-based utilities.  The floating homes are built according to the same codes governing land-based homes, and sometimes these homes cannot be towed.  The ability to be towed may be unimportant considering that many floating homes are kept in the same place for decades.  Finally, pinning “vessel” status to floating homes would lead to undesirable consequences like frustrating “the existing state and local regulatory regime for floating homes . . . .”

Amicus Brief of Maritime Law Professors:

Amici argue that “floating structures that are intentionally and indefinitely moored, that are used in the manner of structures on fast land, that are not used for transportation on the water, and that will not be so used for the foreseeable future are not vessels . . . .”   There is no reason to displace adequate state law with federal admiralty law.  The test for what is a “vessel” should “remain focused on functional considerations” instead of turning on whether “such structures can be, and occasionally are, towed across water.”  Further, extending admiralty jurisdiction to Mr. Lozman’s floating house would prompt serious federalism concerns by infringing on matters typically reserved for state law, such as landlord-tenant relations.

Amicus Brief of the American Gaming Association:

Whether a floating structure is a vessel is a practical consideration that should not depend on whether the structure can be towed across water.  When “practical considerations” are extended to dockside casinos, courts have largely agreed that “dockside casinos that have been moored for years are not vessels even if they theoretically might navigate over water or are registered with the Coast Guard.”  The American Gaming Association’s Brief has a great write-up collecting the eleven federal and state court rulings since Stewart v. Dutra Construction Co. that review whether dockside casinos are vessels under federal maritime law.

Legally a Wife But Not Legally Entitled to Benefits

The deceased, a foreign national, married his first wife and with her had four children, who are now adults.  He then moved to the United States and married his second wife, and with her had two children.  Upon his death, Employer initiated death benefits to the first wife.  When Employer discovered the second wife and two minor children, Employer divided the death benefits among the first wife, the second wife, and the two minor children.

The administrative law judge (“ALJ”) found that only the second wife and her children were entitled to benefits, and that Employer was not entitled to credit for amounts already paid to the first wife.  Employer appealed this decision to the Benefits Review Board (“BRB”).

The BRB affirmed the ALJ’s decision that only the second wife and children were entitled to benefits.  Although the deceased was legally married to his first wife, a legal marriage alone is insufficient for purposes of death benefits under Section 9(b) of the Longshore and Harbor Workers’ Compensation Act (“the Act”).  Under the Act, a wife entitled to death benefits must be “living with or dependent for support upon” the decedent “or living apart for justifiable cause or by reason of [the decedent’s] desertion at the time of death.”  Here, although the decedent was legally married to his first wife, the BRB found that there was insufficient evidence that she met the criteria of a widow entitled to death benefits.  No evidence existed that the decedent was living with the first wife or that the decedent supported the first wife financially.  There was also no evidence establishing any basis for their living apart or desertion.  As such, the BRB held that the second wife, who was living with the decedent at the time of his death, was the only wife entitled to benefits as decedent’s widow.  Without a conjugal nexus, death benefits are not owed to a surviving spouse.

Omar v. Al Masar Transp. Co., No. 11-0809, 2012 WL 2520756 (Ben. Rev. Bd. 2012) (published).