1 United States Court of Appeals,

Fifth Circuit.

No. 96-60716.

CERES MARINE TERMINAL; Ceres Gulf, Inc., Petitioners,

v.

DIRECTOR, OFFICE OF WORKER'S COMPENSATION PROGRAMS, U.S.

DEPARTMENT OF LABOR, Respondent.

July 31, 1997.

Petition for Review of an Order of the Benefits Review Board.

Before SMITH, BARKSDALE and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

Billy Allred, who injured his l eft shoulder and neck during

the course and scope of his employment as a longshore worker,

sought and received wor kers' compensation benefits under the

Longshore and Harbor Workers' Compensation Act ("LHWCA" or "the

Act"), 33 U.S.C. §§ 901-50. Based in part on findings that Allred

suffered from pre-existing permanent partial disabilities and that

his employment injury "was not totally disabling in and of itself,"

an administrative law judge ("ALJ") awarded special fund relief to

Allred's employer, Ceres Gulf, Inc. and Ceres Marine Terminal

(collectively "Ceres"). The Benefits Review Board ("BRB") reversed

the ALJ's grant of special fund relief to Ceres and concluded that

the medical opinions relied upon by the ALJ did not establish that

the employment injury alone would not have caused the claimant's

permanent total disability. Because there was substantial evidence

in the record to support the ALJ's finding that Allred's permanent

total disability was not due solely to his employment injury, we1 We have previously recognized the distinction between the

scheme of judicial review adopted by the LHWCA and the scheme

applicable in labor cases. I d. Because the labor board may

reassess the factual findings of an ALJ, we review that board's

findings for substantial evidence. I d. (citing Presley v. Tinsley

Maintenance Serv., 529 F.2d 433, 436 (5th Cir.1976); 29 U.S.C. §

160(e)). We concluded from this distinction that the LHWCA "has

the effect of shifting deference away from the BRB and to the ALJ."

Id. W e also explained that "[t]he only difference is what

institution, the ALJ or the Board which reviews its decision, is

entitled to the ultimate deference when there i s a conflict. In

2 vacate the judgment of the BRB. Nonetheless, we remand the case to

the ALJ to determine whether Allred's pr e-existing degenerative

cervical spine disease was manifest to Ceres prior to the

employment injury.

I. Standard of Review

The BRB does not have the statutory authority "to engage in

a de novo review of the evidence or to substitute its views for

those of the ALJ." Mijangos v. Avondale Shipyards, Inc., 948 F.2d

941, 944 (5th Cir.1991). Instead, the LHWCA requires the BRB to

accept the findings of the ALJ "unless they are not supported by

substantial evidence in the record considered as a whole or unless

they are irrational." Id. (citing 33 U.S.C. § 921(b)(3)). Thus,

whe n we review decisions of the BRB, our "only function is to

correct error s of law and to determine if the BRB adhered to its

proper scope of review— i.e., has the Board deferred to the ALJ's

fact-finding or has i t undertaken de novo review and substituted

its views for the ALJ's." Avondale Shipyards, Inc. v. Vinson, 623

F.2d 1117, 1119 n. 1 (5th Cir.1980). In conducting our review, we

must independen tly examine the record to determine whether the

ALJ's findings are supported by substantial evidence. 1 Id.LHWCA cases, the ALJ wins, in labor cases, the Board wins." Id.

3 II. Statutory Background

The LHWCA is a federal workers' compensation stat ute that

fixes disability benefits for maritime workers injured on the job.

Under the traditional "aggravation rule" of workers' compensation

law, an employer is liable for a worker's entire disability even

though the disability was the result of both a current employment

injury and a pre-existing impairment. S ee Strachan Shipping Co. v.

Nash, 782 F.2d 513, 517 (5th Cir.1986) (en banc). Congress enacted

section 8(f) of the LHWCA, 33 U.S.C. § 908(f), to diminish an

employer's incentive to discriminate against partially disabled

workers out of fear of increased liability under the aggravation

rule. Director, OWCP v. Bethlehem Steel Corp., 868 F.2d 759, 761

(5th Cir.1989).

Section 8(f) places a temporal limitation on an employer's

liability for a work-related permanent disability if the employee

had an "existing permanent partial disability" that contributed to

the current employment injury. See 33 U.S.C. § 908(f); Eymard &

Sons Shipyard v. Smith, 862 F.2d 1220, 1223 (5th Cir.1989).

