Benefits Review Board Reviews LHWCA Claimant's Illegal Earnings
The Benefits Review Board concludes that a LHWCA claimant's earnings from illegal activity are not evidence of suitable alternative employment, but that a claimant who fails to report such earnings faces forfeiture of benefits.
Young v. Newport News Shipbuilding and Dry Dock Co., BRB No. 10-0678 (June 22, 2011) (per curiam)
Randolph Young injured his knees in the early 1980s while working for Newport News Shipbuilding and Dry Dock Company. An administrative law judge (ALJ) awarded permanent total disability benefits.
Years later, an ALJ issued a stay of compensation order because Young had been incarcerated, apparently after pleading guilty to drug charges.
After Young was released from prison in early 2004, an ALJ lifted the stay of payments, finding that Young still suffered symptoms from his work-related knee injuries. The ALJ rejected the employer's argument that Young's testimony about his symptoms was not credible in light of his criminal conduct. The ALJ distinguished Young's discredited, inaccurate testimony about his criminal activities from his testimony about his medical symptoms, which the ALJ found reliable.
When evaluating Young's physician-imposed work restrictions, the ALJ rejected an assertion by Newport News that Young's illegal activity (in addition to his maintenance job while in prison and his singing in churches at funerals) constituted suitable alternate employment. The ALJ ultimately awarded Young permanent total disability benefits under LHWCA through June 2007, when Newport News established suitable alternate employment. Thereafter Young received an award for partial disability.
The ALJ rejected Newport News's contention that Young's benefits were subject to forfeiture under LHWCA Section 8(j) on the ground that Young failed to report as "income" the earnings from his criminal activity between 1993 and 1996. According to the ALJ, any "income" from such activity did not have to be reported on the LS-200 Report of Earnings form because it was not earnings from employment or self-employment, and it was not included in the regulatory definition of "earnings" found at 20 C.F.R. § 702.285(b).
On appeal to the Benefits Review Board (BRB), the BRB concluded in pertinent part that the fact of a criminal conviction does not negate a claimant's right to benefits or require an ALJ to discredit the claimant's testimony in its entirety. Rather, evidence of a claimant's conviction may be offered to impeach credibility in the customary way.
Here, the ALJ was within his discretion in finding Young's testimony about his knee symptoms credible, where medical records showed that over a span of more than 25 years Young had consistently complained about his knees.
As to the extent of Young's disability, the ALJ correctly found that Young's illegal activities did not constitute suitable alternate employment. The illegal activities were not work available on the open labor market. In Licor v. Washington Metro. Area Transit Auth., 879 F.2d 901 (D.C. Cir. 1989), the court held that any illegal income a claimant may have earned was not an appropriate basis for determining wage-earning capacity. Thus it was proper for the ALJ to determine that any illegal income Young earned was not indicative of suitable alternate employment available on the open labor market.
The ALJ erred, however, in concluding that Young did not have to report any earnings from his illegal activities. For purposes of an employer's request that a claimant report post-injury earnings under Section 8(j), earnings is defined in the supporting regulations as all monies received from any employment, including all revenue from self-employment. That definition was sufficiently broad to include any earnings from a LHWCA benefits claimant's illegal activity.
The court distinguished Licor, observing that that case concerned the extent of a claimant's loss of wage-earning capacity using jobs found on the open market of legal employment, as opposed to earnings from illegal conduct. Licor could not be extended to Section 8(j).
Because the ALJ made no finding about Young's earnings from his illegal activities, the action had to be remanded for findings of fact on that issue, and whether Young's benefits were subject to forfeiture under Section 8(j).
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