Certiorari Denied October 14, 1980. See 101 S.Ct. 281.
Opinion for the Court filed by Circuit Judge McGOWAN.
McGOWAN, Circuit Judge:
This case presents for review an order of the United States Department of Labor's Benefits Review Board awarding compensation to petitioner Robert Hastings. At issue are complex questions of calculating benefits under the District of Columbia Workmen's Compensation Act.
The facts of this case, set forth here as found by an Administrative Law Judge (ALJ), are not challenged in this petition for review. Petitioner Hastings was the secretary, treasurer, and comptroller of Earth Satellite Corp., a District of Columbia consulting firm. His annual salary was $30,000. Earth Satellite interprets aerial photography for private companies and the government. Earth Satellite, in which Hastings had invested heavily, needed an infusion of new capital early in 1971. Hastings, under great pressure to put together a financial package, found himself working an average of 60 hours per week.
Hastings suffered a stroke on April 1, 1971. After hearing conflicting medical testimony, the ALJ found that the stroke was caused by job stress.
Hastings convalesced for ten months. He returned to work on February 8, 1972, and was employed on a part-time basis for about two years. Earth Satellite paid Hastings at the same rate as his previous salary, prorated for the number of hours he worked. Although Hastings worked an average of only 50 hours per month over the two-year period, his time on the job gradually increased between 1972 and 1974.
Hastings filed separate claims for the stroke and the emboli.
The Act requires the ALJ to calculate benefits by assessing both the magnitude and duration of Hastings' disability. Phase I was a period of "temporary-total" disability, according to the ALJ. Compensation for this kind of disability is set by section 8(b) of the Act, 33 U.S.C. § 908(b) (1976).
Phase II was characterized as a period of "permanent-partial" disability. Compensation for this kind of disability is governed by section 8(c) of the Act, 33 U.S.C. § 908(c)
Phase III, the period following the emboli, was deemed by the ALJ to be a period of "permanent-total" disability. Compensation for this kind of disability is governed by section 8(a) of the Act, 33 U.S.C. § 908(a) (1976).
The ALJ further ordered that the Phase II permanent-partial disability award (resulting from the stroke) should end at the time the Phase III permanent-total disability award (following the emboli) began. The ALJ held, finally, that Earth Satellite was liable only for 104 weeks of Phase III payments, and that the "special fund" established by the Act
Both Hastings and the Director, Office of Workers' Compensation Programs (the Director), appealed the ALJ's decision to the Benefits Review Board (the Board). Hastings contended that the ALJ erred in computing the salary upon which compensation should be based. The Director argued that the ALJ erred (1) in requiring the special fund to assume part of the employer's liability, and (2) in terminating the permanent-partial compensation for the stroke on the date Hastings suffered the emboli.
The Board rejected Hastings' argument, and the Director's first argument, and affirmed the ALJ in each respect. The Board did, however, accept the Director's second argument and endorsed concurrent awards for permanent-partial and permanent-total disability. The Board, accordingly, modified the ALJ's decision by requiring the employer to continue to pay $70 per week for permanent-partial disability until $24,000 had been paid,
A. The Salary Basis for the Permanent-Total Disability Award
Hastings contended that the ALJ erred in determining the salary basis of payments for permanent-total disability. Hastings was earning $30,000 per year at the time of the 1971 stroke, and he argued that this figure, rather than his part-time earnings between the stroke and the emboli, should have been the basis for a permanent-total disability award.
The Board disagreed. It noted that the statute authorized payment of two-thirds of the claimant's "average weekly wages." See sections 8(a), 10 of the Act, 33 U.S.C. §§ 908(a), 910 (1976), quoted in notes 8, 10 supra. The Board held that the ALJ correctly computed average weekly wages of $177.48 by dividing Hastings' earnings for the year preceding the emboli—$9,228.80— by 52. The Board thought this calculation was compelled by the language of the statute, namely, that the basis for compensation is the average weekly wage of the injured employee "at the time of the injury." Section 10(d) of the Act, 33 U.S.C. § 910(d) (1976) (emphasis added). That Hastings formerly earned a much higher salary was irrelevant, the Board held.
