ISSUE: Concurrent Jurisdiction in Virginia

Virginia is in the process of doing something fair and reasonable for the maritime employers in the State.  On February 28, 2012, the state legislature completed the process of passing a Bill that ends so called “concurrent” jurisdiction in Virginia between the state act workers’ compensation law and the federal Longshore and Harbor Workers’ Compensation Act.  Effective July 1, 2012, if a worker is covered by the Longshore Act (or by the Jones Act, a federal liability remedy covering crewmembers of vessels) he is no longer covered by the State’s workers’ compensation law.  The Bill is awaiting the Governor’s signature.

Background:  I’ve previously discussed concurrent jurisdiction on several occasions.  A 1980 U.S. Supreme Court decision (Sun Ship v. Pennsylvania, 447U.S. 715) confirmed that maritime workers’ compensation claims are covered simultaneously by both state workers’ compensation laws and the federal Longshore Act. This is referred to as “concurrent jurisdiction”.  Obviously this leads to inefficiencies and extra costs for maritime employers and their insurance companies, who must insure workers under both laws, comply with two sets of regulations, deal with two sets of medical fee schedules, satisfy two regulators, pay occasionally duplicative benefits and attorney fees, fill out two sets of forms, reports, etc., and etc. 

Many maritime states have expressly amended their workers’ compensation laws to eliminate concurrent jurisdiction by providing generally that if a worker is covered by the Longshore Act then he is not covered by the state act.  These so called “exclusive” states include Florida, Louisiana, Maryland, Mississippi, New Jersey, Texas andWashington.  Typical language appears in the Florida law:  “No compensation shall be payable with respect to disability or death of any employee covered by the Federal Employers Liability Act, the Longshore and Harbor Workers’ Compensation Act, or the Jones Act.”

Many other maritime states, however, are still “concurrent” jurisdiction states.  These include Alabama, California, Connecticut, Georgia, New York, Pennsylvania, Rhode Island, South Carolina, and until now, Virginia.  In these concurrent states, injured workers routinely file claims under both the state act and the Longshore Act and the workers, their attorneys, and medical and other service providers all seek and choose whatever is to their advantage under both laws.

Clearly, concurrent jurisdiction is a problem for maritime employers in concurrent states.   There may be an occasional advantage available to an injured worker or service provider in some states under certain circumstances by being able to claim benefits under two laws.  The disadvantage to the maritime employer exists across the board, however, since it must pay for two insurance policies, covering every maritime worker under two separate laws.  Also, once an injury occurs, the maritime employer has a disadvantage in every case for every injured worker in every concurrent state by having to provide two complete systems of compliance, regulation and claims administration.

And please remember that the Longshore Act by no means provides inadequate protection.  In fact, it is arguably more generous, more liberally administered, and provides higher maximum weekly benefits than any of the state workers’ compensation laws.  So in all fairness, Virginia has not deprived injured maritime workers of workers’ compensation protection.  These workers continue to be covered by what is frequently referred to as “the most expensive workers’ compensation law in the country”.  They simply no longer have the peculiar advantage of concurrent jurisdiction that was not available to any other workers in the State.

So, once the Governor signs the Bill in Virginia, which he is expected to do, effective July 1, 2012, Virginia’s maritime employers will no longer have to maintain two concurrent workers’ compensation insurance plans for their longshoremen, shipbuilders, ship repair workers and other traditional maritime workers.

Concurrent Jurisdiction – Part Two

ISSUES

This is a continuation of Concurrent Jurisdiction – In Part One we discussed the historical and constitutional context of the Longshore Act/State Act jurisdictional tension, listed the Concurrent and Exclusive states, and gave examples of how the concurrent jurisdiction problem costs maritime employers money.   Part Two concludes the discussion of Concurrent Jurisdiction. 

