ISSUE: Landmark Case Number 10

The case of P.C. Pfeiffer Co. v. Ford, 444 U.S. 69 (1979), is another early “status” case.  It is “early” (dates of injury April 12, 1973 and May 2, 1973) in the sense that at that time the courts were struggling to interpret the brand new “status” coverage provisions that had been created in the 1972 Amendments to the Longshore Act.  Remember that prior to the 1972 Amendments the test for coverage was based only on the location of the injury.  Anyone injured in the course of employment over the navigable waters of the United States or on a dry dock was covered.  The Amendments added coverage in specified landside areas for employees engaged in “maritime employment”.

The key issue in these early cases was the interpretation of what constituted maritime employment.

Ford is a “status” case involving two workers who were injured while performing their duties landward of the “point of rest” alongside the vessel on the dock. The U.S. Department of Labor’s (DOL) Administrative Law Judges (ALJ) had originally denied the workers’ claims by application of the “point of rest” doctrine.

NOTE: The now discredited so-called “point of rest” doctrine argued that maritime employment includes only the portion of the unloading process that takes place before the longshoremen place cargo from the vessel onto the dock and the portion of the loading process that takes place to the seaside of the last point of rest on the dock.  In other words, loading and unloading only occurs between the vessel and the dock.

The DOL’s Benefits Review Board reversed the ALJ’s denials and found that the workers were covered by the Longshore Act. The federal Court of Appeals for the Second Circuit affirmed.  Then on remand from the Supreme Court for reconsideration in light of its intervening Caputo decision the Court of Appeals reaffirmed its earlier opinion awarding benefits.  So what were these workers doing that complicated the coverage question?

Mr. Ford, a warehouseman, was injured while fastening military vehicles on to railroad flat cars. The vehicles had been delivered to port by ship, put in storage, and then placed on the rail cars by longshoremen on the day prior to the injury.

The consolidated case involved Mr. Bryant, who was injured while unloading a bale of cotton from a dray wagon into a pier warehouse. Cotton arriving at the port from inland shippers entered cotton compress warehouses, then went by dray wagon to pier storage warehouses, and subsequently was moved by longshoremen from the warehouse onto vessels for shipping.

Mr. Ford had been working out of the Warehousemen’s local union on the day of the accident. Union rules limited the types of jobs that warehousemen could perform.  They could not move cargo directly from a vessel either to a point of rest on the dock or, in this case, on to a railcar.  These movements were performed only by longshoremen.

Neither claimant was directly involved in handling cargo between the dock and the vessel. Did their duties constitute “maritime employment”?

NOTE: Remember, these were early cases.  Today these activities would be considered clear instances of maritime employment.  The issue was not clear back when these cases were being adjudicated.

Held: Ford and Bryant were engaged in maritime employment at the time of their injuries because they were engaged in intermediate steps of moving cargo between ship and land transportation.

The principle is that persons moving cargo directly from ship to land transportation are engaged in maritime employment, and a worker responsible for some portion of that activity is as much an integral part of the process of loading or unloading a ship as a person who participates in the entire process.

NOTE: The truck driver carrying the cotton away from or to the terminal and the locomotive engineer transporting the military vehicles away from the terminal are not engaged in maritime employment even though they were present on a covered situs.  They are engaged in land transportation.  Ford’s job of fastening the vehicles to the railroad flatcars was the last step in transferring the cargo from sea to land transportation.

The Longshore Act is going to follow cargo handling from the vessel to the warehouse, from warehouse to warehouse, from terminal to terminal, until it is placed on to land transportation. In the other direction, the Longshore Act will follow cargo from where it is removed from land transportation until it ends up on a vessel.  All intermediate steps are covered.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

 

ISSUE: Aggravation Rule

Awhile ago I discussed the “Aggravation Rule”. There are some recent cases that illustrate how this Rule works, so I thought that I would repeat much of my earlier discussion and then briefly note these recent case examples.

First, let’s start with the “Last Employer Rule”. This is a judge created rule that the courts use to mitigate the difficulties and delays inherent in trying to apportion liability among several employers due to cumulative exposure in occupational disease cases.  The solution is that the last employer to have exposed the worker to “injurious stimuli” prior to the date of injury is held liable for the entire resulting disability (the date of injury in occupational disease cases is the date of manifestation).

