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Wage-Loss Benefits

Below are Final Decisions of the Final Adjudication Branch of the Department of Labor Office of Workers Compensation Programs related to the category of “Wage Loss Benefits.”

A very large (1314 pages, 4.5 MB), searchable pdf file of all of the Final Decisions of the Final Adjudication Branch (FAB) for all categories can be downloaded here. (right-click and “Save Link As” to download to your computer).

We hope these decisions are helpful.  Please add your experiences in the comments section.

 

Wage-Loss Benefits

Calculation of average annual wage

EEOICPA Fin. Dec. No. 10057883-2008 (Dep’t of Labor, October 20, 2010)

NOTICE OF FINAL DECISION FOLLOWING A HEARING

This is the decision of the Final Adjudication Branch (FAB) concerning the above claim for compensation under the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  For the reasons stated below, the claim for wage-loss benefits is accepted under Part E for calendar years 2005, 2006, 2007 and 2008. 

STATEMENT OF THE CASE

On September 27, 2006, the employee filed a Form EE-1 claiming benefits under EEOICPA for non-Hodgkin’s lymphoma and skin cancer.  On April 25, 2008, FAB issued a final decision accepting the claim under Part E based on six primary skin cancers (squamous cell carcinoma or SCC) in situ of the right eyelid, basal cell carcinoma (BCC) of the shoulder, BCC of the chest, SCC of the right lower eyelid, and SCC of the cheek.  In that final decision, FAB determined that he was a covered Department of Energy (DOE) contractor employee at the Mound Plant, a DOE facility, from November 23, 1966 to September 1, 1967.

On July 9, 2008, the employee filed a claim for wage-loss benefits under Part E, stating that he began to lose wages as a result of his covered illness in the first quarter of 2005.  He also submitted medical reports from Dr. Nicholas T. Ilif dated August 18, 2008 and November 18, 2008, who stated that as a result of his cancers and consequential conditions, he began incurring wage-loss in February 2005 and took early retirement in November 2007. 

On November 7, 2008, the employee filed another claim and identified additional skin cancers.  On April 16, 2009, FAB issued a final decision accepting his claim under Part E based on these additional skin cancers (SCC of the left lower eyelid, SCC of the tip of the nose, SCC of the right preauricular).  On July 30, 2009, the district office accepted that the employee had consequential conditions of blindness of the right eye, photophobia and right eye pain. 

On August 7, 2009, the district office issued a recommended decision to deny the claim under Part B for multiple skin cancers and large B-cell lymphoma, and under Part E for lymphoma.  The district office further recommended that the claim for impairment benefits based on the employee’s skin cancers be approved under Part E, based on a whole-person impairment rating of 24%.  

With respect to the employee’s wage-loss claim, the district office recommended that it be accepted for the period 2005 through 2008.  The district office determined that he had an average annual wage (AAW) of $66,801.21 in the 36 months prior to February 2005.  This figure was based on his earnings as reported in annual tax returns.  Specifically, the district office combined the employee’s total “dividend” income reported annually on Line 1 of IRS Schedule K-1 (Shareholder’s Share of Income, Credits, Deductions, etc.), which lists “Ordinary income from trade or business activities” as 100% Shareholder of [Employee’s company], with the amount listed in Box 1 (wages, tips, other compensation) of Form W-2 (Wage and Tax Statement), which is the salary he paid himself as an employee of [Employee’s company].  The district office included his dividend income because he explained that these were “pass through” earnings he paid to himself as the owner of 100% of the shares of [Employee’s company], which is classified as a “subchapter S” corporation for purposes of the Internal Revenue Code.  The district office’s AAW calculation made no deduction for the health insurance premiums the employee paid out of his S corporation dividend income.  Using this method, the district office determined that his inflation-adjusted earnings for the period 2005 through 2008 were as follows:  for 2005, $37,989.00 (57% of his AAW); for 2006, $21,124.33 (32%); for 2007, $17,249.19 (26%); and for 2008, $0 (0%).  Based on these figures, the district office recommended that the employee receive $10,000.00 in wage-loss benefits for calendar year 2005, and $15,000.00 for calendar years 2006, 2007 and 2008.  The total compensation recommended was $55,000.00.

On November 16, 2009, FAB issued a final decision denying the claim for multiple skin cancers and lymphoma under Part B, and for lymphoma under Part E.  The final decision accepted the claim for impairment benefits based on a 24% impairment rating, and awarded the employee compensation of $60,000.00.  With respect to his wage-loss claim, FAB determined that the district office’s calculation of his entitlement to wage-loss benefits was incorrect.  Specifically, FAB determined that the district office should not have included dividend income in the employee’s AAW for the 36 months prior to February of 2005, or in his earnings during and after calendar year 2005.  The case was therefore remanded to the district office for recalculation of the employee’s entitlement to wage-loss benefits for the period 2005-2008. 

On January 29, 2010, the district office issued a recommended decision in which it determined that the employee’s AAW for the 36 months prior to February 2005 was $25,714.21.  This was based solely on his wages as reported in Box 1 of his Form W-2 for the years 2002, 2003 and 2004.  Using the information reported in Box 1 of his W-2s for 2005 through 2008, the district office determined that the employee’s inflation-adjusted earnings were as follows:  $15,780.00 in 2005 (61% of his AAW); $20,376.00 in 2006 (77%); $9,744.00 in 2007 (38%); and $0 in 2008 (0% of AAW).  The district office further concluded that the employee’s health insurance costs should not be considered in determining his AAW or calculating his calendar years of qualifying wage-loss during and after 2005.

On March 16, 2010, the employee filed objections to the recommended decision and requested a hearing.  However, the objections were not addressed and no hearing was scheduled.  On April 13, 2010, FAB issued a final decision accepting the claim for wage-loss benefits for the calendar years 2005 through 2008, concluding that the employee’s AAW for the 36 months prior to February 2005 was $25,714.21.  FAB further concluded that his inflation-adjusted earnings were $15,780.00 in 2005 (61% of AAW); $20,376.00 in 2006 (77%); $9,744.00 in 2007 (38%); and $0 in 2008 (0%).  Accordingly, FAB concluded that the employee was entitled to wage-loss benefits of $10,000.00 for 2005, $15,000.00 for 2007 and $15,000.00 for 2008.  FAB further concluded that the employee had no entitlement to wage-loss benefits for 2006, since his inflation-adjusted wages during that year were greater than 75% of his AAW. 

On June 4, 2010, FAB issued an order granting reconsideration of the employee’s wage-loss claim, because the April 13, 2010 final decision did not address his objections.  The case was subsequently referred for a hearing. 

OBJECTIONS

In his written objections and at a hearing held on August 5, 2010, the employee raised two arguments against the wage-loss calculation in the January 29, 2010 recommended decision.  These are summarized below:

1.  He argued that all of his income from [Employee’s company] constituted payments received from employment or services.  He reiterated that he was the sole proprietor of [Employee’s company], explaining that this was a small company that distributed packaged food products to convenience stores.  For tax purposes, he organized the business as a subchapter S corporation, which allowed the company’s earnings to be passed through to him, the owner, as ordinary income.  He stated that each year he paid himself a small salary (known as a “draw”).  Any profits over and above that salary were reported to the IRS as dividends. 

Therefore, the employee argued that such income met the definition of “wages” under the EEOICPA regulations, and should be included in both the AAW calculation and in determining his inflation-adjusted earnings for subsequent years.  He also submitted copies of his Form 1040 Schedule E for the years in question, which lists his S corporation income from [Employee’s company] for the years 2002 to 2007.   For purposes of his tax returns, his S Corporation income is listed under “nonpassive” income according to Schedule K-1. 

2.  The employee further argued that his health insurance premiums should be deducted from his income for purposes of calculating his AAW and his inflation-adjusted earnings in subsequent years.  He stated that such premiums should be excluded from the wage-loss calculation, since they are tax-deductable. 

After reviewing the evidence in the case file, and considering the objections and the testimony at the oral hearing, FAB hereby makes the following:

FINDINGS OF FACT

1.      By final decisions dated April 25, 2008 and April 16, 2009, FAB determined that the employee is a covered DOE contractor employee who contracted the covered illness of multiple skin cancers through exposure to a toxic substance at a DOE facility.  

2.      On July 30, 2009, the district office determined that he sustained the consequential conditions of blindness of the right eye, photophobia and right eye pain.

3.      The employee filed a claim for wage-loss benefits for the period beginning February 2005.  His date of birth is September 24, 1944, and he will reach normal retirement age for unreduced Social Security retirement benefits at age 66 on September 29, 2010. 

4.      His AAW for the 36-month period prior to February 2005 is $66,801.21.  His adjusted earnings in 2005 were $37,989.00 (57% of his AAW); for 2006, $21,124.33 (32% of AAW); for 2007, $17,249.19 (26% of AAW); and for 2008, $0 (0% of AAW).    

Based on the above findings of fact, FAB hereby also makes the following:

CONCLUSIONS OF LAW

Part E provides for payment of compensation to covered DOE contractor employees who experience wage-loss as a result of a covered illness, and defines wage-loss as any year in which the employee’s wages did not exceed 75% of his average annual wage in the 36-month period prior to the month compensable wage-loss began.  Compensable wage-loss may include any year occurring up to and including the calendar year that a covered Part E employee reaches normal retirement age under the Social Security Act.  To establish eligibility for wage-loss benefits, the evidence must show that the period of wage-loss at issue is causally related to the employee’s covered illness.  42 U.S.C. § 7385s-2(a)(2). 

The implementing regulations provide that in determining an employee’s AAW and any subsequent adjusted earnings, DEEOIC “will consider all monetary payments that the covered Part E employee received in a quarter from employment or services, except for monetary payments that were not taxable as income during that quarter under the Internal Revenue Code, to be ‘wages.’”  20 C.F.R. § 30.805(a) (2009).  Under EEOICPA procedures, wages are defined to include salaries, overtime compensation, sick leave, vacation leave, tips and bonuses received for employment services.  Income specifically excluded from the definition of wages includes capital gains, IRA distributions, pensions, annuities, unemployment compensation, state workers’ compensation benefits, medical retirement benefits and Social Security benefits.  Federal (EEOICPA) Procedure Manual, Chapter 2-1400.8 (2009).  The regulations and the procedures do not specifically exclude dividends from the definition of “wages.” 

In this case, the recommended decision issued on January 19, 2010 is based on a calculation of AAW that excludes the employee’s dividend earnings as the 100% shareholder of [Employee’s company].  He has objected to this calculation, arguing that his dividend earnings qualify as wages under the definition cited above.  The issue, therefore, is whether those dividends are “monetary payments. . .from employment or services” under § 30.805 of the regulations, and if so, whether they are taxable as income under the Internal Revenue Code.  

The employee’s tax records show that his income from [Employee’s company] is classified as “non-passive” income according to Schedule K-1.  Under IRS rules, passive income is defined as earnings derived from a business in which a person “does not materially participate.”[1]  Since the employee’s hearing testimony and tax records make clear that he materially participated in the operation of [Employee’s company] as the sole proprietor and 100% shareholder, I conclude that these earnings constitute monetary payments from employment or services.  His tax records further show that these earnings were taxable as income under the Internal Revenue Code.  Accordingly, I conclude that the employee’s dividend income as 100% shareholder of [Employee’s company], a subchapter S corporation, are “wages.”