B. The Liability of the Special Fund
When a worker with a permanent-partial disability becomes totally and permanently disabled because of a combination of both disabilities, the employer at the time of the permanent-total disability is liable only for 104 weeks of compensation, id. § 8(f)(1), 33 U.S.C. § 908(f)(1) (1976), and the special fund assumes responsibility for the remaining payments, id. § 8(f)(2), 33 U.S.C. § 908(f)(2) (1976). The ALJ attributed Hastings' permanent disability to the combined impact of his earlier stroke and the subsequent, distinct attack of phlebitis and emboli. Accordingly, the ALJ ordered the special fund to pay Hastings after Earth Satellite had paid the first 104 weeks.
The Director argued, however, that because the emboli and phlebitis were directly related to the stroke, and not a separate "subsequent injury," Earth Satellite should be liable for the entire permanent-total disability. The Board rejected this argument. It noted that the ALJ had found that the phlebitis and emboli were caused or aggravated by his sedentary desk job. The ALJ had not found that the phlebitis and emboli were caused by the stroke. Section 8(f) of
C. The Length of the Permanent-Partial Award for the Stroke
The Director next argued that the ALJ erred in terminating the permanent-partial award (resulting from the stroke) at the onset of total disability. The Board agreed, holding that Earth Satellite should have continued to pay $70 per week for permanent-partial disability until the $24,000 statutory maximum was reached. This approach in effect created a system of concurrent awards, because the permanent-partial award for the stroke was to be paid even during the payment of the permanent-total award following the emboli. The Board held:
Presented here for review are several questions arising from the Board's decision. We must decide
We think the Board correctly refused to base the permanent-total disability award on Hastings' salary before the first injury, the stroke. The Act bases benefit computations on the worker's "average weekly wages." Section 8(a) of the Act, 33 U.S.C. § 908(a) (1976), quoted in full in note 8 supra. The Act carefully defines that term. It provides, in pertinent part:
Id. § 10, 33 U.S.C. § 910 (1976) (emphasis added). Where, as here, two injuries befall an employee, the employee's earning capacity during the time preceding the second injury must be the basis of computing benefits attributable to the second injury.
Hastings cites section 2(13) of the Act, 33 U.S.C. § 902(13) (1976), as support for his theory that his compensation should be based on his earnings before the first injury. That section provides, in pertinent part:
Hastings argues that the "money rate" paid before the stroke—$30,000 per year— was identical to the "money rate" paid after the stroke—$30,000 per year prorated for the number of hours worked.
We think Hastings misinterprets both the Act and the part-time employment arrangement he had with Earth Satellite. Hastings' strained reading of the definitional section of the Act cannot be used to subvert
We think, also, that the Board's scheme of concurrent awards for both permanent-partial disability (for the stroke) and permanent-total disability (for the cumulative effects of both stroke and emboli) was appropriate. This conclusion is compelled by our reasoning in the preceding section of this opinion. In that section, we based compensation for Hastings' permanent-total disability on his diminished earning capacity, not on the $30,000 per year earning capacity he possessed before the stroke. Because compensation for his original loss of earning capacity was already addressed in the permanent-partial award, logic and fairness require that the permanent-partial disability award continue concurrently with the permanent-total award.
A hypothetical makes this clear. Consider a worker earning $10,000 per year. An accident permanently reduces his earning capacity to $6,000. He is awarded compensation based on the $4,000 diminution in his earning capacity. A second accident disables him totally. The second compensation award is based on the $6,000 in earning capacity remaining after the first accident. Terminating the first award at the onset of the second would deprive the worker of compensation for the permanent loss of $4,000 in earning capacity. Paying the two awards concurrently, however, compensates him fully. The sum of the two awards reflects the full $10,000 diminution in earning capacity.
This reading of the Act might give rise to an anomaly, namely, that a twice-injured, permanently disabled worker might receive a larger award than a worker who had become permanently disabled in a single injury. The anomaly could arise because of the ceilings on awards imposed by section 6(b) of the Act, 33 U.S.C. § 906(b) (1976). In 1974, for example, the weekly ceiling was $210.54. Consider a worker earning $600 per week, who becomes injured and can earn only $300 per week. The worker is entitled to compensation for the diminution of his earning capacity. His weekly compensation is two-thirds of $300, or $200 per week. Suppose now that a second accident befalls the same worker, leaving him totally disabled. Compensation for the second injury is two-thirds of $300, or $200 per week. The sum of the awards, using the concurrent award approach described above, is $400 per week.
Consider now a second worker who, like the first, initially earned $600 per week. Suppose that the second worker, unlike the first, becomes totally disabled in a single accident. The diminution in earning capacity is $600 per week, and recovery ought to be two-thirds of $600, or $400 per week. The section 6(b) maximum, however, limits recovery to $210.54 per week. Thus, one totally disabled worker might obtain $400 per week in benefits while one with equal earning capacity, also totally disabled, obtains barely half that amount. The difference occurs only because the first worker became totally disabled in two consecutive injuries while the second worker became totally disabled in only one.
