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Delaware River Stevedores v. Difidelto

March 13, 2006


On Petition for Review of an Order of the Benefits Review Board (BRB No. 03-0705).

The opinion of the court was delivered by: Greenberg, Circuit Judge.


Argued October 26, 2005




This matter comes on before this court on a petition for review of a disposition of the Benefits Review Board ("Board") awarding benefits to Edward DiFidelto under the Longshore and Harbor Workers' Compensation Act ("LHWCA"), 33 U.S.C. §§ 901-950, following his sustaining an injury compensable under the LHWCA. The sole issue in these proceedings is whether Delaware River Stevedores, Inc. ("DRS"), DiFidelto's employer, had authority under a provision of the LHWCA, 33 U.S.C. § 908(j) ("section 908(j)"), to require DiFidelto to report information regarding his earnings when it was not paying him compensation at the time of its requests.*fn1 Section 908(j) provides that an employer may inform a "disabled employee" of his obligation to report his earnings to the employer from employment or self-employment and further provides that if the employee fails to report or knowingly or willfully omits or understates his earnings, he forfeits his right to compensation with respect to any period during which he was required to file the report. Knowledge of the amount of an employee's earnings may be useful to an employer as those earnings may enable it to reduce or even eliminate the obligation that it otherwise would have to make payments to a disabled employee on account of a work-related injury.*fn2


The material facts and procedural history with regard to these proceedings are not in dispute. On January 7, 2000, DiFidelto suffered a work-related injury in the course and scope of his employment with DRS entitling him to receive benefits from DRS under the LHWCA. Initially, DRS voluntarily made the payments without an adjudication or order, but on November 19, 2001, it discontinued them as it controverted its obligation to do so on the basis of a medical opinion that DiFidelto had recovered fully from his injuries. When DRS controverted DiFidelto's claim, it requested the District Director of the Office of Workers' Compensation Programs to refer the case to the Office of Administrative Law Judges. Not surprisingly, DiFidelto rejected DRS's position, and thus he prosecuted a claim for benefits under the LHWCA.

After DRS requested a hearing in the case, and at a time that it no longer was making payments to DiFidelto, it sent three Forms LS-200 to his attorney, pursuant to section 908(j), seeking information about his earnings from employment or self-employment. The Director, Office of Workers' Compensation Programs ("Director"), adopted Form LS-200 for the reporting of earnings pursuant to section 908(j). The first and second forms that DRS sent on January 25 and February 21, 2002, respectively, identified the reporting period as being from January 7, 2000, to January 21, 2002. Thereafter, on April 22, 2002, DRS sent DiFidelto's attorney a third Form LS-200 requesting information about DiFidelto's earnings between January 7, 2000, and April 22, 2002. Although DiFidelto received DRS's requests, he refused to report his earnings as he contended that he did not have a legal obligation to do so as long as DRS was not paying him compensation.

An administrative law judge ("ALJ") held a hearing in this case on July 18, 2002, following which on June 2, 2003, he issued his "Decision and Order" awarding DiFidelto benefits. In his June 2, 2003 Decision and Order, the ALJ found, inter alia, that even though DiFidelto was entitled to reinstatement of his compensation payments, he had "forfeited" his right to compensation for the period between January 8, 2000, and April 22, 2002, because he failed to report his earnings as DRS requested.

In reaching this result, the ALJ indicated that forfeiture penalties apply if an employee fails to respond or responds inaccurately to a Form LS-200 request. In considering the applicability of the section 908(j) reporting requirement, the ALJ determined that "the decisive factor is whether earnings information is sought for 'periods during which an employee's earnings could affect employer's liability for compensation.'" App. at 56 (quoting Plappert v. Marine Corps Exch., 31 Ben. Rev. Bd. Serv. 13, 17, aff'd, 31 Ben. Rev. Bd. Serv. 109 (1997) (en banc)). Inasmuch as DRS's LS-200 request covered a period for which DiFidelto sought and obtained compensation, the ALJ applied the forfeiture to that period and denied him compensation from January 8, 2000, to April 22, 2002.

DiFidelto then filed a timely request with the ALJ to reconsider the June 2, 2003 Decision and Order. In support for his argument against forfeiture, DiFidelto relied on the regulation implementing section 908(j), 20 C.F.R. § 702.285(a), and the legislative history of section 908(j), as set forth in a House of Representatives Conference Report. DiFidelto contended that both authorities describe a "disabled employee" within section 908(j) as an individual to whom the employer is paying compensation when it requires an earnings report. Clearly, even though DRS had paid DiFidelto compensation, it was not doing so when it sent him the LS- 200 forms and thus DiFidelto, at that time, did not consider himself to be a disabled employee for purposes of section 908(j).

On June 30, 2003, the ALJ issued a "Decision and Order Granting Claimant's Request for Reconsideration." In the June 30, 2003 Decision and Order, the ALJ corrected technical deficiencies in the June 2, 2003 Decision and Order with respect to the time periods during which DiFidelto was entitled to total versus partial compensation.*fn3 The ALJ, however, rejected DiFidelto's request that the ALJ reconsider his findings with respect to the forfeiture of benefits as the ALJ adhered to his ...

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