ISSUE – District Directors, Part Two

Jack_crop 72dpiThis is a continuation of our discussion concerning the authority and responsibility of the U.S. Department of Labor’s District Directors in the adjudication/administration of claims under the Longshore Act.  Remember, references in the statute to the Secretary usually include his designee the District Director, and references to “Deputy Commissioner” mean either the District Director, the Administrative Law Judge, or both, depending on context.

Section 8(f) – This is the second injury provision.  It begins with the District Director.  Section 8(f)(3) provides that, “Any request (for second injury relief) filed after the date of enactment of (the 1984 amendments) for apportionment of liability to the special fund … for the payment of compensation benefits, and a statement of the grounds therefore, shall be presented to the deputy commissioner prior to the consideration of the claim by the deputy commissioner.  Failure to present such request prior to such consideration shall be an absolute defense to the special fund’s liability ….”

Comment:  If the employer/carrier is seeking to place a case in the Special Fund under Section 8(f) then they have to raise the issue when permanency first becomes an issue in the case or DOL will raise the absolute defense of section 8(f)(3).

Section 17 –  “Where a trust fund which complies with section 302(c) of the Labor-Management Relations Act of 1947 (29 U.S.C. 186(c)) established pursuant to a collective-bargaining agreement in effect between an employer and an employee covered under this Act has paid disability benefits to an employee which the employee is legally obligated to repay by reason of his entitlement to compensation under this Act or under a settlement, the Secretary shall authorize a lien on such compensation in favor of the trust fund for the amount of such payments.”

Section 18(a) – “In case of default by the employer in the payment of compensation due under any award of compensation for a period of thirty days after the compensation is due and payable, the person to whom such compensation is payable may, within one year after such default, make application to the deputy commissioner … for a supplementary order declaring the amount of the default ….”

Comment:  The Special Fund may pay an insolvency case.  It starts here with a default order.

Section 18(b) – “In cases where 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 such fund upon any award made under this Act and in addition, provide any necessary medical, surgical, and other treatment required by section 7 of the Act ….”

Section 19(a) – “Subject to the provisions of section 13 a claim for compensation may be filed with the deputy commissioner … at any time after the first seven days of disability following any injury, or at any time after death, and the deputy commissioner shall have full power and authority to hear and determine all questions in respect of such claim.”

Section 19(b) – “Within ten days after such claim is filed the deputy commissioner … shall notify the employer and any other person (other than the claimant), whom the deputy commissioner considers an interested party, that a claim has been filed….”

Section 19(c) – “The deputy commissioner shall make or cause to be made such investigations as he considers necessary in respect of the claim, and upon application of any interested party shall order a hearing thereon….”

Section 21(a) – “A compensation order shall become effective when filed in the office of the deputy commissioner ….”

Comment:  This is important because the location of the District Director who “files” the Order usually determines which federal court of appeals the parties will end up in on appeal.  It is also important because it determines the effective date for subsequent events, such as appeals and when compensation is due and payable.

Comment:  “Filing” simply means the dating and receipt of an Order in the office of the District Director.  It does not include service on the parties.

Section 22 – This section permits modifications based on mistakes of fact or change in conditions within one year after the date of the last payment of compensation or within one year after the rejection of a claim, in any claim whether or not a compensation order has been issued.  The modification procedure begins with the District Director.

Section 28 – Attorney fees are awarded in appropriate cases for work done at each level of the adjudication process.  The District Director approves attorney fees for work done at the informal district office level, based on a fee petition showing the work performed and the hourly rate.  All attorney fees must be approved by DOL.

Section 30(e) – “Within ten days from the date of any injury, which causes loss of one or more shifts of work, or death … the employer shall send to the … deputy commissioner … a copy of a report ….”  This is the Form LS-202, Employer’s First Report of Injury.  There is a civil penalty of up to $11,000 per occurrence for failure to file the required report.

Section 31(b)(2)(A) – “The Secretary shall annually prepare a list of those individuals in each compensation district who have represented claimants for a fee in cases under this Act and who are not authorized to represent claimants.”

Comment – There is currently no list.

Section 33(f) – “If the person entitled to compensation institutes proceedings within the period prescribed in section 33(b) the employer shall be required to pay as compensation under this Act, a sum equal to the excess of the amount which the Secretary determines is payable on account of such injury or death over the net amount recovered against such third persons….”