Concurrent awards for multiple disabilities might, in this unusual case, aggregate to an amount greater than the section 6 maximum for a single totally disabling injury. This specter does not indicate a flaw in the system of concurrent awards; rather, it is caused by the existence of the Act's maximum-payment provisions. Congress is free to amend the statute to eliminate the resulting anomaly.
We have thus far found appropriate the structure of the Board's award, namely, concurrent awards for permanent-partial disability (based on Hastings' earnings before the stroke) and permanent total disability (based on Hastings' earnings from part-time work). Remaining to be decided are the questions (1) whether the permanent-partial award should be limited by the $24,000 ceiling that was repealed after Hastings' stroke, and (2) whether the Board accurately computed Hastings' "average weekly wages" during the period of part-time work for purposes of paying permanent-total disability.
Section 14(m) of the Act formerly limited permanent-partial recoveries to $24,000. 33 U.S.C. § 914(m) (1970; Historical Note, 1976). That limitation was repealed in 1972, after Hastings suffered his stroke. Pub.L. No. 92-576, § 5(e), 86 Stat. 1252 (1972). The Board thought that, because the stroke preceded the repeal, the limitation was applicable to the permanent-partial disability component of Hastings' award. The Board, accordingly, ordered that payments cease when $24,000 had been paid. We disagree.
The principles by which we must pass upon the retroactivity vel non of the repeal of the $24,000 limitation were explained by the Supreme Court in Bradley v. School Board, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974). We are instructed to apply the amendment unless there is statutory direction or legislative history to the contrary or unless to do so would be manifestly unjust. Id. at 711, 94 S.Ct. at 2016.
We find no congressional intention that the repeal not be applied retroactively. The statutory language, to be sure, does not specifically require retroactive application of the repeal. We think, though, that the absence of a provision prohibiting retroactivity is significant. Congress before 1972 had thrice amended the Act's benefit limitations. Each prior amendment was, by its terms, made inapplicable to injuries or deaths occurring before the date of enactment.
It is also useful to consider the kinds of changes wrought by the 1972 Amendments. Some of the changes have been held to apply only prospectively. Others have been applied retroactively. Comparing the nature of the other amendments with the change in law effected by section 14(m)'s repeal makes it apparent that the $24,000 limitation is inapplicable to this case.
Certain of the 1972 Amendments change principles of substantive law. Amendments of this sort affect the rights and liabilities of persons and businesses in the maritime industry. These amendments, inter alia, (1) eliminated a shipowner's liability to a long-shoreman for injuries caused by the unseaworthiness of the ship,
Certain other of the amendments, however, dealt not with liability vel non, but with the remedy or the mode of its enforcement. The Amendments, inter alia, (1) provided for the payment of attorney's fees,
Where Congress fails to make its intentions absolutely clear, courts are much more inclined to apply retroactively amendments directed at the remedy rather than changes in substantive rights. See Cooper Stevedoring of Louisiana, Inc. v. Washington, 556 F.2d 268, 271-73 (5th Cir. 1977). Retroactive modification of remedies normally harbors much less potential for mischief than retroactive changes in the principles of liability. Persons and employers must be able to base their conduct on what they believe the law to be. Retroactive creation of legal responsibilities or abolition of legal rights risks unfairness because the retroactive change confounds the expectations upon which persons acted.
Retroactive modifications in remedy, on the other hand, often do not involve the same degree of unfairness. Such modifications do not transform a legal act into an illegal act, or render one responsible to safeguard someone previously thought to act at his peril. Modification of remedy merely adjusts the extent, or method of enforcement, of liability in instances in which the possibility of liability previously was known.
We therefore hold that the repeal of section 14(m) applies retroactively to awards for preamendment injuries that had not reached the statutory ceiling before the effective date of the 1972 Amendments.
We acknowledge the numerous Board decisions holding that the repeal of section 14(m) is not retroactive. See decisions cited in note 14 supra. Courts will defer to great extent to a policymaking agency's construction of legislation pertaining to that agency. The Benefits Review Board, however, is not a policymaking agency in this sense.
The final issue to be resolved is the proper calculation of permanent-total disability payments for the period following
Hastings contends that this mechanical application of the statutory formula deprives him of benefits to which he is entitled. He points out that, with occasional setbacks, during his period of part-time work he became able to work an increasing number of hours per week.
