Federal Court Vacates “K.S.,” the Benefits Review Board’s Seminal Average Weekly Wage Opinion

In 2009, the Benefits Review Board (“BRB”) issued a very important decision detailing how to calculate an injured Defense Base Act (“DBA”) worker’s average weekly wage (“AWW”).  See K.S. [Simons] v. Service Employees Int’l, Inc., 43 BRBS 18 (2009), aff’d on recon. en banc, 43 BRBS 136 (2009).  Essentially, when determining the AWW of a DBA employee working in a zone of hostilities, reference is made only to the injured worker’s overseas earnings.  Prior stateside earnings are irrelevant.  The BRB specifically disapproved of the administrative law judge’s (ALJ) use of a “blended” approach to determining AWW (i.e. blending together stateside and overseas earnings when the employee had not worked overseas for a full year prior to the accident).

According to the Southern District of Texas, the BRB was wrong.  Nearly four years later, K.S. is vacated and remanded.  Here is a taste of the decision:

Simons appealed Judge Kennington’s April 17, 2008 decision to the BRB, contending that Judge Kennington erred in calculating Simons’s AWW by looking at both his overseas and stateside wages.  Dkt. 1, Ex. A.  The BRB issued its opinion on March 13, 2009.  Dkt. 1, Ex. B.  In reversing Judge Kennington’s decision, the BRB held that it was bound by the holding of its previous opinion in Proffitt v. Service Employers International, Inc., 40 Ben. Rev. Bd. Serv. (MB) 41 (2006).  Dkt. 1, Ex. B.  In Proffitt, a case involving similar underlying circumstances of overseas employment, the ALJ relied solely on the claimant’s overseas earnings in calculating the AWW, and the BRB affirmed.  Proffitt, 40 Ben. Rev. Bd. Serv. at 42 (“Although Section 10(c) permits the use of wages from the claimant’s other prior employment in an average weekly wage calculation, it does not require such use, as the administrative law judge is afforded wide discretion in arriving at a Section 10(c) calculation.”).  But in Simons, the BRB held that because Simons’s injury occurred in similar circumstances to those present in Proffitt, the ALJ could not evaluate the claimant’s previous earnings and instead must rely solely on overseas earnings.  Dkt. 1, Ex. B at 5–7.  In so doing, the BRB ignored its holding in Proffitt that the ALJ may, but need not, examine wages from prior employment to arrive at a Section 10(c) AWW calculation, and the BRB essentially deprived the ALJ of the “wide discretion” mandated by the statute.  Proffitt, 40 Ben. Rev. Bd. Serv. at 42.  The BRB’s reversal of Judge Kennington’s decision therefore went beyond the statutory requirement that “[t]he findings of fact in the decision under review by the Board shall be conclusive if supported by substantial evidence in the record considered as a whole.”  33 U.S.C. § 921.

Indeed, there is substantial evidence in this case to support Judge Kennington’s original April 17, 2008 decision.  Dkt. 1, Ex. A.  While the BRB may not agree with the ALJ’s factual findings,“the Board does not have the authority to engage in a de novo review of the evidence or to substitute its views for those of the ALJ.”  Mijangos v. Avondale Shipyards, Inc., 948 F.2d 941, 944 (5th Cir.1991) (citing Presley v. Tinsley Maint. Serv., 529 F.3d 433, 436 (5th Cir. 1976)).  Judge Kennington calculated the AWW of Simons by utilizing the method of calculation set forth in 33 U.S.C. § 910(c)

. . .

This can best be summarized as a requirement that the ALJ consider three factors: “(1) past earnings of the employee in which he was working at the time of injury; (2) the earning history of employees of the same or most similar class working in the same or most similar employment; and (3) the employment history of the injured employee.”  Bay, Ltd. v. Dir., Office of Worker’s Comp. Programs, 300 F. App’x 282, 285 (5th Cir. 2008).  Judge Kennington’s decision and order clearly demonstrates his consideration of these three factors in his calculation.  Dkt. 1, Ex. A at 9-10.  Judge Kennington notes Simons’s salary at the time of injury, the unique circumstances surrounding his employment,2 and his past employment and salary.  Id. at 10.  Judge Kennington also notes that while Simons may have intended to work in this position for a long period of time, his commitment was only for a year.  Id.  After considering all of these factors, Judge Kennington determined that the best way to calculate Simons’s wages was to utilize a blended approach accounting for Simons’s higher wages in Iraq and Kuwait, while accounting for his past earnings in the United States.   Id.   According to Judge Kennington, this approach better reflects Simons’s true wage earning capacity.   Id.  This decision was well within the discretion of ALJ Kennington and is supported by the record as a whole. Mijangos, 948 F.2D at 945 (holding that the BRB exceeded its power of review when reversing ALJ’s determinations that were amply supported by the record).

3. Proffitt Is Not Controlling

The BRB interpreted Proffitt as controlling in Simons on grounds that:

“[t]he [DBA] must be construed so that employees injured under the same circumstances receive equal treatment.  To allow two employees who are working under the same contract and conditions, and injured at the same time, to receive different amounts of compensation because one administrative law judge relied on Iraq wages while another reduced claimant’s rate by combining lower, stateside earnings, would be arbitrary.”

Dkt. A, Ex. C at 3.  The BRB provides no statutory, regulatory, or common-law support for this proposition.  To require all cases with facts similar to those in Proffitt to have similar outcomes would relegate the ALJ to simply playing the role of calculator.  It is within the ALJ’s discretion to determine whether or not the facts of two cases are similar enough to merit similar outcomes, and Judge Kennington noted these differences in his May 18, 2010 decision and order on remand.  Dkt. 1, Ex. D at 8-9.  The BRB’s order prevented Judge Kennington from considering these facts, and required that he calculate Simons’s AWW solely based on his overseas wages.  This decision stripped the ALJ of the “wide discretion” in determining AWW pursuant to Section 10(c) of the Act, as set forth in the express language of the statute.

Note: Hat Tip to Billy Frey.

Note 2: Looks like we are going to have a lively Annual Longshore Conference this year.