## Facts

- Arthur McDougall suffered a non-work-related left-hand injury in a 1978 automobile accident and did not work for about 18 months.
- In 1979, McDougall injured his lower back while working for E.P. Paup Company as a pile buck and did not return to work thereafter.
- McDougall sought benefits under both Washington workers’ compensation law and the federal Longshore and Harbor Workers’ Compensation Act (LHWCA).
- Washington paid McDougall compensation and medical benefits, then stopped paying after learning LHWCA benefits had been awarded.
- In the LHWCA proceeding, the parties stipulated McDougall was permanently and totally disabled; the ALJ awarded temporary total disability benefits for two years and permanent total disability benefits thereafter.
- The ALJ granted the employer/carrier relief under LHWCA § 8(f), shifting liability to the federal special fund after 104 weeks, and applied LHWCA § 3(e) credits for amounts paid under state law.
- While review was pending, Washington sought reimbursement from McDougall; McDougall sought modification to shift reimbursement responsibility to the employer/carrier, and Washington intervened.
- The Benefits Review Board (BRB) denied § 8(f) relief and ordered the employer/carrier to reimburse Washington for state benefits previously paid.

## Issues

1. Whether the LHWCA (including § 3(e) and federal exclusivity/preemption principles) bars an order requiring the employer and its LHWCA carrier to reimburse Washington for state benefits paid for the same injury.
2. Whether the employer/carrier proved entitlement to LHWCA § 8(f) special fund relief by showing a qualifying pre-existing permanent partial disability, employer knowledge, and that the ultimate disability was materially and substantially greater than the later work injury alone.

## Decision

- The Ninth Circuit affirmed the BRB’s denial of § 8(f) special fund relief.
- The Ninth Circuit upheld the BRB’s determination that the LHWCA did not bar reimbursement to Washington for state benefits paid, but modified the reimbursement order’s form to keep it consistent with the LHWCA award structure.
- The BRB decision was affirmed as modified.

## Legal Principles

- LHWCA § 3(e) addresses credits to prevent claimant double recovery when benefits are paid under overlapping compensation systems; it does not itself prohibit structuring reimbursement so a state is repaid for benefits advanced before federal coverage is resolved.
- LHWCA exclusivity/preemption prevents imposing state-law liability standards for covered maritime injuries, but does not necessarily bar reimbursement arrangements that implement the federal award without creating an independent, conflicting state obligation.
- LHWCA § 8(f) relief requires the employer to prove: (1) a pre-existing permanent partial disability, (2) employer knowledge of that condition, and (3) that the resulting disability is materially and substantially greater than what the subsequent work injury alone would have caused.
- Failure to prove the § 8(f) elements leaves the employer/carrier responsible for disability payments beyond 104 weeks rather than shifting liability to the special fund.

## Conclusion

The court held that the employer and carrier were not entitled to § 8(f) special fund relief and approved reimbursement to Washington for state-paid benefits, while modifying the reimbursement directive to operate through the federal LHWCA award framework rather than as an independent state-law liability.


E.P. Paup Co. v. Dir., Off. of Workers’ Comp. Programs, U.S. Dep’t of Labor, 999 F.2d 1341 (9th Cir. 1993)