We agree. Concededly, the ALJ and the Board calculated Hastings' benefits in accord with the literal terms of the statutory formula, id. §§ 910(a), 910(d), and we are loath to criticize an administrative agency for that. The statute does not, however, elevate mechanical computation above common sense. An ALJ can, and should, adjust the average weekly wage calculation to award benefits that accurately reflect the claimant's true earning capacity.
The existence of this kind of flexibility is apparent both from the statute itself, and decisions construing it. Section 10(c) of the Act, 33 U.S.C. § 910(c) (1976), provides:
(Emphasis added). This section explicitly recognizes that the mechanical formula for benefit computation must be disregarded where the formula would distort a claimant's actual earning capacity.
Appellate cases make clear that section 10(c) requires the ALJ to reject mechanical calculations when necessary to award benefits commensurate with a claimant's true earning capacity. The Court of Appeals for the Seventh Circuit recently decided one such case. Tri-State Terminals, Inc. v. Jesse, 596 F.2d 752 (7th Cir. 1979), involved the 1974 injury of one Jesse, longshoreman. He had earned $2,758.74 in the 52 weeks preceding his injury. The ALJ computed benefits based on that figure, but the Benefits Review Board reversed. The Board noted that the year following Jesse's injury was a boom year for longshoremen in his town. Jesse's former co-workers earned approximately three times more in 1974 than they had in 1973. The Board held that Jesse was entitled to compensation based on this increase in earnings, because he would have been able to earn the greater amount had he not been injured.
The Seventh Circuit affirmed the Board. It stated that it would be unjust "to compute loss of earning power on facts which do not realistically reflect it." Id. at 758. The court quoted the Board's opinion with approval:
Id. at 757 (emphasis in original).
Similarly, we think Hastings' "potential to earn" at the time of his final collapse is not well measured by his earnings as much as 12 months earlier. At oral argument of
So it is, we think, with a worker recovering from a debilitating stroke. Hastings showed he could work an increasing number of hours during the period following his stroke. Hastings' actual working capacity at the time of the emboli is best measured by the amount he worked during the two-or four-week period immediately preceding the emboli.
We do not, of course, hold that an ALJ must reject the normal formula whenever there is a prospect of increased earnings in the future. An employer need not pay a claimant more than his current earnings on the speculative possibility that the claimant might have earned more money in the future had injury not occurred. The instant case, however, involves no speculation. All we require is that where, as here, an employee demonstrates a progressive increase (or decrease) in earnings in the year immediately preceding an injury, compensation should not be based on earnings received as much as 12 months before the injury. Instead, a compensation award should be fixed by recognizing the trend in earnings by examining most closely the earnings immediately preceding the injury.
We conclude, in sum, that the Board adopted the correct framework for the payment of Hastings' benefits: concurrent awards for permanent-partial disability (running from the time of the stroke) and permanent-total disability (running from the occurrence of the emboli). We think, however, that the Board erred in setting the dollar amount of the award in each part of the concurrent-award framework.
Accordingly, the order of the Board is affirmed in part, reversed in part, and remanded for proceedings consistent with this opinion.
It is so ordered.
1972Nov. 61 July 50 Feb. 21 Dec. 50 Aug. 55 March 53.5 Sept. 50 April 58 1973Oct. 0 May 53.5 Jan. 49.5 Nov. 67 June 43.5 Feb. 52 Dec. 38 July 49.5 March 33 Aug. 50 April 55 1974Sept. 31.5 May 66 Jan. 81 Oct. 31 June 61 Feb. 77
J.A. 75-82. Some months in which lesser amounts of work were done may be attributable to vacation periods. See Reply Brief for Petitioner, Appendix A.
Section 10 of the Act, 33 U.S.C. § 910 (1976).
It is true that Hastings should have requested the Board to apply retroactively the repeal of section 14(m) in the event the Board adopted a concurrent award scheme. However, the special circumstances of this case make us disinclined to insist on overly strict procedural requirements. The Board has clearly taken the view that the repeal of section 14(m) should not be applied retroactively. Davis v. George Hyman Constr. Co., 9 B.R.B.S. 127 (1978); Correia v. General Dynamics Corp., 8 B.R.B.S. 602 (1978); Vinson v. Avondale Shipyards, Inc., 8 B.R.B.S. 597 (1978); Swann v. George Hyman Constr. Co., 3 B.R.B.S. 490 (1976); Salusky v. Army Air Force Exch. Serv., 3 B.R.B.S. 22 (1975); Hayes v. Independent Stevedoring Co., 1 B.R.B.S. 264 (1975). It is therefore highly unlikely that the Board would have changed its mind in this case had it again been asked to consider the issue. In any event, the question of the retroactivity of a statutory amendment is purely one of law. We are not disadvantaged under these circumstances in considering the issue ourselves in the first instance, nor can Earth Satellite reasonably claim that it has been prejudiced by our doing so.
