December 1, 1992 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
_____________________
No. 91-2071
DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS,
UNITED STATES DEPARTMENT OF LABOR,
Petitioner,
v.
GENERAL DYNAMICS CORPORATION,
Employer, Respondent,
and
HAROLD LOCKHART,
Claimant, Respondent.
____________________
ERRATA SHEET
The opinion of this Court issued on November 30, 1992, is
amended as follows:
On page 4, line 7 of second full paragraph, replace "disc"
with "disk".
On page 5, line 4 from bottom, remove underline from space
between "See" and "White".
___ _____
On page 8, last line, insert "See" before "Potomac".
___ _______
On page 18, line 4, remove underline from "v." and spaces
__
before and after it.
On page 19, line 1 below indented quote, insert " v.
Director, Office of Workers' Compensation Programs" after "C&P
____________________________________________________ ___
Tel. Co.".
________
On page 25, line 1, insert "See" before "Air America, Inc.".
___ _________________
November 30, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 91-2071
DIRECTOR, OFFICE OF WORKERS' COMPENSATION PROGRAMS,
UNITED STATES DEPARTMENT OF LABOR,
Petitioner,
v.
GENERAL DYNAMICS CORPORATION,
Employer, Respondent,
and
HAROLD LOCKHART,
Claimant, Respondent.
____________________
ON PETITION FOR REVIEW OF A FINAL ORDER
OF THE BENEFITS REVIEW BOARD
____________________
Before
Selya, Circuit Judge,
_____________
Campbell, Senior Circuit Judge,
____________________
and Keeton,* District Judge.
______________
____________________
Mark A. Reinhalter with whom Marshall J. Breger, Solicitor of
___________________ ___________________
Labor, Carol A. De Deo, Associate Solicitor, Janet R. Dunlop, Counsel
_______________ _______________
for Longshore, and Carol B. Feinberg, Department of Labor, Office of
__________________
the Solicitor, were on brief for petitioner.
Norman P. Beane, Jr., with whom Edward J. Murphy, Jr., and Murphy
____________________ _____________________ ______
& Beane were on brief for employer-respondent.
_______
____________________
____________________
____________________
*Of the District of Massachusetts, sitting by designation.
CAMPBELL, Senior Circuit Judge. This petition for
____________________
review involves a claim by co-respondent Harold Lockhart for
disability compensation under the Longshore and Harbor
Workers' Compensation Act, 33 U.S.C. 901 et seq. ("the
_______
Act"). The Benefits Review Board ("the Board") rejected the
contention of petitioner, who is the Director of the Office
of Workers' Compensation Programs ("the Director"), that co-
respondent General Dynamics Corporation, Lockhart's former
employer, did not qualify for limited liability under section
8(f) of the Act ("Section 8(f)"). See 33 U.S.C. 908(f)(1).
___
In his petition for review of the Board's final
order, the Director raises only one issue: whether the Board
erred in holding that the permanency of an employee's prior
disability need not have been initially "manifest" to the
employer in order for the employer to qualify for Section
8(f) relief. This court has jurisdiction to hear the
petition under 33 U.S.C. 921(c).
I. FACTUAL BACKGROUND
I. FACTUAL BACKGROUND
__________________
Harold Lockhart worked as a heavy duty carpenter
for General Dynamics ("the Company") at its Quincy,
Massachusetts, shipyard. On the job on March 27, 1978, he
experienced severe pain in his back while attempting to lift
a plank weighing over 300 pounds. He reported the injury to
his foreman and was examined the next morning by a General
Dynamics physician at the shipyard clinic. The physician
-3-
initially diagnosed Lockhart's problem as muscle spasms and
recommended that he take a few days off to rest at home.
On April 5, Lockhart returned to the shipyard, but
was still experiencing pain in his back and legs. A company
physician examined Lockhart's back and filed a company
medical report which stated: "Back is sore. Taking it easy
at home." The next day, April 6, Lockhart was again examined
by the company physician who, on an "Attending Physician's
Report," declared Lockhart to be "disabled" and noted that
his "range of motion [is] restricted and painful, all
localized into [the left] hip." Also on April 6, another
form was completed which described how Lockhart injured his
back while lifting a plank. The physician wrote "deferred"
in a blank space on the form which asked for a description of
the nature of the injury. X-rays of Lockhart's back ordered
by the company doctor eventually came back with "negative"
results.