In response to the second objection, I have reviewed the tax records submitted in support of the employee’s claim, which includes Form 1040 Schedule E, Schedule K-1 and his W-2 statements covering the period 2001 through 2008.   I have also reviewed IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits (2010), which is part of the record and was cited by the district office in its recommended decision, as well as other IRS guidance concerning subchapter S corporations.

IRS Publication 15-B states that although the value of S corporation employees’ health benefits are generally excluded from the employees’ wages, this exclusion does not apply to shareholders owning 2% or more of the corporation (“2% shareholders”).  According to the IRS, for 2% shareholders who are also employees, the value of the health benefits premiums must be included in the employee’s wages subject to federal income tax withholding.  IRS Publication 15-B, p. 6 (2010).  A review of the employee’s Form 1040 shows that the value of his health benefits is included in his S corporation earnings (line 17), and is therefore an element of his total income (line 22).  If he were an employee and less than a 2% shareholder, the value of his health benefits would be excluded entirely from his taxable wages.  As a 2% shareholder, he qualifies for a self-employed health benefits insurance deduction (line 29), which is deducted from his total income to derive his adjusted gross income.  In other words, the value of the employee’s health benefits is included in calculating his taxable income, but is not included in his adjusted gross income.  The health benefits deduction is therefore no different than the other deductions available to taxpayers listed on Form 1040, such as student loan interest expenses, educator expenses, or IRA contributions, which are not taken into account when calculating an employee’s AAW.

Accordingly, the evidence establishes that the employee experienced wage-loss as a result of his covered illness during calendar years 2005 through 2008.  I further conclude that his AAW for the 36 months prior to February 2005 is $66,801.21; that his adjusted earnings for calendar year 2005 were between 50 and 75% of his AAW; and that his adjusted earnings for calendar years 2006, 2007 and 2008 were less than 50% of his AAW.  Therefore, in accordance with 42 U.S.C. § 7385s-2(a)(2), the employee is entitled to wage-loss benefits of $10,000.00 for 2005, and $15,000.00 per year for 2006 through 2008, totaling $55,000.00.

Cleveland, OH

Greg Knapp

Hearing Representative

Final Adjudication Branch

[1] See http://www.irs.gov/businesses/small/article/0,,id=146833,00.html (retrieved October 18, 2010).

Causation not proven

EEOICPA Fin. Dec. No. 10002977-2006 (Dep’t of Labor, February 12, 2009)

NOTICE OF FINAL DECISION FOLLOWING A HEARING

This is the decision of the Final Adjudication Branch (FAB) on the employee’s claim for benefits under Part E of the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  For the reasons set forth below, the employee’s claim for wage-loss benefits based on his covered illness of chronic obstructive pulmonary disease (COPD) is denied.

STATEMENT OF THE CASE

On December 8, 2004, the employee filed a claim under Part E of EEOICPA in which he alleged that he had contracted “COPD-Bronchitis, Hearing Loss, Hemorrhoids, Back Disorder, Bursitis, Hernia Multiple, Shoulder Disease, Rotator Cuff, Joint Disease, Knee, Tremors, Essential” due to his work-related exposure to toxic substances at the K-25 and Y-12 Plants in Oak Ridge, Tennessee.[1]  Later on August 28, 2006, the employee submitted a written request for both impairment benefits and wage-loss benefits and alleged he had experienced wage-loss from January 1997 through the date of his request. 

In support of his claim, the employee filed a work history listing his employment by the Department of Energy (DOE) contractors Union Carbide at the K-25 Plant from 1975 to 1981, and by Lockheed Martin Energy Systems and other DOE contractors at the Y-12 Plant from 1981 to 1997.  The Oak Ridge Institute for Science and Education verified that the employee worked for DOE contractors as a Component Assembler, Inspector and Senior Inspector at the K-25 Plant from March 10, 1975 to February 15, 1981, and as a Machinist, Engineering Assistant and Technical Associate at the Y-12 Plant from February 16, 1981 to January 31, 1997. 

In support of his claim, the employee submitted an October 24, 2001 report of a medical screening examination in which Dr. Steven Markowitz noted that while the employee’s chest x-ray “showed no evidence of lung disease,” his ten-year history of symptoms was “consistent with chronic bronchitis.”  The employee also submitted an August 28, 2002 report in which Dr. R. Hal Hughes related “approximately a ten year history of chronic bronchitis symptoms on average of two to three episodes a year.”  The file also contains several medical reports from Dr. Gregory P. LeMense, the employee’s treating physician.  The earliest of those reports note a chest CT scan and a medical examination performed by Dr. LeMense in late February 2004.  In a February 26, 2004 medical report, Dr. LeMense stated “it is my impression that [Employee] has mild obstructive lung disease due to chronic obstructive bronchitis.”

On October 6, 2006, FAB issued a final decision in which it found that the evidence was sufficient to establish a diagnosis of COPD and a causal link between the COPD and the employee’s work-related exposure to toxic substances at the K-25 and Y-12 Plants.  Based on those findings, FAB accepted the employee’s Part E claim for the “covered illness” of COPD and awarded him medical benefits for that particular illness[2]; in that same decision, FAB explicitly deferred a decision on the employee’s August 28, 2006 request for both impairment and wage-loss benefits “since Jan. 1997.”[3]

By letter dated November 29, 2006, the Jacksonville district office asked the employee to submit evidence in support of his allegation that he had experienced wage-loss as a result of his COPD.  The district office specifically asked for earnings information to support his claimed period of wage-loss and medical evidence to support the causal link of that wage-loss to his covered illness of COPD.  In his December 11, 2006 response to the district office’s request, he stated:

I first experience[d] wage loss in Jan. 1, 1997 due [to] my COPD because I was laid off at that time with no pay and 21 years company service.  I feel I was laid off because of this problem.  I did not know I had COPD until Jan. 1, 2002.  

On December 13, 2006, the district office received a wage report from the Social Security Administration in response to its request for the employee’s reported wages for the years 1993 through 2005.  It showed that the employee earned $28,225.80 in 1993, $28,437.56 in 1994, $28,819.96 in 1995, $29,853.88 in 1996, and $19,133.59 in 1997, and stated that “There are no other earnings recorded under this Social Security Number for the period(s) requested.”  On April 3, 2007, the district office sent the employee another letter asking for evidence of his alleged wage-loss, and stated the following:

Our records indicate [you] were diagnosed with COPD on February 20, 2004.  Please state what illness you are claiming that caused your wage loss beginning in 1997 through present.

This letter reminded the employee that he had the burden of providing medical evidence establishing a causal relationship between his accepted covered illness (COPD) and his alleged wage-loss.  In his response to this second letter, the employee submitted a copy of a November 22, 1996 termination notice that Lockheed Martin Energy Systems had given him.  The notice stated the following, in pertinent part:

Subject:            Reduction-In-Force Notification

I regret to inform you that the number of employees at Lockheed Martin Energy Systems, Inc., P.O. Box 2009, Oak Ridge, Tennessee 37831, will be reduced as a result of declining Department of Energy budgets and changing program emphasis for FY 1997.  The layoff, which is expected to be permanent, will commence January 31, 1997.

Your position as Technical Associate II will be terminated on January 31, 1997.

*  *  *

I acknowledge receipt of the Reduction-In-Force Notification.

[Employee] /s/                                                  11/22/96                     

Signature                                                          Date

On August 11, 2007, the district office referred the employee’s case file to a District Medical Consultant (DMC) and requested an opinion on whether, for any of the years between 1997 and 2007, “there is sufficient rationalized medical evidence that the employee was unable to work due to the covered illness of chronic obstructive pulmonary disease.”  In her September 11, 2007 report, Dr. Jeanne M. McGregor, the DMC that the district office selected to provide the opinion, reviewed the medical evidence in the case file and noted that it showed that the employee had “good control of his moderate chronic obstructive lung disease with current medications” and that “[h]is only medication for his lungs is Advair 500/50.”  She also noted that there was nothing in the file to support the employee’s allegation that he was laid off due to his COPD, and concluded as follows:

Unfortunately, the evidence in [Employee]‘s file does not support that he was unable to work due to his COPD in any of the years 1997 to present.  It appears that the only reason that [Employee] stopped working in 1997 was because he was laid off in November of 1996.

*  *  *

Upon consideration of all the above, it is my medical opinion within a reasonable degree of medical certainty that there is not sufficient rationalized medical evidence in the file to establish that [Employee] was unable to work due to his covered illness of COPD for any of the years from 1997 to present.

On October 23, 2007, the Jacksonville district office issued a recommended decision to deny the employee’s request for wage-loss benefits because “the medical evidence is insufficient to support a causal relationship between the employee’s accepted condition of COPD and wage-loss during the claimed period from 1997 to present.”  On November 5, 2007, the employee’s representative filed a timely written objection to the recommended decision and requested a hearing, which was held on April 30, 2008 in Oak Ridge, Tennessee.[4]

OBJECTION

In his November 5, 2007 objection letter, the employee’s representative did not disagree with any specific factual finding included in the district office’s recommended decision; rather, he expressed the employee’s disagreement with the recommended conclusion that there was no causal relationship between his COPD and any wage-loss during the claimed period of January 1997 to August 2006.  The letter was not accompanied by any evidence in support of the disagreement expressed therein.  At the April 30, 2008 oral hearing, the representative raised no additional objections; instead, he submitted a written report from Dr. Marty G. Wallace, together with copies of previously submitted documents, and argued that the medical evidence of causation in the case file was sufficient to award the wage-loss benefits at issue.

After reviewing the evidence in the case file and the employee’s objection, FAB hereby makes the following:

FINDINGS OF FACT

  1. The employee filed a claim for benefits under Part E of EEOICPA, including wage-loss benefits for the period from January 1997 to August 2006 due to his covered illness of COPD.
  1. The employee was a DOE contractor employee who worked at the K-25 Plant from March 10, 1975 to February 15, 1981, and at the Y-12 Plant from February 16, 1981 to January 31, 1997.
  1. Effective January 31, 1997, Lockheed Martin Energy Systems terminated the employee’s position at the Y-12 Plant as part of a Reduction-In-Force.
  1. Prior to the termination of his position, the employee earned wages of $28,225.80 in 1993, $28,437.56 in 1994, $28,819.96 in 1995, $29,853.88 in 1996 and $19,133.59 in 1997.  Following the termination of his position, he was not employed for the balance of 1997, nor was he employed during the years 1998 through the date of his April 30, 2008 hearing.
  1. The employee was first diagnosed with COPD by Dr. LeMense in a February 26, 2004 report.
  1. In a September 11, 2007 report requested by the district office, Dr. McGregor concluded that “it is my medical opinion within a reasonable degree of medical certainty that there is not sufficient rationalized medical evidence in the file to establish that [Employee] was unable to work due to his covered illness of COPD for any of the years from 1997 to present.”

Based on the above findings of fact, FAB hereby also makes the following:   

CONCLUSIONS OF LAW

Part E of EEOICPA provides several different types of benefits to eligible DOE contractor employees or their survivors.  Among those benefits are compensation for permanent impairment, compensation for qualifying calendar years of wage-loss, a lump-sum survivor benefit, and medical benefits.  See 42 U.S.C. §§ 7385s-2(a)(1), 7385s-2(a)(2), 7385s-3, 7385s-8.  In order to prove eligibility for any of these benefits, the evidence must establish that the employee forming the basis for the Part E claim is/was a “covered DOE contractor employee” and that he/she contracted a “covered illness” through exposure to a toxic substance at a DOE facility.  In this particular Part E claim, FAB has already determined that the employee is a “covered DOE contractor employee,” as that term is defined in 42 U.S.C. § 7385s(1), and that his COPD is a “covered illness” pursuant to § 7385s(2).

