Rising Caseload, Fewer Labor Department Judges Triggers Painful Mix for Suffering Laborers

DURHAM, N.C. — It’s been a trying year for James Sawyer, who had two ruined lungs replaced in the space of seven months. Mounting medical expenses only add to his stress.

Sawyer, a 53-year-old wisp of a man, underwent the transplants at Duke University Medical Center here because he had developed hard-metal disease, a rare lung ailment that came within six months of killing him. The disease, caused by the inhalation of microscopic particles of cobalt, is virtually always work-related.

In Sawyer’s case, the source of exposure is no mystery: He worked for more than 30 years at the nation’s largest shipyard, in Newport News, Va., building aircraft carriers and submarines and sucking in dust and fumes generated by grinding, cutting and welding. In 2011, when his labored breathing rendered him unable to work, he entered a federal benefits program designed to help people like him.

Created by the Longshore and Harbor Workers’ Compensation Act and administered by the U.S. Department of Labor, the program for decades was regarded as one of the best of its kind, superior to state programs that are often hostile to sick or injured workers.

No more. Now, many claimants find themselves at a disadvantage in a system with a dwindling roster of Labor Department administrative law judges and a surge in workers’ compensation, immigration, whistleblower and other cases. It can take a year or more to get a hearing in a disputed Longshore Act case, and several more years to get a decision.

Nationwide, the number of Labor Department judges has fallen to 35, plus one part-timer, from 41 earlier this year and 53 a decade ago. Yet new cases filed with the department’s Office of Administrative Law Judges have risen by 68 percent in the past five years, with a 134-percent increase in pending cases.

As a result, the most desperate claimants — the very ill, those in financial straits — may feel compelled to accept meager settlements, lawyers say. In some instances, they say, employers or their insurers are moving to re-litigate cases with the aim of saving money.

“The claimant has to take what he or she can get,” said Joshua Gillelan, a retired Labor Department lawyer who runs the Longshore Claimants’ National Law Center in Washington. “They can’t hold out for another year or two or three; they’re going to starve.”

Sawyer settled his Longshore case with Newport News Shipbuilding last year for a lump-sum payment and, most important to him, future medical benefits. But the shipyard, which is self-insured, has refused to pay for his lung transplants and associated costs, he and his lawyer say.

While his personal health insurance covered most of the $1.5 million-plus bill for the transplants, Sawyer says, he and his wife, Linda, have been stuck with co-payments and other out-of-pocket costs totaling almost $50,000. Collection agencies have begun calling.

“They’re ignoring us, I guess, and hoping it’ll go away,” Sawyer said of the shipyard.

A spokeswoman for Newport News Shipbuilding said the company agreed to pay for “reasonable and necessary” treatment “directly associated with the original claim.” A lawyer for the shipyard has suggested that Sawyer’s lung ailment was related to something other than his three decades of work with materials known to cause hard-metal disease.

Gary DiMuzio, a lawyer in Newport News who represents Sawyer, replied: “They have put forward no evidence to suggest that they should not pay for this man’s medical treatment.”

Cases Backlogged, Claimants Burdened

Enacted in 1927, the Longshore and Harbor Workers’ Compensation Act initially covered only injuries sustained or illnesses contracted on vessels. Congress amended the act in 1972, extending coverage to workers hurt or sickened in the course of onshore “maritime employment” — such as longshore and shipyard workers. Further amendments in 1984 excluded some classes of workers from coverage but made it easier for victims of occupational disease to win benefits.

Covered workers who prove their cases are entitled to a range of benefits, including compensation for medical expenses and “permanent total” or “permanent partial” disability. Expansions of the Longshore program created by the Defense Base Act of 1941 and the Outer Continental Shelf Lands Act of 1953 pulled in military contractors working abroad and offshore oil workers.

The concept underlying the workers’ compensation program is compromise: A sick or injured worker forfeits the right to sue his or her employer. In return, the worker is fairly compensated for a work-related injury or illness, neither getting rich nor going broke. The employer avoids a potentially large jury verdict.

At one time, lawyers who specialize in Longshore cases say, the federal program usually came close to striking this balance. “In 1984, this was probably the best-run workers’ comp system in the world,” said Eric Dupree, a lawyer in Coronado, Calif., who has represented claimants since 1979.

In recent years, however, the Labor Department has thinned the ranks of administrative law judges, the linchpins of the system, even as the caseload soars. The judges hear cases under more than 80 labor statutes; before them appear coal miners with black lung, whistleblowers with grievances against banks and airlines and claimants of many other stripes.

