ISSUE: Section 8(j) – Report of Earnings – Forfeiture of Compensation

Jack_crop 72dpiIs it a good idea for an employer to monitor the post injury earnings of an employee to whom it is paying disability benefits under the Longshore Act?  Yes.  Does the Act provide a way to do this?  Yes.

Why is it a good idea?

If an employee meets the light burden of establishing a prima facie case, i.e., he has suffered a harm and working conditions or an accident at work might have caused the harm, then the section 20(a) presumption supplies the necessary causation link between the employment and the injury.

Then if the injured worker provides evidence that he cannot return to his pre-injury job (which does not necessarily entail a severe injury in the strictly medical sense), and the employer does not establish the existence of suitable alternate employment, the worker is totally disabled, and the employer is paying temporary total disability (TTD) or permanent total disability (PTD) benefits.

It is possible that injured workers receiving TTD or PTD benefits under the Longshore Act are potentially or in fact capable of working, or in fact are working.

We’ve recently discussed section 22, under which any party may request modification in a compensation case, even a case in which a Compensation Order has been issued and is final, based on a change in condition or because of a mistake in a determination of fact.  Such a modification may “terminate, continue, reinstate, increase, or decrease such compensation ….”

A change in the injured worker’s earning capacity may qualify as a change in condition under section 22 and provide the grounds for a modification of an existing TTD or PTD award, or even an award based on a loss of wage earning capacity (PPL) if the partially disabled worker’s actual earnings have increased.

Alternatively, if the claimant doesn’t return the earnings report as required, the employer may seek a compensation order forfeiting compensation for the period of the failure to report.

How does the Longshore Act provide a way for the employers to monitor the earnings of “disabled” employees?

Section 8(j) (33 U.S.C. 908(j)):

8(j)(1) The employer may inform a disabled employee of his obligation to report to the employer not less then 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, and who is determined by the deputy commissioner to have violated clause (A) or (B) of this paragraph, forfeits his right to compensation with respect to any period during which the employee was required to file such report.

(3) Compensation forfeited under this subsection, if already paid, shall be recovered by a deduction from the compensation payable to the employee in any amount on such schedule as determined by the deputy commissioner.

The employer can monitor the earnings of “disabled” employees, but it must be done right.

The Form is U.S. Department of Labor (DOL) Form LS-200, Report of Earnings.  It should be used by an employer to request earnings information at no less than 6 month intervals.

Section 8(j) uses the ambiguous term “disabled employee”.  This has been interpreted to mean an employee to whom the employer is paying Longshore Act benefits, either voluntarily or under an Order.  The employer must be paying benefits concurrently with the request for an earnings report.

Section 8(j) refers to the “deputy commissioner”.  This means the District Director of a DOL Longshore claims office.

The employee is required to report “any earnings”, including earnings from employment, self-employment, investment or rental income, and even earnings from illegal activity.

Form LS-200 requires that the employee sign and return the form to the employer within 30 days after receipt, even if the report is that there have been no earnings.

The administrators of the Special Fund send out Forms LS-200 once a year to those claimants to whom the Fund is paying benefits.  Since the earnings report may be requested at six month intervals it is in the interest of an employer who has placed cases in the Special Fund under the second injury provision of section 8(f) to also request earnings reports in its Special Fund cases.

What if the earnings report shows that the employee may be working or that he may have an earning capacity.  What if the earnings report shows no earnings but the employer has evidence that the employee may be working.  What if the employee fails to return the signed LS-200?

The employer should initiate proceedings with the DOL’s District Director in charge of the claim (or with the Administrative Law Judge if the case is already pending at the ALJ level).  The District Director should convene an informal conference and, depending on the facts of the case and the evidence provided by the employer, the District Director may issue a Compensation Order forfeiting compensation for the period during which the claimant failed to report as required by Form LS-200, or initiate modification proceedings under section 22.

Note:  Any forfeiture will be handled in accordance with section 8(j)(3).   If compensation forfeited for a past period has already been paid then the amount will be recovered by deduction from future compensation on a schedule set up by the District Director, taking into consideration all of the facts, including the claimant’s financial condition as reflected by his living expenses, total income from all sources, and total assets.

