Louisiana Insurance Guaranty, et al v. DOWCP, et al

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
August 10, 2010 N o . 09-60509 Lyle W. Cayce Clerk

L O U I S I A N A INSURANCE GUARANTY ASSOCIATION; BATON ROUGE M A R I N E CONTRACTORS INC, P e titio n e rs v. D I R E C T O R , OFFICE OF WORKERS' COMPENSATION PROGRAMS, U.S. D E P A R T M E N T OF LABOR; NATIONAL BEN FRANKLIN INSURANCE C O M P A N Y , PITTSBURGH, PENNSYLVANIA; FIDELITY AND CASUALTY C O M P A N Y OF NEW YORK; ROBERT HARVEY, R esp on d en ts

P e tit io n s for Review of an Order o f the Benefits Review Board

B e fo r e DAVIS, SMITH, and HAYNES, Circuit Judges. H A Y N E S , Circuit Judge: T h is case arises from Claimant Robert Harvey's ("Harvey") claim before a n administrative law judge ("ALJ") for benefits under the Longshore and H a r b o r Workers' Compensation Act ("LHWCA"). The issues in this petition are w h e t h e r the Benefits Review Board ("BRB") erred in affirming the ALJ's fin d in g s that: (1) Harvey's "last injurious exposure" to absestos occurred in 1977; (2 ) Harvey involuntarily retired; (3) Harvey suffers from a total disability; (4) the

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No. 09-60509 L o u is ia n a Insurance Guarantee Association ("LIGA")1 was responsible for p a y m e n t of Harvey's claims due to the insolvency of the otherwise responsible in s u r a n c e carrier; and (5) LIGA is also responsible for payment of medical b e n e fits without a credit for possible, but thus far unproven, payments from H a r v e y 's existing health insurance coverage. Finding no reversible error, we D E N Y the petition for review. I . FACTUAL & PROCEDURAL BACKGROUND A . Harvey's Work History H a r v e y worked as a longshoreman at the Port of Greater Baton Rouge fr o m 1965 to 1977. His primary employer during that time was Petitioner Baton R o u g e Marine Contractors ("BRMC"). For a large part of the 1960s, Harvey's p r im a r y job was to unload bags of asbestos from the holds of ships docked in the p o r t . In 1970, Harvey began working as a crane operator and remained in that p o s it io n until changing employers and facilities in 1977. As a crane operator, H a r v e y no longer directly handled bags of asbestos, but he continued to pass t h r o u g h warehouse facilities where asbestos was stored in order to access B R M C 's cranes. During this time, the BRMC warehouses were not

d e c o n t a m in a t e d to remove background asbestos fibers deposited in the ordinary c o u r s e of handling. I n 1977, Harvey began working for the State of Louisiana. His new

e m p lo y m e n t first led him to transfer to the Baton Rouge Barge Terminal and t h e n to the Slack Water Canal. Though he eventually returned to the main port fa c ilit y , he never again worked with asbestos. Harvey worked for the State from 1 9 7 7 until his retirement in 2005.

LIGA is an entity created by the Louisiana legislature to "provide a mechanism for the payment of covered claims under certain insurance policies" on behalf of insolvent insurers. LA. REV. STAT. ANN. § 22:2052 (2010).

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No. 09-60509 B . Harvey's Medical History H a r v e y was first diagnosed with pulmonary asbestosis in 1998 by Dr. G le n n Gomes. In 2002, Harvey sought treatment from Dr. Mark Hodges. As a r e s u lt of tests, Dr. Hodges concluded that Harvey was moderately impaired and t h a t his lung capacity was 55% of predicted and his diffusion capacity was 71% o f predicted. Additional testing in 2004 led Dr. Hodges to opine that Harvey had b e c o m e severely restricted with a lung capacity of 40% of predicted and diffusion c a p a c it y of 41% of predicted. By the time of a 2006 report, Dr. Gomes opined t h a t Harvey's condition had significantly worsened from his original 1998 d ia g n o s is such that his total lung capacity had been reduced to 49% of predicted a n d his diffusion capacity was 37% of predicted. Harvey testified that, due to his medical condition, he "wasn't going to be a b le to climb stairs and roam around those docks and up and down the railroad t r a c k s like [he] needed to" to perform his job. He also testified that these lim it a t io n s , at least in part, motivated his decision to retire. C. BRMC's Insurance History B R M C was covered by four different insurance companies for various p e r io d s during Harvey's employment from 1965 to 1977. Relevant here is that E m p lo y e r s ' National Insurance Company provided coverage from October 1, 1 9 7 2 until November 1, 1982. It was declared insolvent and placed into

r e c e iv e r s h ip in 1994. Consequently, LIGA appeared in place of Employers' N a tio n a l in the proceedings below. D . Proceedings Below T h e ALJ conducted a formal hearing, including the taking of live t e s t im o n y from Harvey, on May 10, 2007. In a Decision and Order dated April 3 0 , 2008, the ALJ awarded Longshore Act compensation for the injuries flowing fr o m Harvey's asbestosis. Specifically, the ALJ found that: 1) Harvey's

a s b e s t o s is was causally related to his work for BRMC; 2) Harvey's injuries 3

