FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GENERAL CONSTRUCTION COMPANY; 

LIBERTY NORTHWEST INSURANCE No. 03-72528 CORP.,

Petitioners, OWCP No.

14-129-450

v.  BRB No.

ROBERT CASTRO; DIRECTOR, 02-0783

OFFICE OF WORKERS COMPENSATION OPINION PROGRAMS,

Respondents. 

Petition for Review of an Order of the

Benefits Review Board

Argued and Submitted

December 10, 2004—Portland, Oregon

Filed March 2, 2005

Before: Thomas G. Nelson and Johnnie B. Rawlinson,

Circuit Judges, and William W Schwarzer,*

Senior District Judge

Opinion by Judge Schwarzer

*The Honorable William W Schwarzer, Senior United States District

Judge for the Northern District of California, sitting by designation. 

2397
COUNSEL

Raymond H. Warns, Jr., Holmes Weddle & Barcott, Seattle,

Washington, for the petitioners. 

William D. Hochberg and Nicole A. Hanousek, Law Office

of William D. Hochberg, Edmonds, Washington, for respondent Robert Castro. 

Peter B. Silvain, Jr., Attorney, U.S. Department of Labor,

Washington, D.C., for respondent Director, OWCP. 

Roger A. Levy, Laughlin, Falbo, Levy & Moresi LLP, San

Francisco, California, for amicus curiae Longshore Claims

Association. 

OPINION

SCHWARZER, Senior District Judge: 

General Construction Co. and Liberty Northwest Insurance

Corp. (General Construction), with amicus Longshore Claims

Association (LCA), petition for review of the determination

of the Benefits Review Board (BRB) that claimant Robert

Castro is entitled to total disability compensation under the

Longshore and Harbor Workers’ Compensation Act, 33

U.S.C. §§ 901-950 (1994) (LHWCA), during his period of

participation in a vocational rehabilitation program approved

by the Office of Workers’ Compensation Programs (OWCP).

General Construction also claims that the method the administrative law judge (ALJ) used to calculate Castro’s average

weekly wage was incorrect and that the OWCP violated GenGENERAL CONSTRUCTION CO. v. CASTRO 2401
eral Construction’s procedural rights under the Administrative

Procedure Act (APA) and the Due Process Clause of the federal Constitution. 

We deny the petition for review. The BRB appropriately

affirmed the ALJ’s award under the LHWCA, and the ALJ’s

wage calculation was correct under Ninth Circuit law. The

BRB also correctly concluded that the OWCP’s failure to

grant General Construction a hearing before approving Castro’s rehabilitation program did not violate General Construction’s procedural or due process rights. 

STANDARD OF REVIEW

Under the LHWCA, we review BRB decisions “for errors

of law and for adherence to the substantial evidence standard.” See Alcala v. Dir., OWCP, 141 F.3d 942, 944 (9th Cir.

1998). The BRB must accept the ALJ’s factual findings if

they are supported by substantial evidence. 33 U.S.C.

§ 921(b)(3); see also Lockheed Shipbuilding v. Dir., OWCP,

951 F.2d 1143, 1144 (9th Cir. 1991). “Like the [BRB], this

court cannot substitute its views for the ALJ’s views.” Container Stevedoring Co. v. Dir., OWCP, 935 F.2d 1544, 1546

(9th Cir. 1991). 

On questions of law, including interpretations of the

LHWCA, we exercise de novo review. Gilliland v. E.J. Bartells Co., Inc., 270 F.3d 1259, 1261 (9th Cir. 2001). We need

not defer to the BRB’s construction of the LHWCA, but we

“must . . . respect the [BRB’s] interpretation of the statute

where such interpretation is reasonable and reflects the policy

underlying the statute.” Id. (quoting McDonald v. Dir.,

OWCP, 897 F.2d 1510, 1512 (9th Cir. 1990)). We also “accord considerable weight to the construction of the statute

urged by the Director of the [OWCP] as [s]he is charged with

administering” the LHWCA. Matson Terminals, Inc. v. Berg,

279 F.3d 694, 696 (9th Cir. 2002) (quoting Force v. Dir.,

OWCP, 938 F.2d 981, 983 (9th Cir. 1991) (internal quotation

2402 GENERAL CONSTRUCTION CO. v. CASTRO
marks omitted)). “We will defer to the Director’s view unless

it constitutes an unreasonable reading of the statute or is contrary to legislative intent.” Id. (citing Chevron U.S.A., Inc. v.

Natural Res. Def. Council, 467 U.S. 837, 842-45 (1984)). 

BACKGROUND

I. CASTRO’S EMPLOYMENT, INJURY, AND 

REHABILITATION PROGRAM

Claimant Robert Castro worked as a carpenter and pile

driver from 1973 until he was disabled due to his injury in

1998. He began work as a pile driver for General Construction in 1998. On November 20, 1998, Castro slipped and fell

on a crane step, tearing the anterior cruciate ligament in his

right knee. After three surgeries, Castro was released to return

to light duty work in August 2000. Castro attempted to return

to work at General Construction, but the job he took, cutting

metal plates with a torch while seated, was too strenuous, and

his physician, Dr. Mandt, determined that it was beyond Castro’s ability. No other light duty work being available at General Construction, Mandt recommended vocational retraining.

General Construction conducted labor market studies,

which identified jobs the counselors believed Castro could

perform, such as courier, cashier, and security officer. The

starting wages for these jobs ranged between $8.00 and

$10.00 per hour, or between $16,640 and $20,800 per year,

but with experience, some could pay up to $25,000 per year.

Castro testified that he investigated at least some of these

jobs, but found that they were taken. Castro did not investigate other jobs because after commuting costs they would

have paid around $2.00 per hour. 