Payments after the employer's liability expires are then paid from

the "second injury fund" established by section 44 of the LHWCA, 33

U.S.C. § 944, and financed by members of the industries covered by

the Act. Eymard & Sons Shipyard, 862 F.2d at 1223. To obtain

special fund relief under section 8(f) when an em ployee is

permanently totally disabled, an employer must show t hat (1) the

employee had a pre-existing permanent partial disability, (2) the4

pre-existing permanent partial disability was manifest to the

employer prio r to the current employment injury, and (3) the

current disabi lity was not due solely to the employment injury.

Two "R" Drilling Co., Inc. v. Director, OWCP, 894 F .2d 748, 750

(5th Cir.1990).

This appeal raises issues related to the second and third

requirements for special fund relief.

III. The "Contribution" Requirement

To be eligible for section 8(f) relief, an employer must

establish that the claimant's current disability was not due solely

to the employment injury. S ee 33 U.S.C. § 908(f); T wo "R"

Drilling Co., 894 F.2d at 750. The purpose of this requirement is

to ensure that the employer compensates the employee for the entire

employment injury. S ee Bethlehem Steel Corp., 868 F.2d at 762.

Thus, if the employment injury was sufficient, by itself, to cause

the claimant's total permanent disability, the employer should be

liable for the entire compensation award and section 8(f) relief

should be denied. The aggravation rule that section 8(f) was

intended to counteract ne ver comes into play under these

circumstances because the employer would be liable to the same

extent if an able-bodied employee suffered the same injury. S ee

Director, OWCP v. General Dynamics Corp., 982 F.2d 790, 798 (2d

Cir.1992) ("The section 8(f) relief provision was not intended to

create a windfall for any employer that hires a disabled worker by

limiting its liability even when the later injury itself would have

permanently and totally disabled the employee").5

The ALJ began his analysis of the contribution requirement in

the instant case by correctly noting that the "[e]mployer has the

burden of establishing that the employment-related injury would not

have rendered the employee permanently totally disabled absent the

pre-existing disability." (citing Two "R" Drilling Co., 894 F.2d at

748). The ALJ proceeded to canvas the medical testimony of three

physicians. From that testimony, the ALJ found that "the

[e]mployer ha [d] established that the current injury was not

totally disabling in and of itself." Thus, the ALJ concluded that

Ceres was entitled to section 8(f) relief based on Allred's

"pre-existing back, arm, elbow, and shoulder disabilities."

The medical evidence relied upon by the ALJ established that

Allred's pre-existing disabilities combined with his employment

injury to produce a greater disability than would have occurred in

the absence of the pre-existing disabilities. Dr. Andrew P. Kant

testified that Allred's current disability was the result of a

combination of both a pre-existing back condition and the

employment injury. In addition, Dr. Gerald R. Litel stated that

"most" of Allred's current disability was due to his pre-existing

back injury, rather than to his current neck injury. Nonetheless,

Dr. Litel opined that it was probable that any current disability

attributable to Allred's neck was the result of a pre-existing

degenerative cervical spine disease "superimposed on and combined

with" the employmen t injury. Finally, Dr. Litel unequivocally

stated that Allred's pre-existing cervical spine disease combined

with the employment injury to result in disability that was6

"ma terially and substantially greater" than would have occurred

from the employment injury alone.

The Director argues that such evide nce is insufficient to

satisfy the contribution requirement because it does not establish

that the claimant's current disability was not due solely to the

employment injury. It is true, of course, that evidence that a

claimant's current disability was greater because of a pre-existing

disability or that the current disability was the result of a

combination of a pre-existing disability and an employment injury

does not necessarily prove that the current disability was not due

solely to the employment injury. This would be the case where the

employment injury alone renders a claimant totally disabled ( i.e.,

unemployable), but a pre-existing disability nonetheless combines

with the employment injury to make the claimant's physical

condition even worse ( e.g., more painful).