Eleven days later on April 17, 1978, Lockhart was
again examined by the General Dynamics physician because his
back still hurt. The physician updated the Attending
Physician's Report, noting the "negative" results of certain
tests, stating that Lockhart was still "disabled," and
offering a new diagnosis of "resolving acute LS [lumbosacral]
spine." The doctor also checked various boxes on the form to
indicate that it was unknown when Lockhart would be able to
-4-
return to work, but that, in his opinion, there would be no
"permanent defect, or facial or head disfigurement."
Sometime around April 25, 1978, the Company
authorized Lockhart to return to his job without any
restrictions on his duties. However, when he reported for
work Lockhart informed his supervisor that his back and leg
still hurt. The supervisor agreed to restrict him to light
duty work, which consisted of the supervision of other
carpenters without any lifting or physical exertion. There
is no evidence that anyone at General Dynamics above
Lockhart's immediate supervisor knew of the light duty
assignment.
Despite the light duty assignment, Lockhart injured
his back again on May 1, 1978. He had been called in to work
overtime and perform heavy duty carpentry work on a ship.
While attempting to lift another heavy plank, Lockhart felt a
sharp pain in his back and had to be carried off the boat by
his fellow workers. He was hospitalized and eventually
diagnosed as having a ruptured disk in his spine. Surgery
and other treatment were generally unsuccessful, leaving
Lockhart with limited mobility. He never returned to his job
at General Dynamics.
II. PROCEDURAL HISTORY
II. PROCEDURAL HISTORY
__________________
This case began fourteen years ago when Lockhart
filed a claim for compensation under the Longshore and Harbor
-5-
Workers' Compensation Act, alleging that he was totally and
permanently disabled. See 33 U.S.C. 901 et seq. General
___ _______
Dynamics controverted the claim and also argued that its own
liability should, in any event, be limited to 104 weeks of
payments under Section 8(f) of the Act. See 33 U.S.C.
___
908(f).
Under the Act, an employer must pay an employee
compensation for his permanent total disability. See 33
___
U.S.C. 908(a). Section 8(f) of the Act limits the
employer's liability to 104 weeks of payments in cases in
which an employee having an existing permanent partial
disability suffers a second injury which renders him totally
disabled. See 33 U.S.C. 908(f)(1); CNA Ins. Co. v. Legrow,
___ ____________ ______
935 F.2d 430, 435 (1st Cir. 1991). To prove that it is
entitled to Section 8(f) relief, an employer must show that,
(1) the employee had a permanent partial disability that
existed prior to the second injury; (2) the second injury
contributed to that disability; and (3) the prior disability
was "manifest" to the employer. See General Dynamics Corp.
___ _______________________
v. Sacchetti, 681 F.2d 37, 39-40 (1st Cir. 1982). That the
_________
prior disability was manifest is not a requirement appearing
in the statutory text, but rather is one the courts have
implied, taking into account the history and purpose of
Section 8(f). See White v. Bath Iron Works Corp., 812 F.2d
___ _____ _____________________
33, 35 (1st Cir. 1987). If an employer qualifies for Section
-6-
8(f) relief, after two years the disability payments are made
by the government out of a special fund which is administered
by the petitioner, the Director of the Office of Worker's
Compensation Programs. See 33 U.S.C. 908(f)(2)(A), 944;
___
20 C.F.R. 701.201, 701.202; Legrow, 935 F.2d at 435.
______
After a formal hearing in 1984, an administrative
law judge ("ALJ") found that Lockhart was totally and
permanently disabled, and awarded him benefits to be paid by
General Dynamics. The ALJ rejected General Dynamics's claim
that it was entitled to relief under Section 8(f). The ALJ
held that Section 8(f) did not apply because, among other
reasons, General Dynamics failed to satisfy the manifest
requirement. Though the employer had known about Lockhart's
first injury, "the permanent nature of the March 27, 1978
_________________
injury was [not] manifest to the Employer before May 1, 1978
[the time of the second injury]." (Emphasis added).
On February 24, 1988, the Benefits Review Board
ruled on an appeal brought by General Dynamics, affirming the
ALJ's decision that Lockhart was entitled to disability
benefits, but reversing in part and vacating in part the
ALJ's holding that General Dynamics was not entitled to
Section 8(f) relief. With regard to the manifest
requirement, the Board stated that
The administrative law judge determined
that the permanent nature of the first
_________
injury was not manifest to the employer.
