BRB No. 00-1021
BOOKER T. REDDICK )
)
Claimant-Petitioner )
)
v. )
)
UNIVERSAL MARITIME SERVICES ) DATE ISSUED: 06/13/2001
2001
)
Self-insured )
Employer-Respondent ) DECISION and ORDER
Appeal of the Decision and Order and Order Denying Motion for
Reconsideration of Paul H. Teitler, Administrative Law Judge, United
States Department of Labor.
Philip J. Rooney (Israel, Adler, Ronca & Gucciardo), New York, New York,
for claimant.
Lawrence P. Postol (Seyfarth Shaw), Washington, D.C., for employer.
Before: HALL, Chief Administrative Appeals Judge, DOLDER and McGRANERY,
Administrative Appeals Judges.
PER CURIAM:
Claimant appeals the Decision and Order and Order Denying Motion for
Reconsideration (99-LHC-0594 ) of Administrative Law Judge Paul H. Teitler
rendered on a claim filed pursuant to the provisions of the Longshore and Harbor
Workers' Compensation Act, as amended, 33 U.S.C. §901 et seq. (the
Act). We must affirm the findings of fact and conclusions of law of the
administrative law judge which are rational, supported by substantial evidence, and
in accordance with law. O'Keeffe v. Smith, Hinchman & Grylls Associates,
Inc., 380 U.S. 359 (1965); 33 U.S.C. §921(b)(3).
Claimant, a longshoreman, injured his back on November 5, 1988, as a result
of a falling container. He sought benefits under the Act, and was awarded
permanent total disability benefits by a Decision and Order dated June 17, 1992.
33 U.S.C. §908(a). In that decision, the parties stipulated that claimant had
an average weekly wage of $1,032.01. See Cl. Ex. G. Thereafter, employer
filed a motion for modification based on a change in condition. 33 U.S.C.
§922. Claimant owns a number of businesses, and employer contended that
claimant's direct involvement with the businesses, and therefore his assets, have
increased. Thus, employer contended that claimant has had a change in his economic
condition.
Claimant has a number of business interests in Newark, New Jersey, which
consist primarily of a liquor store, laundromats and rental houses, all of which
he owned prior to his injury in 1988. The liquor store, Booker Liquors, has been
owned continuously by claimant since 1976. The store is open 13 hours a day, from
9:00 a.m. until 10:00 p.m. H. Tr. at 30-32. In addition, claimant has owned
Booker's Laundromat since 1976 or 1977 and the Suds and Duds Laundromat since
1986.[1] Booker's Laundromat is located next
door to Booker's Liquors.
In his decision, the administrative law judge found that there is evidence
revealing a change in claimant's functional impairment. The administrative law
judge also found that claimant's post-injury earnings have increased substantially,
and he is performing substantial full-time, gainful employment. Thus, he found
that modification of the previous award is warranted. Moreover, the administrative
law judge found that claimant knowingly and willfully omitted or underreported his
business earnings from the LS-200 Report of Earnings statements he was required to
file. Therefore, the administrative law judge concluded that claimant must forfeit
all future benefits pursuant to Section 8(j) of the Act, 33 U.S.C. §908(j).
The administrative law judge denied claimant's motion for reconsideration.
Claimant contends on appeal that the administrative law judge improperly found
that claimant is entitled to no further benefits based on a violation of Section
8(j). Claimant contends that, at most, he would not be entitled to benefits during
the period he underreported his earnings, and that if any benefits had been paid
during this period, employer would be entitled to a credit against future benefits
due. In addition, claimant contends that the administrative law judge improperly
analyzed the evidence to conclude that claimant is no longer disabled;
specifically, he asserts that the administrative law judge did not make a finding
as to claimant's post-injury wage-earning capacity. Employer responds, urging
affirmance of the administrative law judge's decision.