In addition to satisfying the general eligibility requirements applicable to all Part E claims, an employee seeking benefits for calendar years of qualifying wage-loss must also satisfy the specific requirements of 42 U.S.C. § 7385s-2(a)(2).  Thus, the evidence must establish:  (1) that the employee held a job at which he/she was earning wages; (2) that the employee experienced a loss in those wages in a particular month; (3) that the wage-loss in that one month was caused by the employee’s covered illness, i.e., that he/she would have continued to earn wages in that month from that job but for the covered illness (this month is known as the “trigger month”); (4) his/her “average annual wage” (AAW) over the 36 months that immediately preceded the trigger month; (5) his/her normal retirement age and the calendar year (known as the “retirement year”) in which he/she would reach that age; (6) beginning with the calendar year of the trigger month, the percentage of the AAW that was earned in each calendar year up to and including the retirement year; (7) the number of those calendar years in which the covered illness caused the employee to earn 50% or less of his/her AAW; and (8) the number of those calendar years in which the covered illness caused him/her to earn more than 50% but not more than 75% of his/her AAW.  See 20 C.F.R. § 30.800 (2008).  Rationalized medical evidence is needed to establish the third of these elements, as well as the causation aspects of the seventh and eighth elements.  See 20 C.F.R. § 30.805(b).   

The employee alleges that he first experienced wage-loss in January 1997, and that this wage-loss has continued at least through the date of his April 30, 2008 oral hearing in his EEOICPA claim.  The factual evidence establishes that the employee held a job at the Y-12 Plant at which he was earning wages, and that he began to lose wages when his job was terminated as part of a Reduction-In-Force, effective January 31, 1997.  The evidence also establishes that the employee has not worked since this job was terminated.  Therefore, FAB concludes that the employee has proven the first two elements of his wage-loss claim:  (1) that he held a job at which he was earning wages; and (2) that he experienced a loss in those wages in a particular month–January 1997.

However, FAB also concludes that the employee has failed to prove that his wage-loss in January 1997 was caused by his covered illness, i.e. that he would have continued to earn wages in January 1997 from his job at the Y-12 Plant had he not contracted COPD in January 1997.  It is axiomatic that an employee cannot lose wages in a particular month because of a covered illness if he/she has not yet contracted that illness.  Although the employee here has submitted medical evidence from Dr. Wallace in support of his argument that he should have been restricted from working at the Y-12 Plant when his job was terminated as part of a Reduction-In-Force in January 1997, the Reduction-In-Force Notification he submitted clearly indicates that the layoff was caused by “declining Department of Energy budgets and changing program emphasis for FY 1997” rather than by any medical condition of the employee.  A review of the medical evidence of record reveals that there is no mention of a diagnosis of COPD prior to treating physician, Dr. LeMense’s February 26, 2004 report.[5]  None of the physicians who have submitted medical reports in this matter have even suggested that the employee had COPD before that date, and COPD is the only covered illness that has been accepted as compensable in this claim.  Thus, the employee has not offered any evidence to establish a diagnosis of COPD in 1997 or at any time prior to February 2004 that could have lead to any wage-loss.

Furthermore, even if the employee had shown that his diagnosed covered illness arose in January 1997 at the time of his wage-loss, the employee’s argument concerning Dr. Wallace’s report ignores the fact that the after-the-fact suggestion of restrictions that might have resulted in wage-loss if put in effect simply have no relevance to why the employee ceased earning wages seven years prior to when his illness was first diagnosed.  EEOICPA does not provide wage-loss benefits for employees who should have been placed under restrictions and might have lost wages had those restrictions been in place, even if those restrictions were caused by a covered illness.  Rather, it only provides wage-loss benefits for employees who, consistent with the terms of 42 U.S.C. § 7385s-2(a)(2)(A)(i), experience wage-loss caused by a covered illness.[6]

Unfortunately, the employee’s February 26, 2004 diagnosis is insufficient to establish his entitlement to wage-loss benefits commencing in 2004 because there is no factual evidence in the case file that the employee experienced a loss of wages in that month (or in any month thereafter).  It is also axiomatic that an employee cannot experience a loss of wages during a particular month if he/she is not earning any wages in that month.  Therefore, even if the employee’s covered illness of COPD made it impossible for him to work from February 2004 forward, it would still be insufficient to establish any compensable wage-loss because the employee had no job and no wages at that time.

The regulations provide that the claimant bears the burden of providing all documentation necessary to establish eligibility for benefits and of proving “by a preponderance of the evidence the existence of each and every criterion” required for eligibility; “[p]roof by a preponderance of the evidence means it is more likely than not that a given proposition is true.”  See 20 C.F.R. § 30.111(a).  Thus, FAB concludes that the evidence in the case file is insufficient to establish, by a preponderance of the evidence, that the employee experienced any compensable calendar years of qualifying wage-loss as the result of his COPD, and hereby denies the employee’s wage-loss claim. 

Washington, DC

Amanda M. Fallon

Hearing Representative

Final Adjudication Branch

[1]  On the same date, the employee also filed a claim under Part B of EEOICPA in which he alleged that he had contracted “COPD-bronchitis” as a result of working at the K-25 and Y-12 Plants.  

[2]  In that decision, FAB denied the employee’s Part B claim because his alleged condition was not an “occupational illness” compensable under that Part.  FAB also denied his Part E claim for hearing loss, a back disorder, hemorrhoids, bursitis, joint disease, multiple hernias, knee tremors, and rotator cuff disease because the evidence was insufficient to establish that those illnesses were contracted through exposure to a toxic substance at a DOE facility.

[3]  On May 7, 2007, FAB issued another final decision awarding the employee $115,000.00 for impairment due to his covered illness of COPD, based on the February 24, 2007 impairment evaluation of Dr. Harvey Popovich.

[4]  Following that hearing, FAB issued a July 14, 2008 final decision denying the employee’s claim for wage-loss benefits.  However, the Director of the Division of Energy Employees Occupational Illness Compensation thereafter issued a September 18, 2008 order vacating FAB’s July 14, 2008 decision because it did not “properly determine whether the employee’s exposure at K-25 and Y-12 resulted in any compensable loss of wages,” and referring the case back to FAB “for issuance of a new final decision that gives appropriate consideration to the evidence in the case file that is relevant to the employee’s Part E claim.” 

[5]  FAB notes that, notwithstanding the employee’s reported history of breathing difficulties, even as of October 24, 2001, the report of Dr. Steven Markowitz’ medical screening examination noted that the employee’s chest x-ray “showed no evidence of lung disease.”

[6]  Alternatively, the employee’s entitlement to wage-loss benefits is also foreclosed because he was unemployed for the 36-month period prior to his initial 2004 diagnosis.  His average annual earnings (AAW) for that 36-month period would therefore be zero.  Under the wage-loss formula in the statute, a benefit payment for a particular calendar year is predicated on a finding that the employee has earned at least 25 percent less than his AAW during that calendar year.  42 U.S.C. § 7385s-2(a)(2).  Since the employee earned no wages in the three years prior to his initial diagnosis, he cannot demonstrate the requisite 25 percentage loss of earnings for any calendar year after his initial diagnosis of a covered medical condition.          

Elements to be proven

EEOICPA Fin. Dec. No. 10002977-2006 (Dep’t of Labor, February 12, 2009)

[ same as one up]

EEOICPA Fin. Dec. No. 10057883-2008 (Dep’t of Labor, October 20, 2010)

NOTICE OF FINAL DECISION FOLLOWING A HEARING

This is the decision of the Final Adjudication Branch (FAB) concerning the above claim for compensation under the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  For the reasons stated below, the claim for wage-loss benefits is accepted under Part E for calendar years 2005, 2006, 2007 and 2008. 

STATEMENT OF THE CASE

On September 27, 2006, the employee filed a Form EE-1 claiming benefits under EEOICPA for non-Hodgkin’s lymphoma and skin cancer.  On April 25, 2008, FAB issued a final decision accepting the claim under Part E based on six primary skin cancers (squamous cell carcinoma or SCC) in situ of the right eyelid, basal cell carcinoma (BCC) of the shoulder, BCC of the chest, SCC of the right lower eyelid, and SCC of the cheek.  In that final decision, FAB determined that he was a covered Department of Energy (DOE) contractor employee at the Mound Plant, a DOE facility, from November 23, 1966 to September 1, 1967.

On July 9, 2008, the employee filed a claim for wage-loss benefits under Part E, stating that he began to lose wages as a result of his covered illness in the first quarter of 2005.  He also submitted medical reports from Dr. Nicholas T. Ilif dated August 18, 2008 and November 18, 2008, who stated that as a result of his cancers and consequential conditions, he began incurring wage-loss in February 2005 and took early retirement in November 2007. 

On November 7, 2008, the employee filed another claim and identified additional skin cancers.  On April 16, 2009, FAB issued a final decision accepting his claim under Part E based on these additional skin cancers (SCC of the left lower eyelid, SCC of the tip of the nose, SCC of the right preauricular).  On July 30, 2009, the district office accepted that the employee had consequential conditions of blindness of the right eye, photophobia and right eye pain. 

On August 7, 2009, the district office issued a recommended decision to deny the claim under Part B for multiple skin cancers and large B-cell lymphoma, and under Part E for lymphoma.  The district office further recommended that the claim for impairment benefits based on the employee’s skin cancers be approved under Part E, based on a whole-person impairment rating of 24%.  

With respect to the employee’s wage-loss claim, the district office recommended that it be accepted for the period 2005 through 2008.  The district office determined that he had an average annual wage (AAW) of $66,801.21 in the 36 months prior to February 2005.  This figure was based on his earnings as reported in annual tax returns.  Specifically, the district office combined the employee’s total “dividend” income reported annually on Line 1 of IRS Schedule K-1 (Shareholder’s Share of Income, Credits, Deductions, etc.), which lists “Ordinary income from trade or business activities” as 100% Shareholder of [Employee’s company], with the amount listed in Box 1 (wages, tips, other compensation) of Form W-2 (Wage and Tax Statement), which is the salary he paid himself as an employee of [Employee’s company].  The district office included his dividend income because he explained that these were “pass through” earnings he paid to himself as the owner of 100% of the shares of [Employee’s company], which is classified as a “subchapter S” corporation for purposes of the Internal Revenue Code.  The district office’s AAW calculation made no deduction for the health insurance premiums the employee paid out of his S corporation dividend income.  Using this method, the district office determined that his inflation-adjusted earnings for the period 2005 through 2008 were as follows:  for 2005, $37,989.00 (57% of his AAW); for 2006, $21,124.33 (32%); for 2007, $17,249.19 (26%); and for 2008, $0 (0%).  Based on these figures, the district office recommended that the employee receive $10,000.00 in wage-loss benefits for calendar year 2005, and $15,000.00 for calendar years 2006, 2007 and 2008.  The total compensation recommended was $55,000.00.