OWCP referred Castro to vocational rehabilitation counselor Carol Williams to develop a rehabilitation plan. She and

Castro decided on hotel management by a “process of elimination.” As part of his vocational rehabilitation plan,

GENERAL CONSTRUCTION CO. v. CASTRO 2403
approved by OWCP sometime prior to August 1999 and initiated in August 1999, Castro enrolled in a hotel tourism program at a local college. He was scheduled to take classes from

September 13, 2000, through June 7, 2002. Evidence suggested that after completing the program, Castro could expect

to earn around $16,000 initially and to progress, with experience, to approximately $27,580 per year, or to as much as

$40,000 per year as manager at a larger hotel.1

Williams disagreed with General Construction’s labormarket survey, claiming that the positions identified would be

difficult for Castro because of his physical limitations, which

included limits on his manual dexterity due to a previous hand

surgery. Williams also took the position that Castro would

have “a great deal of difficulty” going to school and working

at the same time. Castro spent between forty-six and fifty-four

hours per week on his vocational program. His commute to

school took anywhere from one and one-half to two and onequarter hours. He spent fifteen to eighteen hours per week in

class and another twenty-five hours per week in study and

preparation for class. While in school, Castro worked briefly

in a paid internship, but after working about eighty hours he

had to resign due to his vocational program’s demands and

requirements. 

When Williams retired at the end of 2000, Castro began to

see a new vocational consultant, Stan Owings. Owings concluded that Castro was limited to sedentary jobs or those

requiring only light physical exertion, and stated that some of

the jobs General Construction identified are “reasonable

examples of jobs and wages currently available to” Castro.

Owings also recognized that Castro “may return to work with

1

In August 2000, sometime after it learned of Castro’s rehabilitation

plan, General Construction sent a letter to the OWCP disputing the plan

and requesting that the District Director transfer the dispute to an ALJ for

a hearing. The record does not indicate that the OWCP responded to or

acted on this letter. 

2404 GENERAL CONSTRUCTION CO. v. CASTRO
or without completing the education curriculum in which he

is currently enrolled.” As of the dates of the hearing before

the ALJ, June 20, 2001, and the ALJ’s decision, May 8, 2002,

Castro had not completed his schooling. 

Castro earned $38,422.57 in 1995, $38,571.33 in 1996,

$39,648.34 in 1997, and $39,717.62 in 1998, the year of his

injury. General Construction initially paid compensation to

Castro based on an average weekly wage of $988.62. On July

3, 2000, however, General Construction reduced this payment

to one based on a $500 weekly wage, stating that Castro had

not produced requested evidence, including earning statements from prior employment supplementing the $9886.18 he

earned at General Construction in the year prior to his injury.

On July 11, 2000, General Construction reinstated Castro’s

compensation based on a recalculated average weekly wage

of $756.65. Castro argued that his weekly wage should be

$1006.60 and, in support of his motion for partial summary

judgment, submitted a declaration stating that during the fiftytwo weeks before his accident, he worked a total of 201.35

days. The wage records Castro submitted indicate that in most

of the weeks he worked, he worked for forty hours. 

II. CASTRO’S LHWCA CLAIM

Castro filed a claim with the OWCP in November of 1998,

seeking permanent partial disability benefits under the

LHWCA’s schedule for a 35% impairment to his right knee

and seeking temporary and permanent total disability benefits

for the period he was enrolled in the vocational rehabilitation

program. 

In May 2002, following a formal hearing, the ALJ issued

a decision finding Castro’s scheduled disability rating to be

17% and awarding Castro permanent partial disability benefits on the basis of his knee injury for a period of 48.96 weeks

(17% of the statutory 288 weeks), pursuant to 33 U.S.C.

GENERAL CONSTRUCTION CO. v. CASTRO 2405
§ 908(c)(2), (19).2

 On the issue of Castro’s claim for total disability benefits, the ALJ determined that Castro had met his

burden of demonstrating inability to return to his usual work

(and thus total disability, permitting compensation additional

to that for his scheduled injury) but also that General Construction had established the availability of some suitable

alternate employment. Nevertheless, the ALJ found that

because Castro was enrolled in a vocational rehabilitation program and had shown that completion of the program both precluded employment and gave him the best long-term earning

potential, he was entitled to total disability benefits for the

duration of the program, under Louisiana Insurance Guaranty

Ass’n v. Abbott, 40 F.3d 122, 127-28 (5th Cir. 1994).3

With respect to the calculation of Castro’s award, the ALJ

rejected General Construction’s assertion that § 10(c) of the

LHWCA, 33 U.S.C. § 910(c), should govern, applying instead

§ 10(a), 33 U.S.C. § 910(a), in accordance with our holding in

Matulic v. Director, OWCP, 154 F.3d 1052, 1056 (9th Cir.

1998).4

General Construction appealed the ALJ’s decision to the

BRB, which affirmed the award. The BRB, like the ALJ,

found Abbott to be controlling and noted that since the ALJ

had issued the decision in Castro’s case the Fourth Circuit had

2This 2002 hearing on Castro’s claim for benefits thus followed

OWCP’s 1999 approval of Castro’s vocational rehabilitation program by

several years. 

3The ALJ acknowledged that Abbott does not establish an unqualified

entitlement to benefits during vocational rehabilitation but concluded that

Castro’s situation did not differ from that of the claimant in Abbott in any

material respects. 

4Section 10(a) of the LHWCA provides the presumptive method for calculating wages. Section 10(c) is used only when § 10(a) cannot be “reasonably and fairly” applied. 33 U.S.C. §§ 910(a)-(c); see also Matulic,

154 F.3d at 1056. Under § 10(a), the ALJ calculated Castro’s total disability benefits as $669.58 per week, based on an average weekly wage of

$1004.37. 

2406 GENERAL CONSTRUCTION CO. v. CASTRO
also followed Abbott. Newport News Shipbuilding & Dry

Dock Co. v. Dir., OWCP, 315 F.3d 286, 295 (4th Cir. 2002).

The BRB also upheld the ALJ’s use of § 10(a) to calculate

Castro’s average weekly wage, relying, like the ALJ, on

Matulic. Finally, the BRB rejected General Construction’s

claim that the OWCP had violated its procedural rights by

refusing to afford it a hearing before an ALJ on the question

of the appropriateness of vocational rehabilitation in Castro’s

case. The BRB noted that the Ninth Circuit has held that neither the LHWCA nor any other authority guarantees employers or insurers a hearing before an ALJ on all disputes. Healy

Tibbitts Builders, Inc. v. Cabral, 201 F.3d 1090, 1093-95 (9th

Cir. 2000). ALJs specifically lack jurisdiction to adjudicate

disputes over matters committed to the OWCP Director’s discretion. Id. at 1095. The BRB concluded that the relevant statutory and regulatory provisions committed the design and

approval of vocational rehabilitation plans to the discretion of

the Director. Since General Construction was not entitled to

a hearing before an ALJ on this issue, the OWCP did not violate General Construction’s procedural rights when the

OWCP declined to order such a hearing. 