On the o ther hand, this uncontroversial proposition should

not obscure the fact that such ev idence c an satisfy the

contribution requirement under some circumstances. This would be

the case where a pre-existing partial disability combines with an

employment injury to increase what would otherwise have been a

partial disability into a total disability. In other words, the

existence of multiple injuries that combine to increase a

claimant's disability will satisfy the contribution requirement

when the pre-existing injuries are necessary to push the claimant

"over the hump" from partial to total disability.

We believe that it is the role of the ALJ to determine from2 The evidence in this regard supported the inferences drawn by

the ALJ in the instant case. Allred suffered from numerous

pre-existing disabilities, including hypertension and diabetes, as

well as severe arm, elbow, neck and shoulder, and back injuries.

His back condition resulted in two operations, numerous visits to

a hospital emergency room, and significant periods of absence from

work. Allred's current employment injury appears relatively minor

when viewed in light of his medical record as a whole. This is

especially true given evidence in t he record that suggests that

Allred's current neck injury was caused, at least in part, by the

degenerative condition created by his prior injuries. We find it

significant that Dr. Litel reviewed Allred's medical records from

before the employment injury and predicted that "[s]ignificant

disability is likely to develop in cases of this kind."

7 the record whether borderline evidence of the type that existed in

this case falls into the form er or latter category. Although it

w ould be helpful if attorneys asked questions designed to elicit

the "magic words" that authorize special fund relief, we decline to

adopt a rule that would require a rote recitation of the applicable

legal standard. In the absence of such magic words, the fact

finder's inquiry must of necessity be resolved by inferences based

on such factors as the perceived severity of the pre -existing

disabilities and the current employment injury, as well as the

strength of the relationship between them. 2 This court does not

have the expertise necessary to properly evaluate the complex and

frequently conflicting testimony of neurological surgeons,

orthopedists, and other medical experts on this score. Instead, we

must leave th is particular fact finding decision precisely where

Congress placed it—with the ALJ. See Mijangos, 948 F.2d at 945

(explaining that when the facts in a case could support a finding

in favor of either party, the choice between reasonable inferences

is left to the ALJ).3 In Two "R" Drilling, id. at 749-50, w e affirmed the BRB's

affirmance of an ALJ's denial of section 8(f) relief to an employer. We concluded as a matter of law that the employer "did

not meet its burden of showing that the current disability [was]

not due solely to the employment injury since [it] put no medical

evidence before the ALJ which suggest[ed] that [the claimant's]

pre-existing disability in any way contributed to his current

disability." I d. at 750. In reaching this conclusion, we declined

to adopt a "common-sense" presumption that would have dispensed

with the claima nt's obligation to present such evidence when the

claimant had a history of back problems prior to suffering a

totally disabling back injury. I d. We explained that such a

pre sumption was inappropriate because it would read the

contribution requirement out of the Act by merging the contribution

requirement with a claimant's obligation to esta blish a

pre-existing permanent partial disability. Id.

Two "R" Drilling simply does not apply to this case

because Ceres h a s presented evidence that suggested that

Allred's pre-existing disabilities in some way contributed to

his c urrent disability. Moreover, although we refused to

presume contribution based on a history of prior injury in the

absence of such evidence, we never held that an ALJ was

precluded from taking that history into account in drawing an

inference from the evidence that the c urrent disability was

not due solely to the employment injury.

8 The cases relied upon by the Director are not to the contrary.

In several of the decisions, section 8(f) relief was denied by the

ALJ in the first instance. See Two "R" Drilling Co., 894 F.2d at

749; 3 D irector, OWCP v . Jaffe New York Decorating, 25 F.3d 1080,

1083 (D.C.Cir.1994); FMC Corp. v. Director, OWCP, 886 F.2d 1185,

1186 (9th Cir.198 9). In the others, the ALJ applied the wrong

legal standard in granting relief. S ee General Dynamics Corp., 982

F.2d at 797-98; D irector, OWCP v. Luccitelli, 964 F.2d 1303, 1306

(2d Cir.1992). These cases are clearly distinguishable from the

present situation in which the ALJ granted an employer special fund

relief based on an application of the correct legal standard.

The evidence in the instant case was sufficient for the ALJ to4 Although section 8(f) does not explicitly require an

employer's manifest knowledge of a pre-existing disability, courts

have added this requireme nt to further the policy behind special

fund relief. See Director, OWCP v. Newport News Shipbuilding and

Dry Dock Co., 8 F.3d 175, 182 n. 5 (4th Cir.1993), aff'd 514 U.S.

