ISSUE: Benefits

I’ve been posting discussions about the Longshore and Harbor Workers’ Compensation Act since April 20, 2009.  I think it’s about time that I summarize what the Act provides by way of compensation benefits to injured workers.

A.     Disability Compensation Benefits

1. Temporary Total Disability (TTD) Section 908(b) – compensation is paid until the worker is able to return to work or is declared to be medically stable.  TTD applies if an employee’s injury prevents him from working for a period of time, but he is expected to return to work at a later date; he may be under active medical care or the medical condition is expected to improve.  The rate is 66 2/3 percent of the injured worker’s pre-injury average weekly wage, subject to the weekly maximum and minimum rates.  No compensation is paid for the first three days of disability.  If disability lasts more than 14 days, then compensation is paid from the first day.
2. Temporary Partial Disability (TPD) Section 908(e) – compensation is paid during a period of reduced earnings which is not expected to be permanent.  The rate is 66 2/3 percent of the wage loss or loss of wage earning capacity (the difference between wages prior to the injury and wage earning capacity after the injury, subject to the weekly maximum). Compensation is paid for the duration of the disability but limited to five years.
3. Permanent Total Disability (PTD) Section 908(a) – awarded where the worker can not return to his pre-injury employment and there is no evidence in the record of suitable alternate employment that he can perform.  Compensation is paid indefinitely for the continuance of the disability.  The rate is 66 2/3 percent of the worker’s average weekly wage, subject to the weekly maximum and minimum.  The rate is adjusted annually each October 1 based on changes in the National Average Weekly Wage.
4. Permanent Partial Disability (PPD) Section 908(c) –

a)      Scheduled Compensation – The Act contains a schedule, rating various types of permanent partial impairments.  The percentage of impairment is converted into the number of weeks of compensation payable at the rate of 66 2/3 percent of the average weekly wage.  The schedule covers the loss or loss of use of extremities, loss of hearing, and loss of vision.  Partial loss, or loss of use of a part of the body listed in the schedule, is compensated on a pro rata basis.  For example, a worker with 10 percent loss of use of an arm receives 31.2 weeks of compensation based on 312 weeks for 100 percent loss of use.  It is not necessary to show actual wage loss for scheduled injuries.

b)      Non-Scheduled Compensation – where the injury is not confined to the schedule (e.g., injuries to the back. shoulder, neck) compensation is paid at the rate of 66 2/3 percent of loss of wages, i.e., 66 2/3 percent of the difference between the pre-injury average weekly wage and the post injury wage earning capacity.   

NOTE:  Disability under the Act is an economic concept.  The extent of disability cannot be measured by the medical condition alone.  Even a minor physical impairment can establish total disability if it prevents the employee from performing his usual employment.

B.  Death Benefits

1. Section 909 of the Act provides death benefits if the injury causes or contributes to the death of the worker.  Reasonable funeral expenses are paid up to $3,000.  A widow or widower receives 50 percent of the deceased’s average weekly wage (or national average weekly wage at the time of death if greater) for life or until remarriage.  If there are one or more children, an additional 16 2/3 percent is paid, regardless of the number of children, since the first child besides the widow would bring compensation to the maximum payable of 66 2/3 percent of the average weekly wage.  If there is no widow or widower, an only child is entitled to 50 percent of the deceased’s average weekly wage.  Any additional children bring the total payable to 66 2/3 of the deceased’s average weekly wage.  Children share the benefits equally.
2. Other eligible survivors include dependent brothers, sisters, grandchildren, parents and grandparents.  The first three types of beneficiaries are entitled to receive 20 percent and the latter two are entitled to receive 25 percent of the average weekly wage.  These are subordinate to the widow/widower and children.  Thus, a widow and one child would preempt any other beneficiaries.  A surviving widow alone would reduce a dependent brother’s share from 20 percent to 16 2/3 percent.
3. Compensation to an employee’s widow or widower ends upon death or remarriage.  Upon remarriage, a widow or widower will receive 2 years’ compensation in a lump sum.  Awards to children end when they reach 18, but benefits may be extended to age 23 if the child is a student or indefinitely if the child is incapable of self-support.

C.     Disfigurement

Compensation is paid for serious disfigurement of the face, head, neck or other normally exposed area likely to prejudice the injured worker’s ability to secure employment.  Disfigurement awards are set by the District Director and cannot exceed $7,500. 

D.    Annual Adjustment

Under Section 910(f), every October 1 there is an adjustment to compensation payable for permanent total disability or death arising out of injuries subject to the Act.  The increase is the lesser of the percentage, if any, by which the national average weekly wage for the year increased over the previous year or 5 percent.

The maximum weekly rate is twice the National Average Weekly Wage as determined by the Bureau of Labor Statistics, and the weekly minimum is one half of the National Average Weekly Wage.  Effective October 1, 2011, the current maximum weekly rate is $1,295.20 and the minimum is $ 323.80.

ISSUE: Recurring Question

Some questions come up over and over again.  One such question involves foreign workers and/or foreign employers in the United States.  Does the Longshore Act cover foreign workers?  Does the Longshore Act apply to foreign companies?  The answers are yes.

If we look at the definitions and coverage provisions in the Act we do not find anything that pertains to nationality or citizenship, with one minor exception.

Section 2(3) (33 U.S.C. 902(3)) defines “employee” as, “any person engaged in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor-worker including a ship repairman, shipbuilder, and ship-breaker …”. 

Section 2(4) defines “employer” as, “an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel)”.