On November 16, 2009, FAB issued a final decision denying the claim for multiple skin cancers and lymphoma under Part B, and for lymphoma under Part E.  The final decision accepted the claim for impairment benefits based on a 24% impairment rating, and awarded the employee compensation of $60,000.00.  With respect to his wage-loss claim, FAB determined that the district office’s calculation of his entitlement to wage-loss benefits was incorrect.  Specifically, FAB determined that the district office should not have included dividend income in the employee’s AAW for the 36 months prior to February of 2005, or in his earnings during and after calendar year 2005.  The case was therefore remanded to the district office for recalculation of the employee’s entitlement to wage-loss benefits for the period 2005-2008. 

On January 29, 2010, the district office issued a recommended decision in which it determined that the employee’s AAW for the 36 months prior to February 2005 was $25,714.21.  This was based solely on his wages as reported in Box 1 of his Form W-2 for the years 2002, 2003 and 2004.  Using the information reported in Box 1 of his W-2s for 2005 through 2008, the district office determined that the employee’s inflation-adjusted earnings were as follows:  $15,780.00 in 2005 (61% of his AAW); $20,376.00 in 2006 (77%); $9,744.00 in 2007 (38%); and $0 in 2008 (0% of AAW).  The district office further concluded that the employee’s health insurance costs should not be considered in determining his AAW or calculating his calendar years of qualifying wage-loss during and after 2005.

On March 16, 2010, the employee filed objections to the recommended decision and requested a hearing.  However, the objections were not addressed and no hearing was scheduled.  On April 13, 2010, FAB issued a final decision accepting the claim for wage-loss benefits for the calendar years 2005 through 2008, concluding that the employee’s AAW for the 36 months prior to February 2005 was $25,714.21.  FAB further concluded that his inflation-adjusted earnings were $15,780.00 in 2005 (61% of AAW); $20,376.00 in 2006 (77%); $9,744.00 in 2007 (38%); and $0 in 2008 (0%).  Accordingly, FAB concluded that the employee was entitled to wage-loss benefits of $10,000.00 for 2005, $15,000.00 for 2007 and $15,000.00 for 2008.  FAB further concluded that the employee had no entitlement to wage-loss benefits for 2006, since his inflation-adjusted wages during that year were greater than 75% of his AAW. 

On June 4, 2010, FAB issued an order granting reconsideration of the employee’s wage-loss claim, because the April 13, 2010 final decision did not address his objections.  The case was subsequently referred for a hearing. 

OBJECTIONS

In his written objections and at a hearing held on August 5, 2010, the employee raised two arguments against the wage-loss calculation in the January 29, 2010 recommended decision.  These are summarized below:

1.  He argued that all of his income from [Employee’s company] constituted payments received from employment or services.  He reiterated that he was the sole proprietor of [Employee’s company], explaining that this was a small company that distributed packaged food products to convenience stores.  For tax purposes, he organized the business as a subchapter S corporation, which allowed the company’s earnings to be passed through to him, the owner, as ordinary income.  He stated that each year he paid himself a small salary (known as a “draw”).  Any profits over and above that salary were reported to the IRS as dividends. 

Therefore, the employee argued that such income met the definition of “wages” under the EEOICPA regulations, and should be included in both the AAW calculation and in determining his inflation-adjusted earnings for subsequent years.  He also submitted copies of his Form 1040 Schedule E for the years in question, which lists his S corporation income from [Employee’s company] for the years 2002 to 2007.   For purposes of his tax returns, his S Corporation income is listed under “nonpassive” income according to Schedule K-1. 

2.  The employee further argued that his health insurance premiums should be deducted from his income for purposes of calculating his AAW and his inflation-adjusted earnings in subsequent years.  He stated that such premiums should be excluded from the wage-loss calculation, since they are tax-deductable. 

After reviewing the evidence in the case file, and considering the objections and the testimony at the oral hearing, FAB hereby makes the following:

FINDINGS OF FACT

1.By final decisions dated April 25, 2008 and April 16, 2009, FAB determined that the employee is a covered DOE contractor employee who contracted the covered illness of multiple skin cancers through exposure to a toxic substance at a DOE facility.  

2.On July 30, 2009, the district office determined that he sustained the consequential conditions of blindness of the right eye, photophobia and right eye pain.

3.The employee filed a claim for wage-loss benefits for the period beginning February 2005.  His date of birth is September 24, 1944, and he will reach normal retirement age for unreduced Social Security retirement benefits at age 66 on September 29, 2010. 

4.His AAW for the 36-month period prior to February 2005 is $66,801.21.  His adjusted earnings in 2005 were $37,989.00 (57% of his AAW); for 2006, $21,124.33 (32% of AAW); for 2007, $17,249.19 (26% of AAW); and for 2008, $0 (0% of AAW).    

Based on the above findings of fact, FAB hereby also makes the following:

CONCLUSIONS OF LAW

Part E provides for payment of compensation to covered DOE contractor employees who experience wage-loss as a result of a covered illness, and defines wage-loss as any year in which the employee’s wages did not exceed 75% of his average annual wage in the 36-month period prior to the month compensable wage-loss began.  Compensable wage-loss may include any year occurring up to and including the calendar year that a covered Part E employee reaches normal retirement age under the Social Security Act.  To establish eligibility for wage-loss benefits, the evidence must show that the period of wage-loss at issue is causally related to the employee’s covered illness.  42 U.S.C. § 7385s-2(a)(2). 

The implementing regulations provide that in determining an employee’s AAW and any subsequent adjusted earnings, DEEOIC “will consider all monetary payments that the covered Part E employee received in a quarter from employment or services, except for monetary payments that were not taxable as income during that quarter under the Internal Revenue Code, to be ‘wages.’”  20 C.F.R. § 30.805(a) (2009).  Under EEOICPA procedures, wages are defined to include salaries, overtime compensation, sick leave, vacation leave, tips and bonuses received for employment services.  Income specifically excluded from the definition of wages includes capital gains, IRA distributions, pensions, annuities, unemployment compensation, state workers’ compensation benefits, medical retirement benefits and Social Security benefits.  Federal (EEOICPA) Procedure Manual, Chapter 2-1400.8 (2009).  The regulations and the procedures do not specifically exclude dividends from the definition of “wages.” 

In this case, the recommended decision issued on January 19, 2010 is based on a calculation of AAW that excludes the employee’s dividend earnings as the 100% shareholder of [Employee’s company].  He has objected to this calculation, arguing that his dividend earnings qualify as wages under the definition cited above.  The issue, therefore, is whether those dividends are “monetary payments. . .from employment or services” under § 30.805 of the regulations, and if so, whether they are taxable as income under the Internal Revenue Code.  

The employee’s tax records show that his income from [Employee’s company] is classified as “non-passive” income according to Schedule K-1.  Under IRS rules, passive income is defined as earnings derived from a business in which a person “does not materially participate.”[1]  Since the employee’s hearing testimony and tax records make clear that he materially participated in the operation of [Employee’s company] as the sole proprietor and 100% shareholder, I conclude that these earnings constitute monetary payments from employment or services.  His tax records further show that these earnings were taxable as income under the Internal Revenue Code.  Accordingly, I conclude that the employee’s dividend income as 100% shareholder of [Employee’s company], a subchapter S corporation, are “wages.”

In response to the second objection, I have reviewed the tax records submitted in support of the employee’s claim, which includes Form 1040 Schedule E, Schedule K-1 and his W-2 statements covering the period 2001 through 2008.   I have also reviewed IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits (2010), which is part of the record and was cited by the district office in its recommended decision, as well as other IRS guidance concerning subchapter S corporations.

IRS Publication 15-B states that although the value of S corporation employees’ health benefits are generally excluded from the employees’ wages, this exclusion does not apply to shareholders owning 2% or more of the corporation (“2% shareholders”).  According to the IRS, for 2% shareholders who are also employees, the value of the health benefits premiums must be included in the employee’s wages subject to federal income tax withholding.  IRS Publication 15-B, p. 6 (2010).  A review of the employee’s Form 1040 shows that the value of his health benefits is included in his S corporation earnings (line 17), and is therefore an element of his total income (line 22).  If he were an employee and less than a 2% shareholder, the value of his health benefits would be excluded entirely from his taxable wages.  As a 2% shareholder, he qualifies for a self-employed health benefits insurance deduction (line 29), which is deducted from his total income to derive his adjusted gross income.  In other words, the value of the employee’s health benefits is included in calculating his taxable income, but is not included in his adjusted gross income.  The health benefits deduction is therefore no different than the other deductions available to taxpayers listed on Form 1040, such as student loan interest expenses, educator expenses, or IRA contributions, which are not taken into account when calculating an employee’s AAW.

Accordingly, the evidence establishes that the employee experienced wage-loss as a result of his covered illness during calendar years 2005 through 2008.  I further conclude that his AAW for the 36 months prior to February 2005 is $66,801.21; that his adjusted earnings for calendar year 2005 were between 50 and 75% of his AAW; and that his adjusted earnings for calendar years 2006, 2007 and 2008 were less than 50% of his AAW.  Therefore, in accordance with 42 U.S.C. § 7385s-2(a)(2), the employee is entitled to wage-loss benefits of $10,000.00 for 2005, and $15,000.00 per year for 2006 through 2008, totaling $55,000.00.

Cleveland, OH

Greg Knapp

Hearing Representative

Final Adjudication Branch

[1] See http://www.irs.gov/businesses/small/article/0,,id=146833,00.html (retrieved October 18, 2010).

Evidence required

EEOICPA Fin. Dec. No. 10002977-2006 (Dep’t of Labor, February 12, 2009)

NOTICE OF FINAL DECISION FOLLOWING A HEARING

This is the decision of the Final Adjudication Branch (FAB) on the employee’s claim for benefits under Part E of the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  For the reasons set forth below, the employee’s claim for wage-loss benefits based on his covered illness of chronic obstructive pulmonary disease (COPD) is denied.

STATEMENT OF THE CASE

On December 8, 2004, the employee filed a claim under Part E of EEOICPA in which he alleged that he had contracted “COPD-Bronchitis, Hearing Loss, Hemorrhoids, Back Disorder, Bursitis, Hernia Multiple, Shoulder Disease, Rotator Cuff, Joint Disease, Knee, Tremors, Essential” due to his work-related exposure to toxic substances at the K-25 and Y-12 Plants in Oak Ridge, Tennessee.[1]  Later on August 28, 2006, the employee submitted a written request for both impairment benefits and wage-loss benefits and alleged he had experienced wage-loss from January 1997 through the date of his request. 

In support of his claim, the employee filed a work history listing his employment by the Department of Energy (DOE) contractors Union Carbide at the K-25 Plant from 1975 to 1981, and by Lockheed Martin Energy Systems and other DOE contractors at the Y-12 Plant from 1981 to 1997.  The Oak Ridge Institute for Science and Education verified that the employee worked for DOE contractors as a Component Assembler, Inspector and Senior Inspector at the K-25 Plant from March 10, 1975 to February 15, 1981, and as a Machinist, Engineering Assistant and Technical Associate at the Y-12 Plant from February 16, 1981 to January 31, 1997. 

In support of his claim, the employee submitted an October 24, 2001 report of a medical screening examination in which Dr. Steven Markowitz noted that while the employee’s chest x-ray “showed no evidence of lung disease,” his ten-year history of symptoms was “consistent with chronic bronchitis.”  The employee also submitted an August 28, 2002 report in which Dr. R. Hal Hughes related “approximately a ten year history of chronic bronchitis symptoms on average of two to three episodes a year.”  The file also contains several medical reports from Dr. Gregory P. LeMense, the employee’s treating physician.  The earliest of those reports note a chest CT scan and a medical examination performed by Dr. LeMense in late February 2004.  In a February 26, 2004 medical report, Dr. LeMense stated “it is my impression that [Employee] has mild obstructive lung disease due to chronic obstructive bronchitis.”