But before we continue with Part Two, let’s go back to the state lists in Part One.  An astute and well informed reader pointed out that according to her reading of the laws in Indiana and Kentucky these states should have been listed as “exclusive” rather than “concurrent”.  That is a fair interpretation of the language in each state’s law, and it points out two problems.  First, there are too many astute and well informed readers out there.  Second, there is a danger in being too brief in summarily discussing nuanced issues. 

So a brief (sorry) background on how I compiled my lists.  

Back when I was still at the Department of Labor we decided to require authorized insurance carriers to post collateral in the same manner as authorized self-insurers.  This was in response to the unpredictable behavior of state insurance departments and guarantee funds when insolvencies occurred.  Our aim was to protect the Longshore Special Fund. 

Since a security requirement for insurance carriers would be conditioned on several variables related to state action, we needed to collect information.  We needed to know, in the event of a carrier insolvency and default, whether the state guarantee fund would pay Longshore cases and/or would the state administrator or rehabilitator pay Longshore cases under state act up to state maximum rate limits.  We wrote to each state’s insurance department and followed up with telephone calls.  We didn’t get many straight answers. 

Information and impressions gained from that experience were the initial bases for my lists, and I have annotated the lists as I have noted new, relevant information. 

One of the conclusions I’ve drawn is that if the state insurance law does not specifically cite the Longshore Act by name in its exclusions/exemptions provision, then unless I know something firsthand to the contrary I will lean toward calling that state “concurrent” to be conservative.  If the Longshore Act is not cited by name, then there is too much room for a state court to interpret any exclusion as applying only to federal liability statutes such as the Jones Act and the Federal Employers Liability Act. 

So even though your state’s insurance law seems to say that your state is “exclusive”, if it does not specifically cite the Longshore Act by name, it is very possible that your state will be listed by me as “concurrent” in the belief that there is room for improvement in the language of the state act.  This is the situation in Indiana and Kentucky.  I’m not sure whether these two states are concurrent or exclusive, but since there’s room for doubt I play it safe and list them as concurrent. 

Possibly I should list a third category called “ambiguous” states.  Or maybe indicate the uncertainty with regard to some states by  marking the state with a question mark.  Actually this is what I’ll do.  Indiana and Kentucky are now officially listed in my “concurrent” list as IN(?) and KY(?). 

And thank you to that reader for raising the issue. 

PART TWO OF TWO

                                                CONCURRENT JURISDICTION

EXAMPLES – these cases are typical of problems faced by maritime employers due to concurrent state/federal Longshore jurisdiction.

In a recent case in Maine (supposedly an exclusive state so you can see the problem with trying to compile a list.  What is really needed is a uniform, comprehensive solution to the concurrent jurisdiction issue) a worker filed a Longshore Act claim and was paid Longshore Act benefits.  A hospital which had provided medical services sued for reimbursement under the state workers’ compensation law, which allowed for higher medical payments than the federal fee schedule.  Result:  the employer paid the higher medical costs under state law and the higher indemnity benefits under the Longshore Act.

In a recent case in New York a worker was permitted to sue his employer under New York State Labor Law section 240 in a case where his claim was covered under the Longshore Act and concurrently under state law.  The state court held that the lawsuit under state law was not preempted by the Longshore Act.

In recent cases in Connecticut state courts have held that longshoremen injured in the hold of a ship were concurrently covered under both the Longshore Act and state law (directly contrary to Jensen).

Similarly, in Pennsylvania a shipyard worker working in a dry dock was held by state court to be covered concurrently by state law and the Longshore Act.

In Michigan the state workers’ compensation law contains an exception to the employer’s immunity by allowing the injured worker to sue on the theory of “intentional tort”.  Other states also have this exception, such as Louisiana, Texas, and Ohio.

In a civil case currently pending in Michigan a RICO fraud lawsuit by an injured worker against his employer, the workers’ compensation claims adjuster, and a defense doctor has survived a challenge and is proceeding.

CREDIT

Section 903(e) of the Longshore Act states, “Notwithstanding any other provision of law, any amounts paid to an employee for the same injury, disability, or death for which benefits are claimed under this Act pursuant to any other workers’ compensation law or section 20 of the Act of March 4, 1915 (relating to recovery for injury to or death of seamen) shall be credited against any liability imposed by this Act.”