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No. 09-60509 c o n s t it u t e d permanent and total disability; 3) Harvey's retirement in 2005 was in v o lu n t a r y insofar as it was at least partially caused by his medical condition; 4 ) the "last injurious exposure" related to Harvey's asbestosis occurred in 1977; 5 ) BRMC bears full liability under the LHWCA's "last responsible employer" r u le ; and 6) LIGA, as the substitute party for the insolvent Employers' National I n s u r a n c e Company, was the responsible carrier. The ALJ also awarded Harvey a ll reasonable and necessary medical care for services related to his asbestosis, in c lu d in g reimbursement for any past abestosis-related medical expenses. The parties cross-appealed the ALJ's April 30 Decision and Order and the B R B affirmed on May 11, 2009. LIGA timely filed the instant petition for review o n July 8, 2009. I I . STANDARD OF REVIEW T h e BRB's final order is subject to review in the United States Court of A p p e a ls for the circuit in which the injury occurred. 33 U.S.C. § 921(c) (2010). In reviewing a decision of the BRB, our "only function is to correct errors of law a n d to determine if the BRB has adhered to its proper scope of review i.e., has t h e [BRB] deferred to the ALJ's fact-finding or has it undertaken de novo review a n d substituted its views for the ALJ's." Avondale Shipyards, Inc. v. Vinson, 623 F .2 d 1117, 1119 n.1 (5th Cir. 1980). Stated differently, once the BRB affirms an o r d e r of the ALJ, we need only inquire whether the BRB "correctly concluded t h a t the ALJ's order was supported by substantial evidence on the record as a w h o le and is in accordance with the law." Ingalls Shipbuilding, Inc. v. Dir., O W C P , 991 F.2d 163, 165 (5th Cir. 1993) (internal quotation marks omitted). With respect to issues of law, we review the BRB's rulings de novo. Pool C o . v. Cooper, 274 F.3d 173, 177 (5th Cir. 2001). As for findings of fact, we have r e p e a t e d ly acknowledged that the ALJ, as sole factfinder, "is entitled to consider a ll credibility inferences [and the ALJ's] selection among inferences is conclusive if supported by the evidence and the law." Mendoza v. Marine Pers. Co., 46 F.3d 4

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No. 09-60509 4 9 8 , 500 (5th Cir. 1995) (internal quotation marks and citation omitted). See a l s o Bollinger Shipyards, Inc. v. Dir., OWCP, 604 F.3d 864, 870-71 (5th Cir. 2 0 1 0 ). III. DISCUSSION A s stated above, the petition before us presents five issues for review. Three of those issues require us to analyze the ALJ's factual findings: (1) that 1 9 7 7 was the "last injurious exposure"; (2) that Harvey involuntarily retired; and (3 ) that Harvey was totally disabled. The other two issues are questions of law: (1 ) did the ALJ and BRB err in assigning full liability to LIGA by extension of t h e "last responsible employer" rule; and (2) did the ALJ err in awarding medical c o s t s related to Harvey's asbestosis without awarding a credit for unknown and u n p r o v e n payments from another source? We address each issue in turn. A . The ALJ's Factual Findings W e must accept factual findings supported by "substantial evidence" on t h e record as a whole. New Orleans Stevedores v. Ibos, 317 F.3d 480, 483 (5th C ir . 2003). "`Substantial evidence is that relevant evidence--more than a

s c in t illa but less than a preponderance--that would cause a reasonable person t o accept the fact finding.'" Coastal Prod. Servs. Inc. v. Hudson, 555 F.3d 426, 4 3 0 (5th Cir. 2009) (quoting Dir., OWCP v. Ingalls Shipbuilding, Inc., 125 F.3d 3 0 3 , 305 (5th Cir. 1997)). Based on the record evidence, the BRB correctly found t h a t all three of the ALJ's challenged factual findings were properly supported b y substantial evidence. 1 . Last Injurious Exposure L IG A contends that Harvey's last injurious exposure occurred before 1971 w h e n Employers' National began providing coverage to BRMC. Specifically, L IG A contends that, because Harvey stopped working directly with asbestos a ft e r 1970, he therefore never again suffered an injurious exposure. In making t h is argument, LIGA attacks the expert testimony of Frank Parker by arguing 5