The Last Employer Rule is based on the assumption that it is equitable because all employers will be the last responsible employer a fair, proportional number of times; so aside from simplifying litigation, the rationale is that the rule is not unfair.

This may be a dubious proposition in general; in specific instances it can be quite inequitable, but the courts have adopted it across the board.

It can certainly be inequitable as it is applied in Longshore Act cases. As the Last Maritime Employer Rule, it assigns liability to the last responsible employer under the Longshore Act notwithstanding subsequent and intervening injurious exposure in non-covered employment.  An extreme example is the claimant who worked for Newport News Shipbuilding and Dry Dock Company for six months during the 1950s where he was exposed to asbestos and then worked for over thirty years for NASA where he was also exposed to asbestos.  His widow collected benefits from Newport News under the Longshore Act.

The Last Employer Rule used in occupational disease cases has a counterpart in cases involving multiple party cumulative traumatic injuries. It is known as the Aggravation Rule.

As a general proposition, the determination of the responsible employer in cumulative trauma claims turns on the distinction between whether the claimant’s disability is the result of the “natural progression” of a work related injury or an “aggravation” of that injury.

NOTE: “Natural Progression” means that the disability would have occurred and been the same without the occurrence of a subsequent injury or “aggravation”.

If the disability results from the natural progression of an initial injury, then the employer at the time of that initial injury is the Responsible Employer for the entire disability. But if the conditions of employment with a subsequent employer aggravated, accelerated, or combined with the earlier injury, then the employer at the time of the second injury is liable for the entire resulting disability.

Of course there are inequitable applications. In a well known Ninth Circuit case, the claimant continued to work after he was scheduled for bilateral knee surgery.  He worked a total of one shift for a stevedore employer, and the court found that this one shift caused a minor but permanent increase in the claimant’s disability; in other words, an aggravation.  The stevedore on that last day of work was found to be the responsible employer for the entire disability even though the claimant had worked only one day with that employer over the previous 20 years.  The court held that the one day of work was sufficient to aggravate the knee conditions that the last employer inherited from the previous employers.

As noted above, in a traumatic injury case, the pertinent issue is whether an employee’s disability is the result of the natural progression of his injury with earlier employers, or whether the condition was aggravated by work with a later employer.

The Last Employer Rule and the Aggravation Rule raise many questions.

  1. Does the last responsible employer in occupational disease cases get a credit against its liability under section 903(e) of the Longshore Act for settlements reached by the claimant with previous maritime employers for the same injurious exposure? The answer is “No”. Section 903(e) only provides a credit for payments made under “other” workers’ compensation laws or the Jones Act.
  2. In the case of two hearing loss exposures with two different employers confirmed by two separate audiograms, is the last maritime employer responsible for the entire hearing loss? Under certain circumstances, the answer is “No”. These constitute two separate injuries payable by separate employers. They are not merged under the Aggravation Rule.
  3. If the claimant executes a lump sum settlement under section 8(i) of the Longshore Act with the last responsible employer does this end the claimant’s entitlement and let the previous employer(s) off the hook? The answer is “Not necessarily”. Where the settlement with the last responsible employer for whatever reason (in the court’s judgment) does not fully compensate a good faith claimant for his entire disability, the claimant may look to previous employers for full compensation. (Yes, this is an example of inconsistent application of the Rule by the courts.)
  4. In the case of successive traumatic aggravating injuries, can the last responsible maritime employer take a credit for previous scheduled award payments made by previous employers? The answer is “Yes”. In this situation, the Benefits Review Board, affirmed by the federal Courts of Appeal, has created an extra-statutory credit in order to avoid double recoveries. The credit is for the dollar amount of the prior payments and only applies to scheduled awards in cumulative trauma cases.
  5. An increase in pain or the manifestation of symptoms due to employment is an “injury” for application of the Aggravation Rule, regardless of any change in the underlying condition. It also triggers the section 20(a) presumption.
  6. The relative contribution of the pre-existing condition and the aggravating injury are not weighed. The employer at the time of the aggravating injury is responsible for the entire disability.
  7. In traumatic injury cases a claim must be filed within 1 year of the time that the claimant is aware, or should have been aware, of the relationship between the injury and his employment. When additional employers are added as defendants after a claim has been filed, the time limitation does not begin to run against any subsequently added employers until the initial employer against which the claimant timely filed his claim is found not to be liable. The only timeliness issue in these cases involves the claim against the first employer named.

