General Construction v. Owcp

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

GENERAL CONSTRUCTION COMPANY; 
LIBERTY NORTHWEST INSURANCE
No. 03-72528
CORP.,
Petitioners, OWCP No.
v.  14-129-450
BRB No.
ROBERT CASTRO; DIRECTOR, 02-0783
OFFICE OF WORKERS COMPENSATION
OPINION
PROGRAMS,
Respondents.

Petition for Review of an Order of the
Benefits Review Board

Argued and Submitted
December 10, 2004—Portland, Oregon

Filed March 2, 2005

Before: Thomas G. Nelson and Johnnie B. Rawlinson,
Circuit Judges, and William W Schwarzer,*
Senior District Judge

Opinion by Judge Schwarzer

*The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.

2397
 GENERAL CONSTRUCTION CO. v. CASTRO 2401

COUNSEL

Raymond H. Warns, Jr., Holmes Weddle & Barcott, Seattle,
Washington, for the petitioners.

William D. Hochberg and Nicole A. Hanousek, Law Office
of William D. Hochberg, Edmonds, Washington, for respon-
dent Robert Castro.

Peter B. Silvain, Jr., Attorney, U.S. Department of Labor,
Washington, D.C., for respondent Director, OWCP.

Roger A. Levy, Laughlin, Falbo, Levy & Moresi LLP, San
Francisco, California, for amicus curiae Longshore Claims
Association.

OPINION

SCHWARZER, Senior District Judge:

General Construction Co. and Liberty Northwest Insurance
Corp. (General Construction), with amicus Longshore Claims
Association (LCA), petition for review of the determination
of the Benefits Review Board (BRB) that claimant Robert
Castro is entitled to total disability compensation under the
Longshore and Harbor Workers’ Compensation Act, 33
U.S.C. §§ 901-950 (1994) (LHWCA), during his period of
participation in a vocational rehabilitation program approved
by the Office of Workers’ Compensation Programs (OWCP).
General Construction also claims that the method the adminis-
trative law judge (ALJ) used to calculate Castro’s average
weekly wage was incorrect and that the OWCP violated Gen-
2402 GENERAL CONSTRUCTION CO. v. CASTRO
eral Construction’s procedural rights under the Administrative
Procedure Act (APA) and the Due Process Clause of the fed-
eral Constitution.

We deny the petition for review. The BRB appropriately
affirmed the ALJ’s award under the LHWCA, and the ALJ’s
wage calculation was correct under Ninth Circuit law. The
BRB also correctly concluded that the OWCP’s failure to
grant General Construction a hearing before approving Cas-
tro’s rehabilitation program did not violate General Construc-
tion’s procedural or due process rights.

STANDARD OF REVIEW

Under the LHWCA, we review BRB decisions “for errors
of law and for adherence to the substantial evidence stan-
dard.” See Alcala v. Dir., OWCP, 141 F.3d 942, 944 (9th Cir.
1998). The BRB must accept the ALJ’s factual findings if
they are supported by substantial evidence. 33 U.S.C.
§ 921(b)(3); see also Lockheed Shipbuilding v. Dir., OWCP,
951 F.2d 1143, 1144 (9th Cir. 1991). “Like the [BRB], this
court cannot substitute its views for the ALJ’s views.” Con-
tainer Stevedoring Co. v. Dir., OWCP, 935 F.2d 1544, 1546
(9th Cir. 1991).

On questions of law, including interpretations of the
LHWCA, we exercise de novo review. Gilliland v. E.J. Bar-
tells Co., Inc., 270 F.3d 1259, 1261 (9th Cir. 2001). We need
not defer to the BRB’s construction of the LHWCA, but we
“must . . . respect the [BRB’s] interpretation of the statute
where such interpretation is reasonable and reflects the policy
underlying the statute.” Id. (quoting McDonald v. Dir.,
OWCP, 897 F.2d 1510, 1512 (9th Cir. 1990)). We also “ac-
cord considerable weight to the construction of the statute
urged by the Director of the [OWCP] as [s]he is charged with
administering” the LHWCA. Matson Terminals, Inc. v. Berg,
279 F.3d 694, 696 (9th Cir. 2002) (quoting Force v. Dir.,
OWCP, 938 F.2d 981, 983 (9th Cir. 1991) (internal quotation
 GENERAL CONSTRUCTION CO. v. CASTRO 2403
marks omitted)). “We will defer to the Director’s view unless
it constitutes an unreasonable reading of the statute or is con-
trary to legislative intent.” Id. (citing Chevron U.S.A., Inc. v.
Natural Res. Def. Council, 467 U.S. 837, 842-45 (1984)).

BACKGROUND

I. CASTRO’S EMPLOYMENT, INJURY, AND
REHABILITATION PROGRAM

Claimant Robert Castro worked as a carpenter and pile
driver from 1973 until he was disabled due to his injury in
1998. He began work as a pile driver for General Construc-
tion in 1998. On November 20, 1998, Castro slipped and fell
on a crane step, tearing the anterior cruciate ligament in his
right knee. After three surgeries, Castro was released to return
to light duty work in August 2000. Castro attempted to return
to work at General Construction, but the job he took, cutting
metal plates with a torch while seated, was too strenuous, and
his physician, Dr. Mandt, determined that it was beyond Cas-
tro’s ability. No other light duty work being available at Gen-
eral Construction, Mandt recommended vocational retraining.

General Construction conducted labor market studies,
which identified jobs the counselors believed Castro could
perform, such as courier, cashier, and security officer. The
starting wages for these jobs ranged between $8.00 and
$10.00 per hour, or between $16,640 and $20,800 per year,
but with experience, some could pay up to $25,000 per year.
Castro testified that he investigated at least some of these
jobs, but found that they were taken. Castro did not investi-
gate other jobs because after commuting costs they would
have paid around $2.00 per hour.