We emphatically disagree on each point. The Director's strategy about what cases to appeal may result from myriad factors, e. g., allocation of staff attorney time, the amount in controversy in a particular case, the prospects of settlement, and others. The Director's litigation strategy is neither a matter of concern to us, nor in any event relevant to the retroactivity vel non of the repeal of section 14(m).
The same is true of Mr. Hartman's voting record as a member of the Board. His position qua advocate is a product of factors vastly different from those guiding his opinions qua adjudicator. For that reason, Mr. Hartman's employment history also is irrelevant to the issues before us here.
His permanent-total disability payments should reflect his $8,000 per year capacity at the time of the second accident. That, however, would permit "double-dipping" of a sort, because his aggregate disability payments would be based on the loss of $14,000 in earning capacity—$6,000 for the first accident, and $8,000 for the second. This sum represents more earning capacity than he had to begin with. In cases such as this, the award modification mechanism established by the Act should be invoked. 33 U.S.C. § 922 (1976). The initial award, based on a $6,000 loss in earning capacity, resulted in overpayments. The first award should be reduced prospectively to reflect a permanent loss of $2,000 in earning capacity. The claimant concurrently should receive an award for the permanent loss of $8,000 in earning capacity.
Changes in earnings after adjudication can be predicted to some extent by the careful use of medical testimony at hearings. But medical testimony can be incorrect. When this occurs, adjustments should be made, pursuant to the statutory procedures, to avoid injustice resulting from initially incorrect factual determinations. See generally O'Keeffe v. Aerojet-General Shipyards, Inc., 404 U.S. 254, 92 S.Ct. 405, 30 L.Ed.2d 424 (1971).
The problems discussed in this footnote, of course, do not now confront us because Hastings' compensation for both injuries was determined in a single adjudication. For this reason, we are able to see in hindsight the extent of the disability caused by Hastings' first injury by examining his work record up to the onset of total disability. No prospective recomputation of Hastings' permanent-partial award is necessary in this case because Hastings received the statutory maximum of $70 for the stroke. That award would not change even if the extent of disability caused by the stroke were computed to reflect his increased working capacity demonstrated immediately before the emboli.
Attorney's fee. Hastings objects to the Board's reduction of his requested attorney's fee for work done at the Board level. Hastings also seeks an attorney's fee for work done in this court.
We defer consideration of the latter pending receipt of a timely, documented, motion for fees in this court. Until that is submitted, a request for fees for work done before this court is premature.
We affirm the Board's award of attorney's fees for work done before it. Our review of that award is limited to an inquiry into whether the award was arbitrary or capricious. The Board noted that the primary theory under which Hastings prevailed before the Board— the system of concurrent awards—was that advocated by counsel for the Director. The Board reduced Hastings' attorney's fee award accordingly. We think that counsel for the Director, both before this court and before the Board, has performed superior oral and written advocacy. This has benefitted Hastings in important respects (although the Director's position was not aligned with that of Hastings on every issue). We agree with the Board that this is relevant to the amount of fees that should be awarded Hastings' counsel. Accordingly, we cannot say that the Board's award of fees to Hastings' counsel was arbitrary or capricious, and we affirm.
Penalty Payments and Interest. The ALJ noted that a penalty of 10% is payable on compensation awards not paid within 14 days after such became due, unless the employer timely filed notice of controversion. J.A. 26-28; section 14(e) of the Act, 33 U.S.C. § 914(e) (1976). The ALJ also ordered the payment of 6% interest on any such overdue payments. The Board affirmed the ALJ in each respect, but no amount was set by either the ALJ or the Board. The record before the court does not reveal what payments have been made by the employer, whether the employer timely filed a notice of controversion, or what computations were made by the deputy commissioner with respect to penalties and interest. We accordingly express no view about Hastings' entitlement to these additional amounts. The Board upon remand may be able to clarify the record in these respects and thereby issue a ruling that is susceptible to our review.