On October 6, 2006, FAB issued a final decision in which it found that the evidence was sufficient to establish a diagnosis of COPD and a causal link between the COPD and the employee’s work-related exposure to toxic substances at the K-25 and Y-12 Plants.  Based on those findings, FAB accepted the employee’s Part E claim for the “covered illness” of COPD and awarded him medical benefits for that particular illness[2]; in that same decision, FAB explicitly deferred a decision on the employee’s August 28, 2006 request for both impairment and wage-loss benefits “since Jan. 1997.”[3]

By letter dated November 29, 2006, the Jacksonville district office asked the employee to submit evidence in support of his allegation that he had experienced wage-loss as a result of his COPD.  The district office specifically asked for earnings information to support his claimed period of wage-loss and medical evidence to support the causal link of that wage-loss to his covered illness of COPD.  In his December 11, 2006 response to the district office’s request, he stated:

I first experience[d] wage loss in Jan. 1, 1997 due [to] my COPD because I was laid off at that time with no pay and 21 years company service.  I feel I was laid off because of this problem.  I did not know I had COPD until Jan. 1, 2002.  

On December 13, 2006, the district office received a wage report from the Social Security Administration in response to its request for the employee’s reported wages for the years 1993 through 2005.  It showed that the employee earned $28,225.80 in 1993, $28,437.56 in 1994, $28,819.96 in 1995, $29,853.88 in 1996, and $19,133.59 in 1997, and stated that “There are no other earnings recorded under this Social Security Number for the period(s) requested.”  On April 3, 2007, the district office sent the employee another letter asking for evidence of his alleged wage-loss, and stated the following:

Our records indicate [you] were diagnosed with COPD on February 20, 2004.  Please state what illness you are claiming that caused your wage loss beginning in 1997 through present.

This letter reminded the employee that he had the burden of providing medical evidence establishing a causal relationship between his accepted covered illness (COPD) and his alleged wage-loss.  In his response to this second letter, the employee submitted a copy of a November 22, 1996 termination notice that Lockheed Martin Energy Systems had given him.  The notice stated the following, in pertinent part:

Subject:            Reduction-In-Force Notification

I regret to inform you that the number of employees at Lockheed Martin Energy Systems, Inc., P.O. Box 2009, Oak Ridge, Tennessee 37831, will be reduced as a result of declining Department of Energy budgets and changing program emphasis for FY 1997.  The layoff, which is expected to be permanent, will commence January 31, 1997.

Your position as Technical Associate II will be terminated on January 31, 1997.

*  *  *

I acknowledge receipt of the Reduction-In-Force Notification.

[Employee] /s/                                                  11/22/96                     

Signature                                                          Date

On August 11, 2007, the district office referred the employee’s case file to a District Medical Consultant (DMC) and requested an opinion on whether, for any of the years between 1997 and 2007, “there is sufficient rationalized medical evidence that the employee was unable to work due to the covered illness of chronic obstructive pulmonary disease.”  In her September 11, 2007 report, Dr. Jeanne M. McGregor, the DMC that the district office selected to provide the opinion, reviewed the medical evidence in the case file and noted that it showed that the employee had “good control of his moderate chronic obstructive lung disease with current medications” and that “[h]is only medication for his lungs is Advair 500/50.”  She also noted that there was nothing in the file to support the employee’s allegation that he was laid off due to his COPD, and concluded as follows:

Unfortunately, the evidence in [Employee]‘s file does not support that he was unable to work due to his COPD in any of the years 1997 to present.  It appears that the only reason that [Employee] stopped working in 1997 was because he was laid off in November of 1996.

*  *  *

Upon consideration of all the above, it is my medical opinion within a reasonable degree of medical certainty that there is not sufficient rationalized medical evidence in the file to establish that [Employee] was unable to work due to his covered illness of COPD for any of the years from 1997 to present

On October 23, 2007, the Jacksonville district office issued a recommended decision to deny the employee’s request for wage-loss benefits because “the medical evidence is insufficient to support a causal relationship between the employee’s accepted condition of COPD and wage-loss during the claimed period from 1997 to present.”  On November 5, 2007, the employee’s representative filed a timely written objection to the recommended decision and requested a hearing, which was held on April 30, 2008 in Oak Ridge, Tennessee.[4]

OBJECTION

In his November 5, 2007 objection letter, the employee’s representative did not disagree with any specific factual finding included in the district office’s recommended decision; rather, he expressed the employee’s disagreement with the recommended conclusion that there was no causal relationship between his COPD and any wage-loss during the claimed period of January 1997 to August 2006.  The letter was not accompanied by any evidence in support of the disagreement expressed therein.  At the April 30, 2008 oral hearing, the representative raised no additional objections; instead, he submitted a written report from Dr. Marty G. Wallace, together with copies of previously submitted documents, and argued that the medical evidence of causation in the case file was sufficient to award the wage-loss benefits at issue.

After reviewing the evidence in the case file and the employee’s objection, FAB hereby makes the following:

FINDINGS OF FACT

  1. The employee filed a claim for benefits under Part E of EEOICPA, including wage-loss benefits for the period from January 1997 to August 2006 due to his covered illness of COPD.
  1. The employee was a DOE contractor employee who worked at the K-25 Plant from March 10, 1975 to February 15, 1981, and at the Y-12 Plant from February 16, 1981 to January 31, 1997.
  1. Effective January 31, 1997, Lockheed Martin Energy Systems terminated the employee’s position at the Y-12 Plant as part of a Reduction-In-Force.
  1. Prior to the termination of his position, the employee earned wages of $28,225.80 in 1993, $28,437.56 in 1994, $28,819.96 in 1995, $29,853.88 in 1996 and $19,133.59 in 1997.  Following the termination of his position, he was not employed for the balance of 1997, nor was he employed during the years 1998 through the date of his April 30, 2008 hearing.
  1. The employee was first diagnosed with COPD by Dr. LeMense in a February 26, 2004 report.
  1. In a September 11, 2007 report requested by the district office, Dr. McGregor concluded that “it is my medical opinion within a reasonable degree of medical certainty that there is not sufficient rationalized medical evidence in the file to establish that [Employee] was unable to work due to his covered illness of COPD for any of the years from 1997 to present.”

Based on the above findings of fact, FAB hereby also makes the following:   

CONCLUSIONS OF LAW

Part E of EEOICPA provides several different types of benefits to eligible DOE contractor employees or their survivors.  Among those benefits are compensation for permanent impairment, compensation for qualifying calendar years of wage-loss, a lump-sum survivor benefit, and medical benefits.  See 42 U.S.C. §§ 7385s-2(a)(1), 7385s-2(a)(2), 7385s-3, 7385s-8.  In order to prove eligibility for any of these benefits, the evidence must establish that the employee forming the basis for the Part E claim is/was a “covered DOE contractor employee” and that he/she contracted a “covered illness” through exposure to a toxic substance at a DOE facility.  In this particular Part E claim, FAB has already determined that the employee is a “covered DOE contractor employee,” as that term is defined in 42 U.S.C. § 7385s(1), and that his COPD is a “covered illness” pursuant to § 7385s(2).

In addition to satisfying the general eligibility requirements applicable to all Part E claims, an employee seeking benefits for calendar years of qualifying wage-loss must also satisfy the specific requirements of 42 U.S.C. § 7385s-2(a)(2).  Thus, the evidence must establish:  (1) that the employee held a job at which he/she was earning wages; (2) that the employee experienced a loss in those wages in a particular month; (3) that the wage-loss in that one month was caused by the employee’s covered illness, i.e., that he/she would have continued to earn wages in that month from that job but for the covered illness (this month is known as the “trigger month”); (4) his/her “average annual wage” (AAW) over the 36 months that immediately preceded the trigger month; (5) his/her normal retirement age and the calendar year (known as the “retirement year”) in which he/she would reach that age; (6) beginning with the calendar year of the trigger month, the percentage of the AAW that was earned in each calendar year up to and including the retirement year; (7) the number of those calendar years in which the covered illness caused the employee to earn 50% or less of his/her AAW; and (8) the number of those calendar years in which the covered illness caused him/her to earn more than 50% but not more than 75% of his/her AAW.  See 20 C.F.R. § 30.800 (2008).  Rationalized medical evidence is needed to establish the third of these elements, as well as the causation aspects of the seventh and eighth elements.  See 20 C.F.R. § 30.805(b).   

The employee alleges that he first experienced wage-loss in January 1997, and that this wage-loss has continued at least through the date of his April 30, 2008 oral hearing in his EEOICPA claim.  The factual evidence establishes that the employee held a job at the Y-12 Plant at which he was earning wages, and that he began to lose wages when his job was terminated as part of a Reduction-In-Force, effective January 31, 1997.  The evidence also establishes that the employee has not worked since this job was terminated.  Therefore, FAB concludes that the employee has proven the first two elements of his wage-loss claim:  (1) that he held a job at which he was earning wages; and (2) that he experienced a loss in those wages in a particular month–January 1997.

However, FAB also concludes that the employee has failed to prove that his wage-loss in January 1997 was caused by his covered illness, i.e. that he would have continued to earn wages in January 1997 from his job at the Y-12 Plant had he not contracted COPD in January 1997.  It is axiomatic that an employee cannot lose wages in a particular month because of a covered illness if he/she has not yet contracted that illness.  Although the employee here has submitted medical evidence from Dr. Wallace in support of his argument that he should have been restricted from working at the Y-12 Plant when his job was terminated as part of a Reduction-In-Force in January 1997, the Reduction-In-Force Notification he submitted clearly indicates that the layoff was caused by “declining Department of Energy budgets and changing program emphasis for FY 1997” rather than by any medical condition of the employee.  A review of the medical evidence of record reveals that there is no mention of a diagnosis of COPD prior to treating physician, Dr. LeMense’s February 26, 2004 report.[5]  None of the physicians who have submitted medical reports in this matter have even suggested that the employee had COPD before that date, and COPD is the only covered illness that has been accepted as compensable in this claim.  Thus, the employee has not offered any evidence to establish a diagnosis of COPD in 1997 or at any time prior to February 2004 that could have lead to any wage-loss.

Furthermore, even if the employee had shown that his diagnosed covered illness arose in January 1997 at the time of his wage-loss, the employee’s argument concerning Dr. Wallace’s report ignores the fact that the after-the-fact suggestion of restrictions that might have resulted in wage-loss if put in effect simply have no relevance to why the employee ceased earning wages seven years prior to when his illness was first diagnosed.  EEOICPA does not provide wage-loss benefits for employees who should have been placed under restrictions and might have lost wages had those restrictions been in place, even if those restrictions were caused by a covered illness.  Rather, it only provides wage-loss benefits for employees who, consistent with the terms of 42 U.S.C. § 7385s-2(a)(2)(A)(i), experience wage-loss caused by a covered illness.[6]

Unfortunately, the employee’s February 26, 2004 diagnosis is insufficient to establish his entitlement to wage-loss benefits commencing in 2004 because there is no factual evidence in the case file that the employee experienced a loss of wages in that month (or in any month thereafter).  It is also axiomatic that an employee cannot experience a loss of wages during a particular month if he/she is not earning any wages in that month.  Therefore, even if the employee’s covered illness of COPD made it impossible for him to work from February 2004 forward, it would still be insufficient to establish any compensable wage-loss because the employee had no job and no wages at that time.

