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                                 BRB No. 99-0610

LAWRENCE M. SHORT                       )
                                        )
          Claimant-Respondent           )
                                        )
     v.                                 )
                                        )
NEWPORT NEWS SHIPBUILDING               )    DATE ISSUED:   03/10/2000    
       
AND DRY DOCK COMPANY                    )
                                        )    
          Self-Insured                  )
          Employer-Petitioner           )    
                                        )
DIRECTOR, OFFICE OF WORKERS'            )
COMPENSATION PROGRAMS,                  )
UNITED STATES DEPARTMENT                )
OF LABOR                                )
                                        )
          Respondent                    )    DECISION and ORDER  

          Appeal of the Decision and Order on Remand Granting Permanent Partial
     Disability and Denying Section 8(f) Relief and Decision and Order
     Denying Employer's Motion for Reconsideration of Richard K. Malamphy,
     Administrative Law Judge, United States Department of Labor.

          John H. Klein (Montagna, Klein & Camden, L.L.P.), Norfolk, Virginia, for
     claimant.

          Jonathan H. Walker (Mason & Mason, P.C.), Newport News, Virginia, for
     self-insured employer.   

          Laura Stomski (Henry L.  Solano, Solicitor of Labor; Carol DeDeo,
     Associate Solicitor; Samuel J. Oshinsky, Counsel for Longshore),
     Washington, D.C., for the Director, Office of Workers' Compensation
     Programs, United States Department of Labor.

          Before: SMITH, BROWN and McGRANERY, Administrative Appeals Judges.

     Claimant appeals the Decision and Order on Remand Granting Permanent Partial
Disability and Denying Section 8(f) Relief and Decision and Order Denying
Employer's Motion for Reconsideration (94-LHC-1816; 95-LHC-2657) of Administrative
Law Judge Richard K. Malamphy 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 administrative law judge's
findings of fact and conclusions of law if they are supported by substantial
evidence, are rational, and are in accordance with applicable law. O'Keeffe v.
Smith, Hinchman & Grylls Associates, Inc., 380 U.S. 359 (1965); 33 U.S.C.
§921(b)(3).  

     Claimant, a welder, sustained a work-related injury to his right index finger
on September 1, 1985, and a work-related injury to his back on October 11, 1985. 
The parties stipulated before the district director as to claimant's entitlement
to benefits for the finger injury.  With regard to the claim for the back injury,
employer paid various periods of temporary total and partial disability benefits,
and provided claimant a job within his restrictions at its facility.  Employer
discharged claimant effective June 15, 1988, for violating a company rule which
prohibits stealing company property.  Specifically, claimant was discharged for
cashing a duplicate workers' compensation check for his finger injury.  
     In his initial decision, the administrative law judge found employer's
discharge of claimant did not violate Section 49 of the Act, 33 U.S.C. §948a. 
In addition, he determined that claimant is not entitled to any benefits after his
discharge because employer provided claimant with a suitable job at his full pre-
injury wage.  Claimant appealed, challenging the administrative law judge's finding
under Section 49 of the Act, and denial of continuing partial disability benefits
after his discharge.  In its decision, the Board affirmed the administrative law
judge's finding that employer's discharge did not violate Section 49, vacated his
finding that claimant is not entitled to any disability benefits after his
discharge, and remanded the case for consideration of all evidence relevant to
claimant's post-injury wage-earning capacity. Short v. Newport News Shipbuilding
& Dry Dock Co., BRB No. 97-1510 (July 27, 1998)(unpub.).

     On remand, the administrative law judge found claimant entitled to temporary
and permanent partial disability benefits based on a loss of overtime, and denied
employer's request for Section 8(f) relief, 33 U.S.C. §908(f), as employer did
not establish the that claimant had a pre-existing permanent partial disability. 
Employer's motion for reconsideration was denied.    

     On appeal, employer challenges the administrative law judge's award of
benefits and denial of Section 8(f) relief.  Claimant responds, urging affirmance
of the award of benefits.  Additionally, the Director, Office of Workers'
Compensation Programs (the Director), responds, urging affirmance of the
administrative law judge's denial of Section 8(f) relief.
     Employer argues that administrative law judge erred in finding claimant
entitled to partial disability benefits as he failed to establish that overtime was
available to comparable workers between the time of his discharge on July 18, 1988,
and the hearing, or that claimant's inability to work any alleged overtime is due
to his work-related injury.  Employer further argues that pursuant to Brooks v.
Newport News Shipbuilding & Dry Dock Co., 26 BRBS 1 (1992), aff'd sub nom.
Brooks v. Director, OWCP, 2 F.3d 64, 27 BRBS 100 (CRT) (4th Cir. 1993),
claimant's termination for misconduct in the instant case precludes his entitlement
to temporary total or partial disability benefits.  

