Docket Number: 10039710-2007

EMPLOYEE: [Name Deleted]

CLAIMANT: [Name Deleted]

FILE NUMBER: [Number Deleted]

DOCKET NUMBER: 10039710-2007

DATE OF ISSUANCE: November 30, 2007

ORDER GRANTING REQUEST FOR RECONSIDERATION

AND FINAL DECISION

This is the final decision of the Final Adjudication Branch (FAB) concerning the employee’s claim under Part E of the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq. For the reasons stated below, the employee’s claim under Part E for the covered illness of asbestosis is accepted for the payment of medical benefits. However, a surplus in the amount of $132,065.71 must be absorbed before any Part E benefits may actually be paid to or on behalf of the employee. A determination as to whether the employee is entitled to any compensation for potential wage-loss and/or impairment benefits under Part E due to asbestosis is deferred at this time.

STATEMENT OF THE CASE

On August 29, 2005, the employee filed a claim for benefits under Part E of EEOICPA and alleged that he had developed “asbestos lung disease” as the result of his employment in Oak Ridge, Tennessee from 1976 to 2001. On his claim form, the employee indicated that he had both filed a law suit and had received a settlement for the claimed condition of “asbestos lung disease.” He also alleged that he had worked for three different Department of Energy (DOE) contractors at the Y-12 and K-25 Plants, and DOE subsequently verified that he was employed at the Y-12 and K-25 Plants from March 29, 1976 through August 31, 2001.

In support of the claim, the employee’s representative submitted an October 7, 1997 report in which Dr. Scutero reviewed the employee’s medical records and x-rays and diagnosed asbestosis due to asbestos exposure, and a June 8, 1992 report in which Dr. Chirrona related an impression of probable asbestos-related lung disease and mild chronic obstructive pulmonary disease (COPD). In a July 3, 2006 response to a request for additional medical evidence from the Jacksonville district office of the Division of Energy Employees Occupational Illness Compensation (DEEOIC), the representative submitted October 21 and 31, 2005 reports in which Dr. Cherry diagnosed asbestosis due to asbestos exposure as confirmed by evidence of pleural plaques and pulmonary function testing, and COPD due to cigarette smoking, as well as the pulmonary function testing and computerized tomography findings upon which Dr. Cherry had based his opinions.

In a submission that was received by the district office on October 19, 2006, the employee’s representative submitted copies of the “short-form” complaint alleging work-related asbestos exposure at the Oak Ridge Reservation that the employee filed in the Circuit Court for Knox County, Tennessee on August 14, 1992[1], and a “settlement detail” from the employee’s attorneys in that tort action. The latter document listed 14 defendants and the dollar amounts of settlement payments received from 13 of them (the complaint listed 17 defendants) totaling $18,532.43. Entries for 10 of the 13 defendants indicated that attorney fees were deducted from the settlement payments received, and entries for nine of the 13 defendants also indicated that expenses ranging from $0 to $640 were deducted. The employee’s representative also submitted copies of the “worker’s compensation complaint” that the employee filed in the Circuit Court for Anderson County, Tennessee on November 15, 2005[2], an “Order Approving Compromised Settlement of Workers’ Compensation Claim” dated September 15, 2006, and a list of itemized expenses related to that claim. The complaint alleged that the employee contracted “asbestosis or asbestos-related lung disease, due to, or as a consequence of his exposure to asbestos” at work, but did not also allege that the employee had contracted COPD due to his employment. In Sections II, III and V of the September 15, 2006 Order, the judge in that matter found that the employee had contracted one work-related illness, “asbestos-related lung disease,” dismissed his claim against two of the three defendants, and decreed that upon payment of the settlement of $150,869.60 and its agreement to pay medical benefits, the third defendant would be relieved of all further liability to the employee for “the claimed occupational asbestos-related lung disease and any non-malignant respiratory injury.”

On November 24, 2006, the Jacksonville district office issued a recommended decision to accept the employee’s Part E claim and found that the medical evidence established that the employee had contracted the covered illness of asbestosis due to his work-related exposure to asbestos. In that same recommended decision, the district office found that the employee had received a state workers’ compensation settlement of $150,869.60 for his covered illness, and calculated that $119,392.18 of that settlement had to be coordinated with the employee’s Part E benefits. Since the employee was not being awarded any monetary benefits at that time, the Jacksonville district office found that the entire $119,392.18 constituted a “surplus” that would have to be recovered from his future Part E benefits, including the medical benefits that it was recommending for acceptance. However, the district office made no findings of fact regarding the employee’s tort recoveries.