The regulations provide that the claimant bears the burden of providing all documentation necessary to establish eligibility for benefits and of proving “by a preponderance of the evidence the existence of each and every criterion” required for eligibility; “[p]roof by a preponderance of the evidence means it is more likely than not that a given proposition is true.”  See 20 C.F.R. § 30.111(a).  Thus, FAB concludes that the evidence in the case file is insufficient to establish, by a preponderance of the evidence, that the employee experienced any compensable calendar years of qualifying wage-loss as the result of his COPD, and hereby denies the employee’s wage-loss claim. 

Washington, DC

Amanda M. Fallon

Hearing Representative

Final Adjudication Branch

[1]  On the same date, the employee also filed a claim under Part B of EEOICPA in which he alleged that he had contracted “COPD-bronchitis” as a result of working at the K-25 and Y-12 Plants.  

[2]  In that decision, FAB denied the employee’s Part B claim because his alleged condition was not an “occupational illness” compensable under that Part.  FAB also denied his Part E claim for hearing loss, a back disorder, hemorrhoids, bursitis, joint disease, multiple hernias, knee tremors, and rotator cuff disease because the evidence was insufficient to establish that those illnesses were contracted through exposure to a toxic substance at a DOE facility.

[3]  On May 7, 2007, FAB issued another final decision awarding the employee $115,000.00 for impairment due to his covered illness of COPD, based on the February 24, 2007 impairment evaluation of Dr. Harvey Popovich.

[4]  Following that hearing, FAB issued a July 14, 2008 final decision denying the employee’s claim for wage-loss benefits.  However, the Director of the Division of Energy Employees Occupational Illness Compensation thereafter issued a September 18, 2008 order vacating FAB’s July 14, 2008 decision because it did not “properly determine whether the employee’s exposure at K-25 and Y-12 resulted in any compensable loss of wages,” and referring the case back to FAB “for issuance of a new final decision that gives appropriate consideration to the evidence in the case file that is relevant to the employee’s Part E claim.” 

[5]  FAB notes that, notwithstanding the employee’s reported history of breathing difficulties, even as of October 24, 2001, the report of Dr. Steven Markowitz’ medical screening examination noted that the employee’s chest x-ray “showed no evidence of lung disease.”

[6]  Alternatively, the employee’s entitlement to wage-loss benefits is also foreclosed because he was unemployed for the 36-month period prior to his initial 2004 diagnosis.  His average annual earnings (AAW) for that 36-month period would therefore be zero.  Under the wage-loss formula in the statute, a benefit payment for a particular calendar year is predicated on a finding that the employee has earned at least 25 percent less than his AAW during that calendar year.  42 U.S.C. § 7385s-2(a)(2).  Since the employee earned no wages in the three years prior to his initial diagnosis, he cannot demonstrate the requisite 25 percentage loss of earnings for any calendar year after his initial diagnosis of a covered medical condition.          

EEOICPA Fin. Dec. No. 10004605-2006 (Dep’t of Labor, September 30, 2010)

NOTICE OF FINAL DECISION FOLLOWING A HEARING

This is the decision of the Final Adjudication Branch (FAB) on the employee’s claim for wage-loss benefits under Part E of the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  For the reasons set forth below, the employee’s claim for wage-loss benefits based on his covered illness of chronic atrophic gastritis is denied.  The employee’s pending claims for nephritis and beryllium sensitivity are deferred at this time.

STATEMENT OF THE CASE

On August 16, 2001, the employee filed a request for assistance with the Department of Energy (DOE) under Part D of EEOICPA in connection with a state workers’ compensation claim for chronic atrophic gastritis (and a number of other claimed illnesses).  DOE verified that he was a DOE contractor employee who had worked as a machinist at the Rocky Flats Plant in Golden, Colorado, from March 1, 1982 to July 5, 1989.  In early 2005, the employee’s Part D claim was transferred to the Division of Energy Employees Occupational Illness Compensation (DEEOIC) at the Department of Labor for adjudication under the newly enacted Part E.[1]

On December 2, 2005, DEEOIC sent the employee a letter asking if he wanted to request wage-loss benefits under Part E for his chronic atrophic gastritis.  The letter indicated that if he wanted to submit such a request, he should notify DEEOIC of that fact and provide “the period of time and amount of wage loss that was caused by the accepted condition of chronic atrophic gastritis.”  The letter also asked for evidence of any claimed wage-loss.  In response, the employee’s authorized representative indicated that the employee was claiming for wage-loss benefits from the date he was diagnosed with chronic atrophic gastritis “to today March 22, 2006.”[2]  In support of this claim, the employee submitted an Operative Record of the in , , dated March 22, 1995, which reported a postoperative diagnosis of gastritis.  The employee also submitted a medical report of an examination performed on January 25, 1997 by Dr. Deborah Brown.  In that six-page report, Dr. Brown stated that the employee’s atrophic gastritis was “not well controlled with Pepcid and Propulsid,” but concluded in her “Functional Assessment” that the gastritis was not so serious that it would cause the employee to miss work.  Specifically, Dr. Brown opined that the employee’s atrophic gastritis “should not limit the claimant in any areas of employment.”  The file also contains a medical report dated July 18, 2002, in which Dr. Lee S. Newman reviewed the employee’s medical records and described the March 22, 1995 diagnosis of chronic atrophic gastritis as follows:  “The diagnosis was chronic atrophic gastritis which was inactive.”  Further, an impairment evaluation report signed by Dr. Annyce Mayer on November 12, 2006 also opined that the contemporary medical reports of the employee’s March 1995 diagnosis showed that his gastritis was inactive as of the diagnosis date.  The employee also submitted an October 5, 2005 report in which Dr. Thomas N. Told stated that the employee’s chronic atrophic gastritis “appears to be inactive at this point but [he] has had periods of chronicity with recurrent pain.”  In that same report, Dr. Told asserted that “[s]o far, [the employee] has been unable to carry out any extended employment.”

After considering his October 5, 2005 report, the district office wrote to Dr. Told on April 6, 2006 and asked him to clarify the statements in that report and supply additional evidence regarding whether the employee’s covered illness caused him to lose wages.  Specifically, the district office asked Dr. Told how he came to the conclusion that the covered illness caused the employee to lose wages and “[s]ince you state that the gastritis is inactive, what periods of time did the gastritis keep [Employee] from working?”  In response, Dr. Told sent an April 24, 2006 letter that reads, in its entirety, as follows:

In response to your letter regarding [Employee], I did indeed do endoscopy and observed firsthand the chronicity of his gastritis.  Biopsies did confirm a chronic gastritis of the atrophic type.  [Employee] has also been symptomatic throughout this period.  I have observed his response to the medication and stressful situations and have concluded that he will not improve in spite of medicine.  He does need to have avoidance therapy for situations that cause hyperacidity.  I know of no surgeries that will correct this, since hemigastrectomy is an archaic operation.  Therefore, it is my conclusion that he would require stress avoidance as the only effective means of controlling chronic gastritis and I feel he will never be able to work again. 

On May 2, 2006, the district office issued a recommended decision to deny the employee’s claim for wage-loss benefits for his accepted chronic atrophic gastritis.  The employee objected to the recommended decision and requested a hearing before FAB, which was held on September 26, 2006.  On May 2, 2007, FAB issued a final decision denying the employee’s claim for wage-loss benefits due to the lack of probative evidence of a causal relationship between the employee’s covered illness and any period of wage-loss.  The employee sought timely review of FAB’s decision in the United States District Court for the District of Colorado and on January 29, 2009, Judge Lewis T. Babcock issued an order vacating FAB’s denial of the employee’s wage-loss claim based on his chronic atrophic gastritis and remanding the case back to DEEOIC on that point.[3]  Judge Babcock held that FAB’s decision on the employee’s wage-loss claim for chronic atrophic gastritis was arbitrary and capricious because it found that Dr. Told’s April 24, 2006 opinion regarding causation as of that date was contradicted by other evidence.  In his remand order, Judge Babcock disagreed with that particular finding and provided this direction for DEEOIC’s further development of the claim:

Accordingly, Dr. Told’s statement that [the employee] “will never be able to work again”–at least as of April 24, 2006, the date of Dr. Told’s letter to that effect–was in fact uncontradicted by the relevant medical record.

*  *  *

Accordingly, to the extent the May 2, 2007 Final Decision denied [the employee’s] application for wage-loss benefits for his gastritis, it is reversed and remanded for further proceedings.  On remand, OWCP may not disregard Dr. Told’s uncontradicted medical opinion without articulating a relevant factual basis.  Further, if OWCP accepts Dr. Told’s uncontradicted opinion, it must make an additional factual inquiry to determine the relevant dates of wage-loss.  

On remand, DEEOIC accepted Dr. Told’s uncontradicted opinion that the employee could no longer work as of April 24, 2006 due to his chronic atrophic gastritis and followed Judge Babcock’s directive to make additional factual inquiries regarding the employee’s dates of wage-loss.  In a November 18, 2009 development letter, DEEOIC set out the relevant evidence already in the case file and asked the employee to submit additional evidence to determine any dates of compensable wage-loss, as follows:

You have claimed that you suffered wage-loss as a result of your chronic atrophic gastritis from May 1995 to the present day.  In accord with Judge Babcock’s Memorandum Opinion and Order, we accept that Dr. Told’s April 24, 2006 letter constitutes an uncontradicted medical opinion that your covered illness of chronic atrophic gastritis prevented you from working on and after April 24, 2006.  However, we do not yet have sufficient evidence that you experienced wage-loss that is compensable under Part E of EEOICPA and we ask that you submit any evidence that you have that might support your claim.  Specifically, we do not have sufficient probative evidence that your chronic atrophic gastritis caused you to experience wage-loss for any particular period of time between March 22, 1995 and April 24, 2006.  The evidence shows that your gastritis was inactive on the date of its initial diagnosis and that it was inactive when you were examined by Dr. Told on October 5, 2005.  Dr. Told’s October 5, 2005 letter indicates that you experienced “periods of chronicity with recurrent pain,” but there is no evidence in the case file of the frequency, duration, or severity of those flare-ups and there is insufficient evidence in the case file to establish that these flare-ups ever caused you to experience quantifiable wage-loss for any identifiable period of time.  Additionally, although the evidence supports a finding that your covered illness of chronic atrophic gastritis prevented you from working on and after April 24, 2006, there is no evidence in the case file that you earned wages at any time during the 36-month period immediately preceding that date. 

The wage-loss provisions in the Act and regulations require that you submit evidence of an identifiable period of wage-loss and that you submit rationalized medical evidence to establish that the period of wage-loss is causally related to the covered illness.  Additionally, to be eligible for wage-loss benefits under the Act, you must have earned wages in the 36-month period immediately preceding your first period of wage-loss.  Thus, if your wage-loss due to your covered illness began in April 2006, you need to submit evidence establishing earned income during the 36-month period immediately preceding that month.                