Initially, claimant contends that the administrative law judge erred in
finding that he is entitled to no further benefits based on a violation of Section
8(j). Section 8(j) permits an employer to request that a claimant report his
post-injury earnings, including those from self-employment. Once a request is
made, the claimant must complete and return the LS-200 Form within 30 days of his
receipt of the form, whether or not he has any post-injury earnings. The
claimant's benefits are subject to forfeiture for the period during which the
employee was required to file such report if earnings are knowingly omitted or
understated.[2] 33 U.S.C. §908(j)(1994);
Hundley v. Newport News Shipbuilding & Dry Dock Co., 32 BRBS 254 (1998);
Moore v. Harborside Refrigerated, Inc., 28 BRBS 177 (1994)(decision on
recon.); 20 C.F.R. §§702.285-702.286. An employer can recover such
forfeited compensation only "by a deduction from the compensation payable" in the
future. §908(j)(3)(1994); Lennon v. Waterfront Transport, 20 F.3d 658,
28 BRBS 22(CRT)(5th Cir. 1994).
In the present case, the administrative law judge found that claimant's
reasons for not stating his income from his business entities are not credible and
that claimant knowingly and willfully omitted his earnings from his business
entities. The administrative law judge, therefore, concluded that claimant has
forfeited his right to all future compensation benefits under the Act. The
conclusion, that claimant forfeits all benefits, cannot be affirmed, as it is
contrary to the plain language of Section 8(j). Section 8(j) provides for the
forfeiture of benefits only during the period when claimant underreported his
income. Hundley, 32 BRBS at 258. It thus provides for suspension of
benefits during specified periods rather than the forfeiture of all future
benefits. Therefore, we vacate the administrative law judge's finding that
claimant has forfeited his right to all benefits under the Act, as this is not the
remedy provided by Section 8(j).
Although there are several years of income reports at issue in this case, the
administrative law judge did not make any specific findings regarding these
reports, despite discussing claimant's business income at length. The record
contains the reports for the years 1995, 1996 and 1997. Decisions rendered under
the Act are subject to the Administrative Procedure Act which requires that every
adjudicatory decision be accompanied by a statement of "findings and conclusions
and the reasons or basis therefor, on all material issues of fact, law or
discretion presented in the record." 5 U.S.C. §557(c)(A). As the
administrative law judge in the instant case did not make specific findings
regarding whether claimant adequately reported his earnings on each form or the
specific periods in which benefits should be suspended, we remand the case to the
administrative law judge for further consideration of this issue. In addressing
claimant's earnings for each period, the administrative law judge must apply the
definition provided in Section 702.285(b), 20 C.F.R. §702.285(b), which
implements Section 8(j) of the Act. As the administrative law judge recognized,
this provision defines "earnings" as:
all monies received from any employment and includes but is not limited
to wages, salaries, tips, sales commissions, fees for services provided,
piecework and all revenue received from self-employment even if the
business or enterprise operated at a loss or if the profits were
reinvested.
If the administrative law judge finds that claimant had earnings under this
definition which were not reported, claimant's benefits will be forfeited for the
specific periods when reports were requested and earnings were underreported.[3] Hundley, 32 BRBS at 258.
We turn, then, to the administrative law judge's finding that claimant no
longer has a loss in wage-earning capacity. In this regard, claimant contends that
the administrative law judge erred in finding a change in claimant's condition
sufficient to support modification. Section 22 provides that upon his own
initiative or at the request of any party, on the grounds of a change in condition
or mistake in a determination of fact, the factfinder may, at any time prior to one
year after the denial of a claim or the last payment of benefits, reconsider the
terms of an award or denial of benefits. 33 U.S.C. §922. Modification may
be granted where claimant's physical and/or economic condition has improved or
deteriorated following the entry of the initial decision. See Metropolitan Stevedore
Co. v. Rambo [Rambo I], 515 U.S. 291, 30 BRBS 1(CRT) (1995); Vasquez v. Continental Maritime
of San Francisco, Inc., 23 BRBS 428 (1990). The party seeking modification
bears the burden of proving a change in condition or mistake in fact. See
Metropolitan Stevedore Co. v. Rambo [Rambo II], 521 U.S. 121, 31 BRBS 54(CRT) (1997).
Claimant contends that the administrative law judge erred in finding that
claimant's functional impairment improved based on the evidence that "claimant
lifted cases of soda, opened the gates to his stores and operates the computer
which keeps records for his store." Decision and Order at 17. This finding is
supported by the testimony of investigators who observed claimant's activities.
