Jacksonville Shipyards, Inc., Petitioner, v. Director, Office of Workers' Compensation Programs, Unitedstates Department of Labor, Respondents, 842 F.2d 1253 (11th Cir. 1988)

In this case, an employer found liable for disability compensation under the Longshore and Harbor Workers' Compensation Act sought relief under section 8(g) of that Act, 33 U.S.C. § 908(f) (1982). The Administrative Law Judge (ALJ) denied relief and the Benefits Review Board affirmed. We reverse.

William J. Stokes worked in a Jacksonville, Florida shipyard from October 27, 1958 until August 11, 1976. During that eighteen-year period, the shipyard was owned by three different entities. The third owner, Jacksonville Shipyards, Inc., owned the shipyard during the last eleven years of Stokes' employment. Over that period, Jacksonville Shipyards was insured first by Insurance Company of North America and then by Aetna Casualty and Surety Company. On January 1, 1976, seven months before Stokes stopped working at the shipyard, Jacksonville Shipyards became self-insured.

Throughout the 1960's, Stokes worked at the shipyard as a sandblaster in the paint and labor department. In 1971, he began to experience shortness of breath when climbing stairs and ladders. That same year, a chest x-ray was performed which indicated a condition consistent with silicosis, a lung disease that results from exposure to dust and silica.

On June 10, 1971, Jacksonville Shipyards transferred Stokes from the paint and labor department to the dry dock department, where he worked at maintaining and repairing equipment. Stokes continued to experience shortness of breath, however, and in March 1975, x-rays again revealed a condition consistent with silicosis. Tests also revealed that Stokes had contracted tuberculosis. Due to his deteriorating health, Stokes stopped working at the shipyard on August 12, 1976.

Stokes then filed a permanent total disability claim under the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901-950, against Jacksonville Shipyards and its former insurance carriers, as well as Stokes' previous employers at the shipyard and their carriers. A hearing was held before an ALJ on September 1, 1983. At the outset of the hearing, Jacksonville Shipyards stipulated that it had become self-insured on January 1, 1976, and that Stokes had been exposed to dust and silica up until the time he stopped working. Under the so-called "last injurious exposure" rule applicable to total disability claims, the last employer to have exposed the claimant to injurious stimuli bears full liability for disability compensation, regardless of whether that exposure actually injured the claimant. See Travelers Ins. Co. v. Cardillo, 225 F.2d 137, 145 (2d Cir.), cert. denied, 350 U.S. 913, 76 S. Ct. 196, 100 L. Ed. 800 (1955). Thus, by stipulating that the last exposure occurred after it became self-insured, Jacksonville Shipyards conceded that it alone was liable for the full amount of Stokes' compensation claim. Accordingly, the ALJ dismissed Jacksonville Shipyards' former insurance carriers as well as the previous owners of the shipyard and their carriers.

Having conceded liability, Jacksonville Shipyards requested relief under 33 U.S.C. § 908(f) (1982 & Supp.1985).¹  That section provides that when a partially disabled worker becomes totally disabled as a result of a work-related incident, the employer will be liable only for the first 104 weeks of disability compensation; after that, disability compensation is paid from a "special fund" created from payments by employers. In evaluating requests for relief under section 908(f), courts have applied a three-part test developed in C & P Telephone Co. v. Director, OWCP, 564 F.2d 503 (D.C. Cir. 1977). Under that test, (1) the employee must have had a preexisting, permanent partial disability; (2) this condition must have been manifest to the employer; and (3) the employee must have experienced a second injury, with the preexisting partial disability contributing to the seriousness of the second injury. Accord Director, OWCP v. Todd Shipyards Corp., 625 F.2d 317, 319 (9th Cir. 1980); Director, OWCP v. Potomac Elec. Power Co., 607 F.2d 1378, 1382 (D.C. Cir. 1979).

Here, the ALJ found that the first two conditions were satisfied: Stokes had a preexisting permanent partial disability as early as 1971, and that condition had been manifest to Jacksonville Shipyards. The ALJ concluded, however, that the third condition was not satisfied because the evidence failed to show a "second injury." In the ALJ's view, there would be a second injury only if the evidence showed (1) that Stokes had been further exposed to silica after his partial disability was manifest, and (2) that this exposure had actually aggravated the preexisting condition. Although the ALJ found that the evidence showed further exposure to silica, he concluded that the evidence failed to show a causal relationship between that exposure and Stokes' ultimate total disability. Rather, the ALJ found that the total disability was the natural progression of the earlier partial disability and therefore had resulted from the same, earlier exposure that had caused the partial disability. Having thus found no second injury, the ALJ denied Jacksonville Shipyards' request for relief under section 908(f). The Benefits Review Board affirmed, and Jacksonville Shipyards appeals.² 

On appeal, Jacksonville Shipyards does not contest the ALJ's findings of fact. Rather, it argues that the ALJ erred as a matter of law in requiring it to prove that Stokes' total disability resulted in fact from the silica exposure that occurred after the partial disability had become manifest. Jacksonville Shipyards asserts that the mere fact of Stokes' further exposure after the partial disability became manifest should suffice to establish a "second injury" for purposes of section 908(f). In other words, Jacksonville Shipyards asserts that proof of such subsequent exposure should give rise to a conclusive presumption that the exposure, and not the natural progression of the partial disability, was responsible for the total disability.

The purpose of section 908(f) is to encourage employers to hire partially disabled persons, or apropos to this case, to retain employees who become partially disabled in the course of their employment. See H.Rep. No. 1441, 92d Cong., 2d Sess. 8, reprinted in 1972 U.S.Code Cong. & Admin.News 4698, 4705-06. In keeping with the congressional design, the provision should be given a liberal interpretation. See Maryland Shipbuilding & Drydock Co. v. Director, OWCP, 618 F.2d 1082, 1084 (4th Cir. 1980). Thus, section 908(f) relief should be granted if a denial of relief would give rise to incentives inconsistent with the incentives Congress sought to promote.

Under the "last injurious exposure" rule, the rule that the ALJ applied to hold Jacksonville Shipyards liable for Stokes' disability compensation, the last employer to have exposed the claimant to injurious stimuli bears full liability for total disability compensation, regardless of whether that exposure actually aggravated a preexisting condition.³  Under the ALJ's approach to determining the availability of section 908(f) relief to the employer, on the other hand, such exposure by itself is not sufficient to establish the requisite "second injury." Were the ALJ's approach to prevail, an employer in Jacksonville Shipyards' position would have an incentive to fire all partially disabled employees before becoming self-insured: the employer would know that any minimal exposure would be sufficient to trigger full disability liability under the "last injurious exposure" rule, yet insufficient to trigger entitlement to relief under section 908(f). In light of the purpose behind section 908(f), we cannot countenance the creation of that kind of incentive structure. We therefore hold that exposure sufficient to trigger the "last injurious exposure" rule is sufficient to satisfy the "second injury" requirement under section 908(f).⁴  Because such exposure occurred in this case, we reverse the ALJ's order denying appellant's request for relief under section 908(f).

REVERSED.