Comment – The District Director determines the amount based on the net amount received by the injured worker in his third party suit..

Section 39(c)(2) – “The Secretary shall direct the vocational rehabilitation of permanently disabled employees …. “

Comment – District Directors have broad discretion here.

Section 49 (33 U.SC. section 948(a)) – “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 ….”

Comment – The District Directors handle discrimination complaints.

The District Directors, as well as the Claims Examiners, can be an excellent resource for both parties in the handling of a Longshore Act claim.

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: U.S. Department of Labor District Directors

Jack_crop 72dpiThe U.S. Department of Labor, which administers the Longshore and Harbor Workers’ Compensation Act, has a three step process for adjudicating claims.  The first step is informal proceedings at the district office level consisting primarily of dispute resolution services and medical management.  The next step, for unresolved, disputed issues, is a formal hearing at the Office of Administrative Law Judges (OALJ).  The third step is an appeal from the decision at the OALJ to the Benefits Review Board (BRB).

Each district office is managed by a District Director.  District offices are located in Boston, New York, Norfolk, Jacksonville, New Orleans, Houston, Long Beach, San Francisco, Seattle, and Honolulu.  In recent years offices in Chicago, Philadelphia, and Baltimore have been closed.

What does “dispute resolution services and medical management” mean?  What is the authority of the District Directors?  What do they do?  Here’s a briefly summarized list of the responsibilities and authority of the District Directors.

NOTE:  Where the Act says “Secretary (of Labor)” it includes the Secretary’s designee, the District Director.  Also, references to a “Deputy Commissioner” refer either to a District Director or to an Administrative Law Judge, depending on the context.

Section 6(b)(3) (33 U.S.C. 906(b)(3)) – “…. The Secretary shall determine the national average weekly wage….  Such determination shall be the applicable national average weekly wage for the period beginning with October 1 of that year and ending with September 30 of the next year….”

Comment: The national average weekly wage is used to set the maximum (twice the NAWW) and minimum (one-half the NAWW) weekly compensation rates under the Longshore Act.

Section 7(b) – “The employee shall have the right to choose an attending physician authorized by the Secretary to provide medical care under this Act …. The Secretary shall actively supervise the medical care rendered to injured employees, shall require periodic reports as to the medical care being rendered to injured employees, shall have authority to determine the necessity, character, and sufficiency of any medical aid furnished or to be furnished, and may, on his own initiative or at the request of the employer, order a change of physicians or hospitals when in his judgment such change is desirable or necessary in the interest of the employee….”

Comment: A physician “authorized by the Secretary” is any properly licensed physician who has not been barred from providing medical services under the Act.

Section 7(c)(1)(A) – “The Secretary shall annually prepare a list of physicians and health care providers in each compensation district who are not authorized to render medical care or provide medical services under this Act….”

There is currently no list.

Section 7(c)(2) –  “…. An employee may not change physicians after his initial choice unless the employer, carrier, or deputy commissioner has given prior consent to the change….”

Comment: The section goes on to say that such consent is always given when the initial choice of treating physician was not of a specialist whose services are necessary for proper care.  In all other cases a change may be made on a showing of good cause.

Section 7(d)(2) – “No claim for medical or surgical treatment shall be valid and enforceable against such employer unless, within ten days following the first treatment, the physician giving such treatment furnishes to the employer and the deputy commissioner a report of such injury or treatment, on a form prescribed by the Secretary.  The Secretary may excuse the failure to furnish such a report within the ten-day period whenever he finds it to be in the interest of justice to do so.”

Comment: The Secretary almost always finds it in the interest of justice to do so.

Section 7(e) – “in the event that medical questions are raised in any case, the Secretary shall have the power to cause the employee to be examined by a physician employed or selected by the Secretary ….  The Secretary shall have the power in his discretion to charge the cost of examination … to the employer, if he is a self-insurer, or to the insurance company which is carrying the risk, or in appropriate cases, to the Special Fund in section 44.”

Comment:  These so-called Impartial Medical Exams (IMEs) are very helpful to the parties, especially in disputed scheduled award cases.  They are routinely billed to the employer/carrier.

