Calculating Credits for Pre-Existing Disability Under the Longshore Act

In a recently-decided case the Benefits Review Board considered the “dollar for dollar” credit due to an employer/carrier for prior injury. This case is interesting because the claimant’s examining physician actually found less disability in the claimant’s affected body part than was previously found, but under the dollar-for-dollar credit system, the employer still would be exposed to pay more for the “new” injury.

In Myshka v. Electric Boat, the claimant alleged hand injuries resulting from his work as a welder with Pequot River Shipworks. He obtained his own physician’s report, which found a 14% permanent disability to his hands. In 2001 the case was settled in a lump-sum paid pursuant to 33 U.S.C. 908(i) amounting to $9,400. This joint, lump-sum settlement disposed of both the Federal and State claims (there was a claim pending under the Connecticut Workers’ Compensation act as well). He collected his award and went back to work as a welder in 2002, resuming the use of welding and grinding tools.

What is a Longshore “8(i)” Settlement?

Section 908(i) of the Longshore and Harbor Workers’ Compensation Act allows the parties to a claim to resolve it for a lump-sum amount, foreclosing future medical and indemnity payments:

Whenever the parties to any claim for compensation under this Act, including survivors benefits, agree to a settlement, the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress. Such settlement may include future medical benefits if the parties so agree. No liability of any employer, carrier, or both for medical, disability, or death benefits shall be discharged unless the application for settlement is approved by the deputy commissioner or administrative law judge. If the parties to the settlement are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval.

Settlements reached under this section are commonly referred to as “8i Settlements.”

To be approved, settlements under 8i must meet the following criteria:

  • settlement must be adequate and not obtained under duress. See 33 USC § 8(i)(1) and 20 CFR § 702.243(f).
  • May include compensation or medical benefit or both.
  • Settlements are limited to claims then in existence – no “future”c laims can be settled.
  • Settlement application must be a stand-alone document and contain the information set out in 20 CFR § 702.242(b).
  • Settlements are final and not subject to change 30 days after the Order is filed.

  • Structured settlements are permitted.
  • The lump sum payment must be paid (received by the claimant) within 10 days of the filing of the Order Approving Settlement.
  • Late payments are subject to an additional 20% compensation per § 14(f) of the LHWCA.

The point of all these requirements are to ensure that the claimant is voluntarily and knowlingly waiving rights to future or further compensation. The employer/carrier is obtaining a “full and final” closure of the claim.

New Claims to Sites of Old Injuries

It is well-established (‘the Credit Doctrine”) an employer is entitled to a credit for the amount of a prior scheduled award against its liability for permanent partial disability benefits resulting from an injury to the same scheduled member. Strachan Shipping Co. v. Nash, 782 F.2d 513 (5th Cir. 1986).

In Myshka v. Electric Boat, the claimant obtained a 8i settlement in 2001 ($9,400) for hand injuries sustained while employed by Pequot River Shipworks. This settlement was reached based on his physician’s report of a 14% permanent disability. In 2011, while employed a new employer (Electric Boat), he claimed his hand problems worsened. The claim was accepted as compensable. The employer voluntarily paid temporary total disability benefits. Medical treatment including surgery was provided and ultimately the claimant returned to work. In 2012 he sought an award for hand injuries againt his current employer (the prior claim was against “Pequot River Shipworks”).

This time, the examining physician found an overall disability of 8%, attributable to the right upper expremity, fourth trigger finger, cubital and carpal tunnel syndrome (the exam in 2001 found 14% disability). The employer/carrier took exception to an award being made for the hand, as the physicians found a lower degree of permanent disability then had been found previously. The only issue at trial was the nature and extent of any causally-related disability to the hand for carpal tunnel condiiton, and the claimant’s entitlement to benefits based upon same.

The Law Judge decided that the medical evaluations (the claimant’s prior finding from 2001) and more-recent finding of presented by the claimant did not show that he sustained a new injury or an aggravation of his pre-existing right hand condition. Esentially ruling that because the current fmedical impairment rating of 8% was less than the prior impairment evaluation (14%)the law judge denied the permanent partial disability benefits sought by claimant.

Calculating Credits for Prior Awards – the “dollar-for-dollar” rule.

The Benefit Review Board (“BRB”) found that the trial judge’s refusal to make an award for the hand injury where the new medical evaluations found a lower degree of permanent residual disability than the prior one was error. The BRB ruled that the law judge should have found a degree of permanent residual disability attributable to the new loss, even if the percentage of disability would have been lower.

This is because the employer receives a credit for the actual dollar amount of compensation paid for the prior injury rather than for the prior percentage of impairment. Brown v. Bethlehem Steel Corp., 868 F.2d 759, 763-64 (5th Cir. 1989). So, when the administrative law judge awards scheduled permanent disability benefits to claimant she must determine whether employer is entitled to a credit for the compensation paid pursuant to the prior Section 8(i) settlement, and, if employer is so entitled, he must calculate such credit on a dollar-for-dollar basis.

In Myshka, the Judge should have found an impairment (even if she just adopted the 8% of the examining physician) and then calculated an offset basis (using the prior award of $9,400 as the amount paid) under the 2011 benefit rates ($804 per week, according to his calculated AWW). Using the 8% as a baseline, and in light of the fact that would give rise to an award of (maximum for loss of use of the hand is 244 weeks) this would give rise to a gross award of $15,694. After a dollar-for-dollar credit for the prior disability ($9,400) the claimant would be entitled to an additional $6,294, despite the fact that his percentge of disability has actually diminished according to the physicians and despite the prior settlement.

Case: John Myshka v. Electric Boat Corp., BRB No. 14-0161, Decided January 13, 2015.

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Greg Lois is the managing partner of LOIS LLC, a 19-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com