“We’re now seeing cases stretch on for two years or more,” said Stephen Embry, a lawyer in Groton, Conn., who represents Longshore claimants, most of them former shipyard workers with lung disease. “There’s no money coming in in the interim. People who made good money in terms of blue-collar workers are being tremendously burdened.”

The backlog affects a broad spectrum of claimants. Terry Dean Ratliff left his home in Arizona in 2009 to drive a truck in Iraq for Service Employees International Inc. (SEII). He did it for the money — close to $100,000 a year — said his friend and driving partner, Youssef Bouhout.

Ratliff worked long hours and often drove by pits and incinerators in which chemicals were being burned. “It took a toll on his lungs,” Bouhout said.

One day in April 2010, Ratliff fainted. “He couldn’t breathe,” Bouhout said. “They took him to the medic. They were surprised he survived.”

Ratliff was sent home and filed a Longshore claim in May 2010. SEII’s insurer, Chartis, a subsidiary of AIG, contested it, denying that the lung and heart problems Ratliff had developed were work-related.

Bouhout, who’d been driving a truck in Afghanistan, came back to Arizona in the summer of 2011. He and Ratliff worked together for about four months. Bouhout noticed a dramatic change in his once-fit friend, who was weak and deeply fatigued.

Ratliff ultimately had to quit. Bills piled up, and he was hit with a foreclosure notice. “He was really stressed,” Bouhout said. “Sometimes he said he couldn’t find money to buy food.”

Bouhout returned to Afghanistan in December 2011. Two months later, Ratliff was found dead in his home in Tonopah, Ariz. He’d succumbed to a heart attack at 57 before he could get a hearing. His claim was nearly two years old.

If it had been paid promptly, Ratliff could have gotten the medical care he needed, Bouhout believes. “He might be alive today.”

Lawyer Dupree, representing Ratliff’s estate, and Chartis — now known simply as AIG — settled the case for $75,000, which went to Bouhout, Ratliff’s named beneficiary.

In a report prepared for Chartis shortly before Ratliff’s death, a pulmonologist confirmed that Ratliff had chronic obstructive pulmonary disease (COPD) and deemed it “likely” that his exposure to emissions from the burn pits and incinerators had caused a decline in lung function.

Long-approved Benefits Get New scrutiny

For another Dupree client — Robert Durbin, a fiberglass technician for a San Diego yacht-building firm in the 1980s — the challenge isn’t winning a Longshore claim. It’s holding on to benefits he was awarded 21 years ago.

Durbin inhaled an array of chemicals in resins and epoxies while working for Knight & Carver Marine and developed a condition that made him constantly sleepy. When his case went before an administrative law judge in 1992, he prevailed. The judge found a “causal relationship” between Durbin’s chemical exposures and his hypersomnia, for which he received permanent total disability. The decision was affirmed two years later by the Labor Department’s Benefits Review Board.

Durbin never returned to work. He and his wife, Susan, moved from California to rural Kentucky. Under terms of the settlement, Robert receives semimonthly payments — now up to $1,180 — from his former employer’s insurer, AIG, which also must pay for doctor visits and medication.

In August, a lawyer for AIG filed a petition for modification with the Labor Department, saying a “mistake in fact” had been made by the judge 21 years earlier and seeking to reopen the case. A toxicologist hired by the insurer reviewed Durbin’s medical records and concluded his drowsiness was due to “obstructive sleep apnea, unrelated to employment,” the lawyer wrote. “The prior orders should be modified to deny claimant all compensation and medical services.”

The Durbins were shaken by the filing. Robert, 58, takes two drugs — Desoxyn, a powerful stimulant, and Hydergine, a memory aid — that collectively cost $3,400 a month. AIG has stopped paying for his prescriptions and medical treatment, he said.

“They’re trying to break us,” said Susan, who is on Social Security disability for a back injury. “I can afford to pay for Bob’s prescriptions for the next six or seven months and then I’m broke.”

Robert had a cancerous kidney removed two years ago, suffers from congestive heart failure and was recently diagnosed with prostate cancer. He believes the insurance giant is trying to pressure him into accepting a skimpier settlement.

“I’m costing them too much, basically,” he said. He finds this ironic, given that AIG received a $182 billion government bailout at the height of the financial crisis five years ago. (AIG eventually repaid all the funds, plus interest).

“They got the help they needed and gave all their executives these million-dollar bonuses, when they’re shorting me,” Robert said. “If they’re doing it to me, they must be doing it to other people, too.”

Dupree noted that AIG waited until Knight & Carver filed for bankruptcy, in 2012, to try to disassemble Durbin’s deal. “Basically, what they’re asking us to do is reprove the case,” Dupree said, no easy task decades after Durbin’s employment and chemical exposure ended.