Note:  None of the three sections of the Act which provide for recovery of overpayments (sections 14(j), 8(j), and 22), provides that the employer may recover overpayments directly from the employee; such recovery can only be obtained by an offset against future compensation under the Act.

Note:  Employers should check to see if their insurance carriers are sending out LS-200s.  AEU does it for ALMA Members.  The procedures provided in section 8(j) are an appropriate way to monitor cases where benefits are being made, even where benefits are being paid pursuant to a final Compensation Order.

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: Update – Top Ten Longshore Act Questions – Question Number 4 – What Is a Vessel? – What Is a Crewmember?

Jack_crop 72dpiLongshore Act question number 4 was discussed on the AEU Longshore Blog back on March 31, 2010.  It’s finally occurred to me that the previous discussion needs to be updated.

What is a vessel?

Neither the Longshore and Harbor Workers’ Compensation Act nor the Jones Act defines exactly what a vessel is, although the question is central to key issues under both laws.

The Longshore Act’s definition in section 2(21) (33 U.S.C. 902(21)) states, “Unless the context requires otherwise, the term ‘vessel’ means any vessel upon which or in connection with which any person entitled to benefits under this Act suffers an injury or death arising out of or in the course of his employment ….”

Parenthetical Note:  Section 2(21) quoted above refers to an injury or death “arising out of or in the course of employment….”  Section 2(2), which defines “injury”, states “arising out of and in the course of employment….”  Usually the distinction between “and” and “or” is significant.  But in this context is it a distinction without a difference?  Is it just a case of careless phrasing?  That’s for an other day.

So, “vessel” is defined in the Longshore Act as “any vessel”.  That’s no help.

We do know from the case law that whatever “vessel” means, it means the same thing under both the Longshore Act and the Jones Act and general maritime law.

Back on March 31, 2010, I mentioned the then recent U.S. Supreme Court case of Stewart v. Dutra Construction Co., a vessel status case involving the Super Scoop dredge at work digging a tunnel in Boston Harbor.  The Court found that the dredge was a vessel, by a broad application of 1 U.S.C. section 3 (1873), which defines a vessel as, ‘every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water”.  The decision seemed to suggest that anything that floats and is not permanently affixed to land was a vessel.

There has been new case law on the vessel question from the U.S. Supreme Court, and thus the need for this update.

On January 15, 2013, the Supreme Court decided the case of Lozman v. City of Riviera Beach, Florida.  The issue was whether Mr. Lozman’s floating home was a vessel, subject to Admiralty jurisdiction.  The federal Eleventh Circuit Court of Appeals had held that it was a vessel, using Stewart’s reasoning.  The Supreme Court reversed, holding that the floating home was not a vessel, interpreting the language of 1 U.S.C. section 3 through the eyes of a reasonable observer looking at the practical characteristics of the craft or contrivance.  As a result, we have a new vessel status test based on this case.

The test is whether, through the eyes of a reasonable observer, the contrivance is practically, not theoretically, designed as a means of transportation of people or things over water.  Of course, this is a case by case test.

The Court itself recognized the nature of the test.  It admitted that its approach “is neither perfectly precise nor always determinative….  Nonetheless, we believe the criterion we have used, taken together with our examples of its application here, should offer guidance in a significant number of borderline cases….  Moreover, borderline cases will always exist.”

So, good luck with the Lozman reasonable observer looking for practical capability based on design characteristics test.

What Is a Crewmember?

For the issue of crewmember status, we’re still using the test from the Supreme Court’s 1995 Chandris v. Latsis, Inc. decision.  There hasn’t been anything more recent.

To qualify as a crewmember, the employee must:

  1. Contribute to the function of the vessel or to the accomplishment of its mission, and
  2. Have an employment connection to a vessel in navigation (or to an identifiable group of such vessels) that is substantial in terms of both duration and nature.

For the “duration” part of the second prong of the test, there is a 30% rule of thumb.  If you spend less than 30% of work time “in the service of a vessel” then you are probably not a crewmember.

The substantial “nature” part of the employment connection test is more problematic.  This test has not worked too well.

In spite of language in Chandris paying lip service to the necessity of separating land based workers from those sailors who go to sea, in the judicial language, the “perils of the sea” has been replaced by the watered down “perils of the maritime work environment” or similar terminology as a necessary element for seaman status.