OWCP referred Castro to vocational rehabilitation coun-
selor Carol Williams to develop a rehabilitation plan. She and
Castro decided on hotel management by a “process of elimi-
nation.” As part of his vocational rehabilitation plan,
2404 GENERAL CONSTRUCTION CO. v. CASTRO
approved by OWCP sometime prior to August 1999 and initi-
ated in August 1999, Castro enrolled in a hotel tourism pro-
gram at a local college. He was scheduled to take classes from
September 13, 2000, through June 7, 2002. Evidence sug-
gested that after completing the program, Castro could expect
to earn around $16,000 initially and to progress, with experi-
ence, to approximately $27,580 per year, or to as much as
$40,000 per year as manager at a larger hotel.1

Williams disagreed with General Construction’s labor-
market survey, claiming that the positions identified would be
difficult for Castro because of his physical limitations, which
included limits on his manual dexterity due to a previous hand
surgery. Williams also took the position that Castro would
have “a great deal of difficulty” going to school and working
at the same time. Castro spent between forty-six and fifty-four
hours per week on his vocational program. His commute to
school took anywhere from one and one-half to two and one-
quarter hours. He spent fifteen to eighteen hours per week in
class and another twenty-five hours per week in study and
preparation for class. While in school, Castro worked briefly
in a paid internship, but after working about eighty hours he
had to resign due to his vocational program’s demands and
requirements.

When Williams retired at the end of 2000, Castro began to
see a new vocational consultant, Stan Owings. Owings con-
cluded that Castro was limited to sedentary jobs or those
requiring only light physical exertion, and stated that some of
the jobs General Construction identified are “reasonable
examples of jobs and wages currently available to” Castro.
Owings also recognized that Castro “may return to work with
1
In August 2000, sometime after it learned of Castro’s rehabilitation
plan, General Construction sent a letter to the OWCP disputing the plan
and requesting that the District Director transfer the dispute to an ALJ for
a hearing. The record does not indicate that the OWCP responded to or
acted on this letter.
 GENERAL CONSTRUCTION CO. v. CASTRO 2405
or without completing the education curriculum in which he
is currently enrolled.” As of the dates of the hearing before
the ALJ, June 20, 2001, and the ALJ’s decision, May 8, 2002,
Castro had not completed his schooling.

Castro earned $38,422.57 in 1995, $38,571.33 in 1996,
$39,648.34 in 1997, and $39,717.62 in 1998, the year of his
injury. General Construction initially paid compensation to
Castro based on an average weekly wage of $988.62. On July
3, 2000, however, General Construction reduced this payment
to one based on a $500 weekly wage, stating that Castro had
not produced requested evidence, including earning state-
ments from prior employment supplementing the $9886.18 he
earned at General Construction in the year prior to his injury.
On July 11, 2000, General Construction reinstated Castro’s
compensation based on a recalculated average weekly wage
of $756.65. Castro argued that his weekly wage should be
$1006.60 and, in support of his motion for partial summary
judgment, submitted a declaration stating that during the fifty-
two weeks before his accident, he worked a total of 201.35
days. The wage records Castro submitted indicate that in most
of the weeks he worked, he worked for forty hours.

II. CASTRO’S LHWCA CLAIM

Castro filed a claim with the OWCP in November of 1998,
seeking permanent partial disability benefits under the
LHWCA’s schedule for a 35% impairment to his right knee
and seeking temporary and permanent total disability benefits
for the period he was enrolled in the vocational rehabilitation
program.

In May 2002, following a formal hearing, the ALJ issued
a decision finding Castro’s scheduled disability rating to be
17% and awarding Castro permanent partial disability bene-
fits on the basis of his knee injury for a period of 48.96 weeks
(17% of the statutory 288 weeks), pursuant to 33 U.S.C.
2406 GENERAL CONSTRUCTION CO. v. CASTRO
§ 908(c)(2), (19).2 On the issue of Castro’s claim for total dis-
ability benefits, the ALJ determined that Castro had met his
burden of demonstrating inability to return to his usual work
(and thus total disability, permitting compensation additional
to that for his scheduled injury) but also that General Con-
struction had established the availability of some suitable
alternate employment. Nevertheless, the ALJ found that
because Castro was enrolled in a vocational rehabilitation pro-
gram and had shown that completion of the program both pre-
cluded employment and gave him the best long-term earning
potential, he was entitled to total disability benefits for the
duration of the program, under Louisiana Insurance Guaranty
Ass’n v. Abbott, 40 F.3d 122, 127-28 (5th Cir. 1994).3

With respect to the calculation of Castro’s award, the ALJ
rejected General Construction’s assertion that § 10(c) of the
LHWCA, 33 U.S.C. § 910(c), should govern, applying instead
§ 10(a), 33 U.S.C. § 910(a), in accordance with our holding in
Matulic v. Director, OWCP, 154 F.3d 1052, 1056 (9th Cir.
1998).4

General Construction appealed the ALJ’s decision to the
BRB, which affirmed the award. The BRB, like the ALJ,
found Abbott to be controlling and noted that since the ALJ
had issued the decision in Castro’s case the Fourth Circuit had
2
This 2002 hearing on Castro’s claim for benefits thus followed
OWCP’s 1999 approval of Castro’s vocational rehabilitation program by
several years.
3
The ALJ acknowledged that Abbott does not establish an unqualified
entitlement to benefits during vocational rehabilitation but concluded that
Castro’s situation did not differ from that of the claimant in Abbott in any
material respects.
4
Section 10(a) of the LHWCA provides the presumptive method for cal-
culating wages. Section 10(c) is used only when § 10(a) cannot be “rea-
sonably and fairly” applied. 33 U.S.C. §§ 910(a)-(c); see also Matulic,
154 F.3d at 1056. Under § 10(a), the ALJ calculated Castro’s total disabil-
ity benefits as $669.58 per week, based on an average weekly wage of
$1004.37.
 GENERAL CONSTRUCTION CO. v. CASTRO 2407
also followed Abbott. Newport News Shipbuilding & Dry
Dock Co. v. Dir., OWCP, 315 F.3d 286, 295 (4th Cir. 2002).
The BRB also upheld the ALJ’s use of § 10(a) to calculate
Castro’s average weekly wage, relying, like the ALJ, on
Matulic. Finally, the BRB rejected General Construction’s
claim that the OWCP had violated its procedural rights by
refusing to afford it a hearing before an ALJ on the question
of the appropriateness of vocational rehabilitation in Castro’s
case. The BRB noted that the Ninth Circuit has held that nei-
ther the LHWCA nor any other authority guarantees employ-
ers or insurers a hearing before an ALJ on all disputes. Healy
Tibbitts Builders, Inc. v. Cabral, 201 F.3d 1090, 1093-95 (9th
Cir. 2000). ALJs specifically lack jurisdiction to adjudicate
disputes over matters committed to the OWCP Director’s dis-
cretion. Id. at 1095. The BRB concluded that the relevant stat-
utory and regulatory provisions committed the design and
approval of vocational rehabilitation plans to the discretion of
the Director. Since General Construction was not entitled to
a hearing before an ALJ on this issue, the OWCP did not vio-
late General Construction’s procedural rights when the
OWCP declined to order such a hearing.