General Construction timely appealed all three issues: (1)

the applicability of Abbott to the present case; (2) the applicability of § 10(c) to the present case; and (3) denial of General

Construction’s procedural rights. 

DISCUSSION

I. LEGAL FRAMEWORK

The LHWCA’s compensation scheme distinguishes

between injury, which is a physical impairment, “occupational disease[,] or infection,” 33 U.S.C. § 902(2), and disability, which the LHWCA defines as the “incapacity because of

injury to earn the wages which the employee was receiving at

the time of injury in the same or other employment,” id.

§ 902(10). The statutory scheme also provides for four broad

GENERAL CONSTRUCTION CO. v. CASTRO 2407
classes of benefits, distinguished according to the duration of

the underlying injury (permanent or temporary) and the nature

or degree of disability (partial or total). Id. § 908; Stevens v.

Dir., OWCP, 909 F.2d 1256, 1259 (9th Cir. 1990); Abbott, 40

F.3d at 125-28. 

A disability is temporary “so long as there [is] a possibility

or likelihood of improvement through normal and natural

healing.” Stevens, 909 F.2d at 1259 (citation omitted). After

a claimant is shown to have attained “maximum medical

improvement,” however, the remaining disability is classified

as permanent. Id. at 1258. A disability may be classified as

permanent and benefits paid under the LHWCA’s provisions

for permanent disability for a finite period. See 33 U.S.C.

§§ 908(a) (providing that permanent total disability benefits

pay 66 2/3% of the employee’s average weekly wage for the

duration of the disability); 908(c), 908(c)(21) (providing that

permanent partial disability benefits pay 66 2/3% of the

employee’s average weekly wage for a length of time determined by schedule or “during the continuance of disability”).

A disability is classified as total when (1) a claimant demonstrates that the work-related injury in question renders him

unable to return to prior employment, and (2) the employer

subsequently fails to establish the availability of suitable alternative employment within the geographic area of the claimant’s residence, which the claimant can perform considering

the claimant’s limitations, age, education, and background,

and with a diligent employment search on the claimant’s part.

See Bumble Bee Seafoods v. Dir., OWCP, 629 F.2d 1327,

1329-30 (9th Cir. 1980); Stevens, 909 F.2d at 1258.5 Disabilities not precluding suitable alternative employment are classified as partial. Stevens, 909 F.2d at 1258. In other words, in

5The LHWCA also provides that a disability is classified as total if the

underlying injury involves “[l]oss of both hands, or both arms, or both

feet, or both legs, or both eyes, or of any two thereof.” 33 U.S.C. § 908(a).

2408 GENERAL CONSTRUCTION CO. v. CASTRO
general, if the claimant is capable of engaging in some gainful

work, the disability is partial. Id. 

[1] Two circuits, the Fifth and the Fourth, have added

another element to this basic test for distinguishing between

total and partial disability. Under their precedent, a claimant

who is enrolled in a vocational rehabilitation program and can

demonstrate that the program entirely precludes him from

engaging in otherwise suitable employment may receive total

disability benefits for the duration of the program. Abbott, 40

F.3d at 127; Newport News, 315 F.3d at 295. In Abbott, an

opinion by retired U.S. Supreme Court Justice Byron White,

the Fifth Circuit reasoned that although the Act does not

explicitly provide for total disability during rehabilitation

training, such an interpretation is consistent with “the Act’s

goal of promoting the rehabilitation of injured employees to

enable them to resume their places, to the greatest extent possible, as productive members of the work force.” Abbott, 40

F.3d at 127 (citation omitted). The validity of this standard in

the Ninth Circuit is one of the issues in the present case. 

Benefits for total disability, whether temporary or permanent, are calculated on the basis of the claimant’s “average

weekly wages” and awarded for the “continuance” of the disability. 33 U.S.C. §§ 908(a), (b). Benefits for partial disability, whether temporary or permanent, are awarded according

to one of two statutory schemes. See Potomac Elec. Power

Co. v. Dir., OWCP (Pepco), 449 U.S. 268, 270-71 & n.1

(1980); 33 U.S.C. §§ 908(c), 908(c)(21). For particular statutorily enumerated, or “scheduled,” injuries, the LHWCA sets

forth formulas for calculation of benefits. 33 U.S.C. § 908(c).

For injuries that do not fall into any of the scheduled categories, benefits for partial disability are awarded on the basis of

the claimant’s reduction in earning capacity resulting from the

injury. Id. § 908(c)(21). These remedies are exclusive; a

claimant with a scheduled injury may not elect earningcapacity-based benefits. Pepco, 449 U.S. at 273-80. However,

under the statutory scheme the distinction between scheduled

GENERAL CONSTRUCTION CO. v. CASTRO 2409
and unscheduled injuries is pertinent only to the calculation of

permanent partial disability benefits; the distinction has no

bearing on benefits for total disability. See 33 U.S.C. § 908(c)

(setting forth schedule formulas for calculating “[p]ermanent

partial disability”); see also Brown v. Nat’l Steel & Shipbuilding Co., 34 Ben. Rev. Bd. Serv. (MB) 195, 198 (2001); Gregory v. Norfolk Shipbuilding & Dry Dock Co., 32 Ben. Rev.

Bd. Serv. (MB) 264, 265-66 (1998). 

All of the above calculations require an initial determination of the claimant’s “average weekly wage at the time of the

injury.” See 33 U.S.C. § 910. Three different formulas for

determination of this amount are set forth at 33 U.S.C.

§§ 910(a)-(c). The selection of the proper formula in Castro’s

case is also at issue in this appeal. 

II. CASTRO’S ENTITLEMENT TO TOTAL 

DISABILITY DURING VOCATIONAL 

REHABILITATION 

The ALJ in the present case found Abbott applicable to

Castro’s case and held that Castro was entitled to total disability benefits for the period during which he was enrolled in his

vocational rehabilitation program. On appeal, General Construction argues (1) that Abbott was wrongly decided and

should not be applied to this case and (2) that even if Abbott

was correct on its facts, Castro’s case is distinguishable. We

address these arguments in turn. 