See, e.g., Tr. at 153. Therefore, we affirm the administrative law judge's
finding that claimant is capable of performing some work, as it is supported by
substantial evidence. However, this finding alone does not establish that
modification under Section 22 is warranted. Employer sought modification of
claimant's permanent total disability award; thus, it bore the burden of
demonstrating that claimant can return to his former longshore work or that he has
obtained suitable alternate employment. Moreover, a showing that claimant has no
loss in wage-earning capacity requires a determination that claimant's wage-earning
capacity exceeds his pre-injury average weekly wage. Evidence that claimant
performed some tasks at his businesses does not establish that he has the physical
capacity to return to his usual work as a longshoreman, or that he no longer has
a loss in wage-earning capacity. Therefore, the administrative law judge's
conclusion that the evidence supports modification based on a change in claimant's
wage-earning capacity must be vacated and the case remanded for further findings.
In this regard, claimant further contends that the administrative law judge
failed to determine the dollar amount representing his wage-earning capacity and
erred in concluding that he has no loss in wage-earning capacity. The
administrative law judge found that claimant's business activities, although they
pre-existed the injury, have increased since the total disability award was entered
and that his assets have also increased. On this basis, the administrative law
judge concluded that modification was warranted. However, in reaching this
conclusion, the administrative law judge did not determine claimant's wage-earning
capacity, as claimant correctly contends. Consequently, he did not make a proper
finding regarding the current extent of claimant's disability. Moreover, the
administrative law judge erred in including claimant's profits and the increase in
his assets in his analysis.
Pursuant to Section 8(h) of the Act, 33 U.S.C. §908(h), the overarching
objective is to ascertain the wage that would have been paid on the open labor
market to the claimant in his injured condition. Randall v. Comfort Control,
Inc., 725 F.2d 791, 16 BRBS 61(CRT). Section 8(h) states that the claimant's
wage-earning capacity "shall be determined by his actual earnings if such actual
earnings fairly and reasonably represent his wage-earning capacity." If the
claimant has no actual earnings or if his actual earnings do not fairly and
reasonably represent claimant's earning capacity, the administrative law judge must
determine claimant's wage-earning capacity with regard to the factors stated in
Section 8(h).[4] Actual post-injury earnings
which are higher than the claimant's pre-injury average weekly wage do not preclude
a finding that the claimant has a loss in wage-earning capacity,
Container Stevedoring Co. v. Director, OWCP, 935 F.2d 1544, 24 BRBS
213(CRT)(9th Cir. 1991), nor do lower actual earnings preclude a finding that the
claimant's wage-earning capacity is higher than his actual earnings. Penrod
Drilling Co. v. Johnson, 905 F.2d 84, 23 BRBS 108(CRT)(5th Cir. 1990). In
addition, the Act defines "wages" in pertinent part as "the money rate at which the
service rendered by an employee is compensated by an employer under the contract
of hiring in force at the time of the injury, including the reasonable value of any
advantage which is received from the employer and included for purposes of any
withholding of tax under subtitle C of the Internal Revenue Code of 1954 (relating
to employment taxes)...." 33 U.S.C. § 902(13).
Thus, "wage-earning capacity" refers to an injured employee's ability to
command regular income as the result of his personal labor. See 2 Arthur
Larson and Lex K. Larson, LARSON'S WORKERS' COMPENSATION LAW, §83.05 (2000).
Income from a business owned by the employee, even though he contributes some work
to it, is not included in claimant's earnings and should not be used to reduce
disability compensation. Id.; Joy Technologics, Inc. v. Workmen's
Compensation Appeals Board, 155 Pa. Cmwlth. 9 (1993). Where, however, the
business income is the direct result of the claimant's "personal management or
endeavor," or the claimant performs such extensive services for the business that
the income represents salary rather than profits, the income should be considered
in determining wage-earning capacity. LARSON'S, §83.05; see Seidel v.
General Dynamics Corp., 22 BRBS 403 (1989)(Board affirmed administrative law
judge's finding that claimant was more like an employee than an owner, but held
that administrative law judge erred in including in claimant's wage-earning
capacity estimated "profits" because no payments were anticipated); see also
McGee v. Estes Express Lines, 125 N.C. App. 298, 480 S.E. 2d 416 (N.C. Ct. App.