      Sections 8(c)(21) and (e) of the Act, 33 U.S.C. §908(c)(21), (e),
provide for an award for partial disability benefits based on two-thirds of the
difference between claimant's pre-injury average weekly wage and post-injury wage-
earning capacity.  The wage-earning capacity of an injured employee is determined
by his actual post-injury earnings if such earnings fairly and reasonably represent
his wage-earning capacity. See 33 U.S.C. §908(h).  The fact that
claimant received actual post-injury wages equal to his pre-injury earnings does
not mandate a conclusion that he has no loss in wage-earning capacity. Container
Stevedoring Co. v. Director, OWCP, 935 F.2d 1544, 24 BRBS 213 (CRT)(9th Cir.
1991); Mangaliman v. Lockheed Shipbuilding Co., 30 BRBS 39 (1996).  Actual
earnings in a suitable job lost by claimant for reasons related to his misconduct,
like any other suitable job claimant holds post-injury, should be considered by the
administrative law judge in determining claimant's post-injury wage-earning
capacity.   Mangaliman, 30 BRBS at 42.  Moreover, when overtime hours are a regular
and normal part of claimant's employment, they should be considered in determining claimant's average weekly wage as
well as his loss of wage-earning capacity. See Peele v. Newport News Dry Dock & Shipbuilding Co., 20 BRBS 113
(1987).  In determining whether claimant is entitled to partial disability compensation based on a loss of overtime, the focus
should be on claimant's loss of overtime because of his injury. See Brown v. Newport News Shipbuilding & Dry Dock
Co., 23 BRBS 110 (1989); Sears v. Newport News Shipbuilding & Dry Dock Co., 19 BRBS 235 (1987).   
     In Sears, the Board affirmed the administrative law judge's finding that claimant failed to establish a loss
in overtime pay based on evidence submitted by employer which showed that no overtime was available in claimant's pre-
injury job and that claimant worked decreasing amounts of overtime before her injury. Sears, 19 BRBS at 235.  
In Brown, the Board held that the administrative law judge erred in requiring claimant to prove that overtime was
available in her pre-injury welding job after her injury, when in fact, the focus should be on claimant's loss of previously
available overtime because of her injury. Brown, 23 BRBS at 110.  The Board distinguished Sears on the
basis that employer in Brown, presented no evidence that overtime was unavailable in claimant's old job after her
injury and the evidence of record showed that claimant worked increasing amounts of overtime prior to her injury.
Id.

     In the instant case, claimant, like his counterparts in Sears and Brown, was assigned, post-injury,
to employer's MRA shop to perform light-duty work.  The administrative law judge found that employer, as in the
Brown case, did not produce any evidence to show that no overtime was available in claimant's pre-injury job or
that claimant worked decreasing amounts of overtime before his injury.[1]   Brown, 23 BRBS at 110; Order on Recon. at 2.  Rather, employer
focused on the fact that claimant did not produce evidence regarding overtime
available after his discharge.[2]   Contrary to
employer's contention, however, the proper inquiry is whether claimant established
a loss of wage-earning capacity prior to his discharge.

     The payroll memo history shows that claimant earned overtime in the years preceding his injury and that subsequent
to his injury he did not.[3]   CX 5.  In addition, the record establishes that claimant
was earning the same hourly rate both pre-injury and post-injury, CX 4, and that employer paid claimant  temporary partial
disability benefits due to his work-related back injury between mid-October 1985 and mid-July 1988.  EX 1.  The
administrative law judge  therefore rationally determined that the stipulated average weekly wage at the time of claimant's
injury reflected claimant's earnings from overtime, and thus, that the difference between his post-injury wage-earning
capacity and pre-injury average weekly wage is due to the unavailability of overtime hours as a result of claimant's transfer,
post-injury, to the MRA shop. See Everett v. Newport News Shipbuilding & Dry Dock Co., 23 BRBS 316 (1989);
Brown, 23 BRBS at 110.  We therefore affirm his finding that claimant is entitled to continuing permanent partial
disability benefits at a compensation rate of $38.57 based on a post-injury loss of overtime hours as it is rational and
supported by substantial evidence.