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No. 09-60509 t h a t Parker's opinion contradicted Harvey's testimony and that Parker's t e s t im o n y was speculative. Neither argument has merit and, accordingly, we fin d the BRB correctly affirmed the ALJ's ruling as to "last injurious exposure." The ALJ had substantial evidence demonstrating that Harvey worked in w a r e h o u s e s where latent asbestos fibers subjected him to toxic background e x p o s u r e for the duration of his employment with BRMC. Consequently,we c o n c lu d e the BRB correctly held that the ALJ had substantial evidence to find t h a t the "last injurious exposure" occurred in 1977. 2 . Involuntary Retiree Status N e x t , BRMC contends that Harvey failed to advance sufficient evidence fo r the ALJ to find that his retirement was "involuntary." As the BRB explained b e lo w , if a claimant's work-related injury played a role in causing his retirement, t h e n the retirement is "involuntary." See Harmon v. Sea-Land Serv., Inc., 31 B R B S 45, 1997 WL 295228, at *4 (DoL Ben. Rev. Bd. 1997).2 Here, the ALJ was p r e s e n t e d with substantial evidence supporting the finding that Harvey's illness c o n t r ib u t e d to his decision to retire in the form of Harvey's own testimony and e v id e n c e from Drs. Gomes and Hodges describing Harvey as suffering from a " s ig n ific a n t impairment." BRMC offered no rebuttal evidence to contradict this e v id e n c e . Harvey's failure to file for a medical retirement and his failure to e x c lu d e all other explanations for his retirement do not provide grounds to set a s id e the ALJ's factual findings. As previously noted, the ALJ, as sole factfinder,

In its briefing, BRMC takes issue with the ALJ's reliance on Hansen v. Container Stevedoring Co., 31 BRBS 155, 1997 DOLBRB LEXIS 52 (DoL Ben. Rev. Bd. 1997). Specifically, BRMC argues that the ALJ erred in adopting Hansen's holding that: "Where, however, a claimant's retirement is due, at least in part, to his occupational disease, claimant is not a voluntary retiree . . . ." Id. at *8. While Hansen involved different facts as BRMC asserts, its statement of the standard for assessing voluntariness is accurate and was appropriately adopted by the ALJ. See Harmon, 1997 WL 295228, at *4 (asserting same standard); Pryor v. James McHugh Constr. Co., 18 BRBS 273, 1986 WL 67110, at *6 (DoL Ben. Rev. Bd. 1986) (same); McDonald v. Bethlehem Steel Corp., 18 BRBS 181, 1986 WL 66356, at *2 (DoL Ben. Rev. Bd. 1986) (same).

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No. 09-60509 " is entitled to consider all credibility inferences [and his] selection among in fe r e n c e s is conclusive if supported by the evidence and the law." Mendoza, 46 F .3 d at 500 (internal quotation marks and citation omitted). We conclude that t h e ALJ's determination of Harvey's retiree status was properly supported by s u b s t a n t ia l evidence. 3. Harvey's Total Disability I n a similar fashion, BRMC argues that the BRB erred in affirming the A L J 's finding that Harvey suffers from a total disability because he did not seek a disability retirement and his doctors did not testify that he was 100% im p a ir e d . To establish a prima facie case of total disability, the claimant must s h o w that he is unable to return to his regular or usual employment due to his w o r k related injury. See La. Ins. Guar. Ass'n v. Abbott, 40 F.3d. 122, 127 (5th C ir . 1994). The availability of suitable alternative employment distinguishes p a r tia l from total disability. Id. at 126. "[O]nce a claimant demonstrates that h e is unable to perform his former longshore employment tasks because of a jo b -r e la t e d injury, he has made a prima facie case of total disability. The burden t h e n shifts to the employer, should it wish to reduce or eliminate its c o m p e n s a tio n liability, to establish that the employee is capable of performing o t h e r realistically available jobs." Id. at 127. In light of this burden-shifting fr a m e w o r k and the strong presumption of correctness afforded ALJ findings, B R M C has failed to show that Harvey was not totally disabled.3

BRMC's argument regarding the testimony of Drs. Gomes and Hodges appears to be based on a misreading of the evidence. BRMC contends Dr. Hodges claimed that Harvey was 40% disabled and Dr.Gomes claimed that Harvey was 49% disabled. In reality, Dr. Hodges claimed Harvey was 60% disabled and Dr. Gomes claimed Harvey was 51% disabled. Read properly, the medical testimony presented to the ALJ--spanning from 1998 until 2006-- explicitly states that Harvey had declined from moderate impairment to severe impairment by the time of his retirement.