Section 7(f) – “An employee shall submit to a physical examination under subsection (e) at such place as the Secretary may require.  The place, or places, shall be designated by the Secretary ….”

Comment:  Frequently, disputed medical issues, as well as other issues such as average weekly wage under section 10, are resolved at Informal Conferences among the parties convened in the district offices and presided over by the District Director.

Section 8(i) – “Whenever the parties to any claim for compensation under this Act … 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 ….”

Comment:  The best way to close a case under the Longshore Act is to have an order issued by a District Director or ALJ approving a lump sum settlement under section 8(i).

Section 8(j)(2) –  Section 8(j)(2) provides that “An employee who (A) fails to report the employee’s earnings (on Form LS-200) … 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.  Section 8(j)(2) provides that “compensation forfeited under the subsection, if already paid, shall be recovered by a deduction from the compensation payable to the employee in any amount and on such schedule as determined by the deputy commissioner.”

The District Director determines in what amount and how quickly the employer recovers his overpayment.

Section 9(b) – With regard to survivor’s benefits, “… The deputy commissioner having jurisdiction over the claim may, in his discretion, require the appointment of a guardian for the purpose of receiving the compensation of a minor child….”

Section 9(g) –  “Compensation under this chapter to aliens not residents (or about to become nonresidents) of the United States or Canada shall be the same in amount as provided for residents, except that dependents in any foreign country shall be limited to surviving wife and child or children, or if there be no surviving wife or child or children, to surviving father or mother whom the employee has supported, either wholly or in part, for the period of one year prior to the date of the injury, and except that the Secretary of Labor may, at its option or upon the application of the insurance carrier, shall, commute all future installments of compensation to be paid to such aliens by paying or causing to be paid to them one-half of the commuted amount of such future installments of compensation as determined by the Secretary of Labor.”

Section 10(h)(1) – Under this section the Secretary determines the increase in weekly benefit amount in cases of permanent total disability or death effective each October 1, based on the change in the national average weekly wage determined under Section 6(b)(3).

Section 12(d) – “Failure to give such notice (30 day notice of injury) shall not bar any claim under this Act (1) if the employer (or his agent or agents or other responsible official or officials designated by the employer pursuant to subsection (c)) or the carrier had knowledge of the injury or death, (2) the deputy commissioner determines that the employer or carrier has not been prejudiced by failure to give such notice, or (3) if the deputy commissioner excuses such failure on the ground that (i) notice, while not given to a responsible official designated by the employer pursuant to subsection (c) of this section, was given to an official of the employer or the employer’s insurance carrier, and that the employer or carrier was not prejudiced due to the failure to provide notice to a responsible official designated by the employer … or unless objection to such failure is raised before the deputy commissioner at the first hearing of a claim for compensation ….”

Section 14(b) – “The first installment of compensation shall become due on the fourteenth day after the employer has been notified pursuant to section 12, or the employer had knowledge of the injury or death, on which date all compensation then due shall be paid.  Thereafter compensation shall be paid in installments, semimonthly, except where the deputy commissioner determines that payment in installments should be made monthly or at some other period.

Section 14(e) – If any installment of compensation payable without an award is not paid within fourteen days after it becomes due … there shall be added to such unpaid installment an amount equal to 10 per centum thereof, … unless such nonpayment is excused by the deputy commissioner ….”

Section 14(h) – “The deputy commissioner (1) may upon his own initiative at any time in a case in which payments are being made without an award, and (2) shall in any case where right to compensation is controverted, or where payments of compensation have been stopped or suspended, … make such investigations, cause such medical examinations to be made, or hold such hearings, and take such further action as he considers will properly protect the rights of all parties.”

Comment:  I believe that the powers of the District Directors to affect the conduct of a case are generally underestimated and under utilized.

Section 14(i) – “Whenever the deputy commissioner deems it advisable he may require any employer to make a deposit with the Treasury of the United States to secure the prompt and convenient payment of such compensation, and payments therefrom upon any awards shall be made upon order of the deputy commissioner.”

Comment:  This section is never used.

Section 14(g) – “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.”

Comment:  The form prescribed by the Secretary is Form LS-208, Notice of Final Payment or Suspension of Compensation Payments.

Comment:  Effective November 11, 1997, the penalty amount is $110.00.