A. Abbott Is Consistent with the LHWCA’s Text and 

Purpose

The interpretation of the LHWCA found in Abbott and

Newport News and adopted by the OWCP Director in this

case is supported by the language of the LHWCA and its purpose. 

The LHWCA does not specifically provide that total disability benefits are to be awarded where a claimant shows that

2410 GENERAL CONSTRUCTION CO. v. CASTRO
participation in a rehabilitation program precludes acceptance

of alternative employment. But the statute’s silence is not

determinative. In fact, the statute is generally silent on the

scope and definition of “total disability.” See 33 U.S.C.

§ 908(a) (providing that where claimant has not lost two

major body parts, the existence of “total disability shall be

determined in accordance with the facts”). As the Fifth Circuit

noted in Abbott, the statute leaves it to the courts to “enunciate standards for distinguishing between the various categories” of disability—total and partial as well as permanent and

temporary. 40 F.3d at 125-26. 

[2] The Abbott rule is consistent with the language and a

principal policy of the LHWCA: the encouragement of vocational rehabilitation. The LHWCA specifically provides that

“[t]he Secretary shall direct the vocational rehabilitation of

permanently disabled employees and shall arrange . . . for

such rehabilitation.” 33 U.S.C. § 939(c)(2). Moreover, the

LHWCA defines “disability” as the “incapacity because of

injury to earn the wages which the employee was receiving at

the time of injury in the same or other employment.” 33

U.S.C. § 902(10). Thus, the LHWCA speaks of disability in

terms of economic harm, not just physical harm. Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 126-27 (1997). The Abbott

rule, consistently with this definition, simply clarifies that it

is possible for a claimant to be entitled to benefits for “total

disability” when the claimant is physically capable of performing certain work but unable to secure that work for some

other reason. See Abbott, 40 F.3d at 127; see also Newport

News, 315 F.3d at 295. 

Amicus LCA argues that Abbott was wrongly decided

because in 1984 Congress considered and failed to pass

amendments to the LHWCA creating a statutory entitlement

to total disability for all claimants during vocational rehabilitation training. We note at the outset that congressional inaction is not a reliable guide to legislative intent. See Cent. Bank

of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511

GENERAL CONSTRUCTION CO. v. CASTRO 2411
U.S. 164, 187 (1994) (“Congressional inaction lacks persuasive significance because several equally tenable inferences

may be drawn from such inaction, including the inference that

the existing legislation already incorporated the offered

change.”) (internal quotations and citations omitted); United

States v. Wise, 370 U.S. 405, 411 (1962). Moreover, the failed

amendments in this case would have been more sweeping

than Abbott’s rule, since they would have created an entitlement to disability benefits during rehabilitation. H.R. 7610,

96th Cong., 2d Sess. at 19-20 (1980) (providing that “[a]n

employee who as a result of injury is undergoing vocational

rehabilitation . . . shall be entitled to receive continued temporary total or partial compensation during . . . such rehabilitation”).6

 In contrast, the Abbott rule requires a fact-finder to

consider on a case-by-case basis an injured worker’s participation in a rehabilitation program as one factor in determining

whether suitable alternative employment is available to that

worker. Cf. Kee v. Newport News Shipbuilding & Dry Dock

Co., 33 Ben. Rev. Bd. Serv. (MB) 221 (2000) (applying

Abbott and denying temporary total disability benefits when

claimant failed to show that enrollment in rehabilitation program precluded acceptance of alternate employment);

Gregory, 32 Ben. Rev. Bd. Serv. (MB) 264 (same). Congress’s failure to enact an amendment more sweeping than the

Abbott rule cannot be taken to invalidate that rule. The text,

purposes, and legislative history of the LHWCA thus provide

no basis for rejecting the Abbott approach.7

6

See also H.R. Rep. No. 98-570, pt. I, at 83 (1983) (including comments

from sponsor of H.R. 7610 (1980) noting that compromises on LHWCA

amendments included the elimination of “amendments concerning vocational rehabilitation which assured continued payment of benefits during

rehabilitation”). 

7General Construction and LCA also invoke the language of § 8(g) of

the LHWCA in support of the contention that the only money Congress

intended to be provided to claimants during vocational rehabilitation is a

$25 maintenance stipend. 33 U.S.C. §§ 908(g), 944. This argument

ignores the plain language of the statute. Section 8(g) states that an injured

2412 GENERAL CONSTRUCTION CO. v. CASTRO
B. Abbott Applies to the Present Case

General Construction further argues that even if Abbott is

a valid interpretation of the LHWCA, it is inapplicable here

because Castro’s situation differs significantly from that of

the claimant in Abbott. Specifically, (1) Castro’s program did

not involve an agreement with the OWCP that expressly forbade his employment during the program; (2) General Construction itself never agreed to the rehabilitation plan; (3) the

evidence showed Castro could work while enrolled in his

rehabilitation program; (4) Castro was not diligent in attempting to locate work while pursuing the program; (5) completion of the program would not increase Castro’s earning

capacity; and (6) Castro, unlike the claimant in Abbott, suffered scheduled injuries, and Pepco therefore limits Castro to

recovery under the LHWCA’s schedule. 

[3] We agree with the Fourth Circuit in Newport News that

Abbott did not set forth a rigid rule and that a number of factors enumerated by the BRB may be relevant to determining

whether an individual may receive benefits while enrolled in

a rehabilitation program. These include whether enrollment in

the rehabilitation program precludes any employment;

whether the employer agreed to the rehabilitation plan and

continuing payment of temporary total disability benefits;

whether completion of the program would benefit the claimant by increasing his wage-earning capacity; and whether the

claimant showed full diligence in completing the program.

Newport News, 315 F.3d at 293 (citing Gregory, 32 Ben. Rev.

Bd. Serv. 264). The Fourth Circuit observed that no one of

worker in vocational rehabilitation who is being rendered fit for remunerative occupation “shall receive additional compensation necessary for his

maintenance, but such additional compensation shall not exceed $25 a

week.” 33 U.S.C. § 908(g) (emphasis added). This language indicates

Congress’s intent that the fee be paid in addition to—not in place of—

other appropriate compensation. 