     Moreover, employer's contention that claimant's discharge for misconduct
precludes his entitlement to continuing partial disability benefits is without
merit.  In Brooks, 2 F.3d at 64, 27 BRBS at 100 (CRT),  the Fourth Circuit
affirmed the Board's holding that the claimant was not entitled to total disability
benefits following a discharge, as his inability to perform the post-injury job at
employer's facility was due to his own misfeasance, and thus, not due to the
disability resulting from the work-related incident.  This holding is based on the
principle that employer does not bear the renewed burden of demonstrating suitable
alternate employment where claimant loses a suitable job due to his own misconduct.
See also Walker v. Sun Shipbuilding & Dry Dock Co., 19 BRBS 171 (1986).  It
does not, however, hold that partial disability which preceded the discharge and
reflects an ongoing loss of wage-earning capacity in the alternate employment
terminates; such partial disability does not result from the discharge but from
claimant's work-related injury.  In the instant case, claimant's loss of wage-
earning capacity was not due to his termination, but instead occurred prior to his
termination as a result of his inability to return to his pre-injury welding
position which offered overtime on a regular basis.  Thus, claimant's existing loss
of wage-earning capacity in the suitable job he performed continues notwithstanding
the discharge, see Mangaliman, 30 BRBS at 42; Walker v. Sun Shipbuilding
& Dry Dock Co., 19 BRBS 171 (1986); Harrod v. Newport News Shipbuilding &
Dry Dock Co., 12 BRBS 10, 17 (1980), unless employer can establish, via
modification proceedings, that claimant has a higher wage-earning capacity.
See 33 U.S.C. §922; Metropolitan Stevedore Co. v. Rambo [Rambo
II], 521 S.Ct. 121, 31 BRBS 54 (CRT) (1997); Metropolitan Stevedore Co. v.
Rambo [Rambo I], 515 U.S. 291, 30 BRBS 1 (CRT)(1995); Price v. Brady-
Hamilton Stevedore Co., 31 BRBS 91 (1996). Accordingly, employer's contentions
are rejected and the administrative law judge's award of permanent partial disability
benefits is affirmed.

     Employer next argues that the administrative law judge erred in failing to
find that claimant's chronic back pain and/or right index finger injury do not
constitute pre-existing permanent disabilities for purposes of Section 8(f) relief. 
Employer first asserts it satisfied the "cautious employer" test and thus,
established the pre-existing permanent partial disability element for Section 8(f)
relief based on the fact that claimant, with a history of back pain, was hired to
perform heavy manual labor.  Employer maintains that this evidence, in conjunction
with Dr. Hall's opinion that "even an insignificant back injury could have an
effect on an employer's desire to either hire or retain an individual with prior
back problems," satisfies its burden under Section 8(f).  Employer also argues that
claimant's right finger injury, to which Dr. Knauft assigned a 5 percent permanent
partial disability rating and for which claimant received compensation, similarly
satisfies its burden to establish a pre-existing permanent partial disability under
Section 8(f) of the Act.  

     To avail itself of Section 8(f) relief where an employee suffers from a
permanent partial disability, an employer must affirmatively establish: 1) that
claimant had a pre-existing permanent partial disability;  2) that the pre-existing
disability was manifest to the employer prior to the work-related injury; and 3)
that the ultimate permanent partial disability is not due solely to the work injury
and that it materially and substantially exceeds the disability that would have
resulted from the work-related injury alone.  Director, OWCP v. Newport News
Shipbuilding & Dry Dock Co. [Carmines], 138 F.3d 134, 32 BRBS 48 (CRT) (4th
Cir. 1998); Director, OWCP v. Newport News Shipbuilding & Dry Dock Co. [Harcum
II], 131 F.3d 1079, 31 BRBS 164 (CRT)(4th Cir. 1997); Director, OWCP v.
Newport News Shipbuilding & Dry Dock Co. [Harcum I], 8 F.3d 175, 27 BRBS 116
(CRT)(4th Cir. 1993), aff'd on other grounds, 514 U.S. 122, 29 BRBS 87
(CRT)(1995).  If employer fails to establish any of these elements, it is not
entitled to Section 8(f) relief. Id.

     An employer may satisfy the pre-existing permanent partial disability
requirement by demonstrating that, prior to the most recent injury,

          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, OWCP, 564 F.2d 503, 513, 6 BRBS 399, 412
(D.C. Cir. 1977); see also Morehead Marine Services, Inc. v. Washnock, 135
F.3d 366, 32 BRBS 8 (CRT)(6th Cir. 1998); Director, OWCP v. General Dynamics
Corp., 982 F.2d 790, 26 BRBS 139 (CRT)(2d Cir. 1992); Lockheed Shipbuilding
v. Director, OWCP, 951 F.2d 1143, 25 BRBS 85(CRT) (9th Cir. 1991).  In this
case, employer sought to do so based on evidence of prior back pain and an injury
to claimant's right index finger.