Some Recent Cases

SSA Terminals, LLC and Homeport Insurance Company v. Robert Amezcua, et al., Ninth Circuit, 2/17/2016 (Unpublished)

This is example number one in the application of the unintentionally ironically labeled “equitable” Aggravation doctrine.

The claimant suffered a torn ACL and torn medial meniscus to the right knee on January 9, 2009, while employed by Yusen Terminals. He continued working with pain for APM Terminals on January 14, 18, 19, and 20th and for SSA on January 12, 13, 16, 17, and 22.  January 22 was his last day of work, at which point “extreme pain” precluded further work (he eventually returned to longshore work about 2 years later after 3 knee surgeries, which is not relevant too our discussion).

Who’s the responsible employer? He was working for Yusen when he suffered his traumatic knee injury on January 9.  He was working for SSA on January 22, his last day of work.

He worked all of the shifts following the January 9 injury as a Utility Tractor Removal (UTR) truck driver. According to the claimant’s testimony this was “light” duty, entailing sitting all day with 2 steps to climb into and out of the cab.  There was no second trauma, but was there an “aggravation” of the January 9 injury on January 22?

Medical evidence was split. The claimant’s initial treating physician opined that absent a specific trauma, the claimant’s post injury work did not aggravate his knee injury.

On the other hand, a consulting physician was of the opinion that all post injury weight bearing activity aggravated the knee condition.

The Administrative Law Judge (ALJ) picked the second doctor’s opinion, finding SSA liable as the last responsible employer. This was affirmed at the Benefits Review Board and at the federal Ninth Circuit Court of Appeals.

This is certainly a straightforward application of the Aggravation Rule. But this case could have gone either way.  A different ALJ, or maybe this ALJ on a different day, could have found Yusen liable in a natural progression scenario.  This would be equally affirmable on appeal as supported by “substantial evidence.”

It boils down to SSA being liable based on its being the employer for 1 last shift of work on January 22 (on equivocal evidence).

Gary J. Aubert, Sr. v. American Sugar Refining Incorporated and Ace American Insurance Company, BRB No. 15-0219, 3/03/2016

This case involves a hearing loss claim that went up to the Benefits Review Board, was remanded, and returned back to the Board a total of three times.

The claimant is a longshoreman with a 22 year history of occupational noise exposure. The employer/defendant employed him for 1 shift of work on June 27, 2009, two days prior to his audiogram on June 29, 2009.

Guess who is liable for the entire hearing loss as the “last covered employer to expose the claimant to injurious noise levels”?

If you guessed the employer he worked for on one day after 22 years of exposure then you understand the Aggravation rule.

In this case, the evidence for injurious exposure for the duration of that one day of work was contested and equivocal, although adequate to withstand scrutiny under the “substantial evidence” standard of review.

So there you have two recent examples of the Aggravation rule, holding a marginally and minimally responsible employer as “last” and “responsible” for the entire disability. Under this Rule, you can have a claimant working for many years for one employer and then one last day (with injurious exposure) for a different, “last employer” and that last employer picks up the entire cost of the claim.

That’s the way it is. As the Benefits Review Board says, “It is outside the Board’s scope of review to change the last employer rule or to apply a rule that provides a more equitable approach to compensation”.

Under the applicable doctrines these results are very much mainstream. It’s just another day at the bench under the Longshore Act.
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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

ISSUE: Civil Penalties- Going Up

On July 1, 2016, the U.S. Department of Labor (DOL) published an “interim final rule” in the Federal Register. It announced the upward adjustment of the amounts of civil penalties assessed or enforced in its regulations.  The Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires agencies to adjust the levels of civil monetary penalties for inflation.  These adjustments apply to any penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015.

In case you’re still reading, these adjustments affect several provisions of the Longshore and Harbor Workers’ Compensation Act and its extensions, the Defense Base Act, the Outer Continental Shelf Lands Act, and the Nonappropriated Fund Instrumentalities Act.

To make a long story short, here’s how the Longshore Act is affected:

Form LS-202, Employer’s First Report of Injury – the current maximum penalty amount for late reporting is $11,000 per occurrence. Effective August 1, 2016, the new maximum penalty amount is $22,587 per occurrence.

Form LS-208, Employer’s Final Report of Payment – the current maximum penalty amount for late reporting is $110 per occurrence. Effective August 1, 2016, the new maximum penalty amount is $275.