This conclusion is also flawed by the
-7-
administrative law judge's use of the
wrong standard in determining whether
claimant had a pre-existing permanent
partial disability. . . . The medical
records need not indicate the severity or
the precise nature of the pre-existing
condition for it to be manifest, so long
as there is sufficient information
regarding the existence of a serious
lasting problem which would motivate a
cautious employer to consider terminating
the employee because of the risk of
compensation liability.
(citing Board precedent) (emphasis in original). Among other
issues, the Board vacated and remanded the case to the ALJ
for a new finding as to whether Lockhart's preexisting
disability was manifest to General Dynamics before the second
injury.
Because the original ALJ had retired by the time
the Board remanded the case in 1988, a different ALJ
reconsidered the case in light of the Board's decision. On
January 11, 1989, the second ALJ ruled that General Dynamics
had met all of Section 8(f)'s requirements, including the
manifest requirement. The ALJ found that the prior
disability was manifest because the Company had "sufficient
information regarding the existence of a serious lasting
problem which would motivate a cautious employer [to consider
terminating Lockhart] because of the risk of compensation
liability."
The Director, who by this stage had joined the
action as a party-in-interest, moved for reconsideration,
-8-
arguing that the manifest requirement was unfulfilled because
General Dynamics did not have sufficient information prior to
the second injury that the prior disability, caused by the
March 27 accident, was permanent. The ALJ rejected the
Director's motion on March 28, 1989, reiterating that "the
full ramifications of a condition need not be determinable"
to fulfill the manifest requirement.
Finally, on August 29, 1991, the Board rejected the
Director's appeal and affirmed the ALJ's decision, stressing
again that "the permanency of a pre-existing condition need
not be manifest prior to the claimant's second injury for the
condition to support an award of Section 8(f) relief." The
Director now petitions for review of the Board's final order,
contending that the Board's statement of the law on the
manifest requirement is reversible error.
III. STANDARD OF REVIEW
III. STANDARD OF REVIEW
__________________
Reversal of the ALJ by the Board is warranted only
if either the ALJ's findings of fact are unsupported by
substantial evidence in the record considered as a whole, or
if the decision is contrary to law. 33 U.S.C. 921(b)(3);
Legrow, 935 F.2d at 433. The only issue before us is the
______
Board's decision to reverse the first ALJ's ruling of law
that the manifest requirement is fulfilled only if the
permanent nature of a disability is itself manifest. Our
review of the case, therefore, requires only that we
-9-
determine the legal correctness of the Board's conclusions.
Because the Board is not a policy-making agency, the Supreme
Court has indicated that the Board's interpretation of the
applicable law is not entitled to any special deference from
the courts. See Potomac Elec. Power Co. v. Director, Office
___ _______________________ ________________
of Workers' Compensation Programs, 449 U.S. 268, 278 n.18
___________________________________
(1980); but see Estate of Cowart v. Nicklos Drilling Co., 112
_______ ________________ ____________________
S. Ct. 2589, 2595 (1992) (describing deference to Board as a
"difficult issue[]").1 Neither party, in fact, argues for
special deference to the Board.
The Director, however, argues that we must defer to
his construction of Section 8(f) because the Office of
___
Workers' Compensation Programs is the agency authorized to
administer the Act. See 20 C.F.R. 701.202. The Director
___
contends that, under the principles of deference articulated
____________________
1. This court has previously indicated some willingness to
defer to the Board. "[E]ven though [an] issue may be looked
upon as largely legal in nature, a reviewing court should
accord the Board's interpretation considerable deference."
General Dynamics Corp. v. Sacchetti, 681 F.2d 37, 38 (1st
_______________________ _________
Cir. 1982). "And even when the issue involves the
`application of a broad statutory term or phrase to a
specific set of facts,' the Board's decision will be affirmed
so long as it has a `reasonable legal basis.'" Bath Iron
__________
Works Corp. v. White, 584 F.2d 569, 574 (1st Cir. 1978). We
___________ _____
need not attempt to determine to what extent, if any, these
views can stand in light of the cited opinions of the Supreme
Court. Even if deferring to the Board could somehow be
squared with the Court's pronouncements, no deference would
be due to the Board's determination in this case. As
______________
explained infra, this case does not involve the Board's
_____
interpretation of the Act, but only of the judicially-created
doctrine of manifest disability.
