Issue: Maximum Weekly Rate

Back on March 14, 2011, I mentioned that an Outer Continental Shelf Lands Act case (OCSLA) (43 U.S.C. 1331 et seq.) was at the U.S. Supreme Court to determine whether and where there is a situs of injury requirement in the OCSLA.  Oral argument was held in that case (Pacific Operations Offshore LLP v. Vallodolid, Docket No. 10-507) on October 11, 2011, and we are waiting for the decision of the Court.  The OCSLA is an extension of the Longshore Act.

Remarkably, there currently is a second Longshore Act case at the Supreme Court (Roberts v. Sea-Land Services, Inc., et al., 625 F.3d 1204 (9^th Cir. 2010)), with oral argument scheduled for January 11, 2012.

The issue in Roberts is: What maximum weekly rate applies to compensation for disability under the Longshore Act?  Is it the maximum in effect as of the date of first entitlement to permanent total disability (in this case 7/12/05), or is it the higher, later maximum as of the date of the Administrative Law Judge’s Compensation Order (in this case 10/12/06)?    

This case involves benefits being paid at the maximum rate.  This worker’s average weekly wage ($2,853.08) is so high in relation to the NAWW at all times that the issue is significant. And it’s about time we’re settling the question, since the language to be interpreted has been in the Act since the 1972 Amendments.

This case could end up costing maritime employers and their insurance carriers money in the form of higher benefit rates in maximum rate cases. 

The Court will interpret the following language: 

Section 906(c) – Applicability of determinations.  Determinations under subsection (b)(3) (new NAWW) with respect to a period shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period, as well as those newly awarded compensation during such period (emphasis added).

The weekly rate at which a disabled worker is paid a PTD benefit is increased each October 1 and is capped at 200% of the NAWW in effect during the period he is “newly awarded” benefits.  Is this the date that he first becomes entitled or is it the later date of an ALJ’s Compensation Order?   

Facts

Mr. Roberts’ date of injury is February 24, 2002.

The ALJ’s Compensation Order, dated October 12, 2006, found that Mr. Roberts is entitled to:  temporary total disability (TTD) from March 11, 2002 to July 11, 2005, permanent total disability (PTD) from July 12, 2005 to October 9, 2005, and permanent partial disability (PPD) from October 10, 2005 and continuing. 

If Mr. Roberts was “newly awarded” PTD benefits during the period of his first entitlement on July 12, 2005, his benefit is $1,047.16 per week increasing to $1,073.64 on October 1, 2005, with the new NAWW and maximum.

If Mr. Roberts was “newly awarded” PTD benefits on the date of the ALJ’s Compensation Order on October 12, 2006, his weekly rate for PTD beginning back on July 12, 2005 is $ 1,114.44.  There is no increase on October 1, 2005, since he would already be above the maximum for that year based on the retroactive application of the maximum in effect on the date of the ALJ’s Order.

The amount at stake in this case is only $830.99, since Mr. Roberts’ entitlement changed from PTD to PPD on October 10, 2005, after only 3 months of PTD.  PPD benefits based on a loss of wage earning capacity are paid at two-thirds of the difference between the worker’s AWW and his residual wage earning capacity, are capped at the maximum on the date of injury, and are not subject to annual increases.  In the typical case, however, PTD benefits are paid for life and the difference per week based on a higher maximum rate for each affected disabled worker, multiplied in each case by life expectancy, would add up significantly for maritime employers.

Circuit Conflict

After the petition for writ of certiorari was granted on September 27, 2011, the Eleventh Circuit published Bernard D. Boroski v. Dyncorp International, et al., a Defense Base Act case (the Defense Base Act is an extension of the Longshore and Harbor Workers’ Compensation Act which incorporates the relevant statutory provisions).  The Eleventh Circuit reached conclusions opposite to those of the Ninth Circuit in Roberts.

There is also a Fifth Circuit case that supports Mr. Roberts’ position, but the Ninth Circuit and the BRB marginalized it as lacking pertinent analysis (Lovett R. Wilkerson v. Ingalls Shipbuilding, Inc. and Director, Office of Workers’ Compensation Programs, 125 F.3d 904 (5^th Cir. 1997)).

This case could go either way.  The term “award” is used inconsistently in the Act, and there is support in the statute for both arguments.

If Mr. Roberts wins his case, then, at least going forward, virtually all injured workers eligible for payment at the maximum weekly rate would be entitled to payment at the higher rate in effect on the date of the ALJ’s Compensation Order retroactive to the date of their first entitlement to PTD. 

You can read more about the Roberts case next month at my posting on SCOTUSblog.com.

ISSUE: Lump Sum Settlements, Section 908(i)

Submitted by: Will Scheffler IV, AIC; Branch Manager, American Equity Risk Services (AERS)

Reminder:  What follows are some observations and a summary of general principles based on my reading of the statute, regulations and case law.  Obviously, such statements of general principles and summary review in this format do not represent the position of any party in any actual case or controversy. 

Section 908(i) (33 U.S.C. 908(i)) is a key provision of the Longshore and Harbor Workers’ Compensation Act.  It provides for the closing of a claim, discharging the liability of the employer/carrier. 

Section 908(i) states – “(1) Whenever the parties to any claim for compensation under this Act, including survivor’s benefits, agree to a settlement, the deputy commissioner or administrative law judge shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress.  Such settlement may include future medical benefits if the parties so agree.  No liability of any employer, carrier, or both for medical, disability, or death benefits shall be discharged unless the application for settlement is approved by the deputy commissioner or administrative law judge.  If the parties to the settlement are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval.”

All of the information necessary to file a complete section 908(i) settlement application is contained in the Department of Labor’s Regulations governing administration of the Longshore Act at 20 C.F.R. sections 702.242 and 702.243.  It will save time and money to get it right the first time.

Basically, a complete application should contain:

1. A description of the incident as well as the nature of the injury;
2. A description of the medical care rendered to the date of settlement;
3. A summary of compensation paid and the compensation rate and average weekly wage (AWW);
4. A full description of the settlement indicating, as applicable, the amounts to be paid for compensation, medical benefits, survivor benefits, and attorney’s fees;
5. The reason for the settlement and the issues in dispute, if any;
6. The claimant’s date of birth and, in death claims, the names and birth dates of all dependents;
7. A description of the claimant’s educational background and work history;
8. A current medical report;
9. A statement explaining why the settlement amount is considered adequate;
10. If the settlement covers medical benefits, an itemization of medical expenses for the 3 years prior to the settlement application, an estimate of the claimant’s need for future medical treatment, and information on any collateral source available for the payment of medical expenses (Medicare is not an acceptable collateral source).

There are many considerations to keep in mind when preparing a section 908(i) settlement.  Here are some of them:

-         Generally, the Department of Labor (DOL) will not let you settle past medical benefits unless they are in dispute;

-         The settlement must be deemed adequate by the DOL’s District Director in order to obtain approval;

-         The Department of Labor will protect the interests of the unrepresented claimant to ensure that the settlement is adequate;

-         Payments pursuant to approved settlements are made directly to the claimant and not to the claimant and his attorney jointly;

-         Attorney fees are usually “over and above” the claimant’s portion and are not deducted from the overall settlement amount;

-         Even if a settlement is deemed inadequate or deficient, there is an opportunity for the parties to make alterations to gain approval.  This may cost the employer/carrier additional money;

-         A settlement may be “structured” in that payment may extend over the lifetime of the claimant, but if the party making the payments defaults then the liability to make the payments returns to the original employer/carrier. 

These are just some of my thoughts and observations regarding lump sum settlements under the Longshore Act.