So, in most instances double recovery to the injured worker is avoided, but the employer still has the burden of double costs, etc.

SOLUTIONS?

It would help if the courts would enforce Jensen, at least for maritime workers injured over navigable waters, but a more comprehensive solution would be for the U.S. Supreme Court to overturn Sun Ship and enforce the Longshore Act’s exclusivity under the Supremacy, Admiralty, and Commerce clauses of the U.S. Constitution. 

It is unlikely that Sun Ship will be overturned, however, so the solution will have to come from either state legislatures or Congress.

Longshore and Harbor Workers’ Compensation Act – Concurrent Jurisdiction

PART ONE OF TWO

Workers’ compensation claims are covered simultaneously by the Federal Longshore and Harbor Workers’ Compensation Act and by state’s workers’ compensation law in so called “concurrent” states.  This presents problems for maritime employers.

BACKGROUND

The U.S. Constitution makes uniformity in maritime matters a priority.  This is written into the Admiralty Clause (Art. III, Section 2).  State laws cannot conflict with uniform national policy in this area.  This is written into the Supremacy Clause (Art. VI). Powers not expressly granted to the federal government are reserved to the states (Tenth Amendment).  There’s tension built into the system.

1910 – States begin enacting workers’ compensation laws;

1917 – U.S. Supreme Court holds that the states’ new workers’ compensation laws do not cover workers injured over navigable waters (Southern Pacific Ry. Co. v. Jensen, 244 U.S. 205 (1917));

1927 – Congress enacts the Longshore and Harbor Workers’ Compensation Act, covering workers injured over the navigable waters of the U.S.;

1972 – Longshore Act is amended to extend coverage landward for maritime workers;

1980 – U.S. Supreme Court holds that the Longshore Act does not supplant state workers’ compensation laws, but supplements them (Sun Ship v. Pennsylvania, 447 U.S. 715 (1980));

1984 – Longshore Act is amended and Sun Ship is not overruled, so concurrent jurisdiction is preserved.

Concurrent states – AL, AK, CA, CT, GA, IL, IN, KY, MI, MN, MO, NY, PA, RI,  SC, VA, WV, WI

Exclusive states – FL, HI, LA, ME, MD, MS, NJ, OH, OK, OR, TX, WA

The “exclusive” states have expressly provided in their state insurance laws that if you are covered by a federal statute then you are not covered by state workers’ compensation law.  Typical language appears in the Florida law:  “No compensation shall be payable with respect to disability or death of any employee covered by the Federal Employers Liability Act, the Longshore and Harbor Workers’ Compensation Act, or the Jones Act.”  But, in the “concurrent” states, the state workers’ compensation law may apply to workers who are also covered by the Longshore Act.

SECTION 905(a)

Section 905(a) of the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. 905(a)) states, “The liability of an employer prescribed in section 4 shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband, or wife, parents, dependents, next of kin, and any one otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death recover damages from such employer at law or in admiralty on account of such injury or death….”

This language makes the Longshore Act exclusive with regard to suits for damages “at law or in admiralty”.  State workers’ compensation claims are not considered to be suits at law or in admiralty.  Thus, section 905(a) does not prevent state law from applying concurrently to Longshore Act claims

INCREASED COSTS FOR EMPLOYERS

Concurrent jurisdiction increases costs for employers:

-         litigation costs are increased as employers must defend two claims,

-         claims administrators must maintain two files under two regulators,

-         attorney fees must sometimes be paid for claimant attorneys under two laws,

-         there are occasionally duplicative benefits,

-         there are two different insurance requirements,

-         rules of evidence differ (for example, drug use defenses),

-         possibly two different subrogation actions,

-         there are different settlement procedures,

-         there are different medical fee schedules,

-         there are surprises (for example, the Longshore Act statute of limitations for filing a claim is tolled during the pendency of a state act claim)

Part II next week