GENERAL CONSTRUCTION CO. v. CASTRO 2413
these factors, standing alone, should necessarily be considered

determinative. 315 F.3d at 295-96. 

[4] With respect to General Construction’s first argument,

the ALJ noted that the BRB has interpreted Abbott to require

only that a claimant show that, as a practical matter, he cannot

obtain suitable alternative employment, not that he is contractually precluded from working. See Kee, 33 Ben. Rev. Bd.

Serv. at 223. This approach makes sense given the language

and purposes of the LHWCA, which provides for compensation for a claimant’s reduced earning capacity under a variety

of circumstances. See, e.g., 33 U.S.C. §§ 902(10) (defining

“disability”), 908(a) (providing for determination of permanent total disability “in accordance with the facts”). A claimant’s earning capacity suffers as a result of his inability to

engage in alternative employment, regardless of the cause of

that inability. We agree with the ALJ that neither Abbott nor

the LHWCA should be read to require that the inability have

a contractual basis. 

With respect to General Construction’s second argument,

the ALJ noted that General Construction objected to the rehabilitation plan and to continued benefits. But the ALJ also reasoned that allowing employers an effective veto power over

OWCP-approved rehabilitation programs would undermine

the LHWCA’s general policy of encouraging rehabilitation.

We agree. There was no error in the ALJ’s decision that General Construction’s objection to the rehabilitation program

does not sufficiently distinguish Castro’s case from Abbott. 

With respect to General Construction’s third argument,

regarding evidence of Castro’s ability to work while pursuing

his rehabilitation program, the ALJ evaluated relevant evidence, including the testimony of Castro and vocational

experts Carol Williams and Kent Shafer. The ALJ based his

decision that Castro could not work while pursuing his program mainly on Castro’s uncontradicted testimony that,

including commuting, class, and study time, he devoted

2414 GENERAL CONSTRUCTION CO. v. CASTRO
between forty-six and fifty-four hours per week to completion

of the program.8 General Construction notes that Castro

worked briefly in a paid internship. But Castro had to resign

this internship after eighty hours of work because of the

demands of his rehabilitation program. The ALJ found this to

be evidence that Castro was willing but unable to work,

despite testimony to the contrary by General Construction’s

expert. The ALJ’s factual finding is supported by substantial

evidence. 33 U.S.C. § 921(b)(3); Container Stevedoring Co.,

935 F.2d at 1546. 

The ALJ similarly considered General Construction’s

fourth argument, that Castro failed to show he searched diligently for work while pursuing his rehabilitation program.

This argument is largely foreclosed by the ALJ’s determination that the time demands of Castro’s program precluded his

employment during the program. Castro also presented evidence that he investigated jobs identified by General Construction but found them either unavailable or impracticable

because of his commute. The ALJ’s finding is thus supported

by substantial evidence. 

The ALJ also found that Castro was diligent in completing

his program. See Newport News, 315 F.3d at 293 (citing

Gregory, 32 Ben. Rev. Bd. Serv. 264). The ALJ found that,

although Castro expressed concerns about falling behind in

school, his records indicated that his enrollment since 1999

had not been significantly interrupted and that at the time of

the hearing he was on schedule to complete his program. The

ALJ’s finding that Castro had pursued his degree in the program diligently is supported by substantial evidence. 

The ALJ also considered General Construction’s fifth argu8Williams stated that Castro’s intellectual capacity and long commute

would make combining school with a job difficult, while Shafer noted that

travel requirements combined with cognitive capacity could prevent some

people from working while in school. 

GENERAL CONSTRUCTION CO. v. CASTRO 2415
ment, that Abbott should not apply because Castro’s rehabilitation program was not designed to improve his earning

capacity. The ALJ noted that, although hotel management

starting salaries were comparable to the salaries in the jobs

General Construction had identified, Castro’s vocational advisors reasonably determined that training in hotel management

would give Castro the best long-term earning potential.9 The

ALJ was correct to focus on Castro’s long-term wage-earning

prospects in assessing the rehabilitation program, see Newport

News, 315 F.3d at 295-95 (“an immediate increase in wage

earning capacity . . . is not . . . determinative”); Abbott, 40

F.3d at 128 (looking to employee’s long-term increase in

wage-earning capacity in assessing reasonableness of vocational rehabilitation program), and his factual determination

that Castro’s rehabilitation program provided the best longterm wage-earning prospects is supported by substantial evidence. 

[5] Neither the ALJ nor the BRB considered at length General Construction’s argument concerning the application of

Pepco, 449 U.S. 268 (1980), to Castro’s case. However, the

ALJ’s interpretation of the scope of Pepco correctly precluded

application of that case to Castro’s claim for total disability

benefits during his rehabilitation program. In Pepco, the

Supreme Court held that where a claimant is entitled to partial

disability benefits for a scheduled injury, those benefits are

the claimant’s exclusive remedy; a claimant with a scheduled

injury may not elect to recover benefits for partial disability

on the basis of the claimant’s loss in earning capacity. Id. at

273-74. General Construction argues that if a claimant has a

scheduled injury, and the employer shows that the claimant is

employable, the claimant cannot also be entitled to an award

of total disability benefits during a rehabilitation program; the

argument implies that allowing recovery for the time spent in

9Williams estimated that Castro could earn between $30,000 and

$40,000 annually as a hotel manager, as compared to the $16,640 to

$25,000 potential of the jobs identified by General Construction. 

2416 GENERAL CONSTRUCTION CO. v. CASTRO
the rehabilitation program is analogous to allowing recovery

for a loss in earning capacity. The argument fails because, as

the ALJ correctly noted, Pepco addresses only the statutory

provisions for partial disability benefits. See id. at 274 & n.8;

see also Brown, 34 Ben. Rev. Bd. Serv. at 198 (finding scheduled nature of claimant’s injury irrelevant to appropriateness

of rehabilitation program and award of benefits for that

period); Gregory, 32 Ben. Rev. Bd. Serv. at 265-66 (noting

that “where claimant is totally disabled the schedule does not

apply” and that “the fact that any permanent partial disability

would be covered by the schedule is not determinative of the

total disability issue”). Since Pepco does not address computations of awards for temporary total disability, which is the

focus of the Abbott rule, we agree with the ALJ and the BRB

that the scheduled or unscheduled nature of a claimant’s

injury is irrelevant. 