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No. 09-60509 B . LIGA's Liability as the Last Responsible Carrier Because we find that the BRB correctly affirmed the ALJ's resolution of t h e three factual issues discussed above, we must next consider whether the B R B erred in affirming the ALJ's assignment of full responsibility to LIGA. More precisely, we must decide whether the ALJ erred in applying the LHWCA's " la s t responsible employer" rule rather than a pro rata recovery scheme in light o f LIGA's special status as a state-created guarantee association. LIGA argues t h a t it should not be bound by the "last responsible employer" rule because: (1) L o u is ia n a law demonstrates that it is not a "carrier" under the rule; and (2) its lia b ilit y as a replacement party for an insolvent insurer must be prorated among a ll available insurers as required by its enacting legislation and Louisiana c a s e la w . LIGA's position is premised upon a misunderstanding of both

L o u is ia n a and federal law. We find LIGA was correctly held liable as a carrier u n d e r the LHWCA's "last responsible employer" rule. T h e "last responsible employer" rule, also known as the "last exposure" r u le , originated as a policy position adopted by the administrator of the L o n g s h o r e Act. The rule was first judicially adopted by the Second Circuit in T r a v e le r s Insurance Company v. Cardillo, 225 F.2d 137, 145 (2d Cir. 1955). Under the rule as acknowledged in this circuit, "the employer `during the last e m p lo y m e n t in which the claimant was exposed to injurious stimuli . . . should b e liable for the full amount of the award.'" New Orleans Stevedores v. Ibos, 317 F .3 d 480, 483 n.2 (5th Cir. 2003) (quoting Cardillo, 225 F.2d at 145); see also C o o p e r / T . Smith Stevedoring Co. v. Liuzza, 293 F.3d 741, 749 (5th Cir. 2002); L e v in g s to n Ship Bldg. Co. v. Pelaez, 312 F. App'x 711, 713 (5th Cir. 2009) (u n p u b lis h e d ). The rule further mandates that "the treatment of carrier liability w a s intended to be handled in the same manner as employer liability, and that

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No. 09-60509 t h e carrier who last insured the `liable' employer during claimant's tenure of e m p lo y m e n t . . . should be held responsible . . . ." Cardillo, 225 F.2d at 145.4 L IG A first contends that the "last responsible employer" rule should not a p p ly because LIGA does not constitute a "carrier" within the meaning of the r u le . LIGA's argument fails, however, in light of the authorizing statute that c r e a t e d it. Under section 22:2058 of the Louisiana Revised Statutes, LIGA is " d e e m e d the [insolvent] insurer to the extent of [the insolvent insurer's] o b lig a t io n on the covered claims and to such extent shall have all rights, duties a n d obligations of the insolvent insurer as if the insurer had not become in s o lv e n t . . . ." LA. REV. STAT. ANN. § 22:2058(A)(2) (2010). In short, LIGA s t e p p e d into Employers' National's shoes when Employers' National became in s o lv e n t. In so doing, it incurred all of Employers' National's

o b lig a t io n s -- in c lu d in g the obligation to cover liabilities arising as a consequence o f the application of the "last responsible employer" rule. Moreover, LIGA's a t t e m p t to narrowly construe its enacting legislation to limit coverage runs d ir e c t ly contrary to the requirement under Louisiana law that "the provisions o f [LIGA's enabling legislation] must be interpreted to protect claimants and p o lic y h o ld e r s and to advance their interests rather than the interests of [LIGA]." Morris v. E. Baton Rouge Parish Sch. Bd., 826 So. 2d 46, 51-52 (La. Ct. App. 2 0 0 2 ) (citing Senac v. Sandefer, 418 So. 2d 543, 545-46 (La. 1982)). Thus, both t h e Louisiana legislation and caselaw defining LIGA's status clearly d e m o n s t r a t e that the ALJ correctly concluded that LIGA constitutes a "carrier" fo r the purposes of applying the rule. S o u th e r n Silica of Louisiana Inc. v. Louisiana Insurance Guaranty A s s o c ia tio n , 979 So. 2d 460 (La. 2008) is not to the contrary. Its application of a pro rata share of liability was based upon the fact that the suit was brought on
No party to this litigation questions the validity of the "last responsible employer" rule or its extension to insurance carriers.
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No. 09-60509 a Louisiana tort theory that would have required the insolvent insurer to pay a p r o rata share of liability. Id. at 468. Here, under the LHWCA, the applicable la w of allocation would have assigned all liability to Employers' National as the la s t responsible carrier. LIGA took full responsibility for that comprehensive lia b ilit y when it appeared as the replacement party for Employers' National.5 H e n c e , the BRB and ALJ correctly determined that Harvey was under no o b lig a t io n to exhaust any coverage provided by BRMC's previous insurers.6 C . LIGA's Liability for Harvey's Medical Expenses L IG A contends it is entitled to a credit against the ALJ's award because H a r v e y is covered by heath insurance through his retirement plan.7 Under