Discrimination under section 48(a) (33 U.S.C. 948(a)) (old section 49) – the current minimum penalty amount is $1,100 and the current maximum penalty amount is $5,500. Effective August 1, 2016, the new minimum penalty amount is $2,259 and the new maximum penalty amount is $11,293.

To place this information in context, I’ve summarized below my previous blog discussions with regard to Form LS-202 and Fines and Penalties.

Form LS-202, Employer’s First Report of Injury or Occupational Illness

The DOL issued Industry Notice No. 144 on November 14, 2013. It contained important new instructions for mailing injury reports, claims forms, and correspondence in Longshore cases effective December 2, 2013.  The New York Longshore District Office is designated the “Central Case Create” site.  All new reports of injury and claim forms are to be mailed to:  U.S. Department of Labor, OWCP, Division of Longshore and Harbor Workers’ Compensation, 201 Varick Street, Room 740, P. O. Box 249, New York, NY  10014-0249.

After a case has been created, the Jacksonville, FL district office is designated as the “Central Mail Receipt” site. All case specific mail is to go to the following address:  U.S. Department of Labor, OWCP, Division of Longshore and Harbor Workers’ Compensation, 400 West Bay Street, Suite 63A, Box 28, Jacksonville, FL  32202.

All checks (for deposit to the Special Fund or in response to penalties), as well as inquiries, forms, and other documents concerning self-insurance authorization, security deposits, and Special Fund assessments are to go to the following address: U.S. Department of Labor, OWCP, Division of Longshore and Harbor Workers’ Compensation, Branch of Financial Management, Insurance, and Assessments, 200 Constitution Avenue, NW, Room C-4319, Washington, DC  20210.

More on Form LS-202.

This is from the Procedure Manual for Claims Examiners in the Division of Longshore and Harbor Workers’ Compensation in the U.S. Department of Labor (DOL):

“Under Section 30(a) of the Act, an employer must, within ten days from the date of any injury which causes loss of one or more shifts of work, or death (or from the date that the employer has knowledge of a disease, or infection as a result of such injury), furnish an employer’s report of injury or death to the District Director in the appropriate District Office (this is now the New York District Office. See the discussion of Industry Notice No. 144 above.).  In the event that the employer does not have immediate knowledge of the injury, the ten day period begins to run from the date that the employer obtains such knowledge.”

The timely reporting of injuries to the DOL by the employer is very important. In some ways it’s to the advantage of the employer, and there are penalties attached to failure to comply with the 10 day requirement.

On November 9, 2009, the DOL published Industry Notice No. 130: “Subject:  Initiative to Improve Timeliness in Employer’s First Report of Injury and Initial Payment of Compensation.”  In this Notice, the DOL announced its intention to “scrutinize more closely” the “timeliness in filing first reports of injury.”

This Notice did not add any new reporting requirements nor change in any way the Section 30(a) ten day requirement. Rather, it reflected the DOL’s intent to improve the industry’s compliance with the existing standard.  This initiative by DOL is in conformance with the requirements of the Government Performance and Results Act of 1993 (GPRA), which requires that agencies set goals and measure progress against those goals.

So, what must the employer do under Section 30(a)? It’s simple.  The employer must send Form LS-202 to the appropriate DOL district office (New York) within 10 days of a lost time injury, or 10 days from the date that it has knowledge of the injury.  The term “lost time injury” means time lost beyond the day or shift of the injury.  A report of injury should also be filed if no time is lost but it is anticipated that the incident will result in an impairment rating and a claim for a scheduled award under Section 8(c).  Note:  The reports are timely so long as they are mailed within the 10 days as evidenced by the postmark.

The report can be filed by regular mail, or it may be filed electronically once the employer has registered with DOL as an electronic filer.

Keep in mind:

  • the report must be mailed within 10 days. Don’t wait to verify all of the information or to complete an investigation.   It is more important to report the injury timely;
  • the Form LS-202 is not “evidence” of any fact stated in the report. The employer can describe reported events as “alleged” if it wishes, but it’s not necessary;
  • the statute of limitations for filing a claim does not begin to run until the employer files the Form LS-202. If the employer never files the Form LS-202, the claim filing time requirement never begins to run against the injured worker;
  • it is the employer’s obligation to file the Form LS-202, not the insurance carrier’s. If the employer sends the report to its insurance company within 10 days, and the insurance company then files it with the DOL too late, the employer has failed to comply with the requirement;
  • the information on the Form must be accurate. Incorrect statements can be inconvenient to explain later on, and there are harsh provisions in the Act to deal with intentional false statements.