[6] We conclude that the ALJ and BRB did not err in finding that Castro’s case did not differ materially from Abbott

and Newport News so as to preclude application of the Abbott

rule. We therefore affirm the award of permanent total disability benefits to Castro during his participation in his

OWCP-approved rehabilitation program. 

III. CALCULATION OF AVERAGE WEEKLY WAGE

[7] General Construction contends that the ALJ erred in

calculating Castro’s average weekly wage under § 10(a) of

the Act, 33 U.S.C. § 910(a). Although § 10(a) is presumed to

apply absent a showing that its application would be unreasonable, and although the ALJ properly applied this provision

under Ninth Circuit precedent, Matulic, 154 F.3d 1052 (9th

Cir. 1998), General Construction argues that we should overrule that precedent or at least distinguish it. 

The relevant subsections of § 10 of the Act state: 

Except as otherwise provided in this chapter, the

average weekly wage of the injured employee at the

GENERAL CONSTRUCTION CO. v. CASTRO 2417
time of the injury shall be taken as the basis upon

which to compute compensation and shall be determined as follows: 

(a) If the injured employee shall have worked in

the employment in which he was working at the time

of the injury, whether for the same or another

employer, during substantially the whole of the year

immediately preceding the injury, his average annual

earnings shall consist of . . . two hundred and sixty

times the average daily wage or salary for a five-day

worker . . . . 

(c) If . . . the foregoing methods of arriving at the

average annual wage of the injured employee cannot

reasonably and fairly be applied, such average

annual earnings shall be such sum as, having regard

to the previous earnings of the injured employee in

the employment in which he was working at the time

of the injury, and of other employees of the same or

most similar class working in the same or most similar employment in the same or neighboring locality.

. . . 

33 U.S.C. § 910(a), (c) (2000). 

[8] Section 10(a) plainly applies if the employee “worked

in the employment . . . whether for the same or another

employer, during substantially the whole of the year immediately preceding the injury.” 33 U.S.C. § 910(a). In Matulic,

we addressed the meaning and scope of the language “substantially the whole of the year immediately preceding [the]

injury.” 154 F.3d at 1056. Noting that “some ‘overcompensation’ is built into the [LHWCA] system institutionally,” we

concluded that the LHWCA’s language did not require a

claimant to have worked 100% of the potential working days

during the year immediately preceding the injury in order for

§ 10(a) to apply “reasonably and fairly.” Id. at 1057. Specifi2418 GENERAL CONSTRUCTION CO. v. CASTRO
cally, we held that § 10(a) presumptively applies “when a

claimant works more than 75% of the workdays of the measuring year.”

10 Id. at 1058. It may even apply when the claimant has worked less than 75% of these days, if the reduction

in working days is “atypical of the worker’s actual earning

capacity.” Id.11 In Matulic, the claimant worked 213 days in

the relevant year, or 82% of the statutory 260 days. Id. at

1058. We recently approved application of Matulic and

§ 10(a) where a claimant worked 197 days, or 75.77% of the

statutory total. Stevedoring Servs. of Am. v. Price, 382 F.3d

878, 884-85 (9th Cir. 2004). 

General Construction argues that (1) Matulic is contrary to

the language of the LHWCA and should be overruled and that

(2) even if Matulic is good law, it does not apply to Castro’s

case. We consider each of these arguments in turn. 

A. Matulic Is Good Law

General Construction’s primary arguments for overruling

Matulic are as follows: (1) Matulic permits and promotes

overcompensation of claimants, a result contrary to the plain

language of the LHWCA; (2) the 75% bright line drawn in

Matulic creates absurd results; (3) Matulic is inconsistent with

the law in other circuits and with the reasoning in relevant

Supreme Court precedent. 

10We based this conclusion in part on our observation in an earlier case

that “the point at which the disparity between the claimant’s actual days

worked and the [potential days worked] becomes unreasonable or unfair[,

triggering application of § 10(c),] is ‘a question of line-drawing.’ ”

Matulic, 154 F.3d at 1057-58 (quoting Duncanson-Harrelson Co. v. Dir.,

OWCP, 686 F.2d 1336, 1343 (9th Cir. 1982)). We determined in Matulic

that the 75% threshold was an appropriate place to draw this line. 154 F.3d

at 1057-58. 

11We further noted that § 10(c) “may not be invoked in cases in which

the only significant evidence that the application of [§ 10(a)] would be

unfair or unreasonable is that claimant worked more than 75% of the days

in the year preceding his injury.” Matulic, 154 F.3d at 1058-59. 

GENERAL CONSTRUCTION CO. v. CASTRO 2419
To begin, we note that “[w]e are bound by decisions of

prior panels unless an en banc decision, Supreme Court decision or subsequent legislation undermines those decisions.”

Benny v. U.S. Parole Comm’n, 295 F.3d 977, 983 (9th Cir.

2002) (citation omitted). Because none of these conditions

applies, we reject General Construction’s arguments. Even if

we had the capacity to overrule Matulic, however, we would

reach the same conclusion. 

[9] In Matulic itself, we addressed concerns about whether

potential overcompensation was consistent with the purposes

of the LHWCA. 154 F.3d at 1057. We noted that no one in

the country works every working day of every work week and

that Congress must have known that some overcompensation

would result from the standard work year of 260 days provided for in the LHWCA. Id. We reasoned that any inaccuracies in estimating wage-earning capacity should normally

favor the worker, given the “humanitarian purposes” of the

Act and our mandate to construe its provisions broadly in

favor of workers. Id.12 General Construction rests virtually its

entire argument that the LHWCA reflects a policy against

overcompensation on the existence of § 10(c), which

acknowledges the possibility that weekly wage calculations

may be unfair or unreasonable in some circumstances. Given

the virtual inevitability of overcompensation under § 10(a),

we decline to interpret the existence of § 10(c) as a statutory

bar to any application of the LHWCA resulting in arguable

overcompensation. 