I’ll have to end Part One here, since I’m nowhere near finished.

ISSUE: Per Diem, Fair Labor Standards Act, and the I.R.S.

Jack_crop 72dpiWhat do the Fair Labor Standards Act of 1938 (FLSA)(amended many times), the Internal Revenue Code of 1954 (amended many times), and the nature of “per diem” payments to employees have to do with the Longshore and Harbor Workers’ Compensation Act?

I’m not sure, so I’ll work through it and see where they intersect.

I’ll start with section 10 of the Longshore Act (33 U.S.C. 910) which deals with the calculation of an employee’s average weekly wage, from which an injured worker’s weekly compensation rate is derived.

Back on January 15, 2014, here at the AEU Longshore Blog I discussed the Average Weekly Wage (it would be helpful at this point if you went back and read that discussion)(now if possible)(Ok.  But definitely later).

In the course of that discussion I briefly referred to several issues that arise in the course of calculating the worker’s average weekly wage, one of which was:

“’Per diem’ payments – usually not taxable thus not includable in ‘wages’, but there have been instances where so-called ‘per diem’ payments were made without reference to travel costs and were simply wages under a misleading name;”

So let’s back up and see how the FLSA and Internal Revenue Code may intersect with the concept of per diem payments in the context of calculating the average weekly wage.

The FLSA is a federal law dealing with workers’ rights; it defines the 40 hour work week, sets the federal minimum wage, and deals with many issues such as overtime, child labor, equal pay, compensatory time off, etc.  Overtime is a hot topic right now.

It applies to employers whose annual sales total $500,000 or more or who are engaged in interstate commerce.  Interstate commerce in the context of FLSA has been interpreted so broadly that let’s assume that the law applies to everybody (did you mail a business letter addressed out of state today? – congratulations, you have engaged in interstate commerce).

For its own purposes the FLSA appears to include per diem payments for meals and lodging in the definition of “wages” in some contexts and not in others, but luckily for us neither have anything to do with the I.R.S. or the Longshore Act’s usage of the term, so I’m getting out of the FLSA with the conclusion that its treatment of per diem payments is not relevant under the Longshore Act.

Let’s start over with just the I.R.S. and the Longshore Act to consider.

First, let’s clarify what we mean by “per diem”.  In its conventional form, I mean payments or a daily allowance to an employee as reimbursement for meals, lodging, and incidental expenses and for which the employee files an expense report, usually in connection with business travel or working away from home.

The I.R.S. will not treat these per diem payments as wages or taxable income to the employee.  This is a very important consideration with regard to the Longshore Act, since the Longshore Act looks to the I.R.S. Code in its definition of “wages”.

Section 2(13) of the Longshore Act defines “wages” as follows:

“The term ‘wages’ means the money rate at which the service rendered by the employee is compensated by an employer under the contract of hiring in force at the time of injury, including the reasonable value of any advantage received from the employer and included for purposes of any withholding of tax under subtitle C of the Internal Revenue Code of 1954 ….”

The Longshore Act’s definition of wages looks to the I.R.S., and “wages is defined by what the I.R.S. considers to be taxable income subject to withholding tax.  The I.R.S. does not consider legitimate per diem payments to be taxable income, thus they are not “wages” under the Longshore Act, and are not included in the calculation of the average weekly wage.

There are issues and red flags, however, when dealing with “per diem” payments.

If the employee does not file an itemized expense report, you may have “wages”, not “per diem” payments.

If the employee receives the same amount in each pay check designated as “per diem”, but unrelated to any travel expenses, you may have wages, not per diem payments.

If all employees are paid the same amount regularly designated as per diem regardless of duties or travel stratus, you may have wages, not per diem.

If an employment contract contains a provision for a fixed, regular amount to be paid under such references as “food and lodging”, “subsistence and quarters”, etc., these payments may constitute wages.

To sum up, the FLSA’s treatment of per diem payments has no bearing on the effect of these payments in establishing an injured worker’s average weekly wage under the Longshore Act.

On the other hand, the I.R.S.’s treatment of per diem payments will usually be determinative as to whether or not these payments are to be considered, “wages” under the Longshore Act and thus includable in the calculation of the average weekly wage.

But it is important sometimes to take a closer look at so-called “per diem” payments.