In a December 1, 2006 letter, the employee’s representative objected to the recommendation that the employee’s Part E award for asbestosis be coordinated with his state workers’ compensation settlement. In support of this objection, the representative asserted that the employee had both claimed for and received the settlement for both “any non-malignant respiratory injury” and either “asbestosis” or “asbestos lung disease,” and argued that because the district office found that the employee had contracted only one covered illness—asbestosis—no coordination was required under DEEOIC’s procedures.

On February 7, 2007, FAB issued a final decision accepting the employee’s Part E claim. In its decision, FAB considered the representative’s objection to the coordination of the employee’s Part E benefits and rejected it because there was “no evidence that the employee was diagnosed with a non-malignant illness other than from asbestos exposure and that is not considered an asbestos-related pulmonary condition.” Based on this finding, FAB accepted the district office’s recommendation that payment for any medical treatment of the employee’s asbestosis be suspended until the $119,392.18 “surplus” was fully absorbed. FAB also made no findings regarding the employee’s tort recoveries.

On March 22, 2007, the employee filed a petition in the United States District Court for the Eastern District of Tennessee seeking review of the final decision on his Part E claim.[3] Shortly thereafter, on April 30, 2007 the Director of DEEOIC issued an order that vacated the February 7, 2007 final decision and reopened the employee’s claim for both further development and the issuance of new recommended and final decisions. The order noted that neither the recommended nor the final decisions in this matter had discussed the recoveries that the employee had received from his tort action, and that the coordination of his Part E benefits with his state workers’ compensation settlement was not correctly calculated using the proper worksheet.

Following the issuance of the April 30, 2007 order, the national office of DEEOIC sent the employee a July 5, 2007 letter in which it requested additional information regarding his tort recoveries. On July 12, 2007, the employee’s representative responded to the July 5, 2007 development letter by submitting an updated “Settlement Detail” showing the receipt of another $3,000 payment from a defendant, a list of itemized expenses related to the employee’s tort suit amounting to $1,703.96, and a cover letter in which he noted that attorney fees of $7,177.40 had been paid out of the recovery total of $21,532.43.

On August 15, 2007, the national office issued a recommended decision: (1) to accept the employee’s Part E claim for the payment of medical benefits for the covered illness of asbestosis; (2) to offset the employee’s Part E benefits with the $12,673.53 “surplus” recovery from his tort action for asbestos exposure; and (3) to coordinate the employee’s Part E benefits with the $119,392.18 “surplus” of the state workers’ compensation benefits he received for the same covered illness. The case was transferred to FAB on the same date; since no objections to the recommended decision were received within the 60-day period provided for under 20 C.F.R. § 30.310(a) (2007), FAB issued a decision on the employee’s claim on October 25, 2007.

Thereafter, by letter dated November 2, 2007, the employee’s representative made a timely request for reconsideration of the October 25, 2007 decision and submitted copies of an August 29, 2007 letter objecting to the August 15, 2007 recommended decision and an April 20, 2007 affidavit of Dr. Cherry that he alleged had been sent to FAB in a timely manner in support of his reconsideration request. Although there is no evidence that the August 29, 2007 objections or the April 20, 2007 affidavit were ever received by FAB, they appear to have been properly sent to the correct mailing address. Therefore, FAB hereby grants the request to reconsider the employee’s claim to consider the following objections to the recommended decision:

OBJECTIONS

In his August 29, 2007 submission, the employee’s representative argued that the recommended coordination of the employee’s Part E benefits with the $119,392.18 “surplus” of the state workers’ compensation benefits he had received was improper under 20 C.F.R. § 30.626(c)(3), and alleged that the state workers’ compensation benefits at issue were for both asbestos-related lung disease (a covered illness) and COPD (a non-covered illness). In support of his argument, the representative asserted that Dr. Cherry’s affidavit established that the employee’s COPD was a “non-malignant lung injury.” In his affidavit, Dr. Cherry indicated that he had examined the employee on October 21, 2005, that he had diagnosed COPD based on his findings, and that COPD “is a non-malignant respiratory injury.”