General Construction’s absurdity argument rests on the

contention that a worker who has worked 75% of the statutory

12It should also be noted that whether “overcompensation” occurs at all

under Matulic is questionable. The LHWCA does not compensate for,

among other things, lost pay increases or the lost value of fringe benefits.

These gaps in compensation may be partly responsible for Congress’s

decision to provide for calculation methods that would tend to overcompensate for time worked rather than to undercompensate. 

2420 GENERAL CONSTRUCTION CO. v. CASTRO
days will have worked an average of 3.75 days per week, but

under § 10(a) will receive the same compensation as a worker

who worked 5 days per week. This argument would appear to

attack not only the line drawn in Matulic but also the drawing

of a line at all. General Construction does not explain when

such a disparity would not rise to the level of absurdity; if any

disparity between actual hours worked and compensation is

an absurd result, as General Construction’s argument implies,

then no claimant who worked less than 100% of the statutory

260 days would be entitled to application of § 10(a). Yet the

plain language of § 10(a) itself does not require this. Rather,

the subdivision applies to claimants who have worked “substantially the whole of the year immediately preceding his

injury.” 33 U.S.C. § 910(a) (emphasis added). “Substantially”

would be meaningless if we were to follow General Construction’s suggested interpretation of § 10(a), and as a result we

decline to do so. 

General Construction also argues that Matulic is inconsistent with the law in other circuits and with Supreme Court

precedent. The only circuit opinion cited reaching a result

contrary to Matulic is Strand v. Hansen Seaway Service, Inc.,

614 F.2d 572 (7th Cir. 1980). But we acknowledged and

rejected Strand in Matulic itself, noting “[w]e do not believe

such a rigid rule [requiring use of § 10(c) where claimant had

worked 84% of the days in the statutory year] is consistent

with the intent or purpose of the [LHWCA].” Matulic, 154

F.2d at 1058 n.4. General Construction offers no compelling

reason for us to revisit this conclusion. 

General Construction also cites the Supreme Court’s opinion in Director, OWCP v. Greenwich Collieries, 512 U.S. 267

(1994).13 But the limited, technical holding in Greenwich Col13This opinion predates our decision in Matulic, so that General Construction’s reliance on it amounts, again, to a contention that Matulic was

wrongly decided—not to an argument that intervening Supreme Court precedent requires us to reject Matulic’s rule. 

GENERAL CONSTRUCTION CO. v. CASTRO 2421
lieries14 is irrelevant to the soundness of our decision in

Matulic to interpret § 10(a) broadly in light of the remedial

purposes of the LHWCA. See 154 F.3d at 1055, 1057. Even

were we empowered to overrule Matulic, General Construction has presented no convincing reason for us to do so. 

B. Matulic Applies to the Present Case 

General Construction argues that even if we do not overrule

Matulic, we should not apply it to the present case because the

decision of the ALJ and BRB that § 10(a) could “reasonably

and fairly” be applied was not supported by substantial evidence. 33 U.S.C. § 910(c). General Construction maintains

that use of § 10(a) to compute Castro’s award amounts to an

unfair and unreasonable windfall. 

This approach has been foreclosed by Matulic itself, which

established as a matter of law that application of § 10(a) to a

claimant who had worked 75% or more of the statutory 260

days is not unfair or unreasonable. 154 F.3d at 1058-59. During the year preceding his injury, Castro worked 201.35 days

out of 260, approximately 77.4% of the year. His case fits precisely within the rule established in Matulic. The fact that he

worked fewer days than did the claimant in Matulic is not,

14In Greenwich Collieries, the Supreme Court rejected an evidentiary

rule devised by the Department of Labor for use in benefits claims cases

where an ALJ found the evidence on a disputed question to be in equipoise. 512 U.S. at 269. Under this “true doubt” rule, the ALJ was to

resolve such questions in the claimant’s favor. Id. The Supreme Court

rejected this rule as contrary to the language of the governing statutes. Id.

at 280-81. But the Court also implicitly distinguished the true doubt rule

from other procedural and interpretive techniques favoring claimants

under remedial statutes such as the LHWCA. See id. at 280 (“In part due

to Congress’ recognition that claims such as those involved here would be

difficult to prove, claimants . . . benefit from certain statutory presumptions easing their burden. Similarly, the Department’s solicitude for benefits claimants is reflected in the regulations adopting additional

presumptions. But with the true doubt rule the Department attempts to go

one step further.”) (internal quotation marks and citations omitted). 

2422 GENERAL CONSTRUCTION CO. v. CASTRO
under the reasoning in that decision, a basis for distinguishing

the case or refusing to apply its rule.15 Id. 

[10] General Construction also argues that, unlike the

claimant in Matulic, Castro never earned a weekly wage comparable to the result of the § 10(a) calculation in his case. It

notes that the difference between the annual wage resulting

from a § 10(a) calculation and Castro’s actual earnings in the

previous year is approximately $12,000. This is not significantly different from the situation in Matulic itself, in which

under § 10(a) the claimant received a wage increase of

approximately $10,000. 154 F.3d at 1056. It is true that we

found the previous year’s earnings of the claimant in Matulic

to have been anomalously low. Id. at 1058. However, that

finding was not the basis for our articulation of the bright-line

75% rule. Id. at 1058-59. We based our holding in Matulic on

an examination of the purposes of the LHWCA, not the fairness of the result in the particular case. See id. at 1057-59.

The factual distinction noted by General Construction is

therefore irrelevant to whether or not Matulic applies to the

present case. The ALJ and BRB accordingly did not err in

applying Matulic and approving calculation of Castro’s average weekly wage under § 10(a). 

IV. GENERAL CONSTRUCTION’S PROCEDURAL

RIGHTS 

General Construction argues that it demanded, but was

improperly denied, a hearing before an ALJ to determine the

necessity of a vocational rehabilitation program for Castro

before that plan was implemented. According to General Construction, the LHWCA provides it with the right to an ALJ

hearing upon request. 33 U.S.C. § 919(c), (d). General Construction also contends that the OWCP violated its Fifth

15We even noted in Matulic that it might be neither unfair nor unreasonable to apply § 10(a) in a case involving a claimant who had worked less

than 75% of 260 days. 154 F.3d at 1058. 