General Construction timely appealed all three issues: (1)
the applicability of Abbott to the present case; (2) the applica-
bility of § 10(c) to the present case; and (3) denial of General
Construction’s procedural rights.

DISCUSSION

I. LEGAL FRAMEWORK

The LHWCA’s compensation scheme distinguishes
between injury, which is a physical impairment, “occupa-
tional disease[,] or infection,” 33 U.S.C. § 902(2), and disabil-
ity, which the LHWCA defines as the “incapacity because of
injury to earn the wages which the employee was receiving at
the time of injury in the same or other employment,” id.
§ 902(10). The statutory scheme also provides for four broad
2408 GENERAL CONSTRUCTION CO. v. CASTRO
classes of benefits, distinguished according to the duration of
the underlying injury (permanent or temporary) and the nature
or degree of disability (partial or total). Id. § 908; Stevens v.
Dir., OWCP, 909 F.2d 1256, 1259 (9th Cir. 1990); Abbott, 40
F.3d at 125-28.

A disability is temporary “so long as there [is] a possibility
or likelihood of improvement through normal and natural
healing.” Stevens, 909 F.2d at 1259 (citation omitted). After
a claimant is shown to have attained “maximum medical
improvement,” however, the remaining disability is classified
as permanent. Id. at 1258. A disability may be classified as
permanent and benefits paid under the LHWCA’s provisions
for permanent disability for a finite period. See 33 U.S.C.
§§ 908(a) (providing that permanent total disability benefits
pay 66 2/3% of the employee’s average weekly wage for the
duration of the disability); 908(c), 908(c)(21) (providing that
permanent partial disability benefits pay 66 2/3% of the
employee’s average weekly wage for a length of time deter-
mined by schedule or “during the continuance of disability”).

A disability is classified as total when (1) a claimant dem-
onstrates that the work-related injury in question renders him
unable to return to prior employment, and (2) the employer
subsequently fails to establish the availability of suitable alter-
native employment within the geographic area of the claim-
ant’s residence, which the claimant can perform considering
the claimant’s limitations, age, education, and background,
and with a diligent employment search on the claimant’s part.
See Bumble Bee Seafoods v. Dir., OWCP, 629 F.2d 1327,
1329-30 (9th Cir. 1980); Stevens, 909 F.2d at 1258.5 Disabili-
ties not precluding suitable alternative employment are classi-
fied as partial. Stevens, 909 F.2d at 1258. In other words, in
5
The LHWCA also provides that a disability is classified as total if the
underlying injury involves “[l]oss of both hands, or both arms, or both
feet, or both legs, or both eyes, or of any two thereof.” 33 U.S.C. § 908(a).
 GENERAL CONSTRUCTION CO. v. CASTRO 2409
general, if the claimant is capable of engaging in some gainful
work, the disability is partial. Id.

[1] Two circuits, the Fifth and the Fourth, have added
another element to this basic test for distinguishing between
total and partial disability. Under their precedent, a claimant
who is enrolled in a vocational rehabilitation program and can
demonstrate that the program entirely precludes him from
engaging in otherwise suitable employment may receive total
disability benefits for the duration of the program. Abbott, 40
F.3d at 127; Newport News, 315 F.3d at 295. In Abbott, an
opinion by retired U.S. Supreme Court Justice Byron White,
the Fifth Circuit reasoned that although the Act does not
explicitly provide for total disability during rehabilitation
training, such an interpretation is consistent with “the Act’s
goal of promoting the rehabilitation of injured employees to
enable them to resume their places, to the greatest extent pos-
sible, as productive members of the work force.” Abbott, 40
F.3d at 127 (citation omitted). The validity of this standard in
the Ninth Circuit is one of the issues in the present case.

Benefits for total disability, whether temporary or perma-
nent, are calculated on the basis of the claimant’s “average
weekly wages” and awarded for the “continuance” of the dis-
ability. 33 U.S.C. §§ 908(a), (b). Benefits for partial disabil-
ity, whether temporary or permanent, are awarded according
to one of two statutory schemes. See Potomac Elec. Power
Co. v. Dir., OWCP (Pepco), 449 U.S. 268, 270-71 & n.1
(1980); 33 U.S.C. §§ 908(c), 908(c)(21). For particular statu-
torily enumerated, or “scheduled,” injuries, the LHWCA sets
forth formulas for calculation of benefits. 33 U.S.C. § 908(c).
For injuries that do not fall into any of the scheduled catego-
ries, benefits for partial disability are awarded on the basis of
the claimant’s reduction in earning capacity resulting from the
injury. Id. § 908(c)(21). These remedies are exclusive; a
claimant with a scheduled injury may not elect earning-
capacity-based benefits. Pepco, 449 U.S. at 273-80. However,
under the statutory scheme the distinction between scheduled
2410 GENERAL CONSTRUCTION CO. v. CASTRO
and unscheduled injuries is pertinent only to the calculation of
permanent partial disability benefits; the distinction has no
bearing on benefits for total disability. See 33 U.S.C. § 908(c)
(setting forth schedule formulas for calculating “[p]ermanent
partial disability”); see also Brown v. Nat’l Steel & Shipbuild-
ing Co., 34 Ben. Rev. Bd. Serv. (MB) 195, 198 (2001); Greg-
ory v. Norfolk Shipbuilding & Dry Dock Co., 32 Ben. Rev.
Bd. Serv. (MB) 264, 265-66 (1998).

All of the above calculations require an initial determina-
tion of the claimant’s “average weekly wage at the time of the
injury.” See 33 U.S.C. § 910. Three different formulas for
determination of this amount are set forth at 33 U.S.C.
§§ 910(a)-(c). The selection of the proper formula in Castro’s
case is also at issue in this appeal.