After considering the recommended decision, the objections to the recommended decision and all of the evidence in the case file, FAB hereby makes the following:

FINDINGS OF FACT

1. The employee filed a claim for benefits under Part E of EEOICPA on August 29, 2005, and alleged that he had contracted “asbestos lung disease” due to his employment.

2. The employee was employed as a DOE contractor employee at two DOE facilities, the K-25 and Y-12 Plants in Oak Ridge, Tennessee, from March 29, 1976 through August 31, 2001. This is more than 250 days of covered employment, during which the potential for asbestos exposure existed.

3. The medical evidence of record establishes that the employee was first definitively diagnosed with asbestosis due to exposure to asbestos by Dr. Scutero on October 7, 1997, more than ten years after he was first exposed to asbestos at a DOE facility, and that he was later diagnosed with nonwork-related COPD due to cigarette smoking by Dr. Cherry in reports dated October 21 and 31, 2005.

4. It is at least as likely as not that the employee’s exposure to asbestos at two DOE facilities, the K-25 and Y-12 Plants, was a significant factor in aggravating, contributing to, or causing his asbestosis.

5. It is at least as likely as not that the employee’s exposure to asbestos was related to his employment by a DOE contractor at the K-25 and Y-12 Plants.

6. The employee filed a tort suit in the Circuit Court for Knox County, Tennessee on August 14, 1992 against 17 defendants, alleging that he had been exposed to asbestos at work at the K-25 and Y-12 Plants. As of July 12, 2007, the employee had received recoveries from the defendants of $21,532.43 and had paid out allowable attorney fees of $7,199.86 and allowable costs of suit of $1,681.50.

7. The employee also filed a “worker’s compensation complaint” in the Circuit Court for Anderson County, Tennessee on November 15, 2005 seeking workers’ compensation benefits for “asbestosis or asbestos-related lung disease.” The employee did not seek state workers’ compensation benefits for COPD in that action. In an “Order Approving Compromised Settlement of Workers’ Compensation Claim” dated September 15, 2006, the judge in that matter found that the employee had contracted a single illness, “asbestos-related lung disease,” and decreed that payment of the settlement of $150,869.60 would relieve the defendant of all future liability to the employee for “the claimed occupational asbestos-related lung disease and any non-malignant respiratory injury.” Out of this settlement, the employee paid allowable attorney fees of $30,173.92 and allowable costs of suit of $1,303.50.

Based on the above-noted findings of fact, FAB hereby makes the following:

CONCLUSIONS OF LAW

The first issue in this case is whether the employee qualifies as a “covered Part E employee” under 20 C.F.R. § 30.5(p). For this case, the relevant portion of the definition of a “covered Part E employee” is “a Department of Energy contractor employee. . .who has been determined by OWCP to have contracted a covered illness. . .through exposure at a Department of Energy facility,” and the claimed “covered illness” is “asbestos lung disease” or asbestosis.

DEEOIC has established criteria to allow for a presumption of causation in claims filed under Part E for asbestosis. If the evidence in the claim file is sufficient to establish that the employee was diagnosed with asbestosis, that he or she worked at least 250 aggregate days at a facility where the presence of asbestos has been confirmed, and that there was a latency period of at least 10 years between the employee’s first exposure and the first diagnosis of asbestosis, DEEOIC can accept that it was at least as likely as not that the employee’s exposure to asbestos at a DOE facility was a significant factor in aggravating, contributing to or causing his or her asbestosis.[4] See Federal (EEOICPA) Procedure Manual, Chapter E-500.17 (June 2006).

As found above, the employee is a DOE contractor employee who was employed at two DOE facilities in Oak Ridge by DOE contractors and who contracted a “covered illness,” as that term is defined in § 7385s(2) of EEOICPA. The “covered illness” that the employee contracted is asbestosis due to work-related exposure to asbestos, and this is the only “covered illness” that is supported by the medical evidence in the case file (the employee’s COPD is not due to the same work-related exposure that resulted in his asbestosis and is instead due to nonwork-related cigarette smoking). The employee also had more than one year of covered employment with exposure to asbestos and was diagnosed with asbestosis more than ten years following his initial exposure to asbestos at a covered DOE facility. Therefore, he qualifies as a “covered Part E employee” under § 30.5(p) of the regulations for the condition of asbestosis, and the employee’s claim for asbestosis is accepted pursuant to § 7385s-4(c) of EEOICPA. Since he is a “covered Part E employee,” the employee is entitled to medical benefits for the “covered illness” of asbestosis pursuant to § 7385s-8 of EEOICPA, retroactive to the date he filed his claim for benefits on August 29, 2005.