An AIG spokesman would not comment on either the Ratliff or the Durbin cases. In a statement to the Center for Public Integrity, he wrote, “AIG is committed to handling every claim professionally, ethically and fairly, although we do not disclose information about individual claimants or cases. We provide the highest level of service to our customers, which includes the adjudication and payment of claims as promptly as possible within the rules and requirements of the Longshore Act.”

By some measures the Longshore program has improved, said its director, Tony Rios. Employers have been quicker to file first reports of injury or illness with the Labor Department’s Office of Workers’ Compensation Programs, he said. They and their insurers have been making initial payments to claimants more promptly. Data supplied by the department support these statements.

Rios, who has run the program since March, said he meets regularly with lawyers for both claimants and employers. “Anecdotally speaking, what I’m hearing is there have been improvements” within his office, where claims are filed and undergo initial review, he said. Rios has no control, however, over the adjudication of cases, the point at which the logjam is occurring.

In a statement, the Labor Department said, “Proper adjudication of these claims is a cornerstone of the American legal system, and many workers rely on that process to resolve disputes. The Department will continue to work within the Administration and with Congress for the necessary resources as well as other potential reforms for maintaining sufficient due process for our programs.”

Dupree contends insurers in Longshore cases have become more combative over the past 10 years, a period that “largely parallels the underfunding” of the department’s Office of Administrative Law Judges.

When insurers don’t pay, claimants’ medical costs are transferred to government programs such as Medicare and Social Security, said Gillelan, the former Labor Department lawyer. “It’s cost-shifting from the outfits which were supposed to bear a significant part of the human-misery cost,” he said. “They don’t have to bear that cost anymore. It’s been shifted to the federal taxpayer.”

Deadly Toll of Lung Disease

Work-related lung disease takes a heavy toll in America. The National Institute for Occupational Safety and Health — NIOSH, part of the Centers for Disease Control and Prevention — estimates that nearly 39,000 people die each year of COPD, lung cancer, pneumoconiosis (dust-induced lung disease), mesothelioma (an asbestos-linked malignancy usually found in the covering of the lung) and asthma related to on-the-job exposures. By comparison, 31,672 people were killed by guns in 2010, according to the CDC.

Millions more workers annually are thought to contract these diseases, though a doctor may not always make the connection between, say, a case of COPD and a patient’s dusty or fume-laden workplace.

In James Sawyer’s case, the tie was fairly easy to see. Hard-metal disease, a type of pneumoconiosis, is quite rare. Characterized by giant cells with multiple nuclei in the air sacs of the lung, it is found in workers exposed to cobalt through the production and processing of diamond-hard, tungsten carbide metal, or through the inhalation of dust or fumes given off by grinding or cutting.

“Pretty much anybody who gets hard-metal disease wouldn’t have gotten it unless they had a workplace exposure,” said Dr. David Weissman, director of NIOSH’s Division of Respiratory Disease Studies.

Sawyer started in the machine shop at the 550-acre Newport News shipyard — now known as Newport News Shipbuilding, a division of Huntington Ingalls Industries — in 1980. Twelve years later he became a pipefitter, a job he held until he left the shipyard in 2011.

Sawyer used a hand grinder with a 4-inch cutting wheel to cut pipe on aircraft carriers and tankers being built for the U.S. Navy. The cutting gave off dust and sparks. “You could see little flakes of metal floating in the air,” he said. The dust, a doctor at Duke wrote, included tungsten, nickel, copper, brass, carbide steel and galvanized steel.

Welders and painters working nearby contributed to the noxious fog, Sawyer said, and on many occasions he wasn’t provided a respirator. “Sometimes I would walk out of the work area, because you had to let the smoke go down,” he said.

Sawyer began having breathing difficulties in the early 1990s and was diagnosed with asthma late in the decade. By the early 2000s, he said, the attacks had become more frequent and severe. In 2008 he was transferred to his first submarine, the USS California. Ventilation in the tight quarters of the sub was poor, and his condition worsened. “I just got to the point where I couldn’t make it through a full day of work,” Sawyer said.

He was bent double by coughing spells. When he blew his nose, the discharge would come out black.

Sawyer was referred to a pulmonary specialist in mid-2010 but for six months resisted having a lung biopsy that could pinpoint the nature of his illness. “I didn’t want to miss work,” he said. His condition continued to deteriorate, however, and his last day at the shipyard was March 3, 2011.

He had the biopsy done about two weeks later. The pathologist found “marked granulomatous inflammation” in the tissue samples, which, he said, could be consistent with cigarette smoking (Sawyer didn’t smoke), pneumoconiosis or some sort of infection.