     In his decision, the administrative law judge considered but rejected the
relevant opinions of Drs. Hall and Reid as contrary to the other evidence of
record.[4]   Specifically, the
administrative law judge concluded that in the absence of any complaints of back
pain between mid-July 1985 and the work-related back injury in October 1985, and
as claimant returned to full duty without any restrictions in July 1985, the injury
in June 1985 did not result in any permanent impairment.  Thus, contrary to
employer's contention, the administrative law judge rationally found that  claimant's
prior back injury and pain did not result in a "serious lasting physical
condition,"and thus, is insufficient to establish a pre-existing permanent partial
disability. C & P Telephone Co., 564 F.2d at 513, 6 BRBS at 412;
Director, OWCP v. Campbell Industries, Inc., 678 F.2d 836, 14 BRBS 974 (9th
Cir. 1982), cert. denied, 459 U.S. 1104 (1983); Kubin v. Pro-Football,
Inc., 29 BRBS 117 (1995). 

     Similarly, the administrative law judge considered and rejected employer's
contention that claimant's right index finger injury, in which a piece of metal
became lodged in that digit, is a pre-existing permanent partial disability since
there was no evidence that the finger injury was disabling prior to the October 11,
1985, back injury.  In particular, the administrative law judge found that there
are no shipyard clinical records on file that refer to such an injury, and that
claimant's treating physician, Dr. Knauft, indicated that the condition was
asymptomatic until late 1986.[5]   The
administrative law judge therefore rationally concluded that this impairment cannot
be considered a pre-existing permanent partial disability for purposes of Section
8(f) relief.  

     The mere fact that claimant sustained prior injuries is insufficient to
establish the existence of a serious lasting physical impairment.  See CNA Ins.
Co. v. Legrow, 935 F.2d 430, 24 BRBS 202 (CRT) (1st Cir. 1991); Director,
OWCP v. Belcher Erectors, Inc., 770 F.2d 1220, 17 BRBS 146 (CRT) (D.C. Cir.
1985); Director, OWCP v. Campbell Industries, Inc., 678 F.2d 836, 14 BRBS
974 (9th Cir. 1982), cert. denied, 459 U.S. 1104 (1983). Thus,  as the
administrative law judge's findings are rational and supported by substantial evidence,
we affirm the administrative law judge's conclusion that claimant did not suffer
from a pre-existing permanent partial disability due to either his prior back
injury, see Legrow, 935 F.2d at 430, 24 BRBS at 202 (CRT); Belcher
Erectors, 770 F.2d at 1222, 17 BRBS at 149 (CRT); Campbell Industries,
678 F.2d at 840, 14 BRBS at 977, or the injury to his right index finger.  The
administrative law judge's denial of Section 8(f) relief is therefore affirmed.
See Hundley v. Newport News Shipbuilding & Dry Dock Co., 32 BRBS 254 (1998).
     Accordingly, the administrative law judge's Decision and Order on Remand
Granting Permanent Partial Disability and Denying Section 8(f) Relief, and Decision
and Order Denying Employer's Motion for  Reconsideration are affirmed.

     SO ORDERED.



                                                                                                      
                         ROY P. SMITH
                         Administrative Appeals Judge



                                                                                                      
                         JAMES F. BROWN
                         Administrative Appeals Judge



                                                                                                      
                         REGINA C. McGRANERY
                         Administrative Appeals Judge

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Footnotes.


1)In fact, the payroll memo history indicates that claimant worked more overtime hours in 1985, i.e., the year of his injury, than in 1983 and 1984 combined. See n. 3 infra. Back to Text
2)Employer also asserted that claimant's assignment to the MRA shop was only temporary, and that he was still under the supervision of Mr. Miller, who testified that he had post-injury work outside the MRA shop within claimant's restrictions which claimant could have performed during that time, and in which claimant presumably could have earned overtime. While Mr. Miller did state that such post-injury work was available, he also stated that he did not give claimant any of this light duty work post-injury, since claimant was working, when not out on total disability, exclusively in the MRA shop during his entire post-injury employment with employer. If this light-duty work was not made available to claimant, it cannot serve as evidence that claimant's overtime opportunities did not decrease due to his injury. Back to Text
3)This memo shows as follows: 1983 120 overtime hours 1984 56 overtime hours 1985 216 overtime hours 1986-1988 no overtime hours CX 5. Back to Text
4)Dr. Hall opined that claimant's "chronic" problem with his back in June and July 1985, is indicative of a permanent and serious defect, while Dr. Reid stated that the June 12, 1985, abrasion and contusion on claimant's back resulted in a 6 percent permanent impairment. EX 22, 24. Back to Text
5)There is no evidence of disability until 1987, when Dr. Knauft removed the metal from claimant's right index finger and assigned a permanent impairment rating for which claimant ultimately received compensation. Back to Text

NOTE: This is an UNPUBLISHED LHCA Document.

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