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: Defense Base Waivers

Jack_crop 72dpiI’ve discussed the Defense Base Act (DBA) (42 U.S.C. 1651) on several previous occasions so I’ll just briefly review it here and then discuss one particular aspect.

The DBA is a workers’ compensation law that extends the benefits of the Longshore Act to employees outside of the continental U.S. under certain circumstances.  It was enacted in 1941, supplemented in 1942 by the War Hazards Compensation Act (WHCA) (42 U.S.C. 1701), and amended in 1953 and 1958 to broaden coverage.

The DBA covers the following employment activities:

  1. All employees working overseas for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside the continental U.S. in any Territory or possession,
  2. All employees working on public works contracts with any U.S. Government agency outside the continental U.S.,
  3. All employees working on contracts approved or funded by the U.S. under the Foreign Assistance Act, generally providing for cash sale of military equipment, materials, or services to allies if the contract is performed outside the continental U.S.,
  4. All employees working for American employers providing welfare or similar services outside the U.S. for the benefit of the armed forces (such as the USO).

The DBA applies to all employees, not just to U.S. citizens, and to all employers, foreign or domestic.

The DBA applies to all contracts regardless of length, whether just a few days, a year, or longer.

There does not have to be a causal relationship between the employment of the injured worker and the injury in the conventional sense.  All that is required is that the “obligations and conditions” of employment create the “Zone of Special Danger” out of which the injury arose.  This is sometimes inaccurately referred to as “24 hour coverage”.

Defense Base Act Waivers

Section 1(e) of  the Defense Base Act states, “Upon the recommendation of the head of any department or other agency of the United States, the Secretary of Labor, in the exercise of his discretion, may waive the application of this section with respect to any contract, subcontract, or subordinate contract, work location under such contracts, or classification of employees.”

Waiver requests are routinely granted when submitted by the proper person in the proper form, but there are limits and conditions.

Waivers do not apply to any employee who is a U.S. citizen, or is hired in the U.S., or who is a bona fide resident of the U.S. regardless of nationality.  The one exception to this policy is the case of Guam, where the DBA has been waived in its entirety even though the residents are U.S. citizens.

There is a further, very important, consideration.  There is a condition attached to every waiver.  The condition is that employees covered by the waiver must receive workers’ compensation benefits pursuant to the provisions of the local laws.  If this condition is not met then the waiver is null and void and the DBA applies to all employees.

Federal agencies should insert in every contract the requirement that each contractor, before commencing performance under the contract, must provide and maintain for all waived employees such workers’ compensation insurance or injury and death benefit protection required by local law.  It is important that this protection not exclude war hazards, since a waiver under the DBA also waives coverage under the WHCA for direct claims by injured employees.

A problem arises when there is no effective local workers’ compensation law.  Where that is the case, you either apply the provisions of the DBA, or if you obtain a waiver of the DBA as to host country and third country nationals you make sure that the conditions for application of the waiver are satisfied.  For third country nationals, for example, you can provide home country or country of hire coverage.  For host country nationals, if there is no existing law, you have a problem.  What did the local law provide when and if it was in effect?  What kind of existing health and disability coverage is available which approximates workers’ compensation protection?  Does it include war risk protection?  You must come up with something close to local coverage or else you must provide DBA benefits.

The burden is on the contractor to make sure that his waiver meets all conditions.

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 and Financial Management, and the 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: Unasked questions

Jack_crop 72dpiPrincipal Skinner once introduced Lisa Simpson as, “The answer to the question nobody asked”.  Yes, Lisa could occasionally be an annoying, obtrusive know it all.

In that same vein, it has occurred to me that some of the questions that frequently arise concerning the Longshore Act have flip sides that are left unasked.

For example, we recently discussed the application of the Longshore Act’s coverage when American workers travel temporarily on the high seas or to the foreign waters of other countries (June 2, 2015).

What about workers coming in the other direction?  What about foreign workers who come to the U.S. temporarily to perform maritime employment?

I think that this is a straightforward proposition.  The status and situs provisions which govern coverage under the Act do not mention citizenship or nationality, on the part of the employee, or for that matter, on the part of the employer.  If a foreign worker comes to the United States, temporarily or otherwise, and does work which meets the status and situs provisions then he is covered by the Longshore Act.