-10-
in Pauley v. BethEnergy Mines, Inc., 111 S. Ct. 2524 (1991),
______ ______________________
this Court must accept his interpretation of the manifest
requirement unless it is unreasonable or contrary to the
purposes of the statute, or contrary to clearly expressed
legislative intent. See id. at 2534 (stating that courts
________
should defer "to an agency's interpretation of ambiguous
provisions of the statutes it is authorized to implement").
This court recently stated in Liberty Mutual Ins.
____________________
Co. v. Commercial Union Ins. Co., No. 92-1337, 1992 U.S. App.
___ _________________________
LEXIS 27902 (1st Cir. Oct. 28, 1992), that it has yet to
decide whether to extend deference to the Director's
interpretation of the Act. Id. at 17. Other circuits are
___
split on whether and under what circumstances to accord
deference to the Director. Id. at 16-17 (reviewing circuit
___
positions on deference); Director, Office of Workers'
________________________________
Compensation Programs v. General Dynamics Corp. (Krotsis),
______________________ _________________________________
900 F.2d 506, 510 (2d Cir. 1990) (same).
We again refrain from deciding whether deference is
due to the Director's interpretation of the Act because in
this case "[t]he Director's position concerns merely his
interpretation of the case law, not his interpretation of the
controlling statute." Liberty Mutual, No. 92-1337 at 17-18.
_______________
The manifest requirement at issue is a judicially-created
doctrine, developed by the courts as a "judicial gloss" on
the Act. American Ship Bldg. Co. v. Director, Office of
________________________ ____________________
-11-
Workers' Compensation Programs, 865 F.2d 727, 730-32 (6th
________________________________
Cir. 1989) (reviewing the history of the manifest
requirement); Director, Office of Workers' Compensation
______________________________________________
Programs v. Brandt Airflex Corp., 645 F.2d 1053, 1059 (D.C.
________ ____________________
Cir. 1981). The text of Section 8(f) contains no reference
to the manifest requirement. See 33 U.S.C. 908(f). The
___
Labor Department regulations implementing Section 8(f) do not
specify what employers must demonstrate to fulfill the
manifest requirement. See 20 C.F.R. 702.145(b) (making no
___
mention of the manifest requirement); 20 C.F.R. 702.321
(stating only that an applicant for Section 8(f) relief
should describe "the basis for the assertion that the pre-
existing condition relied upon was manifest to the
employer"). In his brief, the Director argues only that the
case law of this and other circuits support his version of
the manifest requirement.2 The Director has no special
expertise nor Congressional grant of authority to interpret
case law. "It is nonsense to suggest that a federal court
must defer to an administrative agency in determining the
____________________
2. The sole reference in the Director's brief to the text of
the statute is a conclusory statement that because the word
"permanent" appears in Section 8(f), the permanent nature of
a disability must be manifest to an employer to qualify for
limited liability. This point is neither developed nor
relied upon in the rest of the Director's brief. Except for
this off-hand reference to the statute, the Director's
position is supported only by his interpretation of case law.
-12-
meaning and applicability of the court's own precedent."
Liberty Mutual, No. 92-1337 at 18.
______________
In addition, the Director takes his position as a
litigating party, not in support of his rule-making capacity.
Generally, agency positions raised adversarially for the
first time in the course of litigation are not owed
deference. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204,
_____ _______________________
212 (1988) ("We have never applied the principle of [Chevron
_______
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
____________ ________________________________________
U.S. 837 (1984)] to agency litigating positions that are
wholly unsupported by regulations, rulings, or administrative
practice."); see also Martin v. Occupational Safety & Health
________ ______ ____________________________
Review Comm'n, 111 S. Ct. 1171, 1179 (1991) (distinguishing
_____________
an agency's litigating positions from an agency's delegated
lawmaking powers). The Supreme Court recently questioned
whether the Director should be accorded deference for a
position raised for the first time in litigation. See Estate
___ ______
of Cowart, 112 S. Ct. at 2594-95.
_________
The Director fulfills various functions in the
administration of the Act, including promulgating rules and
regulations implementing the Act, see 33 U.S.C. 939(a), and
___
administering the special fund from which Section 8(f)
payments are made to disabled employees, see 33 U.S.C. 944.