II. CASTRO’S ENTITLEMENT TO TOTAL
DISABILITY DURING VOCATIONAL
REHABILITATION

The ALJ in the present case found Abbott applicable to
Castro’s case and held that Castro was entitled to total disabil-
ity benefits for the period during which he was enrolled in his
vocational rehabilitation program. On appeal, General Con-
struction argues (1) that Abbott was wrongly decided and
should not be applied to this case and (2) that even if Abbott
was correct on its facts, Castro’s case is distinguishable. We
address these arguments in turn.

A. Abbott Is Consistent with the LHWCA’s Text and
Purpose

The interpretation of the LHWCA found in Abbott and
Newport News and adopted by the OWCP Director in this
case is supported by the language of the LHWCA and its pur-
pose.

The LHWCA does not specifically provide that total dis-
ability benefits are to be awarded where a claimant shows that
 GENERAL CONSTRUCTION CO. v. CASTRO 2411
participation in a rehabilitation program precludes acceptance
of alternative employment. But the statute’s silence is not
determinative. In fact, the statute is generally silent on the
scope and definition of “total disability.” See 33 U.S.C.
§ 908(a) (providing that where claimant has not lost two
major body parts, the existence of “total disability shall be
determined in accordance with the facts”). As the Fifth Circuit
noted in Abbott, the statute leaves it to the courts to “enunci-
ate standards for distinguishing between the various catego-
ries” of disability—total and partial as well as permanent and
temporary. 40 F.3d at 125-26.

[2] The Abbott rule is consistent with the language and a
principal policy of the LHWCA: the encouragement of voca-
tional rehabilitation. The LHWCA specifically provides that
“[t]he Secretary shall direct the vocational rehabilitation of
permanently disabled employees and shall arrange . . . for
such rehabilitation.” 33 U.S.C. § 939(c)(2). Moreover, the
LHWCA defines “disability” as the “incapacity because of
injury to earn the wages which the employee was receiving at
the time of injury in the same or other employment.” 33
U.S.C. § 902(10). Thus, the LHWCA speaks of disability in
terms of economic harm, not just physical harm. Metro. Steve-
dore Co. v. Rambo, 521 U.S. 121, 126-27 (1997). The Abbott
rule, consistently with this definition, simply clarifies that it
is possible for a claimant to be entitled to benefits for “total
disability” when the claimant is physically capable of per-
forming certain work but unable to secure that work for some
other reason. See Abbott, 40 F.3d at 127; see also Newport
News, 315 F.3d at 295.

Amicus LCA argues that Abbott was wrongly decided
because in 1984 Congress considered and failed to pass
amendments to the LHWCA creating a statutory entitlement
to total disability for all claimants during vocational rehabili-
tation training. We note at the outset that congressional inac-
tion is not a reliable guide to legislative intent. See Cent. Bank
of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511
2412 GENERAL CONSTRUCTION CO. v. CASTRO
U.S. 164, 187 (1994) (“Congressional inaction lacks persua-
sive significance because several equally tenable inferences
may be drawn from such inaction, including the inference that
the existing legislation already incorporated the offered
change.”) (internal quotations and citations omitted); United
States v. Wise, 370 U.S. 405, 411 (1962). Moreover, the failed
amendments in this case would have been more sweeping
than Abbott’s rule, since they would have created an entitle-
ment to disability benefits during rehabilitation. H.R. 7610,
96th Cong., 2d Sess. at 19-20 (1980) (providing that “[a]n
employee who as a result of injury is undergoing vocational
rehabilitation . . . shall be entitled to receive continued tempo-
rary total or partial compensation during . . . such rehabilita-
tion”).6 In contrast, the Abbott rule requires a fact-finder to
consider on a case-by-case basis an injured worker’s partici-
pation in a rehabilitation program as one factor in determining
whether suitable alternative employment is available to that
worker. Cf. Kee v. Newport News Shipbuilding & Dry Dock
Co., 33 Ben. Rev. Bd. Serv. (MB) 221 (2000) (applying
Abbott and denying temporary total disability benefits when
claimant failed to show that enrollment in rehabilitation pro-
gram precluded acceptance of alternate employment);
Gregory, 32 Ben. Rev. Bd. Serv. (MB) 264 (same). Con-
gress’s failure to enact an amendment more sweeping than the
Abbott rule cannot be taken to invalidate that rule. The text,
purposes, and legislative history of the LHWCA thus provide
no basis for rejecting the Abbott approach.7
6
See also H.R. Rep. No. 98-570, pt. I, at 83 (1983) (including comments
from sponsor of H.R. 7610 (1980) noting that compromises on LHWCA
amendments included the elimination of “amendments concerning voca-
tional rehabilitation which assured continued payment of benefits during
rehabilitation”).
7
General Construction and LCA also invoke the language of § 8(g) of
the LHWCA in support of the contention that the only money Congress
intended to be provided to claimants during vocational rehabilitation is a
$25 maintenance stipend. 33 U.S.C. §§ 908(g), 944. This argument
ignores the plain language of the statute. Section 8(g) states that an injured
 GENERAL CONSTRUCTION CO. v. CASTRO 2413
B. Abbott Applies to the Present Case

General Construction further argues that even if Abbott is
a valid interpretation of the LHWCA, it is inapplicable here
because Castro’s situation differs significantly from that of
the claimant in Abbott. Specifically, (1) Castro’s program did
not involve an agreement with the OWCP that expressly for-
bade his employment during the program; (2) General Con-
struction itself never agreed to the rehabilitation plan; (3) the
evidence showed Castro could work while enrolled in his
rehabilitation program; (4) Castro was not diligent in attempt-
ing to locate work while pursuing the program; (5) comple-
tion of the program would not increase Castro’s earning
capacity; and (6) Castro, unlike the claimant in Abbott, suf-
fered scheduled injuries, and Pepco therefore limits Castro to
recovery under the LHWCA’s schedule.

[3] We agree with the Fourth Circuit in Newport News that
Abbott did not set forth a rigid rule and that a number of fac-
tors enumerated by the BRB may be relevant to determining
whether an individual may receive benefits while enrolled in
a rehabilitation program. These include whether enrollment in
the rehabilitation program precludes any employment;
whether the employer agreed to the rehabilitation plan and
continuing payment of temporary total disability benefits;
whether completion of the program would benefit the claim-
ant by increasing his wage-earning capacity; and whether the
claimant showed full diligence in completing the program.
Newport News, 315 F.3d at 293 (citing Gregory, 32 Ben. Rev.
Bd. Serv. 264). The Fourth Circuit observed that no one of

worker in vocational rehabilitation who is being rendered fit for remunera-
tive occupation “shall receive additional compensation necessary for his
maintenance, but such additional compensation shall not exceed $25 a
week.” 33 U.S.C. § 908(g) (emphasis added). This language indicates
Congress’s intent that the fee be paid in addition to—not in place of—
other appropriate compensation.
2414 GENERAL CONSTRUCTION CO. v. CASTRO
these factors, standing alone, should necessarily be considered
determinative. 315 F.3d at 295-96.