GENERAL CONSTRUCTION CO. v. CASTRO 2423
Amendment due process rights when the OWCP imposed

compensation liability on General Construction for the duration of a rehabilitation plan into which it had no input.16 We

address these arguments in turn. 

A. The OWCP Did Not Violate General Construction’s

Statutory Procedural Rights 

The LHWCA provisions General Construction cites state

only that “the deputy commissioner shall make or cause to be

made such investigations as he considers necessary in respect

of the claim, and upon application of any interested party

shall order a hearing thereon,” 33 U.S.C. § 919(c), and that

such hearings will be governed by the APA. Id. § 919(d). 

[11] We recently described the scope of § 919(c) in Healy

Tibbitts, 201 F.3d at 1094. We held that “section 919(c) does

not necessarily require an evidentiary hearing before an ALJ

on all contested issues.” Healy Tibbitts, 201 F.3d at 1093. We

held that ALJs in fact lack jurisdiction over certain disputes,

in particular those involving “strictly legal issues,” id. at

1095, and matters within the discretion of a District Director

turning on assessments of “reasonableness” and not involving

factual questions resolvable by an ALJ, id. at 1097. Thus, the

existence of a dispute does not in itself trigger a right to a

hearing under the LHWCA. 

16General Construction also argues more broadly that the rule in Abbott

is “unconstitutional” because it deprives employers of due process. But an

employer may receive a hearing if it controverts or contests an injured

employee’s claim for benefits. See 33 U.S.C. §§ 914(d), (h). And if an

ALJ determines that an employer paid a claimant more in benefits than

required by law, the ALJ may order deduction of the overpayment from

future payments to the claimant. See, e.g., Bush v. I.T.O. Corp., 32 Ben.

Rev. Bd. Serv. (MB) 213, 215 n.5 (1998) (noting ALJ’s order that overpayment be recovered by deductions from claimant’s continuing benefit

payments). Given these safeguards, Abbott puts employers at no risk of

suffering any kind of permanent wrongful deprivation. 

2424 GENERAL CONSTRUCTION CO. v. CASTRO
[12] The dispute in the present case concerned the initial

reasonableness of the vocational rehabilitation plan

undertaken by Castro and approved by the OWCP. This determination, while not entirely a legal issue, Healy Tibbitts, 201

F.3d at 1095, turned on a “reasonableness” decision and did

not require any factual determinations of disputed issues by

an ALJ, id. at 1097. Moreover, the LHWCA and its accompanying regulations commit the direction and therefore also the

approval of such rehabilitation programs to the discretion of

the Director. See 33 U.S.C. § 939(c)(2) (“The Secretary shall

direct the vocational rehabilitation of permanently disabled

employees.”); 20 C.F.R. §§ 701.202 (delegating to OWCP

Director authority for administering LHWCA), 701.301(a)(6),

(7) (delegating to District Director administrative approval

authorities of OWCP Director), 702.506 (providing that “[t]he

vocational rehabilitation advisor shall arrange for and develop

all vocational training programs”). Under Healy Tibbitts, the

LHWCA did not entitle General Construction to an ALJ hearing on the reasonableness of Castro’s rehabilitation plan prior

to the implementation of that plan. 

[13] General Construction also argues that the failure to

afford it a hearing violated the APA. But § 919(d) merely

requires that any hearings ordered by the Director be conducted in accordance with the APA. 33 U.S.C. § 919(d); see

also Healy Tibbitts, 201 F.3d at 1094. If no hearing is

required, no question as to whether the APA has been violated

can arise. We conclude that the OWCP’s failure to order an

ALJ hearing regarding Castro’s rehabilitation program prior

to approval of the program did not violate the provisions of

the LHWCA. 

B. The OWCP Did Not Violate General Construction’s

Constitutional Due Process Rights 

General Construction claims it was entitled to a hearing

before an ALJ prior to implementation of the vocational rehabilitation program, which deprived it of property by requiring

GENERAL CONSTRUCTION CO. v. CASTRO 2425
payment of benefits to Castro, in violation of the Due Process

Clause of the Fifth Amendment. See Mathews v. Eldridge,

424 U.S. 319, 333 (1976).17

[14] The flaw in General Construction’s argument is that

the OWCP’s implementation of Castro’s rehabilitation plan

did not, in itself, deprive General Construction of its property,

since that implementation did not automatically trigger payment of permanent benefits to Castro. When the issue of disability compensation arose with Castro’s filing of a claim for

benefits, the District Director properly forwarded the matter

to the Office of Administrative Law Judges for further handling, and an ALJ held a full hearing on the merits of Castro’s

claim for benefits. General Construction received notice and

an opportunity to submit evidence and argument before the

ALJ’s decision awarding compensation and before it was

required to pay anything. This constituted a sufficient predeprivation hearing. See Mathews, 424 U.S. at 333 (1976)

(requiring the opportunity to be heard “at a meaningful time

and in a meaningful manner”) (internal quotation marks and

citations omitted); Cleveland Bd. of Educ. v. Loudermill, 470

U.S. 532, 542 (1985) (requiring that a party have the opportunity for “some kind of a hearing” before being deprived of a

significant property interest) (citation omitted). We conclude,

therefore, that the OWCP’s handling of Castro’s claim for

benefits did not deprive General Construction of its due process rights under the federal Constitution. 

17Specifically, General Construction argues that it “had a direct financial stake in whether the vocational plan concocted by the consultant hired

by the Department of Labor went forward because, under Abbott, it was

going to be liable for total disability compensation under that program.”

As noted, any liability for compensation on General Construction’s part

under Abbott did not arise until Castro had (1) filed a claim for benefits

and (2) at a hearing, carried his burden of showing that his rehabilitation

program precluded his employment. See Kee, 333 Ben. Rev. Bd. Serv. at

223 (holding that claimant has burden of showing that “suitable alternative

jobs were realistically unavailable while he was in the [rehabilitation] program”). 

2426 GENERAL CONSTRUCTION CO. v. CASTRO
CONCLUSION

For the above-stated reasons, we DENY the petition for

review. 

DENIED. 

GENERAL CONSTRUCTION CO. v. CASTRO 2427