Article Summary

• The United States Court of Appeals for the Fifth Circuit recently affirmed a Benefits Review Board (“BRB”) decision upholding an Administrative Law Judge’s (“ALJ”) calculation of a claimant’s average weekly wage (“AWW”) under Section 10(c) of the Longshore and Harbor Workers’ Compensation Act (“Act”).
• In Brady v. Director, Office of Workers’ Compensation Programs, the Fifth Circuit addressed whether substantial evidence supported the BRB’s determination that Claimant’s AWW was $402.19, rather than the substantially higher figures Claimant asserted.
• The Court’s decision demonstrates that when a claimant’s employment history is inconsistent and the evidence does not reliably establish his average earnings, an ALJ may properly rely on Section 10(c) and consider earnings from multiple employers to determine an AWW that reasonably represents the claimant’s annual earning capacity.

Brady V. Director, OWCP – Background

Brady v. Director, Office of Workers’ Compensation Programs arose from a claim filed by Kevin Brady (“Claimant”) under the Longshore and Harbor Workers’ Compensation Act after he alleged that he sustained an injury while working for Texas Terminals, L.P. (“Texas Terminals” or “Employer”). Signal Mutual Indemnity Association, Ltd. (“Carrier”) was Employer’s workers’ compensation carrier. Following the alleged injury, Claimant pursued compensation for disability under the Longshore Act. The primary issue ultimately reaching the Fifth Circuit concerned the proper calculation of Claimant’s AWW and whether he had established a compensable loss of wage-earning capacity.

Claimant’s employment history presented difficulties in determining his actual earning capacity at the time of his injury. Claimant had worked for Texas Terminals for only a portion of the year preceding his injury and had experienced periods of unemployment and employment with multiple employers. The administrative record also contained conflicting and insufficient evidence concerning Claimant’s alleged earnings. Claimant ultimately argued that his AWW should be calculated using either $651, which he asserted was his earnings during the week immediately preceding his injury, or $1,000 per week, which he maintained represented his earnings before the injury.

The ALJ initially denied Claimant’s request for partial disability benefits. On appeal, however, the BRB determined that the ALJ had not adequately addressed Claimant’s pre-injury AWW or whether Claimant sustained a compensable loss of wage-earning capacity resulting from lost overtime wages. The BRB therefore remanded the matter to the ALJ for further consideration of those issues.

On remand, the ALJ determined that Claimant’s AWW should be calculated under Section 10(c), which applies when the methods set forth in Sections 10(a) and 10(b) cannot reasonably and fairly be applied. Rather than relying exclusively upon Claimant’s earnings from Texas Terminals, the ALJ considered Claimant’s earnings from multiple employers during the 52 weeks preceding his injury. The ALJ concluded that those combined earnings more reasonably represented Claimant’s annual earning capacity at the time of his injury. The BRB subsequently affirmed the ALJ’s determination, calculating Claimant’s AWW at $402.19.

Fifth Circuit’s Decision

On appeal, the Fifth Circuit affirmed the BRB’s decision and denied Claimant’s petition for review. The Court emphasized that its review of a BRB decision is limited to determining whether the Board committed an error of law and whether the ALJ’s factual findings are supported by substantial evidence and consistent with the law.

The Court first addressed Claimant’s challenge to the use of Section 10(c). Under Section 10, the Act provides different methods for calculating a claimant’s AWW depending upon the claimant’s employment history and the circumstances surrounding the employment. Sections 10(a) and 10(b) generally apply when a claimant’s employment and wages permit his average annual or daily earnings to be reasonably calculated. Section 10(c), however, applies when those methods “cannot reasonably and fairly be applied.”

The Fifth Circuit agreed that Section 10(c) was appropriate under the circumstances. The Court noted several difficulties with determining Claimant’s actual average wages, including his periods of unemployment, inconsistent employment history, the ALJ’s determination that Claimant was not credible, and the absence of sufficient evidence supporting Claimant’s assertion that he earned $1,000 per week. Because Claimant’s circumstances did not permit his earnings to be reliably generalized under Sections 10(a) or 10(b), the Court concluded that the ALJ properly relied upon Section 10(c).

The Court also rejected Claimant’s contention that his AWW should have been calculated using his earnings immediately preceding the injury. The Fifth Circuit found no evidence supporting Claimant’s asserted $1,000 weekly wage and concluded that the BRB reasonably accepted the ALJ’s use of “blended earnings” from several employers during the year preceding the injury. Those earnings provided substantial evidence for the determination that $402.19 reasonably represented Claimant’s annual earning capacity at the time of his injury.

Importantly, the Court also declined to revisit several issues that Claimant attempted to raise on appeal because those issues had been resolved by the BRB in its earlier 2022 decision. Claimant did not petition the Fifth Circuit for review of that earlier order, making the order final as to the issues it resolved. The BRB therefore properly treated those issues as barred under principles of law of the case and forfeiture.

Because the BRB’s determination that Claimant’s AWW was $402.19 was supported by substantial evidence, the Fifth Circuit denied Claimant’s petition for review.

Conclusion

The Fifth Circuit’s decision in Brady v. Director, OWCP provides useful guidance to Employers and Carriers when a claimant’s asserted wages are not supported by reliable evidence. The decision confirms that Section 10(c) provides an alternative method for calculating AWW when the more traditional methodologies under Sections 10(a) and 10(b) cannot reasonably and fairly be applied. An ALJ is not required to accept a claimant’s unsupported assertion regarding his pre-injury earnings when the broader employment record provides a more reliable measure of earning capacity.

For Employers and Carriers, Brady also demonstrates the importance of examining a claimant’s complete employment and wage history rather than relying solely upon the claimant’s characterization of his earnings. Where a claimant has periods of unemployment, an inconsistent employment history, multiple employers, or insufficient documentation of claimed wages, Section 10(c) may permit the ALJ to consider the claimant’s earnings from the preceding year as a whole. In addition, the decision reinforces the importance of preserving and enforcing final administrative decisions, as issues resolved in an earlier BRB order may become unavailable for later appellate review when a claimant fails to timely seek review.

Ultimately, Brady serves as a reminder that a claimant’s unsupported wage assertion does not control the calculation of AWW. Where the evidence does not reasonably support the claimant’s proposed wage, an ALJ may rely on the available employment and wage records to determine an AWW that more fairly represents the claimant’s actual earning capacity, thereby limiting compensation exposure where the claimant cannot establish a compensable loss of wage-earning capacity.