[4] With respect to General Construction’s first argument,
the ALJ noted that the BRB has interpreted Abbott to require
only that a claimant show that, as a practical matter, he cannot
obtain suitable alternative employment, not that he is contrac-
tually precluded from working. See Kee, 33 Ben. Rev. Bd.
Serv. at 223. This approach makes sense given the language
and purposes of the LHWCA, which provides for compensa-
tion for a claimant’s reduced earning capacity under a variety
of circumstances. See, e.g., 33 U.S.C. §§ 902(10) (defining
“disability”), 908(a) (providing for determination of perma-
nent total disability “in accordance with the facts”). A claim-
ant’s earning capacity suffers as a result of his inability to
engage in alternative employment, regardless of the cause of
that inability. We agree with the ALJ that neither Abbott nor
the LHWCA should be read to require that the inability have
a contractual basis.

With respect to General Construction’s second argument,
the ALJ noted that General Construction objected to the reha-
bilitation plan and to continued benefits. But the ALJ also rea-
soned that allowing employers an effective veto power over
OWCP-approved rehabilitation programs would undermine
the LHWCA’s general policy of encouraging rehabilitation.
We agree. There was no error in the ALJ’s decision that Gen-
eral Construction’s objection to the rehabilitation program
does not sufficiently distinguish Castro’s case from Abbott.

With respect to General Construction’s third argument,
regarding evidence of Castro’s ability to work while pursuing
his rehabilitation program, the ALJ evaluated relevant evi-
dence, including the testimony of Castro and vocational
experts Carol Williams and Kent Shafer. The ALJ based his
decision that Castro could not work while pursuing his pro-
gram mainly on Castro’s uncontradicted testimony that,
including commuting, class, and study time, he devoted
 GENERAL CONSTRUCTION CO. v. CASTRO 2415
between forty-six and fifty-four hours per week to completion
of the program.8 General Construction notes that Castro
worked briefly in a paid internship. But Castro had to resign
this internship after eighty hours of work because of the
demands of his rehabilitation program. The ALJ found this to
be evidence that Castro was willing but unable to work,
despite testimony to the contrary by General Construction’s
expert. The ALJ’s factual finding is supported by substantial
evidence. 33 U.S.C. § 921(b)(3); Container Stevedoring Co.,
935 F.2d at 1546.

The ALJ similarly considered General Construction’s
fourth argument, that Castro failed to show he searched dili-
gently for work while pursuing his rehabilitation program.
This argument is largely foreclosed by the ALJ’s determina-
tion that the time demands of Castro’s program precluded his
employment during the program. Castro also presented evi-
dence that he investigated jobs identified by General Con-
struction but found them either unavailable or impracticable
because of his commute. The ALJ’s finding is thus supported
by substantial evidence.

The ALJ also found that Castro was diligent in completing
his program. See Newport News, 315 F.3d at 293 (citing
Gregory, 32 Ben. Rev. Bd. Serv. 264). The ALJ found that,
although Castro expressed concerns about falling behind in
school, his records indicated that his enrollment since 1999
had not been significantly interrupted and that at the time of
the hearing he was on schedule to complete his program. The
ALJ’s finding that Castro had pursued his degree in the pro-
gram diligently is supported by substantial evidence.

The ALJ also considered General Construction’s fifth argu-
8
Williams stated that Castro’s intellectual capacity and long commute
would make combining school with a job difficult, while Shafer noted that
travel requirements combined with cognitive capacity could prevent some
people from working while in school.
2416 GENERAL CONSTRUCTION CO. v. CASTRO
ment, that Abbott should not apply because Castro’s rehabili-
tation program was not designed to improve his earning
capacity. The ALJ noted that, although hotel management
starting salaries were comparable to the salaries in the jobs
General Construction had identified, Castro’s vocational advi-
sors reasonably determined that training in hotel management
would give Castro the best long-term earning potential.9 The
ALJ was correct to focus on Castro’s long-term wage-earning
prospects in assessing the rehabilitation program, see Newport
News, 315 F.3d at 295-95 (“an immediate increase in wage
earning capacity . . . is not . . . determinative”); Abbott, 40
F.3d at 128 (looking to employee’s long-term increase in
wage-earning capacity in assessing reasonableness of voca-
tional rehabilitation program), and his factual determination
that Castro’s rehabilitation program provided the best long-
term wage-earning prospects is supported by substantial evi-
dence.

[5] Neither the ALJ nor the BRB considered at length Gen-
eral Construction’s argument concerning the application of
Pepco, 449 U.S. 268 (1980), to Castro’s case. However, the
ALJ’s interpretation of the scope of Pepco correctly precluded
application of that case to Castro’s claim for total disability
benefits during his rehabilitation program. In Pepco, the
Supreme Court held that where a claimant is entitled to partial
disability benefits for a scheduled injury, those benefits are
the claimant’s exclusive remedy; a claimant with a scheduled
injury may not elect to recover benefits for partial disability
on the basis of the claimant’s loss in earning capacity. Id. at
273-74. General Construction argues that if a claimant has a
scheduled injury, and the employer shows that the claimant is
employable, the claimant cannot also be entitled to an award
of total disability benefits during a rehabilitation program; the
argument implies that allowing recovery for the time spent in
9
Williams estimated that Castro could earn between $30,000 and
$40,000 annually as a hotel manager, as compared to the $16,640 to
$25,000 potential of the jobs identified by General Construction.
 GENERAL CONSTRUCTION CO. v. CASTRO 2417
the rehabilitation program is analogous to allowing recovery
for a loss in earning capacity. The argument fails because, as
the ALJ correctly noted, Pepco addresses only the statutory
provisions for partial disability benefits. See id. at 274 & n.8;
see also Brown, 34 Ben. Rev. Bd. Serv. at 198 (finding sched-
uled nature of claimant’s injury irrelevant to appropriateness
of rehabilitation program and award of benefits for that
period); Gregory, 32 Ben. Rev. Bd. Serv. at 265-66 (noting
that “where claimant is totally disabled the schedule does not
apply” and that “the fact that any permanent partial disability
would be covered by the schedule is not determinative of the
total disability issue”). Since Pepco does not address compu-
tations of awards for temporary total disability, which is the
focus of the Abbott rule, we agree with the ALJ and the BRB
that the scheduled or unscheduled nature of a claimant’s
injury is irrelevant.