I know what you’re thinking.  There may be a contradiction here.  If the “navigable waters of the United States” necessary for Longshore Act coverage includes the high seas and in some cases, according to the Benefits Review Board, the foreign waters of other countries, why don’t foreign workers in these areas also meet situs for Longshore Act coverage?  Why is there Longshore Act coverage only for U.S. workers temporarily on the high seas and foreign waters?

I think that it has to do with the need for uniformity for U.S. workers in federal maritime matters.   U.S. workers should have the same workers’ compensation protection when traveling temporarily overseas that they have when at home.  This is a valid idea to the extent that it can coexist with competing principles governing the application of U.S. law overseas.

But back to foreign workers performing maritime employment in the U.S.  If they meet the situs and status provisions of the Longshore Act, then they are covered by the Longshore Act.  There are several implications here that are important for the maritime employer, domestic or foreign.

If you refer back to our recent discussions regarding section 4(a)’s statutory employer provisions (5/5/2015) and the common law doctrine of “borrowed employee” (5/19/2015), you will see that U.S. companies bringing in foreign workers, even for brief, temporary job assignments, should be concerned with making sure that they are not picking up an unanticipated Longshore Act exposure.  It is likely that most foreign companies sending workers to the United States do not have their own Longshore Act coverage.

And foreign employers who send workers to the U.S. should be aware that they are subject to the same Longshore Act insurance requirements as domestic U.S. employers.  This includes the election of remedies for the injured worker, possible criminal prosecution, and personal joint and several liability for corporate officers if the foreign employer is uninsured for its Longshore Act exposure.

While we’re on the subject of foreign workers, I should reiterate the discussion (9/21/09) with regard to workers in the U.S. illegally.

It’s a good bet that they are covered by the Longshore Act if they meet situs and status.  The definition of employee, and the way that the term has been interpreted, simply does not include modifiers like American, legal, etc.  And that goes for employers as well.  Don’t just take my word for it.

Section 902(3) – Definition of “employee” – “The term ‘employee’ means 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 902((4) – Definition of “employer” – “The term ‘employer’ means an employer any of whose employees are employed in maritime employment, in whole or in part, upon the navigable waters of the United States ….”

As inadequate as those definitions are in many respects, one thing is clear.  They do not contain any provision or condition for citizenship, nationality, or immigration status.

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 and Financial Management, and the 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: Burden of Proof

Jack_crop 72dpi

How is the winner determined when a controverted Longshore case goes to a formal hearing at the Office of Administrative Law Judges?

The ALJ considers all of the testimony and all of the documentary evidence, medical and otherwise, for credibility, weight, and relevance, and the prevailing party is the one that meets its “burden of proof”.

Although the claimant has the overall burden of proof by persuasion by a preponderance of the evidence, the Longshore Act uses a burden shifting framework at different points during the adjudicatory process.

I’ll look at a few examples of how the burden of proof shifts from one party to the other and what this means for the outcome of the case.

Section 20(a)

The initial burden of proof in a Longshore claim is on the claimant.  He must establish his prima facie case.  He must demonstrate the existence of an injury or harm and that a work related accident occurred or working conditions existed which could have caused the harm.  This is a light burden.  In most cases, the claimant can establish his prima facie case simply by testifying that he had pain or an illness at work even if it is not supported by witnesses or medical evidence.

Once the claimant meets this initial burden of proof a rebuttable presumption arises in the case in favor of the claimant under section 20(a) that the harm or pain is work related.

At this point, the burden of proof shifts to the employer on the issue of causation by virtue of the fact that the claimant has established his prima facie case and has the benefit of the application of the section 20(a) presumption.  The employer’s burden to rebut the presumption is one of “production” rather than “persuasion”.  The employer must produce “substantial evidence” that, IF believed (credibility or persuasion is not involved at this stage) would show that the harm or pain is not work related.

Note:  Substantial evidence is that relevant evidence that is more than a scintilla but less than a preponderance – that would cause a reasonable person to accept the fact finding.

If the employer meets its burden of proof and produces substantial evidence to rebut the presumption, then the presumption drops from the case and the burden of proof shifts back to the claimant to prove or persuade on the issue of causation by a preponderance of the evidence based on the record as a whole.