___
See also 20 C.F.R. 701.202 (transferring Secretary of
_________
Labor's authority over the Act to the Director); Ingalls
_______
-13-
Shipbuilding Div. v. White, 681 F.2d 275, 286 (5th Cir. 1982)
_________________ _____
(summarizing the Director's diverse duties in "implementing,
administering and enforcing" the Act). The principle of
deference to agency interpretation of statutes is rooted in
the notion that the agency in its policy-making capacity is
better able than the courts to balance the various competing
interests affected by such interpretation. Pauley, 111 S.
______
Ct. at 2534; Chevron U.S.A., Inc. v. Natural Resources
_____________________ __________________
Defense Council, Inc., 467 U.S. 837, 843-44 (1984). However,
_____________________
the Director's position in this case is not one that was
developed in the course of formal or informal agency
proceedings. Rather, it most clearly reflects his official
responsibility to protect the fund's financial health a
narrowly defined, somewhat adversarial role unlike the more
formal and neutral policy-making capacity to which courts
generally defer. See Director, Office of Workers'
___ _________________________________
Compensation Programs v. General Dynamics Corp. (Krotsis),
______________________ _________________________________
900 F.2d 506, 510 (2d Cir. 1990) (refusing to defer to the
Director because his "position has not been articulated in a
more objective context through the promulgation of
regulations" and because the Director was in an "adversarial
position in this litigation"); Director, Office of Workers'
_____________________________
Compensation Programs v. Mangifest, 826 F.2d 1318, 1324 (3d
_____________________ _________
Cir. 1987); see also Martin, 111 S. Ct. at 1179 (explaining
________ ______
that less deference is due to agency positions developed in
-14-
informal proceedings or litigation than to the results of
formal rule-making); Equal Employment Opportunity Comm'n v.
____________________________________
Arabian American Oil Co., 111 S. Ct. 1227, 1235 (1991)
__________________________
(deciding that the deference due to EEOC guidelines, in
contrast to agencies' rules and regulations, depends on the
guidelines' "thoroughness," "reasoning," "consistency," and
their overall "power to persuade"); cf. Williams Bros., Inc.
___ ____________________
v. Pate, 833 F.2d 261, 265 (11th Cir. 1987) ("Common sense
____
tells us that if deference were always to be given to the
Director's litigating position, then claimants would be
effectively denied the right to appellate review."). But see
_______
Arabian American Oil Co., 111 S. Ct. at 1236 (Scalia, J.,
_________________________
concurring in part and concurring in the judgment) (writing
that the "`legislative rules vs. other action' dichotomy is
an anachronism" after Chevron).
_______
In any event, as the Director's position does not
involve the textual interpretation either of the Act or of
regulations promulgated under the Act, but rather is based
upon an interpretation of judge-made case law, we accord no
special deference to his views.
IV. DISCUSSION
IV. DISCUSSION
__________
In his appeal before the Board, the Director
conceded that virtually all of the requirements for Section
8(f) relief are satisfied in this case: that is, prior to May
1, 1978 (the date of the second injury), Lockhart had
-15-
suffered from what was, in fact, a permanent partial
disability; his second back injury combined with his
preexisting disability to render him totally disabled;
General Dynamics knew that Lockhart injured his back on March
27, 1978; and General Dynamics had sufficient information
prior to May 1, 1978 about the March 27 back injury to know
that it disabled Lockhart. The Director's only contention
before the ALJ, the Board, and this court, is that the
information possessed by General Dynamics prior to the second
injury did not establish that Lockhart's disability was
permanent rather than temporary. The Company's physicians
did not expressly diagnose Lockhart, at the time of the first
injury, as permanently disabled, nor was it determined then
that his back pain was caused by a ruptured disk. Because
the permanent nature of the prior disability was not then
_________________
manifest, the Director reasons, the Company failed to satisfy
the manifest requirement altogether, and thus should not have
been awarded Section 8(f) relief. The Board rejected this
argument and reaffirmed its statement that:
The medical records need not indicate the
severity or the precise nature of the
pre-existing condition for it to be
manifest, so long as there is sufficient
information regarding the existence of a
serious lasting problem which would
motivate a cautious employer to consider
terminating the employee because of the
risk of compensation liability.
-16-
The Director argues that this version of the manifest
requirement misstates the law.
Before deciding whether the Board erred in so
construing the manifest requirement, we must clarify exactly
what it held. We disagree with the Director that the Board's
formulation means that an employer who had every reason to
believe a claimant's preexisting condition would resolve, and
no reason to believe that it was permanent, will nonetheless
be permitted to reap the benefit of Section 8(f). The
Director makes the faulty assumption that an employer can
know only one of two things: either that the disability is
permanent, or else that it is temporary.