[6] We conclude that the ALJ and BRB did not err in find-
ing that Castro’s case did not differ materially from Abbott
and Newport News so as to preclude application of the Abbott
rule. We therefore affirm the award of permanent total dis-
ability benefits to Castro during his participation in his
OWCP-approved rehabilitation program.

III. CALCULATION OF AVERAGE WEEKLY WAGE

[7] General Construction contends that the ALJ erred in
calculating Castro’s average weekly wage under § 10(a) of
the Act, 33 U.S.C. § 910(a). Although § 10(a) is presumed to
apply absent a showing that its application would be unrea-
sonable, and although the ALJ properly applied this provision
under Ninth Circuit precedent, Matulic, 154 F.3d 1052 (9th
Cir. 1998), General Construction argues that we should over-
rule that precedent or at least distinguish it.

The relevant subsections of § 10 of the Act state:

Except as otherwise provided in this chapter, the
average weekly wage of the injured employee at the
2418 GENERAL CONSTRUCTION CO. v. CASTRO
time of the injury shall be taken as the basis upon
which to compute compensation and shall be deter-
mined as follows:

(a) If the injured employee shall have worked in
the employment in which he was working at the time
of the injury, whether for the same or another
employer, during substantially the whole of the year
immediately preceding the injury, his average annual
earnings shall consist of . . . two hundred and sixty
times the average daily wage or salary for a five-day
worker . . . .

(c) If . . . the foregoing methods of arriving at the
average annual wage of the injured employee cannot
reasonably and fairly be applied, such average
annual earnings shall be such sum as, having regard
to the previous earnings of the injured employee in
the employment in which he was working at the time
of the injury, and of other employees of the same or
most similar class working in the same or most simi-
lar employment in the same or neighboring locality.
...

33 U.S.C. § 910(a), (c) (2000).

[8] Section 10(a) plainly applies if the employee “worked
in the employment . . . whether for the same or another
employer, during substantially the whole of the year immedi-
ately preceding the injury.” 33 U.S.C. § 910(a). In Matulic,
we addressed the meaning and scope of the language “sub-
stantially the whole of the year immediately preceding [the]
injury.” 154 F.3d at 1056. Noting that “some ‘overcompensa-
tion’ is built into the [LHWCA] system institutionally,” we
concluded that the LHWCA’s language did not require a
claimant to have worked 100% of the potential working days
during the year immediately preceding the injury in order for
§ 10(a) to apply “reasonably and fairly.” Id. at 1057. Specifi-
 GENERAL CONSTRUCTION CO. v. CASTRO 2419
cally, we held that § 10(a) presumptively applies “when a
claimant works more than 75% of the workdays of the mea-
suring year.”10 Id. at 1058. It may even apply when the claim-
ant has worked less than 75% of these days, if the reduction
in working days is “atypical of the worker’s actual earning
capacity.” Id.11 In Matulic, the claimant worked 213 days in
the relevant year, or 82% of the statutory 260 days. Id. at
1058. We recently approved application of Matulic and
§ 10(a) where a claimant worked 197 days, or 75.77% of the
statutory total. Stevedoring Servs. of Am. v. Price, 382 F.3d
878, 884-85 (9th Cir. 2004).

General Construction argues that (1) Matulic is contrary to
the language of the LHWCA and should be overruled and that
(2) even if Matulic is good law, it does not apply to Castro’s
case. We consider each of these arguments in turn.

A. Matulic Is Good Law

General Construction’s primary arguments for overruling
Matulic are as follows: (1) Matulic permits and promotes
overcompensation of claimants, a result contrary to the plain
language of the LHWCA; (2) the 75% bright line drawn in
Matulic creates absurd results; (3) Matulic is inconsistent with
the law in other circuits and with the reasoning in relevant
Supreme Court precedent.
10
We based this conclusion in part on our observation in an earlier case
that “the point at which the disparity between the claimant’s actual days
worked and the [potential days worked] becomes unreasonable or unfair[,
triggering application of § 10(c),] is ‘a question of line-drawing.’ ”
Matulic, 154 F.3d at 1057-58 (quoting Duncanson-Harrelson Co. v. Dir.,
OWCP, 686 F.2d 1336, 1343 (9th Cir. 1982)). We determined in Matulic
that the 75% threshold was an appropriate place to draw this line. 154 F.3d
at 1057-58.
11
We further noted that § 10(c) “may not be invoked in cases in which
the only significant evidence that the application of [§ 10(a)] would be
unfair or unreasonable is that claimant worked more than 75% of the days
in the year preceding his injury.” Matulic, 154 F.3d at 1058-59.
2420 GENERAL CONSTRUCTION CO. v. CASTRO
To begin, we note that “[w]e are bound by decisions of
prior panels unless an en banc decision, Supreme Court deci-
sion or subsequent legislation undermines those decisions.”
Benny v. U.S. Parole Comm’n, 295 F.3d 977, 983 (9th Cir.
2002) (citation omitted). Because none of these conditions
applies, we reject General Construction’s arguments. Even if
we had the capacity to overrule Matulic, however, we would
reach the same conclusion.

[9] In Matulic itself, we addressed concerns about whether
potential overcompensation was consistent with the purposes
of the LHWCA. 154 F.3d at 1057. We noted that no one in
the country works every working day of every work week and
that Congress must have known that some overcompensation
would result from the standard work year of 260 days pro-
vided for in the LHWCA. Id. We reasoned that any inaccura-
cies in estimating wage-earning capacity should normally
favor the worker, given the “humanitarian purposes” of the
Act and our mandate to construe its provisions broadly in
favor of workers. Id.12 General Construction rests virtually its
entire argument that the LHWCA reflects a policy against
overcompensation on the existence of § 10(c), which
acknowledges the possibility that weekly wage calculations
may be unfair or unreasonable in some circumstances. Given
the virtual inevitability of overcompensation under § 10(a),
we decline to interpret the existence of § 10(c) as a statutory
bar to any application of the LHWCA resulting in arguable
overcompensation.