In April 2011, Sawyer found his way to a Newport News law firm, Patten, Wornom, Hatten & Diamonstein, which handles toxic torts. He weighed about 100 pounds. The receptionist rang lawyer Gary DiMuzio, who handled mostly asbestos-exposure cases and had seen his share of skeletal mesothelioma victims. Even by this standard, Sawyer stood out.

“He was wraithlike,” DiMuzio said. “He was thin as a rail and could barely breathe while speaking. I thought he might die within days.”

DiMuzio filed a Longshore claim with the Labor Department on Sawyer’s behalf in May 2011. Newport News Shipbuilding contested.

That June, a physician for the shipyard, Dr. Andrew Churg, reviewed the slides and records from Sawyer’s biopsy. The evidence “fits best for what is referred to as ‘hard metal disease,’ ” Churg concluded.

The strength of Sawyer’s claim was put to its first test at an informal Labor Department conference that September. It passed: The claims examiner found that Sawyer had established a prima facie case that his disease was work-related.

Sawyer gave a sworn deposition in his Longshore case in December 2011. Lawyer Christopher Hedrick, representing the shipyard, probed for evidence that Sawyer’s troubles originated elsewhere.

Did his wife smoke? “Yes, but she smokes outside,” Sawyer testified. Had he ever welded outside the plant gates? “Very, very little,” Sawyer said. The last time had been three years earlier, when he’d helped his son-in-law build a canoe rack for his truck.

In February 2012, Dr. Carrie Redlich, a professor at the Yale School of Medicine, reinforced Churg’s conclusion, writing in a report to DiMuzio, “There is no other more likely diagnosis than hard metal lung disease.” The ailment, she warned, “can progress away from exposure, and can lead to end stage pulmonary disease.” In short, Sawyer could die.

Three months later, Sawyer settled with the shipyard. He received a lump-sum payment of $170,219. The settlement papers included the following language: “Future medicals are to remain open.”

Sawyer, who was bracing for the first of two transplant operations at Duke, assumed that was the end of it. It wasn’t.

The shipyard refused to pay for his new right lung in January 2013. It refused to pay for his new left lung in August.

Before the transplants, “Jimmy looked like he was at death’s door,” Linda Sawyer said. “Personally, I think they agreed to all of this thinking he wasn’t going to live.”

Shipyard lawyer Hedrick suggested in a March 2013 letter to a Labor Department claims examiner that there might be a condition other than hard-metal disease “necessitating … the lung transplant.” In a letter to DiMuzio, the doctor who wrote the report accused Hedrick of cherry-picking from it and affirmed that Sawyer’s lung transplant “was due to his Hard Metal Pneumoconiosis.”

After an informal conference between the parties in April, claims examiner P.R. Hodgson sided with Sawyer, finding that “the claimant is entitled to authorization and payment of related medical treatment.” This was only a recommendation, however. The shipyard still wouldn’t pay.

Sawyer’s personal health carrier, Blue Cross/Blue Shield, absorbed the bulk of the transplant costs. But he and his wife have been stuck with prescription and doctor-visit co-pays that cost thousands each month. To date, they say, their out-of-pocket expenses, including rent on a small apartment near the medical center in Durham — a necessity because James is still in recovery — exceed $48,000.

“We almost lost our house” in Newport News, Linda said. “If it wasn’t for his uncle, it would have been taken away.”

In a written statement, a spokeswoman for Newport News Shipbuilding, Christine Miller, said the shipyard “agreed to pay for Mr. Sawyer’s future medical treatment provided such treatment was reasonable and necessary and directly associated with the original claim. The shipyard did not, however, agree to pay lifetime medical benefits to Mr. Sawyer for any and all claims he might present.”

Miller declined to elaborate, saying the dispute was working its way through the Labor Department.

“While we cannot speak to any further specifics of this case, we are very concerned about the health and safety of our employees and take many precautions to protect them and to comply with all applicable health and safety regulations,” she wrote. “Those precautions include a respiratory protection program that minimizes employee exposure to potential health hazards from airborne contaminants.”

Rios, head of the Longshore program, said he could not comment on any individual case. In general, however, a district director with the Office of Workers’ Compensation Programs can issue a default order against an employer, enforceable in court, only if the employer has failed to pay benefits that are “very clearly articulated” in a compensation order.

Otherwise, the only remedy for the claimant is to request another hearing before an administrative law judge and get back into the ever-lengthening queue.

DiMuzio, who is seeking such a hearing, said all the doctors who have examined Sawyer “agree he is suffering from occupationally induced hard metal disease and that the transplants were necessary to save Jim’s life.

“We are not asking the shipyard to pay for a broken leg or any other sort of unrelated health condition,” DiMuzio said. “We just want them to do what they agreed to do.”