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.