General Construction’s absurdity argument rests on the
contention that a worker who has worked 75% of the statutory
12
It should also be noted that whether “overcompensation” occurs at all
under Matulic is questionable. The LHWCA does not compensate for,
among other things, lost pay increases or the lost value of fringe benefits.
These gaps in compensation may be partly responsible for Congress’s
decision to provide for calculation methods that would tend to overcom-
pensate for time worked rather than to undercompensate.
 GENERAL CONSTRUCTION CO. v. CASTRO 2421
days will have worked an average of 3.75 days per week, but
under § 10(a) will receive the same compensation as a worker
who worked 5 days per week. This argument would appear to
attack not only the line drawn in Matulic but also the drawing
of a line at all. General Construction does not explain when
such a disparity would not rise to the level of absurdity; if any
disparity between actual hours worked and compensation is
an absurd result, as General Construction’s argument implies,
then no claimant who worked less than 100% of the statutory
260 days would be entitled to application of § 10(a). Yet the
plain language of § 10(a) itself does not require this. Rather,
the subdivision applies to claimants who have worked “sub-
stantially the whole of the year immediately preceding his
injury.” 33 U.S.C. § 910(a) (emphasis added). “Substantially”
would be meaningless if we were to follow General Construc-
tion’s suggested interpretation of § 10(a), and as a result we
decline to do so.

General Construction also argues that Matulic is inconsis-
tent with the law in other circuits and with Supreme Court
precedent. The only circuit opinion cited reaching a result
contrary to Matulic is Strand v. Hansen Seaway Service, Inc.,
614 F.2d 572 (7th Cir. 1980). But we acknowledged and
rejected Strand in Matulic itself, noting “[w]e do not believe
such a rigid rule [requiring use of § 10(c) where claimant had
worked 84% of the days in the statutory year] is consistent
with the intent or purpose of the [LHWCA].” Matulic, 154
F.2d at 1058 n.4. General Construction offers no compelling
reason for us to revisit this conclusion.

General Construction also cites the Supreme Court’s opin-
ion in Director, OWCP v. Greenwich Collieries, 512 U.S. 267
(1994).13 But the limited, technical holding in Greenwich Col-
13
This opinion predates our decision in Matulic, so that General Con-
struction’s reliance on it amounts, again, to a contention that Matulic was
wrongly decided—not to an argument that intervening Supreme Court pre-
cedent requires us to reject Matulic’s rule.
2422 GENERAL CONSTRUCTION CO. v. CASTRO
lieries14 is irrelevant to the soundness of our decision in
Matulic to interpret § 10(a) broadly in light of the remedial
purposes of the LHWCA. See 154 F.3d at 1055, 1057. Even
were we empowered to overrule Matulic, General Construc-
tion has presented no convincing reason for us to do so.

B. Matulic Applies to the Present Case

General Construction argues that even if we do not overrule
Matulic, we should not apply it to the present case because the
decision of the ALJ and BRB that § 10(a) could “reasonably
and fairly” be applied was not supported by substantial evi-
dence. 33 U.S.C. § 910(c). General Construction maintains
that use of § 10(a) to compute Castro’s award amounts to an
unfair and unreasonable windfall.

This approach has been foreclosed by Matulic itself, which
established as a matter of law that application of § 10(a) to a
claimant who had worked 75% or more of the statutory 260
days is not unfair or unreasonable. 154 F.3d at 1058-59. Dur-
ing the year preceding his injury, Castro worked 201.35 days
out of 260, approximately 77.4% of the year. His case fits pre-
cisely within the rule established in Matulic. The fact that he
worked fewer days than did the claimant in Matulic is not,
14
In Greenwich Collieries, the Supreme Court rejected an evidentiary
rule devised by the Department of Labor for use in benefits claims cases
where an ALJ found the evidence on a disputed question to be in equi-
poise. 512 U.S. at 269. Under this “true doubt” rule, the ALJ was to
resolve such questions in the claimant’s favor. Id. The Supreme Court
rejected this rule as contrary to the language of the governing statutes. Id.
at 280-81. But the Court also implicitly distinguished the true doubt rule
from other procedural and interpretive techniques favoring claimants
under remedial statutes such as the LHWCA. See id. at 280 (“In part due
to Congress’ recognition that claims such as those involved here would be
difficult to prove, claimants . . . benefit from certain statutory presump-
tions easing their burden. Similarly, the Department’s solicitude for bene-
fits claimants is reflected in the regulations adopting additional
presumptions. But with the true doubt rule the Department attempts to go
one step further.”) (internal quotation marks and citations omitted).
 GENERAL CONSTRUCTION CO. v. CASTRO 2423
under the reasoning in that decision, a basis for distinguishing
the case or refusing to apply its rule.15 Id.

[10] General Construction also argues that, unlike the
claimant in Matulic, Castro never earned a weekly wage com-
parable to the result of the § 10(a) calculation in his case. It
notes that the difference between the annual wage resulting
from a § 10(a) calculation and Castro’s actual earnings in the
previous year is approximately $12,000. This is not signifi-
cantly different from the situation in Matulic itself, in which
under § 10(a) the claimant received a wage increase of
approximately $10,000. 154 F.3d at 1056. It is true that we
found the previous year’s earnings of the claimant in Matulic
to have been anomalously low. Id. at 1058. However, that
finding was not the basis for our articulation of the bright-line
75% rule. Id. at 1058-59. We based our holding in Matulic on
an examination of the purposes of the LHWCA, not the fair-
ness of the result in the particular case. See id. at 1057-59.
The factual distinction noted by General Construction is
therefore irrelevant to whether or not Matulic applies to the
present case. The ALJ and BRB accordingly did not err in
applying Matulic and approving calculation of Castro’s aver-
age weekly wage under § 10(a).

IV. GENERAL CONSTRUCTION’S PROCEDURAL
RIGHTS

General Construction argues that it demanded, but was
improperly denied, a hearing before an ALJ to determine the
necessity of a vocational rehabilitation program for Castro
before that plan was implemented. According to General Con-
struction, the LHWCA provides it with the right to an ALJ
hearing upon request. 33 U.S.C. § 919(c), (d). General Con-
struction also contends that the OWCP violated its Fifth
15
We even noted in Matulic that it might be neither unfair nor unreason-
able to apply § 10(a) in a case involving a claimant who had worked less
than 75% of 260 days. 154 F.3d at 1058.
2424 GENERAL CONSTRUCTION CO. v. CASTRO
Amendment due process rights when the OWCP imposed
compensation liability on General Construction for the dura-
tion of a rehabilitation plan into which it had no input.16 We
address these arguments in turn.

