In the course of human events – mistakes are made. Many mistakes result from traps laid for the unwary. One of the biggest traps for employer representatives under the Longshore and Harbor Workers' Compensation Act, 33 U.S.C.S. § 901 et seq. (LHWCA), is the failure to file a timely and fully documented petition for Second Injury Fund/Special Fund relief under 33 U.S.C.S. § 908(f). This failure can result in the appearance of the johnny-come-lately Solicitor of Labor to assert THE ABSOLUTE DEFENSE!! This knee-buckling defense may bar the award of Second Injury Fund relief in otherwise meritorious situations. Fortunately, there are few absolutes in nature. This article will address the history of the absolute defense and ways to defend against its punitive effects.
The LHWCA applies the aggravation rule to make the work-related aggravation of a pre-existing disability compensable no matter how slight the work-related aggravation. Newport News Shipbuilding & Dry Dock Co. v. Fishel, 694 F.2d 327, 15 BRBS 52(CRT) (4th Cir. 1982). In order to encourage employers to hire employees with pre-existing disabilities, the Act includes a section providing a Second Injury Fund to assist employers in making payments to employees with pre-existing disabilities. Lawson v. Suwannee Fruit & Steamship Co., 336 U.S. 198, 93 L. Ed. 611, 69 S. Ct. 503 (1949). The Second Injury Fund provides that where an employee has a pre-existing permanent partial disability which combines with and contributes to the effects of an injury to make the claimant more disabled, then the employer's liability for permanent disability is limited to 104 weeks, after which the Second Injury Fund assumes liability for payment of permanent disability benefits. 33 U.S.C.S. § 908(f); Director, OWCP, etc. v. Campbell Industries, Inc., 678 F.2d 836, 14 BRBS 974(CRT) (9th Cir. 1982), cert. denied, 459 U.S. 1104, 74 L. Ed. 2d 951, 103 S. Ct. 726 (1983).1 The requirements for obtaining Second Injury Fund relief are (1) the claimant has a pre-existing permanent-partial disability; (2) the pre-existing disability, in combination with the subsequent work-related injury, contributes to a greater degree of permanent disability; and (3) the pre-existing disability was manifest to the employer. Lawson v. Suwannee Fruit & Steamship Co., supra; Director, OWCP, etc. v. Campbell Industries, Inc., supra; Brogden v. Newport News Shipbuilding & Dry Dock Co., 16 BRBS 259 (1984).
Prior to the 1984 amendments to the Act, employers' contributions to the Fund were not based on their use of the Fund. Furthermore, employers were entitled to claim Second Injury Fund relief so long as it was raised by the date of the first hearing before the administrative law judge. Wilson v. Old Dominion Stevedoring Corp., 10 BRBS 943 (1979); Egger v. Willamette Iron & Steel Co, 9 BRBS 897 (1979). However, the 1984 amendments increased the premium paid by employers based upon their use of the Fund.2 Furthermore, the amended statute requires that an employer must fully perfect its claim for Second Injury Fund relief earlier in the proceedings so as to give the Director an adequate opportunity to protect the interests of the Fund. Cajun Tubing Testors, Inc. v. Hargrave, 951 F.2d 72, 75, 25 BRBS 109(CRT) (5th Cir. 1992); 51 Fed. Reg. 4270, 4278 (Feb. 3, 1986). Specifically, the Act now provides as follows, to-wit:
Any request, filed after the date of enactment of the Longshore and Harbor Workers' Compensation Amendments of 1984, for apportionment of liability to the special fund established under Section 44 of this Act for the payment of compensation benefits, and a statement of the grounds therefore, shall be presented to the deputy commissioner prior to the consideration of the claim by the deputy commissioner. Failure to present such request prior to such consideration shall be an absolute defense to the special fund's liability for the payment of any benefits in connection with such claim, unless the employer could not have reasonably anticipated the liability of the special fund prior to the issuance of a compensation order.
33 U.S.C.S. § 908(f)(3) (emphasis added).
Likewise, the regulations implementing the Act provide as follows:
[(b)(1)] i. Where notice is given to all parties that permanency shall be an issue at an informal conference, the fully documented application must be submitted at or before the conference. . . .
(3) Where the claimant's condition has not reached maximum medical improvement and no claim for permanency is raised by the date the case is referred to the OALJ, an application need not be submitted to the district director to preserve the employer's right to later seek relief under section 8(f) of the Act. In all other cases, failure to submit a fully documented application by the date established by the district director shall be an absolute defense to the liability of the special fund. This defense is an affirmative defense which must be raised and pleaded by the Director. The absolute defense will not be raised where permanency was not an issue before the district director. In all other cases, where permanency has been raised, the failure of an employer to submit a timely and fully documented application for section 8(f) relief shall not prevent the district director, at his/her discretion, from considering the claim for compensation and transmitting the case for formal hearing. The failure of an employer to present a timely and fully documented application for Section 8(f) relief may be excused only where the employer could not have reasonably anticipated the liability of the special fund prior to the consideration of the claim by the district director. . . .