1997)(inquiry is whether skills used by the claimant in running his business would
enable him to compete in labor market); Nannery v. GAF Corp., 75 A.D.2d 697,
427 N.Y.S. 2d 306 (N.Y. App. Div. 1980). In contrast, as discussed above, the
term "earnings" as used in Section 8(j) is a much broader concept, as "wages" and
"salaries" are merely exemplary of earnings under Section 702.285, and this
definition includes "revenue" earned by a business without regard to whether it
is gross revenue or net revenue. See 20 C.F.R. §702.285. Thus,
claimant's total earnings from self-employment for purposes of Section 8(j) do not
automatically equate to his wage-earning capacity, and they must be analyzed to
determine whether they represent gross receipts or profits as opposed to wages paid
for claimant's personal labor. Only the latter is properly considered in
evaluating wage-earning capacity.
In the present case, the administrative law judge erred in considering the
gross revenue from claimant's businesses in determining that the evidence
establishes that claimant's economic condition has changed. As claimant correctly
contends, the profits of his businesses were not included in the determination of
his pre-injury average weekly wage, and thus they cannot be included now to
determine claimant's wage-earning capacity. Only those earnings which are properly
considered as wages paid for his services may be included in determining his wage-earning capacity. Therefore, on remand, the administrative law judge must discuss
the relevant evidence of record and render findings as to the nature of the
earnings claimant receives from his business entities in order to determine
claimant's current wage-earning capacity. The administrative law judge should
determine claimant's wage-earning capacity with reference to the amount of salary
claimant could earn from his own labor. See Seidel, 22 BRBS at 406. Then,
the administrative law judge must compare claimant's current wage-earning capacity,
adjusted for inflation, with his pre-injury average weekly wage to determine
whether claimant is entitled to benefits pursuant to Section 8(c)(21). 33 U.S.C.
§§908(c)(21), 908(h); see Richardson v. General Dynamics Corp.,
23 BRBS 327 (1990).
Accordingly, the Decision and Order and the Order Denying Motion for
Reconsideration are vacated, and the case is remanded to the administrative law
judge for further consideration consistent with this opinion.
SO ORDERED.
BETTY JEAN HALL, Chief
Administrative Appeals Judge
NANCY S. DOLDER
Administrative Appeals Judge
REGINA C. McGRANERY
Administrative Appeals Judge
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Footnotes.
1) 1Claimant also owns a property on 17th Street in Newark,
which consists of a multi-family residence, which has been condemned since 1983,
and another laundromat, Suds and Duds II, on the first floor. H. Tr. 59-61.
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2) 2Specifically, Section 8(j) provides:
(1) The employer may inform a disabled employee of his obligation to report
to the employer not less than semiannually any earnings from employment or
self-employment, on such forms as the Secretary shall specify in regulations.
(2) An employee who-
(A) fails to report the employee's earnings under paragraph
(1) when requested, or
(B) knowingly and willfully omits or understates any part of
such earnings, and who is determined by the [district
director] to have violated clause (A) or (B) of this
paragraph,
forfeits his right to compensation with respect to any period during
which the employee was required to file such report.
(3) Compensation forfeited under this subsection, if already paid, shall
be recovered by a deduction from the compensation payable to the
employee in any amount and on such schedule as determined by the
[district director].
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3) 3If the administrative law judge finds that claimant's
benefits should be suspended because of claimant's misrepresentation of his
earnings, the administrative law judge must remand the case for the district
director to consider claimant's financial situation and to establish the forfeiture
schedule. 33 U.S.C. §908(j)(3)(1994); 20 C.F.R. §702.286(c);
Moore, 28 BRBS at 184.
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4) 4These include: the nature of the injury, the degree of
physical impairment, the claimant's usual employment, and "any other factors or
circumstances . . . which may affect his capacity to earn wages in his disabled
condition, including the effect of disability as it may naturally extend into the
future." 33 U.S.C. §908(h); see Metropolitan Stevedore Co. v. Rambo,
521 U.S. 121, 31 BRBS 54(CRT)(1992).
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NOTE: This is an UNPUBLISHED LHCA Document.
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