So we see at the threshold issue of whether or not the injury was work related, that the burden of proof on the claimant to establish the prima facie case shifts to the employer to rebut the section 20(a) presumption and then shifts back to the claimant to prevail on this issue by a preponderance of evidence.

Section 49

Section 49 of the Longshore Act (33 U.S.C. 948(a)) prohibits an employer from discriminating against an employee because the employee has claimed compensation under the Act.  The initial burden of proof is on the claimant to establish a prima facie case of discrimination.  To do this, a claimant must demonstrate that his employer committed a discriminatory act motivated by discriminatory intent.  He must produce enough evidence to permit the trier of fact to infer that the employer had discriminatory intent.

For example, a claimant could show that he was singled out for discipline or fired immediately after filing a claim.

Once the prima facie case of discrimination is established the burden of proof shifts to the employer to show that there was no discriminatory intent, i.e., any discipline imposed was not due to the filing of a compensation claim.

Once the employer produces evidence of lack of discriminatory intent the burden shifts back to the claimant to persuade by a preponderance of the evidence that there was discriminatory intent.

So once again the initial burden of proof is on the claimant, then it shifts to the employer, then it shifts back to the claimant.

Last Responsible Employer – Multi Employer Occupational Disease Case

The employer responsible for paying benefits under the Longshore Act in an occupational disease (OD) case is the last covered employer to expose the employee to injurious stimuli prior to the date that he becomes aware that he is suffering from an occupational disease arising out of employment.  How are the burdens of proof distributed when there are multiple potentially liable employers involved as defendants?

I’ll discuss the approach taken by the federal Ninth Circuit Court of Appeals, which frequently sees this type of case.

First, the claimant must establish a prima facie case against each employer named as a defendant in order to keep the employer in the case.  As we’ve seen, once this initial burden of satisfying the prima facie case is met with regard to an employer, the section 20(a) presumption applies to shift the burden of proof to the employer to rebut the presumption by producing substantial evidence to the contrary.  If the presumption is rebutted it drops from the case and the claimant has the burden of proving his case by a preponderance of the evidence.

But there are multiple employers potentially liable, and only the last employer to expose the worker to injurious stimuli in sufficient degree to cause or aggravate the disease will be liable for all benefits.

At this point, each employer has the burden of establishing that it is not the last responsible employer.  It must prove either, 1) that exposure to injurious stimuli did not occur at its worksite, or 2) that the employee performed work covered by the Longshore Act for a subsequent employer where he was exposed.  The adjudicator will decide these questions sequentially for each employer starting with the last and going back in reverse order until he finds the last responsible employer.

Note:  In a multi employer cumulative trauma case the approach is somewhat different.  Instead of the sequential last to first analysis used in OD cases there is more of a simultaneous analysis in cumulative trauma cases due to the natural progression/aggravation/multiple employer nature of the case which requires concurrent review of all of the medical evidence.

Note:  There is a particular situation which arises at the outset of the formal hearing process.  After the parties have submitted their pleadings, briefs, and evidence, either party may request that the ALJ issue a Summary Decision, either with respect to a single issue or on the case as a whole.

The burden of proof is on the party bringing the request, or motion.  The ALJ will review the evidence in the light most favorable to the non-moving party opposing the motion.  If the ALJ finds that there is no material issue of fact raised by the evidence and that the non-moving party cannot win as a matter of law, then he will grant the request for Summary Decision.

Note:  “material” as applied to a question of fact means of such nature that proof of the fact would establish or refute an essential element of the claim or a defense.

Note:  Mere allegations or denials will not be sufficient to successfully oppose a motion for summary decision.  The opposing party must set forth specific facts which establish a genuine issue of fact for trial.

There are many other instances where the Longshore Act shifts the burden of proof during the adjudicatory process, whether to rebut a presumption by producing substantial evidence or to persuade by a preponderance of the evidence.  The “winning” party successfully meets its burden of proof.

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 and Financial Management, and the 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: High Seas, Foreign Waters

Jack_crop 72dpiYogi Berra might have said this.  “Some questions always come up, because they don’t come up that often.”   You know.  Sort of like, “Nobody goes there anymore.  It’s too crowded”.