s e c t i o n 22:2062 of the Louisiana Revised Statutes, the payment by other

LIGA incorrectly asserts that the application of the LHWCA to apply the "last responsible employer" rule to it effectively "trumps" state law. As perhaps best articulated in the Department of Labor's brief, the issue is nothing more than a matter of sequence. Under Louisiana law, the first question that must be asked is what type of case is being litigated. If the case had been filed under Louisiana tort law, then the pro rata scheme would have applied. Here, however, the suit was filed under the LHWCA and, thus, the ALJ was required by Louisiana law to apply the law of allocation for claims arising under that statute. Therefore, the application of the "last responsible employer" rule in this case not only does no harm to Louisiana law but, rather, complies with its strictures. Further, the Louisiana Supreme Court has also held that the mere existence of other solvent carriers does not protect LIGA from liability where solvent carriers did not cover the period for which the defendant seeks recovery. Hall v. Zen-Noh Grain Corp., 787 So. 2d 280, 281-82 (La. 2001). To avoid this issue, LIGA advances an elaborate waiver argument on the theory that the insurance carriers inappropriately acted in concert with BRMC at the outset of the instant litigation. But as the BRB explained below, the insurance carriers did not act in concert to defend BRMC against the subject claim; instead, each defended the specific periods of time for which it covered the employer's risk under the LHWCA. No one was misled by any carrier into thinking that that carrier would provide coverage for a time period other than the period set forth in the subject policy. Additionally, the only case cited by LIGA on this topic--Steptore v. Masco Constr. Co., 643 So. 2d 1213 (La. 1994)--addresses a state law claim against a general liability carrier, not an LHWCA claim against an employer's workers' compensation liability carrier. The parties agree that Harvey is currently covered by a health insurance policy provided by the state as part of his retirement. However, neither side placed the actual policy in evidence before the ALJ or BRB, and no one could point to any actual payments made by this carrier for any medical problems for which LIGA has been adjudged liable to pay benefits.
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No. 09-60509 in s u r a n c e of the same medical expenses entitles LIGA to a credit for those p a y m e n t s in order to avoid double recovery. LA. REV. STAT. ANN. § 22:2062(A) (2 0 1 0 ). The only evidence about other insurance contained in the record is that H a r v e y received insurance as a continuation of his coverage under the Louisiana O ffic e of State Group Benefits administered by United Health Care. Nothing in t h e record indicates whether Harvey's health insurance policy would or could c o v e r his work-related asbestosis injuries. More importantly, nothing in the r e c o r d supports a conclusion that any other carrier paid or is obligated to pay a n y amount for which LIGA should then receive a credit. Louisiana cases have p la c e d the burden on LIGA to provide evidence for recovery of the credit, and t h is placement of the burden makes sense in light of the overall policy u n d e r p in n in g LIGA's creation--to benefit policyholders and claimants of in s o lv e n t carriers. See Morris v. E. Baton Rouge Parish Sch. Bd., 826 So. 2d 46, 5 5 (La. Ct. App. 2002) (granting LIGA a credit only for the amount shown a c t u a lly paid); see also Jones v. GMC, 871 So. 2d 1109, 1117 (La. 2004) (r e q u ir in g employers seeking workers' compensation offsets to bear the burden o f demonstrating their entitlement to a credit). LIGA concedes that it did not o ffe r evidence regarding Harvey's health insurance coverage or any other in fo r m a t io n demonstrating that Harvey's medical costs related to his asbestosis w e r e paid or payable by another source. Thus, LIGA has failed to demonstrate t h a t its contention necessitates reversal of the BRB's award of medical costs. I V . CONCLUSION F o r the reasons set forth above, the petition for review of the decision of t h e BRB is DENIED.

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