A disability is, to be sure, either temporary or
permanent. Palombo v. Director, Office of Workers'
_______ ________________________________
Compensation Programs, 937 F.2d 70, 76 (2d Cir. 1991);
______________________
Director, Office of Workers' Compensation Programs v.
________________________________________________________
Berkstresser, 921 F.2d 306, 312 (D.C. Cir. 1990). However,
____________
the amount of information an employer possesses at the early
stage of an employee's disability may vary along a continuum.
Where a worker suffers an injury, the employer could at the
relevant earlier time: (1) have no information as to
__
existence of an active disability; (2) know that some
disability exists, but believe, incorrectly, as it may turn
out, that the disability is merely temporary; (3) know that
_________
some disability exists, but be uncertain as to the nature or
_________
-17-
duration of the disability; or (4) know that some disability
exists and understand that the disability is permanent. (Of
_________
course, the employer's own actual knowledge of the disability
is not required. Adequate medical records reflecting the
nature of the disability will suffice to show what was known
at the relevant time. White v. Bath Iron Works Corp., 812
_____ _____________________
F.2d 33, 35 (1st Cir. 1987)).
We construe the Board's statement as excluding (1)
and (2). There has to be "sufficient information regarding
the existence of a serious lasting problem which would
motivate a cautious employer to consider terminating the
employee because of the risk of compensation liability."
This standard would not be met if the injury appeared to be
merely temporary. Only if apparently permanent, or else so
lasting and serious as to cause cautious employers to
consider terminating, does the injury meet the Board's
requirement. While the latter standard does not call for
absolute certainty as to permanency, the "serious lasting"
language calls for an injury of substantial duration and
consequence, such as might lead a cautious employer to
terminate. An injury of that description carries, at least,
some apparent risk of permanency. This court has said, "To
be considered permanent, a disability need not be `eternal or
everlasting;' it is sufficient that the `condition has
continued for a lengthy period, and it appears to be of
-18-
lasting or indefinite duration, as distinguished from one in
_____________________
which recovery merely awaits a normal healing period.'" Air
___
America, Inc. v. Director, Office of Workers' Compensation
_____________ ___________________________________________
Programs, 597 F.2d 773, 781 (1st Cir. 1979) (emphasis added)
________
(citation omitted).
We turn next to whether a standard of this nature
is legally correct. No court has squarely confronted the
question posed by the Director in this case, so we must
examine the Board's standard in light of the purpose of the
manifest requirement. The manifest requirement was developed
by the courts to further the Congressional purpose underlying
Section 8(f): to discourage discrimination against
handicapped workers "by ensuring that the employer would not
have to compensate in full for a subsequently incurred
permanent disability when that disability was attributable in
part to a previously existing handicap." CNA Ins. Co. v.
_____________
Legrow, 935 F.2d 430, 435-36 (1st Cir. 1991) (quoting General
______ _______
Dynamics Corp. v. Sacchetti, 681 F.2d 37, 40 (1st Cir.
_______________ _________
1982)); White v. Bath Iron Works Corp., 812 F.2d at 35. The
_____ _____________________
courts reasoned that Section 8(f) should apply only to
situations in which the existing disability is manifest, and
therefore capable of causing or supporting discrimination
against disabled workers. White v. Bath Iron Works Corp.,
_____ ______________________
812 F.2d at 35. An employer who has no idea that a worker is
disabled has no incentive to discriminate against him on the
-19-
basis of that disability, and thus the disability is not
considered manifest. See id.
_______
The manifest requirement and the other requirements
of Section 8(f) have been expressed in various forms in our
decisions. In White v. Bath Iron Works Corp. we wrote that:
_____ _____________________
The courts have accordingly construed
[Section 8(f)] to apply only to
situations in which the existing
disability is "manifest," and therefore
capable of causing or supporting
discrimination against disabled workers.
. . . [R]egardless of the employer's
actual knowledge, a condition has been
considered "manifest" if it was diagnosed
and identified in medical records
available to the employer.
812 F.2d at 35. In CNA Insurance Co. v. Legrow, we explained
_________________ ______
that:
Section 8(f) first requires the employer
to prove that the claimant had a manifest
permanent partial disability prior to the
accident which, in combination, caused
the claimant permanent total disability.