A. The OWCP Did Not Violate General Construction’s
Statutory Procedural Rights

The LHWCA provisions General Construction cites state
only that “the deputy commissioner shall make or cause to be
made such investigations as he considers necessary in respect
of the claim, and upon application of any interested party
shall order a hearing thereon,” 33 U.S.C. § 919(c), and that
such hearings will be governed by the APA. Id. § 919(d).

[11] We recently described the scope of § 919(c) in Healy
Tibbitts, 201 F.3d at 1094. We held that “section 919(c) does
not necessarily require an evidentiary hearing before an ALJ
on all contested issues.” Healy Tibbitts, 201 F.3d at 1093. We
held that ALJs in fact lack jurisdiction over certain disputes,
in particular those involving “strictly legal issues,” id. at
1095, and matters within the discretion of a District Director
turning on assessments of “reasonableness” and not involving
factual questions resolvable by an ALJ, id. at 1097. Thus, the
existence of a dispute does not in itself trigger a right to a
hearing under the LHWCA.
16
General Construction also argues more broadly that the rule in Abbott
is “unconstitutional” because it deprives employers of due process. But an
employer may receive a hearing if it controverts or contests an injured
employee’s claim for benefits. See 33 U.S.C. §§ 914(d), (h). And if an
ALJ determines that an employer paid a claimant more in benefits than
required by law, the ALJ may order deduction of the overpayment from
future payments to the claimant. See, e.g., Bush v. I.T.O. Corp., 32 Ben.
Rev. Bd. Serv. (MB) 213, 215 n.5 (1998) (noting ALJ’s order that over-
payment be recovered by deductions from claimant’s continuing benefit
payments). Given these safeguards, Abbott puts employers at no risk of
suffering any kind of permanent wrongful deprivation.
 GENERAL CONSTRUCTION CO. v. CASTRO 2425
[12] The dispute in the present case concerned the initial
reasonableness of the vocational rehabilitation plan
undertaken by Castro and approved by the OWCP. This deter-
mination, while not entirely a legal issue, Healy Tibbitts, 201
F.3d at 1095, turned on a “reasonableness” decision and did
not require any factual determinations of disputed issues by
an ALJ, id. at 1097. Moreover, the LHWCA and its accompa-
nying regulations commit the direction and therefore also the
approval of such rehabilitation programs to the discretion of
the Director. See 33 U.S.C. § 939(c)(2) (“The Secretary shall
direct the vocational rehabilitation of permanently disabled
employees.”); 20 C.F.R. §§ 701.202 (delegating to OWCP
Director authority for administering LHWCA), 701.301(a)(6),
(7) (delegating to District Director administrative approval
authorities of OWCP Director), 702.506 (providing that “[t]he
vocational rehabilitation advisor shall arrange for and develop
all vocational training programs”). Under Healy Tibbitts, the
LHWCA did not entitle General Construction to an ALJ hear-
ing on the reasonableness of Castro’s rehabilitation plan prior
to the implementation of that plan.

[13] General Construction also argues that the failure to
afford it a hearing violated the APA. But § 919(d) merely
requires that any hearings ordered by the Director be con-
ducted in accordance with the APA. 33 U.S.C. § 919(d); see
also Healy Tibbitts, 201 F.3d at 1094. If no hearing is
required, no question as to whether the APA has been violated
can arise. We conclude that the OWCP’s failure to order an
ALJ hearing regarding Castro’s rehabilitation program prior
to approval of the program did not violate the provisions of
the LHWCA.

B. The OWCP Did Not Violate General Construction’s
Constitutional Due Process Rights

General Construction claims it was entitled to a hearing
before an ALJ prior to implementation of the vocational reha-
bilitation program, which deprived it of property by requiring
2426 GENERAL CONSTRUCTION CO. v. CASTRO
payment of benefits to Castro, in violation of the Due Process
Clause of the Fifth Amendment. See Mathews v. Eldridge,
424 U.S. 319, 333 (1976).17

[14] The flaw in General Construction’s argument is that
the OWCP’s implementation of Castro’s rehabilitation plan
did not, in itself, deprive General Construction of its property,
since that implementation did not automatically trigger pay-
ment of permanent benefits to Castro. When the issue of dis-
ability compensation arose with Castro’s filing of a claim for
benefits, the District Director properly forwarded the matter
to the Office of Administrative Law Judges for further han-
dling, and an ALJ held a full hearing on the merits of Castro’s
claim for benefits. General Construction received notice and
an opportunity to submit evidence and argument before the
ALJ’s decision awarding compensation and before it was
required to pay anything. This constituted a sufficient prede-
privation hearing. See Mathews, 424 U.S. at 333 (1976)
(requiring the opportunity to be heard “at a meaningful time
and in a meaningful manner”) (internal quotation marks and
citations omitted); Cleveland Bd. of Educ. v. Loudermill, 470
U.S. 532, 542 (1985) (requiring that a party have the opportu-
nity for “some kind of a hearing” before being deprived of a
significant property interest) (citation omitted). We conclude,
therefore, that the OWCP’s handling of Castro’s claim for
benefits did not deprive General Construction of its due pro-
cess rights under the federal Constitution.
17
Specifically, General Construction argues that it “had a direct finan-
cial stake in whether the vocational plan concocted by the consultant hired
by the Department of Labor went forward because, under Abbott, it was
going to be liable for total disability compensation under that program.”
As noted, any liability for compensation on General Construction’s part
under Abbott did not arise until Castro had (1) filed a claim for benefits
and (2) at a hearing, carried his burden of showing that his rehabilitation
program precluded his employment. See Kee, 333 Ben. Rev. Bd. Serv. at
223 (holding that claimant has burden of showing that “suitable alternative
jobs were realistically unavailable while he was in the [rehabilitation] pro-
gram”).
 GENERAL CONSTRUCTION CO. v. CASTRO 2427
CONCLUSION

For the above-stated reasons, we DENY the petition for
review.

DENIED.