Claimant was hired as a chipper in 1983. He hurt each of his knees on separate dates in 1983 while working for Employer. In 1992, the Benefits Review Board affirmed an Administrative Law Judge’s award of permanent total disability benefits because Employer failed to establish suitable alternative employment. Employer sought modification of benefits in 1997. A hearing was scheduled; however, because Claimant became incarcerated, an ALJ judge issued a stay of compensation until Claimant’s 2004 release. A formal hearing on the reinstatement of benefits was held on October 14, 2009. At the hearing, Employer asserted that Claimant’s illegal activity prior to his incarceration, as well as maintenance work he performed while in prison and the singing he performed at funerals constituted suitable alternative employment. The ALJ judge rejected these positions as suitable alternative employment, but found that ten other jobs identified by Employer were sufficient. Therefore, the ALJ judge awarded the Claimant permanent total disability benefits from the date of the stay of compensation through July 1, 2007, the date when the suitable positions were identified. Further, the ALJ judge awarded benefits to be paid according to the schedule for the knee injuries.
At the same hearing, Employer also asserted that Claimant’s benefits should be suspended because of failure to report earnings under Section 8(j) of the Longshore and Harbor Workers’ Compensation Act. 33 U.S.C. §908(j). Under Section 8(j), an employer may require a claimant to report post-injury earnings semi-annually. If a claimant knowingly or willfully fails to report earnings within the 30 day period as required by the statute, then a claimant’s benefits are subject to forfeiture for the periods when pay went unreported. Forfeiture under this Section is deducted from prospective benefits, and thus really operates as a suspension of benefits. 33 U.S.C. §908(j)(3). In this case, Claimant had failed to report income that he earned from illegal activities prior to his incarceration. ALJ Judge Krantz held that any income from Claimant’s criminal activity was not included in the definition of “earnings” within the governing regulation, 20 C.F.R. §702.285(b), and therefore Claimant was not required to report those earnings.
On June 22, 2011, the Benefits Review Board found that the ALJ judge correctly relied on the holding in Licor v. Washington Metro. Area Transit Auth., 879 F.2d 901 (D.C. Cir. 1989) when he determined that Claimant’s illegally obtained income was not an appropriate basis for determining wage earning capacity. Further, the BRB held that the Employer did not sufficiently establish that the work Claimant performed in prison was available on the open market prior to July 7, 2007, or that Claimant’s singing jobs were sufficiently regular and continuous to establish wage earning capacity.
However, on the Section 8(j) issue, the Board held that Claimant was required to report earnings from illegal activities. The Board stated: “Although Section 8(j) does not define “earnings,” the implementing regulation does. Section 702.285(b) provides: ‘earnings’ is defined as all monies received from any employment and includes but is not limited to wages, salaries, tips, sales commissions, fees for services provided, piecework and all revenue received from self-employment . . . Thus, Section 8(j) contemplates a claimant’s reporting “all monies” from “any employment” and “all revenue” from “self-employment,” as well as “fees for services.” There is no exclusion for earnings from illegal activities. In addition, the regulation specifically states that the earnings are “not limited to” the list given.”
The BRB further held that the Licor decision was inapposite to the Section 8(j) issue, since that case applied to the use of illegally earned income in a loss of wage earning capacity calculation, and its holding could not be extended to define “earnings” under Section 8(j). The Board remanded the case for a determination of how much Claimant earned during the reporting periods, and for a determination on the suspension of benefits.
Note: Earnings are typically reported on a Form LS-200 Report of Earnings.
(Note: I originally published this post on Navigable Waters: A Maritime, Longshore and Defense Base Act Blog.)