 

PENALTY

The 1984 amendments to the Longshore Act changed the basis for the assessment of penalties under Section 30(a). The language of “failure or refusal to send any required report” was changed to “knowingly and willfully” failing or refusing to send a report.  “Knowingly” means that the employer knew or should have known of the requirement, and “willfully” means either intentionally disregarding the statute or being plainly indifferent to its requirements.

The maximum penalty for failing to file Form LS-202 within 10 days was set in the 1984 amendments at $10,000 per occurrence. Then, effective November 17, 1997, the maximum was increased to $11,000 under the provisions of the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Debt Collection Improvement Act of 1996. Effective August 1, 2016, the maximum penalty amount is $22,587.

Fines and penalties assessed under various provisions of the Act go into the Special Fund, but raising money for the Fund is not the purpose of the penalty provisions. Far less than 1% of Special Fund receipts in any given year are due to fines and penalties.  The Section 30(a) requirement in particular and DOL’s current compliance initiative are intended to improve the administration of the Act.

ISSUE: Fines and Penalties

There are several sections in the Longshore Act that provide for civil or criminal fines and penalties. These provisions variously apply either to claimants or employers as specified.  Here’s a list of the things that you can do or not do to earn a fine or penalty.

Section 8(j)

“8(j)(1) – the employer may inform a disabled employee of his obligation to report to the employer not less than semiannually any earnings from employment or self-employment, on such forms as the Secretary shall specify in regulations.

(2) An employee who –

(A) fails to report the employee’s earnings under paragraph (1) when requested, or

(B) knowingly and willfully omits or understates any part of such earnings … forfeits his right to compensation with respect to any period during which the employee was required to file such report.”

Notes on Section 8(j):

“A disabled employee” is interpreted to mean one who is actually receiving compensation.

U.S. Department of Labor Form LS-200 is used to request reports of earnings.

Any amounts forfeited under section 8(j) are recovered by offset against future compensation as determined by the District Director.

The Longshore Act does not provide for recovery of an overpayment directly from the claimant. The only recourse for recovery is to offset the overpayment against future compensation.

Section 8(j) was added in the 1984 Amendments.

Section 14(e)

“(e) If any installment of compensation payable without an award is not paid within fourteen days after it becomes due, as provided in subdivision (b) of this section, there shall be added to such unpaid installment an amount equal to 10 per centum thereof, which shall be paid at the same time as, but in addition to, such installment … unless such nonpayment is excused by the deputy commissioner ….”

Notes on section 14(e):

The employer is not liable under section 14(e) if it timely controverts the claim under section 14(d).

“Deputy Commissioner” means District Director.

Nonpayment is excused by the District Director based on a showing by the employer of conditions beyond its control.

Section 14(f)

“(f) If any compensation, payable under the terms of an award, is not paid within ten days after it becomes due, there shall be added to such unpaid compensation an amount equal to 20 per centum thereof, which shall be paid at the same time as, but in addition to, such compensation, unless review of the compensation order making such award is had as provided in section 21 and an order staying payments has been issued by the Board or court.”

Notes on section 14(f):

“…within ten days” outside the federal Fifth Circuit Court of Appeals means 10 calendar days. Within the Fifth Circuit (states of LA, MS, TX) it means 10 business days.

There is no defense, equitable or otherwise, to the 10 day requirement of money in the claimant’s hands.

Section 14(g)

“(g) Notice of payment; penalty. Within sixteen days after final payment of compensation has been made, the employer shall send to the deputy commissioner a notice, in accordance with a form prescribed by the Secretary of Labor, stating that such final payment has been made, the total amount of compensation paid, the name of the employee and of any other person to whom compensation has been paid, the date of the injury or death, and the date to which compensation has been paid.  If the employer fails to so notify the deputy commissioner within such time the Secretary of Labor shall assess against such employer a civil penalty in the amount of $100.”

Effective August 1, 2016, the maximum penalty amount is $275.

Notes on Section 14(g):

The form prescribed by the Secretary of Labor is Form LS-208.