20 C.F.R. § 702.321 (emphasis added).
Based upon the newly created absolute defense, the Director, OWCP, through his attorneys in the Office of the Solicitor, often asserts that Second Injury Fund relief is not allowable since the workers' compensation administrator, the adjuster, or (incredibly) even the attorney failed to file a fully documented petition for Second Injury Fund relief in a timely fashion. Then it is time to see what can be done to make chicken salad out of a bad situation.
The absolute defense may not be so absolute after all. The wording of the statute and regulation, as well as the case law, suggests that several methods may be asserted to counter the so-called "absolute defense." First, the statute itself provides that it is not applicable to claims pending as of the date of the 1984 amendments. Unfortunately, there are not many of those around any more. See Scott v. S.E.L Maduro, Inc., 22 BRBS 259 (1989); Verderane v. Jacksonville Shipyards, Inc., 772 F.2d 775, 778 n.5, 17 BRBS 155(CRT), 157 n.5 (11th Cir. 1985).
Second, the regulation specifies that the absolute defense is an affirmative defense which must be raised and pleaded by the Director, OWCP. 20 C.F.R. § 702.321(b)(3). It is insufficient for the Solicitor to merely make an appearance in the case and rely upon the District Director's referral letter which raises the absolute defense. Abbey v. Navy Exchange, 30 BRBS 139 (1996); Marko v. Morris Boney Co., 23 BRBS 353 (1990).
Third, the absolute defense does not apply where the Director, OWCP, affirmatively asserts the absolute defense in the wrong claim in a case with consolidated claims. Hawthorne v. Ingalls Shipbuilding, Inc., 28 BRBS 73 (1994), modified on reconsideration, 29 BRBS 103 (1995).
Fourth, the absolute defense is not applicable where the employer files a petition for Second Injury Fund relief by the date of the informal conference. Rice v. Newport News Shipbuilding & Dry Dock Co., 32 BRBS 102 (1998); Container Stevedoring Co. v. Director, OWCP (Gross), 935 F.2d 1544, 24 BRBS 213(CRT) (9th Cir. 1991).
Fifth, the absolute defense is clearly not applicable to cases wherein the claimant had not reached maximum medical improvement by the date of the informal conference. Nathenas v. Shrimp Boat, Inc., 13 BRBS 34 (1980); Laput v. Blakeslee, Arpaia, Chapman, Inc., 11 BRBS 363 (1979); Jamison v. Marine Terminals, Inc., 10 BRBS 194 (1979).
Sixth, the absolute defense is not applicable where the claimant does not seek permanent disability benefits at the conference even though the claimant should have sought such benefits. Brazeau v. Tacoma Boat Building Co., 24 BRBS 128 (1990).
Seventh, the absolute defense is not applicable where the claimant alleges entitlement to only scheduled permanent disabilities of less than 104 weeks. Strachan Shipping Co. v. Nash, 751 F.2d 1460, 17 BRBS 529(CRT) (5th Cir. 1985), on reconsideration en banc, 782 F.2d 513, 18 BRBS 45(CRT) (5th Cir. 1986); Byrd v. Toledo Overseas Terminal and Wills Trucking Co., 18 BRBS 144 (1986).
Eighth, the absolute defense is not applicable where the claimant has failed to reveal information about pre-existing disabilities. Currie v. Cooper Stevedoring, Co., Inc., 23 BRBS 420 (1990).
Ninth, the absolute defense is not applicable where the employer reasonably did not possess sufficient medical information that the claimant had a pre-existing disability that contributes to his current level of disability. Director, OWCP v. Vessel Repair, Inc., 168 F.3d 190, 33 BRBS 65(CRT) (5th Cir. 1999); Ortiz v. Todd Shipyards Corp., 25 BRBS 228 (1991).
Tenth, the absolute defense does not apply where the employer files a generic petition for Second Injury Fund relief by the date of the informal conference so long as the petition provides the documentation of the basis for the claim. Callnan v. Morale, Welfare & Recreation, Department of the Navy, 32 BRBS 246 (1998).
From the foregoing, it is obvious that the absolute defense is not an insurmountable obstacle to obtaining Second Injury Fund Relief, despite what the Director would have us believe. However, the best defense to the absolute defense is to avoid it being raised in the first place. In order to avoid this issue, the following helpful hints are offered:
1. Maintain medical or employment records documenting pre-existing disabilities where allowed by law.
2. Obtain a thorough statement from the claimant at the time of injury, inquiring as to pre-existing disabilities.
3. Inquire of the doctors as to whether pre-existing conditions contribute to the effects of claimant's current injury.
4. Review any file in which a claimant has reached maximum medical improvement prior to the informal conference to determine whether it is a viable situation for 8(f) relief.
5. Retain competent legal counsel to file an 8(f) petition and represent the interests of the employer and/or carrier at the informal conference.
6. If an 8(f) petition cannot be filed by the date of the conference, obtain an extension of the deadline from the claims examiner.
In conclusion, although there are some procedural objections to the absolute defense, the primary defense is to show that Second Injury Fund liability could not be reasonably anticipated at the time of the informal conference. This may get into a Watergate-like debate as to what the employer knew and when it knew it. Good claims practice would be to timely file a fully documented petition for Second Injury Fund relief by the date of the informal conference.