Section 3 is the Coverage provision.  Section 3(a) states, “… compensation shall be payable under this Act in respect of disability or death of an employee, but only if the disability or death results from an injury occurring upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel).”

Section 3(b) states that, “No compensation shall be payable in respect of the disability or death of an officer or employee of the United States, or any agency therof, or of any State or foreign government, or any subdivision thereof.”

So that’s it.  Section 2(3) is the “status” provision, and Section 3(a) is the “situs” provision.  Together they provide the tests for coverage for employees under the Longshore Act.  A maritime employer is any employer who employs a worker who meets the “status” and “situs” tests.

With the exception of employees of a foreign government, there is no nationality or citizenship component to Longshore Act coverage.

If a domestic U.S. company hires foreign workers to work in the U.S., either permanently or temporarily, these workers are covered by the Longshore Act if they meet the status and situs tests.

If a foreign company sends foreign workers to work in theUnited States, either permanently or temporarily, these workers are covered by the Longshore Act if they meet the status and situs tests.

All employees, working in maritime employment on covered sites as specified in Section 3(a), and not specifically excluded somewhere else in the Act, are covered.  Nationality or citizenship is not part of the coverage analysis.  It all comes down to status and situs, period.

Now bear in mind that we’ve been discussing the coverage issue of foreign workers working in the U.S. The coverage issue presented by U.S. citizens working overseas or on the high seas is an entirely separate question.  We discussed this back on August 21, 2009, and we will have the opportunity to pick up the issue again when the Ninth Circuit issues its decision in the pending appeal of Joseph Tracy v. Keller Foundation, Inc./Case Foundation Co. and ACE USA/ESIS v. Global Offshore Int’l, Inc., Liberty Mutual Insurance Co., and Director, Office of Workers’ Compensation Programs (Ninth Circuit Nos. 11-71703, 11-71800)(Yes, that is a long caption with a lot of parties).  This case involves aU.S. citizen performing maritime work in Singapore and Indonesia.  One issue is, “Does the Longshore Act cover an American citizen injured on foreign territorial waters in the course of his maritime employment?”

Finally, congratulations to David Widener, who has been selected for the position of Longshore District Director in the U.S. Department of Labor’s Houston district office.  Dave, formerly with The American Equity Risk Services (AERS),ALMA’s claims unit, and most recently with the Department of Labor as a Claims Examiner in the DOL’s Houston office, is an excellent choice.

INSOLVENCY – PART TWO

Back on August 31, 2011, in Insolvency – Part One, we considered the circumstances where the insurance carrier was insolvent but the insured employer was solvent, and we concluded that if the insurance company doesn’t pay then the employer must pay.

We said at that time that we would discuss various other insolvency scenarios in future postings.

So, now we will look at what happens when there is a default because the insurance carrier is insolvent and the insured employer is bankrupt.

If both the insurance carrier and the insured employer have defaulted on the payment of benefits then the injured worker may seek to proceed under Section 918 (33 U.S.C. 918) and obtain payment from the Special Fund administered by the U.S. Department of Labor.

Section 918(a) provides that in the case of default by the employer in the payment of compensation due under any Award for a period of thirty days after the compensation is due and payable, the injured worker may seek the issuance of a Supplemental Order Declaring Amount of Default.  This “Default Order” may be issued by the Department of Labor’s District Director after the appropriate investigation.  The injured worker may then file a copy of this “Default Order” with the clerk of the Federal district court for the judicial district in which the employer has his principal place of business or maintains an office, or for the judicial district where the injury occurred.  If the “Default Order” is in accordance with law, the district court will issue a judgment in favor of the injured worker.  The injured worker can then proceed to attempt to execute the judgment.

Section 918(b) provides that in cases where the judgment cannot be satisfied by reason of the employer’s insolvency or other circumstances precluding payment, the Secretary of Labor may, in his discretion and to the extent he shall determine advisable after consideration of current commitments payable from the Special Fund, make payment from the Fund.

The basic requirements for relief under section 918(b) are:

1)      There must be an existing final Compensation Order,

2)      The employer must be in default,

3)      Thirty days must elapse without payment,

4)      The injured worker must obtain a “Default Order”,

5)      The injured worker must obtain a judgment from federal district court based on the default order,

6)      The injured worker must seek to execute the district court’s judgment. 

If there is no existing Compensation Order, then the injured worker should have the case immediately referred to the Office of Administrative Law Judges for a formal hearing, since the District Director does not have the authority to issue a Compensation Order unless there is the express agreement of all parties.

Expedited Payment

Under certain circumstances, the injured worker may seek expedited payment from the Special Fund under Section 918(b).  In the event that both the insurance carrier and the employer are defunct and this can be clearly documented, the injured worker may seek expedited payment from the Director, Division of Longshore and Harbor Workers’ Compensation. Where the investigation by the District Director reveals that the responsible employer and insurance carrier are both defunct and that it would be futile to require the injured worker to obtain and attempt to execute a judgment from the federal district court, and there is no other possible source of payment, then the Director may make payment from the Special Fund without requiring the injured worker to follow futile procedures.   

Note:  payment under section 918(b) will only be made after all other sources of payment have been eliminated, including state insurance administrators, state guarantee funds, collateral deposits, and corporate officers (in the case where the employer was uninsured).

Section 918(b) is funded by means of the annual Special Fund assessment of all authorized insurance carriers and authorized self-insured employers.  It currently accounts for between 3 and 4 per cent of annual Special Fund expenditures.

Next:  What happens when an uninsured employer goes bankrupt?