Section 15(a)

“15. (a) No agreement by an employee to pay any portion of premium paid by his employer to a carrier or to contribute to a benefit fund or department maintained by such employer for the purpose of providing compensation or medical services and supplies as required by this Act shall be valid, and any employer who makes a deduction for such purpose from the pay of any employee entitled to the benefits of this Act shall be guilty of a misdemeanor and upon conviction thereof shall be punished by a fine of not more than $1,000.”

Section 28(e)

“(e) A person who receives a fee, gratuity , or other consideration on account of services rendered as a representative of a claimant, unless the consideration is approved by the deputy commissioner, administrative law judge, Board, or court, or who makes it a business to solicit employment for a lawyer, or for himself, with respect to a claim or award for compensation under this Act, shall, upon conviction thereof, for each offense be punished by a fine of not more than $1,000 or be imprisoned for not more than one year, or both.”

Notes on Section 28(e)

This was added by the 1984 Amendments.

Section 30(a) –  See discussion regarding Form LS-202 above.

Section 30(e)

“(e) Any employer, insurance carrier, or self-insured employer who knowingly and willfully fails or refuses to send any report required by this section or knowingly or willfully makes a false statement or misrepresentation in any such report shall be subject to a civil penalty not to exceed $10,000 for each such failure, refusal, false statement, or misrepresentation.”

Notes to section 30(a):

This penalty was changed in the 1984 Amendments. The amount was increased from $500 and the “knowingly and willfully” language was added.

Section 31(a)(1)

“Sec. 31(a)(1) Any claimant or representative of a claimant who knowingly and willfully makes a false statement or representation for the purpose of obtaining a benefit or payment under this Act shall be guilty of a felony, and on conviction thereof shall be punished by a fine not to exceed $10,000, by imprisonment not to exceed five years, or by both.”

This section was changed by the 1984 Amendments, when a misdemeanor became a felony.

Section 31(c)

“(c) A person including, but not limited to, an employer, his duly authorized agent, or an employee of an insurance carrier who knowingly and willfully makes a false statement or representation for the purpose of reducing, denying, or terminating benefits to an injured employee, or his dependents pursuant to section 9 if the injury results in death, shall be punished by a fine not to exceed $10,000, by imprisonment not to exceed five years, or by both.”

This section was added by the 1984 Amendments.

Section 37

“Sec. 37. No stevedoring firm shall be employed in any compensation district by a vessel or by hull owners until it presents to such vessel or hull owners a certificate issued by a deputy commissioner assigned to such district that it has complied with the provisions of this Act requiring the securing of compensation to its employees.  Any person violating the provisions of this section shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or by both such fine and imprisonment.”

Note: This Certificate, Form LS-239, may be obtained by the employer by request to the District Director in the district where the covered operations will take place.

Section 38(a)

“Sec. 38. (a) Any employer required to secure the payment of compensation under this Act who fails to secure such compensation shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than one year or by both such fine and imprisonment; and in any case where such employer is a corporation, the president, secretary, and treasurer thereof shall be also severally liable to such fine or imprisonment as herein provided for the failure of such corporation to secure the payment of compensation;….“

Note: The amount of the fine was increased from $1,000 to $10,000 by the 1984 Amendments.

Section 38(b)

“(b) Any employer who knowingly transfers, sells, encumbers, assigns, or in any manner disposes of, conceals, secretes, or destroys any property belonging to such employer, after one of his employees has been injured within the purview of this Act, and with intent to avoid the payment of compensation under this Act to such employee or his dependents, shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than one year, or by both such fine and imprisonment; and in any case where such employer is a corporation, the president, secretary, and treasurer thereof shall be also severally liable to such penalty or imprisonment as well as jointly liable with such corporation for such fine.”

Note: The amount of the fine was increased from $1,000 to $10,000 by the 1984 Amendments.

Section 41(f)

“(f) Any employer who, willfully, violates or fails or refuses to comply with the provisions of subsection (a) of this section (furnish and maintain safe places of employment) … shall be guilty of an offense, and, upon conviction thereof, shall be punished for each offense by a fine of not less than $100 nor more than $3,000; and in any case where such employer is a corporation, the officer who willfully permits any such violation to occur shall be guilty of an offense, and, upon conviction thereof, shall be punished also for each offense by a fine or not less than $100 nor more than $3,000.”