Please submit any additional evidence that you have not yet submitted that will assist us in determining the relevant dates of wage-loss caused by your chronic atrophic gastritis.  Please provide evidence of the frequency, duration, and severity of the active flare-ups of chronic atrophic gastritis that you have experienced and provide evidence of dates during which those flare-ups caused you to experience wage-loss.  If any of your evidence is in the form of a sworn written statement, please provide documentation to corroborate any factual assertions that you make in your written statement.  Employment and earnings evidence showing actual dates of wage-loss, as well as medical evidence that shows a causal relationship between specific periods of wage-loss and your chronic atrophic gastritis, is vitally important to the eligibility determination in your case.

In response to the above request, the employee’s representative submitted a letter and several enclosures on December 30, 2009:  (1) a copy of the employee’s December 18, 1995 state workers’ compensation claim for an injury to “multiple body parts” on July 5, 1989; (2) a portion of a December 20, 1995 letter to the Traveler’s Insurance Company that purports to show the employee’s medical expenses related to chronic atrophic gastritis up to that date; (3) a January 27, 1996 letter from the employee to the Colorado Division of Workers’ Compensation in which the employee states that he was diagnosed with chronic atrophic gastritis in 1995, and in which the employee describes a contamination accident that is alleged to have occurred around October of 1982; (4) a November 2, 1995 letter from the employee to a Mr. Jerman, notifying him of the employee’s workers’ compensation claim; (5) pharmacy receipts from 1996 for Pepcid tablets and Propulcid; (6) a Diagnostic Imaging Report of an October 20, 1998 examination of the employee’s abdomen and pelvis, in which Dr. Mark J. Sulek concluded “NO ABNORMALITY IDENTIFIED”; and (7) a typed page which purports to show the employee’s earnings for each calendar year from 1970 through 1997. 

Item 7 above was signed by the employee and shows earnings figures for 1991 to the present as follows:  $3,768.48 in 1991; $13,423.25 in 1992; $5,650.89 in 1993; $2,494.35 in 1994; $0 in 1995 and 1996; and $1,658.32 in 1997.  These earnings figures are consistent with those shown by Social Security Administration (SSA) documents that were already in the case file.  The other SSA documents in the file also indicate that the employee had no earned wages reported for any year from 1998 through 2008.  Despite being asked to do so, the employee did not provide any statement or documented evidence of the frequency, duration, and severity of the active flare-ups of chronic atrophic gastritis that he experienced from 1995 to the present, nor did he provide the requested evidence of dates during which those flare-ups caused him to experience wage-loss. 

On January 26, 2010, the district office issued a recommended decision to deny the employee’s claim for wage-loss benefits based on his accepted chronic atrophic gastritis.  The district office’s recommendation was based on two separate conclusions of law regarding the period prior to April 24, 2006 and the period on and after that date.  After their analysis of the evidence of the pre-April 24, 2006 time period, the district office stated:

Based on the totality of the evidence in the case file, we conclude that the rationalized medical evidence in this case is not sufficient to establish a causal relationship between the employee’s covered illness and any loss of wages prior to April 24, 2006.  Thus, as the evidence is insufficient to establish that the covered illness caused any wage-loss prior to April 24, 2006, there can be no qualifying wage-loss for the calendar years prior to that date.  See 42 U.S.C. § 7385s-2(a)(2)(A)(i); 20 C.F.R. § 30.805.  

Regarding the period beginning on April 24, 2006, the district office concluded–consistent with Judge Babcock’s Order–that “the rationalized medical evidence of causation is sufficient to establish that the employee’s illness would keep him from working from April 24, 2006 forward.”  However, the district office also concluded that since the evidence established that the employee earned no wages during the relevant 36-month period prior to April 24, 2006, the employee could not have any qualifying calendar years of wage-loss after that date because, by application of the formula supplied by the statute, he had no wages to lose.   

OBJECTIONS

By letter dated March 15, 2010, the employee’s representative objected to the recommended decision and requested a hearing before FAB.  The letter of objection did not identify any finding of fact or conclusion of law with which the employee disagreed; rather, it was simply a general objection to the recommended denial of benefits. 

Per the employee’s request, a telephone hearing was conducted on May 25, 2010, at which the employee and his representative both testified.  The employee testified that he made several hospital visits when he experienced flare-ups of gastritis, but he stated he had no documentation to corroborate that allegation.  He also testified that he sometimes simply did not go to work because of stomach pain that may have been due to his gastritis, but he provided no dates and made no assertions of amounts of income that were lost due to such sick days.  The employee’s representative argued that the burden of proof as “impossible” to satisfy and asserted that DEEOIC had “ignored” Dr. Told’s letters and given them too little weight.  She asserted that the evidence already submitted was sufficient to prove the employee’s wage-loss claim.  Also, the employee confirmed that he stopped working in 1998, with the exception of some occasional work scooping snow from friends’ driveways–which he described as “just a fly-by-night, you know, friend type thing here and there, that type of situation”–but he provided no time frame or income amounts relating to this work.  The representative testified that the employee “didn’t make enough [through this occasional work] to report it on Federal income tax.”

On June 17, 2010, the representative submitted a copy of a one-page April 29, 1996 report by Dr. Lawrence Stelmach.  In this report, which was written for use in the employee’s state workers’ compensation claim, Dr. Stelmach noted that the employee had been a patient of his for less than a year, reviewed his past medical records and provided his current findings.  Dr. Stelmach stated that “biopsy done in the spring of 1995 did show some gastric atrophy of non-specific character and his symptoms have been unremitting since that time.”  Dr. Stelmach concluded by observing that “[a]t this point it appears as though this patient is chronically debilitated.”                        

After reviewing the evidence in the case file, FAB hereby makes the following:

FINDINGS OF FACT

  1. On August 16, 2001, the employee filed a claim under EEOICPA for his illness of chronic atrophic gastritis.
  1. The employee was a DOE contractor employee at the Rocky Flats Plant from March 1, 1982 to July 5, 1989.
  1. The employee was diagnosed with chronic atrophic gastritis on March 22, 1995, and his gastritis was inactive at that time. 
  1. On January 12, 2006, FAB issued a final decision accepting the employee’s claim for chronic atrophic gastritis and awarding him medical benefits under Part E for that covered illness.   
  1. On December 14, 2005 and March 22, 2006, the employee claimed for wage-loss benefits under Part E based on his chronic atrophic gastritis and alleged that he had lost wages due to that illness from the March 22, 1995 date of his diagnosis to the present.
  1. Starting in 1991, the employee earned reported wages as follows:  1991 $3,768.48; 1992 $13,423.25; 1993 $5,650.89; 1994 $2,494.35; 1995 and 1996 $0; 1997 $1,658.32.  The employee earned no reported wages from 1998 up to the May 25, 2010 date of his latest hearing.      
  1. On January 25, 1997, the employee was examined by Dr. Brown, who wrote a detailed medical report that included a “Functional Assessment” in which she opined that the employee’s atrophic gastritis “should not limit the claimant in any areas of employment.”  This medical opinion is the only opinion in the file that addresses wage-loss due to chronic atrophic gastritis between March 1995 and October 2005.
  1. On April 24, 2006, Dr. Told opined that the employee “will never be able to work again” due to his chronic atrophic gastritis. 

Based on the above-noted findings of fact and the totality of the evidence, FAB hereby makes the following:

CONCLUSIONS OF LAW

Part E of EEOICPA provides several different types of benefits to eligible DOE contractor employees.  Among those benefits are medical benefits, compensation for permanent impairment, and compensation for qualifying calendar years of wage-loss.  In order to prove eligibility for any of these benefits, the evidence must establish that the employee is or was a “covered DOE contractor employee” and that he or she contracted a “covered illness” through exposure to a toxic substance at a DOE facility. 

In this particular Part E claim, FAB has already determined that the employee is a “covered DOE contractor employee,” as that term is defined in 42 U.S.C. § 7385s(1), and that his chronic atrophic gastritis is a “covered illness” pursuant to § 7385s(2).  Additionally, he has already been awarded both medical benefits and impairment benefits under Part E for that covered illness.  However, FAB concludes that the employee did not experience qualifying calendar years of wage-loss as the result of his covered illness of chronic atrophic gastritis and that, therefore, he is not entitled to wage-loss benefits for that illness under Part E of EEOICPA.  See 42 U.S.C. § 7385s-2(a)(2). 

The employee claims entitlement to wage-loss benefits from March 1995 to the present.  In order to establish qualifying calendar years of wage-loss under Part E, the statute requires evidence that the employee experienced wage-loss beginning in a specific month, as well as rationalized medical evidence that the wage-loss in that “trigger month” was caused by his covered illness.  See 42 U.S.C. § 7385s-2(a)(2); 20 C.F.R. §§ 30.800-805.  Both the loss of wages and the causal relationship with the covered illness must be proven.  If the evidence does not sufficiently prove the statutory element of causation, the employee cannot have qualifying calendar years of wage-loss because the covered illness did not cause his wage-loss.  Likewise, if the evidence does not show that the employee earned wages during the 36-month period immediately preceding the trigger month, the employee cannot have qualifying calendar years of wage-loss because he had no wages to lose.  These elements of causation and lost earnings must co-exist, and must be tied to the same trigger month, in order for a wage-loss claim to satisfy the statutory requirements.  See 42 U.S.C. § 7385s-2(a)(2); 20 C.F.R. §§ 30.800-811.  See also Trego v. Dep’t of Labor, 681 F.Supp.2d 894 (E.D. Tenn. 2009).

A review of the medical evidence of record establishes that the employee was first diagnosed with chronic atrophic gastritis on March 22, 1995.  Two separate doctors, Dr. Newman and Dr. Mayer, opined that the employee’s gastritis was inactive as of the date of its diagnosis.  In chronological order, the next piece of medical evidence is the April 29, 1996 report of Dr. Stelmach.  In that report, Dr. Stelmach reviewed the employee’s gastrointestinal issues up to that point in time, and concluded that “[a]t this point it appears as though this patient is chronically debilitated.”  In her June 17, 2010 letter to FAB, the employee’s representative urged that Dr. Stelmach’s observation be accepted as a firm, rationalized medical opinion that the employee could no longer earn wages as of the April 29, 1996 date of the letter.  As the letter does not constitute such evidence, FAB declines to reach such a conclusion.  

However, Dr. Stelmach’s observation is to be accorded an appropriate level of weight as evidence that it appeared to Dr. Stelmach on that day that the employee was chronically weak.  Such an observation is some evidence that the employee was in a generally weakened condition at that point in time due to his many gastrointestinal ailments, including his gastritis.  However, Dr. Stelmach’s reserved observation does not, either standing alone or coupled with other available evidence, constitute the type of “rationalized medical evidence of sufficient probative value” that the regulations require be supplied to establish a causal link between the employee’s covered illness and a specific period of wage-loss.  See 20 C.F.R. § 30.805(b).  As described above, Dr. Stelmach’s letter is brief, unrationalized and conclusory in nature, and his initial characterization of the employee’s gastritis symptoms as “unremitting” is inconsistent with both the employee’s own hearing testimony and his treating physician’s (Dr. Told) later description of those symptoms as periodic.  The letter is not proof that the employee could not work or that he lost wages over any identifiable term due to his covered illness.  Again, the letter is of some, albeit limited, value on the specific issue at issue in this claim.    