The second issue in this case is whether the employee’s Part E benefits must be offset. Under § 7385 of EEOICPA and 20 C.F.R. § 30.505(b), Part E benefits must be offset to reflect payments made pursuant to a final judgment or a settlement received in litigation for the same exposure that EEOICPA benefits are payable. As found above, the employee filed a tort suit in the Circuit Court for Knox County, Tennessee on August 14, 1992 against 17 defendants, alleging that he had been exposed to asbestos at work. Through July 12, 2007, the employee has received total recoveries from the defendants of $21,532.43, and had paid out allowable attorney fees of $7,199.86 and allowable costs of suit of $1,681.50. Using the “EEOICPA Part B/E Benefits Offset Worksheet,” the employee has a “surplus” recovery from his tort action of $12,673.53; this “surplus” must be absorbed from medical benefits and any lump-sum monetary benefits payable in the future before any Part E benefits can actually be paid to or on behalf of the employee.

The third issue in this case is whether the employee’s Part E benefits also must be coordinated. Under § 7385s-11 of EEOICPA and 20 C.F.R. § 30.626, Part E benefits must be coordinated with any state workers’ compensation benefits (other than medical or vocational rehabilitation benefits) that the claimant has received for the same covered illness. As found above, on November 15, 2005 the employee filed a “worker’s compensation complaint” in the Circuit Court for Anderson County, Tennessee seeking state workers’ compensation benefits solely for “asbestosis or asbestos-related lung disease.” In an “Order Approving Compromised Settlement of Workers’ Compensation Claim” dated September 15, 2006, the judge specifically found that the employee had contracted one illness, “asbestos-related lung disease,” and decreed that the payment of the settlement of $150,869.60 would relieve the defendant of all future liability to the employee for “the claimed occupational asbestos-related lung disease and any non-malignant respiratory injury.”

This does not mean, however, that the settlement was for anything other than the employee’s “covered illness” of asbestosis, which is the only work-related lung disease that is established by the medical evidence of record. This conclusion is consistent with the medical evidence in the case file, the “worker’s compensation complaint” that the employee filed, and the remainder of the Order itself, which explicitly states in Sections II, III and V that the employee contracted a single work-related illness of “asbestos-related lung disease,” not that illness and a work-related non-malignant respiratory injury.[5] In his August 29, 2007 objection to the recommended decision, the employee’s representative argued for the first time that Dr. Cherry’s affidavit established that the employee’s COPD is a non-malignant respiratory injury, and the medical evidence of record supports that particular conclusion. However, the record also establishes that the employee’s COPD is due to his nonwork-related cigarette smoking rather than to his exposure to asbestos while employed at a DOE facility. Therefore, because the record does not establish that the employee received state workers’ compensation benefits “for both a covered illness and a non-covered illness arising out of and in the course of the same work-related incident,” coordination of the employee’s Part E benefits for the “covered illness” of asbestosis with his $150,869.60 settlement is required. See 20 C.F.R. 30.626(c)(3). Out of this settlement, the employee paid allowable attorney fees of $30,173.92 and allowable costs of suit of $1,303.50. Using the “EEOICPA/SWC Coordination of Benefits Worksheet,” the employee has received “surplus” state workers’ compensation benefits totaling $119,392.18 after deducting allowable attorney fees and costs of suit from his gross settlement. This second “surplus” must also be absorbed from the employee’s medical benefits and any lump-sum monetary benefits payable in the future before any Part E benefits can actually be paid to or on behalf of the employee.

Accordingly, the employee is entitled to medical benefits for his asbestosis, retroactive to the date he filed his EEOICPA claim on August 29, 2005. However, a total “surplus” in the amount of $132,065.71 must be absorbed pursuant to §§ 7385 and 7385s-11(a) of EEOICPA before any Part E benefits are actually payable.

Washington, D.C.

Tom Daugherty

Hearing Representative

Final Adjudication Branch