Section 48(a) (as recodified; section 49 in printed versions of the Act)

Sec. 49. It shall be unlawful for any employer or his duly authorized agent to discharge or in any other manner discriminate against an employee as to his employment because such employee has claimed or attempted to claim compensation from such employer, or because he has testified or is about to testify in a proceeding under this Act…. Any employer who violates this section shall be liable to a penalty of not less than $1,000 or more than $5,000 ….”

Note: The 1984 Amendments raised the range from $100/$1,000 to $1,000/$5,000, and added the phrase, “The discharge or refusal to employ a person who has been adjudicated to have filed a fraudulent claim for compensation is not a violation of this section.”

Effective August 1, 2016, the minimum penalty amount is $2,259 and the maximum penalty amount is $11,293.

Fines and penalties assessed under the various provisions of the Act go into the Special Fund, but raising money for the Fund is not the purpose of the fine and penalty provisions. An insignificant amount of Special Fund receipts in any given year are due to fines and penalties.  The fine and penalty provisions are intended solely to improve administration of the Act.

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.

ISSUE: Landmark Cases Number Nine – Schwalb

The latest addition to my list of landmark Longshore Act cases is Chesapeake & Ohio Ry. Co. v. Schwalb, 493 U.S. 40 (1989).

Three employees of an interstate railroad were injured while working at a coal loading facility owned and operated by their employer. They each filed a negligence lawsuit against the employer under the Federal Employers Liability Act (FELA).  The trial courts in the state of Virginia dismissed the lawsuits on the grounds that the workers were covered by the Longshore Act, and that this workers’ compensation law was their exclusive remedy against their employer.

The Virginia Supreme Court reversed the trial courts’ dismissals and found that the employees had a tort remedy under FELA. The U.S. Supreme Court granted appellate review, because the state court’s interpretation of the concept of “status” under the Longshore Act differed from the approach taken in several federal courts.

Schwalb is a key “status” case that reinforces the landmark principles of Northeast Marine Terminal Co., Inc. v. Caputo, 432 U.S. 249 (1977).  In light of Caputo, the Schwalb decision is straightforward and uncomplicated.

Nancy Schwalb was injured while performing janitorial services at a location where coal was being unloaded from railway cars onto a vessel. One of her duties was to clear spilled coal from around and underneath conveyor belt rollers which carried the coal to a loading tower where it was dumped into the hold of a ship.

The Supreme Court of Virginia had taken the position that employees performing purely maintenance duties are not covered by the Longshore Act, likening such workers to clerical workers who it viewed as peripheral to the maritime process.

The U.S. Supreme Court had explained in Caputo that Congress, in amending the Longshore Act in 1972, intended to solve the problem of workers walking in and out of coverage.  Under the pre-1972 Amendments Longshore Act employees would walk in and out of Longshore Act coverage during their workday as they performed some tasks over water and other tasks ashore.  Congress intended, “to provide continuous coverage throughout their employment to those amphibious workers who, without the 1972 Amendments, would be covered only for part of their activity”.

Congress had in mind coverage for, “… persons whose employment is such that they spend at least some of their time in indisputably longshoring operations ….”

Specifically with regard to Schwalb, the Court stated that those employees who are injured while repairing or maintaining equipment essential to the loading or unloading process are covered. The determinative consideration is that the ship loading process could not continue unless the equipment was operating properly.

“Someone who repairs or maintains a piece of loading equipment is just as vital to and integral a part of the loading process as the operator of the equipment. When machinery breaks down or becomes clogged or fouled because of the lack of cleaning the loading process stops.”

So, from Schwalb we have the now familiar expansive formulation of the interpretation of “status”.

“Maritime” employment, within the meaning of 33 U.S.C. Section 902(3), includes not only the specified occupations or employees who physically handle cargo, but also land based activity occurring within the relevant situs if it is an “integral or essential part of loading or unloading a vessel”.

The Schwalb Court also reinforced a key principle of Caputo.

“It is not essential to our holding that the employees were injured while actually engaged in these essential tasks. They are covered by the LHWCA even if, at the moment of injury, they had been performing other work that was not essential to the loading process.”

There is no walking in and out of status. Workers who meet maritime status for any part of their employment are covered throughout their employment.  There is no minimum amount of time required.  It is simply necessary that some regularly assigned part of the employee’s duties be “maritime” and you have a full time Longshore worker.  And there is no “moment of injury” test.

 

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John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation.  Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of the AEU Longshore Blog.