Next chronologically, Dr. Brown examined the employee and obtained historical information directly from both the employee and his wife on January 25, 1997.  Dr. Brown prepared a detailed 6-page report, which included a “Functional Assessment” section.  In this section, Dr. Brown opined that the employee’s chronic atrophic gastritis “should not limit the claimant in any areas of employment.”  This opinion is supported by her findings in the body of the report that the employee suffered “crampy belly pain” only periodically (“a couple of times a week”) and that such pain was limited by the employee through avoiding stress, taking Pepcid tablets, and avoiding certain foods.  The report addressed a plethora of illnesses and conditions experienced by the employee from 1988 through January 1997 and discussed the impact of the employee’s health condition on his daily living.

As the district office found, Dr. Brown’s detailed assessment and her resulting medical opinion constitute objective, rationalized medical evidence on the determinative issue, i.e., whether there is a causal link between the employee’s covered illness and a loss of wages.  Dr. Brown’s opinion is supported by her description of her examination of the employee and was explicitly informed by the history provided by both the employee and his wife.  Importantly, the opinion directly addresses the statutory wage-loss element of causation, and it is the most contemporary medical opinion (i.e., the closest in time to the March 1995 time at which the employee claims his wage-loss began) to do so.  Although he claims to have visited the hospital multiple times due to his gastritis, the employee did not provide any medical records from the 1990s that directly addressed this causation issue, except for Dr. Brown’s report.  For these reasons, the district office found that Dr. Brown’s 1997 opinion is to be accorded significant probative weight on the issue of whether the employee’s gastritis caused him to experience wage-loss in the years following his initial diagnosis.  FAB agrees with that assessment. 

The next medical opinion, chronologically speaking, comes almost nine years later.  On October 5, 2005, Dr. Told stated in a letter to the district office that the employee’s gastritis had caused him “periods of chronicity with recurrent pain [and so] far, he has been unable to carry out any extended employment.”  Consistent with the district office’s impression, FAB concludes that that letter is of limited probative value for several reasons.  Dr. Told did not, in that letter, identify the timing, duration, or severity of the reported “periods of chronicity,” nor did he explain what he meant by “extended employment.”  Also, the “so far” statement at the end of that letter does not identify a time-frame for the claimed period of the employee’s inability to “carry out. . .extended employment.”  FAB thus concludes that Dr. Told did not, in that letter, identify any specific periods of time during which the employee’s gastritis caused him to lose wages, nor did he provide a rationalized explanation for his “so far” statement.  FAB also concludes that Dr. Told’s October 5, 2005 letter does not, standing alone or in concert with other evidence, constitute rationalized medical evidence of sufficient probative value to establish that the employee experienced wage-loss in March 1995–or during any other identifiable time frame–as a result of his covered illness. 

Because Dr. Told’s October 5, 2005 letter was vague in its time frame and was lacking in rationalization, the district office asked for clarification.  Specifically, the district office asked Dr. Told how he came to the conclusion that the covered illness caused the employee to lose wages and, they asked him, “[s]ince you state that the gastritis is inactive, what periods of time did the gastritis keep [Employee] from working?”  In his April 24, 2006 response, Dr. Told stated that “[Employee] has. . .been symptomatic throughout this period.” (emphasis added)  Since Dr. Told did not further define or explain what he meant by “this period,” that portion of his April 24, 2006 letter provides little, if any, clarification of his letter of October 5, 2005.  The final sentence of his April 24, 2006 letter, however, provides the requested clarification.  In that sentence, Dr. Told summed up his opinion:  “Therefore, it is my conclusion that he would require stress avoidance as the only effective means of controlling chronic gastritis and I feel he will never be able to work again.”  In this sentence, Dr. Told, for the first time, provides a medical opinion of the causal effect of the employee’s covered illness on his wages and a time-frame as to when the gastritis will cause the employee to lose wages; i.e., from the April 24, 2006 date of the letter onward.  Dr. Told’s clarification letter did not identify any month prior to April 2006 during which the employee experienced wage-loss as the result of the covered illness, but the letter does constitute medical evidence that the employee’s illness would keep him from working from April 24, 2006 forward.[4] 

The EEOICPA wage-loss provisions and governing regulations require “rationalized medical evidence” of sufficient probative value to establish by a preponderance of the evidence that the period of wage-loss at issue is causally related to the employee’s covered illness.  See 42 U.S.C. § 7385s-2(a)(2)(A)(i); 20 C.F.R. §§ 30.111(a), 30.805(b).  See also Trego, 681 F.Supp.2d at 897.  Based on the totality of the evidence in the case file, FAB concludes that the rationalized medical evidence in this case is not sufficient to establish a causal relationship between the employee’s covered illness and any loss of wages prior to April 24, 2006.  Thus, as the evidence is insufficient to establish that the covered illness caused any wage-loss prior to April 24, 2006, there can be no qualifying wage-loss for the calendar years prior to that date.  See 42 U.S.C. § 7385s-2(a)(2)(A)(i); 20 C.F.R. § 30.805.      

However, the medical evidence is sufficient to establish that the employee’s illness would keep him from working from April 24, 2006 forward.  Thus, as the element of causation under clause (i) of § 7385s-2(a)(2)(A) is established as of April 2006, clause (ii) requires calculation of the employee’s average annual wage (AAW) relevant to that trigger month.  See 42 U.S.C. § 7385s-2(a)(2)(A); 20 C.F.R. §§ 30.800-811.  See also Trego, 681 F.Supp.2d at 897-898.  The AAW that is relevant for purposes of the wage-loss provisions of EEOICPA is “the average annual wage of the employee for the 36-month period immediately preceding the calendar month referred to in clause (i).”  See 42 U.S.C. §§ 7385s-2(a)(2)(A)(ii); 20 C.F.R. § 30.801.  Because the month referred to in clause (i) is April 2006, FAB must look to the 36-month period immediately preceding the second quarter of 2006.  See 20 C.F.R. § 30.810; Federal (EEOICPA) Procedure Manual, Chapter 2-1400.9 (July 2009).        

The evidence establishes that the employee earned no wages during the relevant 36-month period in 2003-2006.  Several SSA documents in the case file, including documents submitted by the employee since the District Court’s remand, show that the employee earned no wages in 2003 through 2006.  During the latest hearing, the employee confirmed that he had earned no reported wages since 1998, and that the only money he did earn since that time was of a negligible amount from “occasionally” plowing snow from his friends’ driveways (for which he provided no evidence of dates or amounts earned).  Therefore, his AAW for the relevant 2003 to 2006 time frame, calculated in accordance with the governing regulations, is zero.  See 20 C.F.R. § 30.810.  Since the employee had no wages during the relevant 36-month period preceding the trigger month, he cannot have any subsequent qualifying calendar years of wage-loss under clause (iii) of § 7385s-2(a)(2)(A).  See 42 U.S.C. § 7385s-2(a)(2)(A)(iii); 20 C.F.R. §§ 30.800-811.     

The regulations provide that “Except where otherwise provided in the Act and these regulations, the claimant bears the burden of proving by a preponderance of the evidence the existence of each and every criterion” required for eligibility.  See 20 C.F.R. § 30.111(a).  In light of the above, FAB concludes that the evidence in the case file is insufficient to establish, by a preponderance of the evidence, that the employee experienced any qualifying calendar years of wage-loss as the result of his chronic atrophic gastritis.  Therefore, FAB concludes that the employee is not entitled to wage-loss benefits for his covered illness of chronic atrophic gastritis and hereby denies his claim for such benefits under Part E of EEOICPA.

Denver,

Anna Navarro

Hearing Representative

Final Adjudication Branch

[1]  This transfer was required by 42 U.S.C. § 7385s-10(g).

[2]  Consistent with the district office’s interpretation of this response, FAB has analyzed the employee’s request with the understanding that he is seeking wage-loss benefits for the entire period from March 22, 1995 (the date of diagnosis) to the present.

[3]  597 F.Supp.2d 1235 (D. 2009).

[4]  At this point in time, the case file consists of over 4,000 pages of documents, including dozens if not hundreds of pages of medical records extending back into the early 1980’s.  A review of those records shows that the employee has been periodically placed under work restrictions at various times for various ailments, but none of those documented work restrictions refers to the employee’s covered illness of chronic atrophic gastritis, until Dr. Told’s letter of April 24, 2006.  

EEOICPA Order No. 10076066-2009 (Dep’t of Labor, March 5, 2010)

REMAND ORDER

This Remand Order of the Final Adjudication Branch (FAB) concerns the above claim for wage-loss under Part E of the Energy Employees Occupational Illness Compensation Program Act of 2000, as amended (EEOICPA), 42 U.S.C. § 7384 et seq.  Pursuant to the authority granted by the EEOICPA regulations, and for the reasons set forth below, the claim is remanded to the Seattle district office for further development and the issuance of a new recommended decision.  20 C.F.R. § 30.317 (2010).

On June 20, 2008, the employee filed a Form EE-1 claiming benefits under EEOICPA for the alleged conditions of asthma, idiopathic thrombocytopenia purpura (ITP) and bipolar depression.  On May 8, 2009, FAB issued a final decision accepting the claim for asthma under Part E, based on the determination that the employee was a covered Department of Energy (DOE) contractor employee who was diagnosed with a covered illness (asthma), and that it was at least as likely as not that exposure to a toxic substance at a DOE facility was a significant factor in aggravating, contributing to, or causing that asthma.  FAB therefore awarded the employee medical benefits for the treatment of her asthma, retroactive to June 20, 2008. 

On October 21, 2009, FAB issued a second final decision accepting the employee’s Part E claim for impairment due to her asthma and awarded her compensation in the amount of $62,500.00.  On November 23, 2009, the employee requested wage-loss benefits due to her accepted asthma, for the period May of 1990 to December 31, 2008.

As part of the development of the employee’s request for wage-loss benefits, the Seattle district office referred her claim to a District Medical Consultant (DMC).  On February 3, 2010, the district office received the report of the DMC, who concluded that the employee’s records supported approximately five to eight weeks of wage-loss causally related to her asthma or the treatment thereof, during 2004 and 2005.

On February 24, 2010, the Seattle district office issued a recommended decision to accept the claim for wage-loss due to asthma in the amount of $30,000.00.  On March 4, 2010, FAB received her written statement, waiving her right to object to any of the findings of fact or conclusions of law found in the recommended decision of February 24, 2010. 

In order to support a request for wage-loss benefits under Part E, rationalized medical evidence of sufficient probative value to establish that the period of wage-loss at issue is causally related to a covered illness must be submitted.  20 C.F.R. § 30.805(b).  Specifically, the employee must prove that if not for her accepted condition of asthma, she would have continued to earn wages from her existing employment in January of 2004, the first month indicated by the DMC as a potential period of wage-loss. 

The evidence of record, including an itemized statement of earnings from the Social Security Administration, indicates that the employee was not employed during the years 2003 or 2004.  Since she was not employed in January of 2004, the first month in which the DMC indicated that her asthma could have prevented her from working, the employee could not experience wage-loss at the time that was causally related to her accepted condition of asthma.

The regulations provide that at any time before the issuance of its decision, FAB may remand the claim to the district office for further development without issuing a decision.  In light of the evidence of record showing that the employee did not actually lose any wages during January of 2004, her claim is being remanded to the Seattle district office.  On remand, the district office should take such further development as they deem necessary, and issue a new recommended decision.

Seattle, Washington

Keiran Gorny

Hearing Representative

Final Adjudication Branch

In general

EEOICPA Fin. Dec. No. 10002977-2006 (Dep’t of Labor, February 12, 2009)

[same as three up]