Todd Shipyards Corporation and Aetna Casualty and Surety Company v. Director, Office of Workers' Compensation Programs, U.S. Department of Labor and Vincent P. Clark
Docket: 87-7307
Court: Court of Appeals for the Ninth Circuit; May 31, 1988; Federal Appellate Court
Todd Shipyards Corporation and Aetna Casualty and Surety Company petitioned for review of a Benefits Review Board order regarding Vincent P. Clark's benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA). Clark sustained a left leg injury while employed at Todd, contributing to an 18% impairment—17% of which was related to a preexisting knee condition and 1% to the ankle due to the employment injury. The Administrative Law Judge (ALJ) initially determined that Todd was responsible for 66 2/3% of the scheduled benefits, attributing two-thirds of the knee disability to preexisting conditions. However, the Board modified this decision, holding Todd liable for the full 18% disability based on the 'aggravation rule' and addressing the 'credit doctrine.' The aggravation rule mandates that employers compensate for the complete disability, including any exacerbation of preexisting conditions. The credit doctrine, which allows deductions for prior compensation to avoid double recovery, was deemed inapplicable by the Board since Clark's veterans' disability benefits did not constitute LHWCA compensation. Thus, the main issue revolved around whether Todd could deduct the preexisting disability percentage when determining liability for Clark's injury.
Todd and Aetna seek to reverse the Board's decision by applying the credit doctrine to offset Clark's Veterans Administration (VA) disability benefits against his Longshore and Harbor Workers' Compensation Act (LHWCA) award. However, the court finds it cannot do so, affirming the Board's decision on different grounds. An analysis of 33 U.S.C. Sec. 903(e) and relevant legislative history reveals that VA disability benefits do not qualify under the LHWCA or any workers' compensation laws, thus falling outside the credit doctrine's scope.
Historically, the credit doctrine allowed offsets only when prior benefits were awarded under the LHWCA, preventing double recoveries in limited circumstances. In 1984, Congress amended the doctrine, allowing offsets for any workers' compensation or Jones Act benefits received for prior injuries. While the Board concluded that the credit doctrine did not apply because Clark's prior injury was not compensated under the LHWCA, this reasoning did not fully address the current statutory requirements.
The court acknowledges that the Board may have applied the pre-1984 version of the doctrine, as it did not reference the codification. However, the Director of Workers' Compensation Programs argued that any errors in the Board's reasoning were harmless. The court concurs, stating that VA disability benefits do not fall under "any other workers' compensation law" and thus cannot be offset under the credit doctrine. It concludes that VA benefits are not classified as workers' compensation and that members of the armed forces are not typically regarded as workers in this legal context.
The legislative history of 33 U.S.C. Sec. 903(e) clarifies that the offset for workers' compensation applies specifically to state and federal workers' compensation benefits, including those under the Federal Employees' Compensation Act (FECA), but does not extend to other federal benefits such as VA disability benefits. Congressional intent was to limit the credit doctrine's application and not to broaden it to include such benefits. Additionally, the Veterans' Act's purpose is to protect veterans from being disadvantaged due to their service, and it is to be interpreted liberally in their favor. Other federal disability laws, like the Social Security Act, similarly do not apply offsets to VA service-connected disability awards, affirming that veterans have a distinct compensation framework. Instances where Congress has explicitly prevented double recovery for veterans, such as requiring deductions from VA benefits for military severance pay, highlight a deliberate choice not to allow deductions from LHWCA benefits for VA disability. No statute exists that allows for the deduction of VA disability benefits from LHWCA awards.
Provisions within VA statutes and regulations demonstrate a clear congressional intent to differentiate between benefits for disabled veterans and traditional workers' compensation. VA disability benefits for peacetime injuries are designed to be lifelong (38 U.S.C. Secs. 314, 331, 334), with additional compensation for dependents of veterans rated with a disability of at least 30% (38 U.S.C. Sec. 315). Moreover, if a veteran receiving disability benefits goes missing, their compensation remains payable to their family (38 U.S.C. Sec. 358). This indicates that Congress did not intend for veterans' benefits to be offset under the credit doctrine established in the Longshore and Harbor Workers' Compensation Act (LHWCA).
The case of Strachan Shipping Co. v. Nash, which Todd relies on, confirms that only actual compensation received under the LHWCA can be deducted from subsequent awards, not potential eligibility. The court acknowledged the extension of the credit doctrine to other workers' compensation statutes but did not equate VA benefits with workers' compensation. Given the unique nature of military service and the distinct statutory framework for veterans' compensation, veterans' disability benefits fall outside the credit doctrine's scope as set forth in 33 U.S.C. Sec. 903(e). Thus, an injured worker can receive full LHWCA benefits without offset for veterans' disability benefits related to earlier injuries. The Board's order is affirmed based on this reasoning.
The credit doctrine was expanded in 1984 to include offsets from other workers' compensation laws, but the Board's decisions are reviewed without special deference, respecting reasonable interpretations that align with the statute's policy.
Affirmation of the Board's Order is not mandatory based on its reasons, as per 33 U.S.C. Sec. 921(c). Legal affirmation of the Board's decision is permissible even if based on different grounds. The Jones Act (46 U.S.C. Sec. 688) allows for compensation in cases of seamen's injury or death and is the sole non-workers' compensation benefit recognized under the credit doctrine. LHWCA benefits are classified as workers' compensation. Both parties approached the case assuming the codified version of the credit doctrine was applicable rather than the earlier version used by the Board, justifying a decision based on the codified version. Public Law 98-426, Section 28(a), states that section 903(e) applies to pending cases, supporting the inclusion of prior LHWCA payments under the doctrine despite statutory ambiguities. Congressional intent regarding this matter is clear. Under 38 U.S.C. Sec. 106(a)(1), certain individuals discharged for disability from the Women's Army Auxiliary during the 1940s are recognized as active duty for VA-administered laws. Compensation under the LHWCA for permanent partial disability amounts to 66 2/3% of average weekly wages for a set duration, whereas veterans with similar injuries receive lifetime compensation. Todd contends that including VA disability benefits in the credit doctrine could incentivize employers to hire disabled workers, a concern he believes should be directed to Congress for potential legislative amendments.