Questions continue to come up with regard to U.S. workers going overseas, either on the high seas or in foreign waters, to do work that would meet the maritime “status” requirement for Longshore Act coverage if done on or adjoining the navigable waters of the United States in the conventional sense.

We are assuming that these high seas/foreign waters workers meet “status”, so this is strictly a “situs” issue.

It has been a safe bet that the Longshore Act applies on the “high seas”, subject to conditions such as contacts with the U.S. and the temporary nature of the work assignment.  The problem has been, and still is, with regard to foreign territorial waters.

We have the U.S. Department of Labor’s Benefits Review Board’s decision in Weber v. S.C. Loveland Co., 35 BRBS 75 (2001) aff’d on recon., 35 BRBS 190 (2002) for the proposition that the Longshore Act coverage extends to the territorial waters of foreign countries.  The Board’s rationale is based on the language of section 39(b) of the Longshore Act, which authorizes the Secretary of Labor to establish compensation districts to include the high seas, and provides for judicial jurisdiction for proceedings involving injuries occurring on the high seas.  The Board also cited the trend in Admiralty law to extend federal maritime jurisdiction into foreign waters to provide uniform coverage for American workers.

But in Keller Found./Case Found. v. Tracy, 696 F.3rd 835 (9th Cir. 2012), the federal Ninth Circuit Court of Appeals (states of WA, OR, MT, ID, CA, NV, AZ, AK, HI) accepts the proposition that the Longshore Act applies on the high seas, but the court states, “we hold that foreign territorial waters and their adjoining ports and shore based areas are not the ‘navigable waters of the United States’”.  The court cited the strong presumption that enactments of Congress do not apply extraterritorially, and did not find strong enough intent in the Longshore Act to overcome this presumption.

To further muddy the waters, in Kollias v. D.G. Marine Maintenance, 29 F.3rd 67 (2nd Cir. 1994) the federal Second Circuit (states of NY, CT, VT) opined that the Longshore Act covers injuries on the high seas without qualification and that in section 39(b) the court found Congressional intent to overcome the general presumption against extraterritoriality.

So what’s our best guess today with regard to American workers overseas performing maritime employment?

  1. In the Ninth Circuit the Longshore Act applies on the high seas subject to conditions, but not in the territorial waters of other countries.
  2. Outside of the Ninth Circuit, the Longshore Act applies on the high seas also subject to conditions, but the issue of coverage in foreign territorial waters is uncertain.
  3. Will Circuits other than the Ninth follow the rationale of the Board in Weber (and for that matter will the Board continue to follow its own precedent in the wake of Tracy), or will the Circuits split? It may be worth noting that the Board did not disturb its opinion in Weber when Tracy went through on its way to the Ninth Circuit. Rather, the Board distinguished Tracy in that Mr. Tracy was based overseas from 1998 to 2002, not temporarily, and his trips did not begin and end in the U.S. This prolonged foreign assignment did not meet the conditions of Weber for Longshore Act coverage.
  4. Until the issue of situs in foreign territorial waters is clarified, maritime employers whose cases are likely to end up in a Circuit other than the Ninth should get Longshore Act coverage for their employees who are going overseas to perform maritime work.

Note:  if the overseas work is on a U.S. military base or pursuant to a government contract, be thinking about the Defense Base Act.

Note:  Will your case end up in the Ninth Circuit?  The location of the Office of Workers’ Compensation Program’s District Director who serves the Order of the Administrative Law Judge controls jurisdiction.  Cases are usually assigned to the District Director closest to the injured worker’s residence.

The jurisprudence is somewhat sparse, but not non-existent, but unfortunately what exists is not uniform.

So, once again we look to Yogi Berra, who almost certainly never said, “When you come to a fork in the road – take it.”

When there’s any doubt, play it safe and get coverage.

Notwithstanding the above discussion, some aspects of overseas coverage are clear.  The navigable waters of the United States includes the Territories and the territories, such as Guam, American Samoa, the U.S. Virgin Islands, the Commonwealth of the Northern Marianas, Gilbert and Solomons (not Sullivans), etc.

Note:  The Longshore Act does not apply in Puerto Rico, but the Defense Base Act does.  The Defense Base Act does not apply in Guam, but the Longshore Act does.

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 and Financial Management, and the 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.



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