High Court OKs Benefit Cuts for Some Disabled Workers : Ruling: U.S. justices decide that payments can be denied to an injured employee who finds a higher-paying job.

The U.S. Supreme Court ruled Monday that a former Orange County longshoreman who suffered an on-the-job injury gave up his right to federal disability benefits when he later found more lucrative work.

In a decision that apparently will affect a narrow group of workers, the court ruled 8 to 1 that disability benefits for John Rambo, 50, of Garden Grove, could be altered or revoked because his economic status had changed.

“A disability award may be modified . . . where there is a change in the employee’s wage-earning capacity, even without any change in the employee’s physical condition,” Justice Anthony M. Kennedy wrote for the court. Justice John Paul Stevens was the lone dissenter.

Attorneys on both sides said the decision affects approximately 500,000 maritime laborers involved in international commerce. The workers are covered by a 68-year-old set of federal labor laws, called the Longshore and Harbor Workers Compensation Act, which allowed employees or employers to petition for a change in their disability benefits if the injured worker experienced a “change in conditions.”

The guidelines did not specify, however, whether that change is limited to an employee’s medical condition or can be taken to mean a change in wages, employment or wealth.

Rambo was working for Metropolitan Stevedore in Wilmington in 1980 when he injured his back and leg. He filed a disability claim and began receiving a weekly check of $80.16 for his permanent partial disability.

Rambo then received new training and took a job as a crane operator with another company. His earnings jumped to $1,550 a week, about three times what he had earned before being injured. Representatives of Metropolitan cited those higher earnings when they sought to reduce his benefits in 1989.

An administrative law judge canceled Rambo’s benefits, saying that the father of three no longer suffered a loss of wage-earning capacity.

Rambo, who has called his legal battle a fight for principle, appealed. In June, 1993, the 9th Circuit Court of Appeals reinstated his award, citing its ruling 60 years earlier that disability awards could only be altered or stripped if a worker’s physical condition changed.

Rambo’s attorney, Thomas J. Pierry Sr., said the ruling could provide the U.S. Department of Labor with more authority in disability cases involving dockworkers.

“When an injured worker is not receiving fair compensation, they want to be able to step in on their behalf,” he said. “In instances where the worker has rehabilitated, they want to be able to step in on the side of the employer.”

Rambo’s four-year legal struggle may not yet be over. While the Supreme Court ruled against him, it also sent the case back to a lower court to resolve some side issues. An attorney for Metropolitan called those side issues “just loose ends.”

“The court ruled on the substantive issue and we’ll be filing to dismiss the appeal,” said Robert E. Babcock, a Portland, Ore., maritime law specialist representing Metropolitan.

But Pierry said the unresolved issues include a promise by Rambo’s employers that his benefits would be guaranteed for life.

Rambo said through his attorney that he intends to pursue the case because of the employer’s promise to pay him $80 a week for life.

“I took them at their word and I think they should live up to their promise,” he said.