Stated differently, the employer must
show that the disability is serious
enough to motivate a cautious employer
either not to hire or to fire employee
because of the "greatly increased risk of
employment-related accident and
compensation liability."
935 F.2d at 435 (quoting C&P Tel. Co. v. Director, Office of
____________ ____________________
Workers' Compensation Programs, 564 F.2d 503, 510 (D.C. Cir.
______________________________
1977)). While the Board's decision did not employ the exact
language used in our previous opinions to describe the
manifest requirement, it properly focused on the crucial
issue, which is the potential for discrimination against the
-20-
disabled. The centrality of this issue is emphasized in all
our cases interpreting the Act in this context. In General
_______
Dynamics Corp. v. Sacchetti, 681 F.2d 37 (1st Cir. 1982),
______________ _________
where this Court first adopted the manifest requirement, we
emphasized that an applicant for Section 8(f) relief must
show that "a cautious employer would have been moved to
discharge [the employee] because of the increased risks of
disability illness and resultant compensation liability."
Id. at 40. Similarly, in Director, Office of Workers'
___ ______________________________
Compensation Programs v. General Dynamics Corp. (Fantucchio),
_____________________ ___________________________________
787 F.2d 723 (1st Cir. 1986), we rejected a narrow
interpretation of the Act advocated by the Director and ruled
that an employee's hypertension was a "disability" even
though it did not prevent him from working. "The question []
is whether it was of sufficient consequence to fall within
the statutory purpose, whether it was such that, absent the
statutory protection, a cautious employer might well hesitate
to hire him." Fantucchio, 787 F.2d at 724.
__________
The language of the Board's standard is identical
to that of another case which explored the scope of the
manifest requirement. In Director, Office of Workers'
_______________________________
Compensation Programs v. Berkstresser, 921 F.2d 306 (D.C.
______________________ ____________
Cir. 1990), the court rejected the Director's argument that
"what must be manifest to the employer is the existence of a
permanent partial disability, i.e., a serious condition that
-21-
actually impairs the employee." Id. at 310 (emphasis added).
________________ ___
The Berkstresser court reasoned that because "disability"
____________
under the Act is not limited to economically disabling
conditions, neither should the manifest requirement be
limited to cases where the employee is actually prevented
from performing some aspect of his job.
As we have previously held,
. . . "Disability" under new 8(f)
is necessarily of sufficient breadth
to encompass those cases, like that
before us, wherein the employee had
such a serious physical disability
in fact that a cautious employer
would have been motivated to
discharge the handicapped employee
because of a greatly increased risk
of employment-related accident and
compensation liability.
C&P Telephone Co. v. Director, Office of
__________________ ___________________
Workers' Compensation Programs, 564 F.2d
_______________________________
503, 513 (D.C. Cir. 1977). This broad
definition of "disability" governs the
manifest requirement under 8(f). When
the evidence shows that such a
"disability" was objectively apparent,
the "manifest" requirement has been met.
Thus, contrary to the Director's
contention, the manifest condition need
not be "a serious condition that actually
impairs the employee" at the time of
hiring or retention; an asymptomatic
disability may be sufficient to motivate
an employment decision and fulfill the
"manifest" requirement.
Berkstresser, 921 F.2d at 310. The "proper touchstone" for
____________
the manifest requirement, the court explained, is "whether
the condition puts the employer on notice of greatly
increased liability and thus creates a risk of
discrimination." Id. The court concluded that "the
___
-22-
appropriate legal standard for manifestation requires a
showing of objective evidence of a serious disabling
condition that would motivate the `cautious employer . . . to
discharge the [] employee because of a greatly increased
risk' of liability." Id. (quoting C&P Telephone, 564 F.2d at
___ _____________
513).
These cases and the Board's standard in Lockhart's
case all rely on the original rationale for creating the
manifest requirement. In the seminal case on the issue,
American Mutual Insurance Co. v. Jones, the court wrote that:
_____________________________ _____
[Section] 8(f)(1) does not apply to every
case of permanent total disability in
which a present injury is not the sole
cause of the disability. It was not
intended to provide a windfall to
employers, nor to actively encourage
employment of the handicapped. Its
purpose was simply to remove that aspect
of discrimination against the disabled
which would otherwise be encouraged by
the very statute intended to protect
them. Any such discrimination, however,
must rest upon knowledge of the
characteristic upon which the
discrimination is to be based. In
consequence, courts have distinguished
between "manifest" and "latent"
conditions for purposes of apportioning
claims between employers and special
funds such as the present one.