122, 115 S.Ct. 1278, 131 L.Ed.2d 160 (1995).

9 have inferred that Allred's pre-existing permanent partial

disabilities combined with his employment injury to increase what

would otherwise have been a partial disability into a total

disability. This evidence was sufficient, in turn, for the ALJ to

have found that the claimant's current disability was not due

solely to the employment injury. Therefore, we conclude that the

BRB exceeded its statutory power of review by substituting its view

of the facts for those of the ALJ. Accordingly, we vacate the

decision of the BRB and reinstate this aspect of the ALJ's order.

IV. The "Manifest" Requirement

To satisfy the requirements of section 8(f), this court has

required an employer to prove that the claimant's pre-exist ing

permanent partial disability was "manifest" to the employer prior

to the current injury. 4 S ee Two "R" Drilling Co., 894 F.2d at 750;

E ymard & Sons Shipyard, 862 F.2d at 1223. We explained that

"[t]his requirement s erves an obvious function: a latent defect

cannot logically be said to be an "ex isting permanent partial

disability' and cannot be capable of causing discrimination against

the worker." Eymard & Sons Shipyard, 862 F.2d at 1223.

We have previously recognized that a diagnosed, pre-existing

disability of which the employer has actual knowledge is manifest.

Id. In addition, most co urts have recognized that an employer's5 The ALJ explicitly found that Allred's hypertension and

injuries to his arm, elbow, and back were manifest to Ceres prior

to the employment injury.

10 constructive knowledge of a pre-existing permanent partial

disability is sufficient to satisfy the manifest requirement. S ee,

e.g., Bunge Corp. v. Director, OWCP, 951 F.2d 1109, 1111 (9th

Cir.1991) ("If the condition is readily discoverable from the

employee's me dical record in the possession of the employer,

knowledge of the condition is imputed to the employer"); Director,

OWCP v. Berkstresser, 921 F.2d 306, 310 (D.C.Cir.1990) ("When the

evidence shows that such a "disability' was objectively apparent,

the "manifest' requirement has been met"). Although this court has

not expressly adopted an objective standard for determining whether

an employer has satisfied the manifest r equirement, we have

"assumed that there may be instances where although a diagnosis as

such is not expressly stated in the medical records[,] nevertheless

sufficient unambiguous, objective, and obvious indication of a

disability is reflected by the factual information contained in the

available records so that the disability should be considered

manifest even though actually unknown to the employer." Eymard &

So ns Shipyard, 862 F.2d at 1224. The Director does not dispute

that an objective inquiry is appropriate to determine whether the

manifest requirement has been met.

It is undisputed that although th e ALJ relied on a

pre-existing degenerative cervical spine disease as one basis for

finding contribut ion, his discussion of the manifest requirement

lacks any mention of the condition. 5 Both parties urge this court11

to independently review the record and correct this error without

a remand. The Director argues that the record is devoid of any

m edical evidence to support a finding that Allred's degenerative

cervical spine disease was objectively determinable to Ceres prior

to the current employment injury. In contrast, Ceres argues that

the ALJ made an implicit finding that Allred's degenerative

cervical spine disease was manifest prior to the employment injury

and that such a finding is supported by substantial evidence in the

record. We believe, however, that the same considerations that led

us to defer to the ALJ's finding with respect to the contribution

requirement would render inappropriate any decision by this court

in the first instance with respe ct to the manifest requirement.

Accordingly, we remand the case to the ALJ for a finding on whether

Allred's degenerative cervical spine disease was manifest to Ceres

prior to the employment injury. S ee Darby v. Ingalls Shipbuilding,

Inc., 99 F.3d 685, 689 (5th Cir.1996) (vacating and remanding an

ALJ's award for findings consistent with the requirements of the

LHWCA).

V. Conclusion

We hold that there was substantial evidence in the record to

support and allow the ALJ's finding that Allred's permanent total

disability was not due solely to his employme nt injury. The ALJ

failed, however, to determine whether Allred's pre-existing

degenerative cervical spine disease was manifest to Ceres prior to

the employment injury. Therefore, we VACATE the order of the BRB

and REMAND the case to the ALJ for the requisite finding.12