American Mutual Ins. Co. v. Jones, 426 F.2d 1263, 1267 (D.C.
_________________________ _____
Cir. 1970).
In summary, we find no error in the Board's
standard. It effectuates the purpose of the manifest
requirement and Section 8(f) by making only potential
-23-
discriminators eligible for Section 8(f) relief. The Board's
test properly denies Section 8(f) relief to those employers
who know little or nothing about the disability or
incorrectly believe the disability to be merely temporary.
At the other end, it finds that the disability is manifest to
those employers who know that the disability is permanent or
who are uncertain, but have objective evidence of a serious
lasting problem that would motivate a cautious employer to
discharge the employee because of a greatly increased risk of
liability.
The Director proposes that we adopt the first ALJ's
holding that the manifest requirement is not fulfilled when
an employer does not know with absolute certainty that the
disability is permanent. If we adopted this position, an
employer would be required to know without a doubt, or have
medical records conclusively indicating, that the disability
was permanent. Such a rule would severely restrict the
coverage of Section 8(f) and conflict with the purposes of
the manifest requirement and of Section 8(f) itself. To deny
limited liability to all employers who, at the early stage of
a disabling injury, are not 100% certain that it will be
permanent would exclude even those employers who have a
strong incentive to discriminate. For example, under the
Director's proposed rule an employer who knew that a worker
had sustained a disabling knee injury and had substantial,
-24-
but not yet conclusive, information that the knee condition
was permanent would fail to meet the manifest requirement and
thus be ineligible for Section 8(f) relief. However, the
uncertain employer would have had as much a financial
incentive to fire the worker with the weak knee as the
employer who knew conclusively that the knee was permanently
weakened. Awarding limited liability under Section 8(f) to
the latter but denying it to the former would severely
restrict the availability of Section 8(f) relief in a manner
inconsistent with the purposes of the manifest requirement
and Section 8(f). In many circumstances, it is impossible
until years have passed to definitively determine whether an
injury has caused permanent damage. See Liberty Mutual, No.
___ ______________
92-1337 at 6 (explaining that it is "treacherous, highly
speculative terrain" for a physician to make "a fairly exact
prediction as to how the disease would progress in an
individual case"). Under the Director's rule, cautious
employers might try to avoid retaining or hiring any workers
with a history of prior injury. See Director, Office of
___ ____________________
Workers' Compensation Programs v. Brandt Airflex Corp., 645
_______________________________ _____________________
F.2d 1053, 1062 (D.C. Cir. 1981). The consequence would be
more, not less, discrimination against workers who had
sustained possibly disabling injuries.
The Director suggests that a tightened rule would
prevent windfalls to undeserving employers who know of no
-25-
reason to discriminate against a disabled worker. We are not
convinced that the Board's standard, if properly applied,
will create windfalls. The Director's narrow rule would
eliminate that small danger at the expense of handicapped
workers.
In locating the proper place of [a]
factual situation within the framework of
[court] precedents, . . . we must
remember that manifestness is a matter of
degree, and we must not guard so
zealously against windfalls that the
explicit congressional intent to protect
the handicapped worker is sacrificed to
an auxiliary purpose elaborated by the
courts.
Brandt Airflex, 645 F.2d at 1059.
______________
We also reject the Director's argument that the
terms "serious and lasting" used by the Board are too
flexible and vague, and will result in Section 8(f) relief
being granted to employers who have no reason to believe that
a preexisting condition is permanent. As with any standard,
especially in the field of disability compensation, the
Board's version of the manifest requirement is not self-
applying. However, as already discussed, the words "serious
and lasting" are plainly not equivalent merely to
"temporary." See Air America, Inc. v. Director, Office of
___ __________________ ___________________
Workers' Compensation Programs, 597 F.2d at 781 (permanent
_______________________________
disability is "lasting or indefinite" and need not be
"eternal or everlasting").
V. CONCLUSION
V. CONCLUSION
__________
-26-
The Director argues only that the Board's statement
of the manifest requirement was an error of law. The
Director does not argue that, assuming this standard to be
correct, the record is without substantial evidence to
support the Board's finding that Lockhart's disability was,
under the standard as so articulated, manifest. Because we
find no reversible error in the Board's formulation of the
manifest requirement in this case, we deny the petition for
review.
Petition for review denied.
__________________________
-27-