We’ve certainly seen many examples of live at home “seamen” qualifying for the seamen’s remedies under the Jones Act and the general maritime law.  Construction workers on all manner of special purpose vessels, ship repair and maintenance workers, and even cargo handlers, all of whom in no sense of the word are exposed to the “perils of the sea”, can qualify as daily commuting crewmembers.

There is a recent example of this from the federal Fifth Circuit Court of Appeals (states of TX, LS, MS).  In the case of Larry Naquin v. Elevating Boats Inc. a ship repair supervisor was determined by the jury in district court to be a seaman, and this finding was affirmed by the appellate court.  The injured worker’s job was ship repair and he worked nearly exclusively on moored vessels in a shipyard canal.  He rarely went to sea.

He met the 30% test, because as a ship repair worker he obviously spent most of his time on the ships he was repairing.  To find that ship repair work meets the “substantial nature” employment relationship requirement of the Chandris test, however, for a worker who rarely goes to sea, seems very broad.  Clearly a worker has an employment relationship with a vessel that he is building or repairing, just as an airplane mechanic has a relationship with the airplane he is repairing, but that doesn’t make the mechanic a pilot.

So, it seems to me that Lozman may have somewhat narrowed the application of the vessel status test, or at least didn’t expand it; some things that float may not be vessels.  But the test for crewmember status is becoming more broadly interpreted.

Paradoxically, the Supreme Court’s rejection of the “voyage test” for seaman status, and the Chandris requirement for a substantial employment relationship in terms of duration have prevented workers who actually do go to sea in ships from achieving crewmember status.  Workers such as harbor pilots, divers, and oilfield industry service contractors who typically work on successive short contracts on different vessels often have trouble meeting the 30% test with a single vessel or group of vessels under common ownership.

Maybe one of these days we’ll have a better test for crewmember 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: The Aggravation Rule

 

 

Jack_crop 72dpiI’m surprised that I haven’t yet discussed the Aggravation Rule here at AEU’s Longshore Blog.  So it’s about time.

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 for disability due to cumulative exposure in occupational disease cases.  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.

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 survivor’s 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.

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 an injury 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 Longhshore 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.

There is obviously much to be said on both sides of the Aggravation Rule, but it is a fact of life in Longshore Act cases.  This has been only a very brief summary of how it works.

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: Situs – Unusual Situations

Jack_crop 72dpiAs we’ve frequently discussed, a worker must meet the maritime employment “status” test for Longshore Act coverage (section 2(3) of the Act), and he also must independently meet the “situs” or location  of injury requirement (section 3(a)).

Let’s take a look at some marginal situs situations.

There are three ways to meet “situs”:  1) “… if the disability or death results from an injury occurring upon the navigable waters of the United States …”, 2) on certain “enumerated” sites (such as a pier, wharf, dry dock. terminal, building way, or marine railway), or, 3) on an “other adjoining areas customarily used” for maritime activity.

The Longshore Act does not define “navigable waters of the United States”.  For both the Longshore Act and the seamen’s remedies under the Jones Act and the general maritime law the phrase is interpreted under the so-called “navigable in fact” test as set out in the U.S. Supreme Court’s decision in The Daniel Ball, 10 Wall. 557, 19 L.Ed. 999 (1871)

“(Rivers) are navigable in fact, when they are used, or susceptible of being used, in their ordinary condition, as highways of commerce, over which trade and travel are or may be conducted … and they constitute navigable waters of the United States, in contradistinction from the navigable waters of the State, when they form in their ordinary condition by themselves, or by uniting with other waters, a continued highway over which commerce is or may be carried on with other states or foreign countries.”

So, the water at the site of the injury must carry or be capable of carrying interstate or international commerce, or it must join up with other waters that are capable of carrying interstate or international commerce.

Whether or not the water is affected by the tides, or whether it may have been navigable at some point in the past, doesn’t matter.  The test for navigable waters under the Longshore Act is based on present use or susceptibility for future use in interstate or international commerce.  This was illustrated in a recent Benefits Review Board case (Daniel O’Donnell v. Nautilus Marine Protection, Inc. and State Compensation Insurance Fund) in which the Board affirmed an Administrative Law Judge’s finding that a stretch of the Los Angeles River was not “navigable in fact”  even though the U.S. Army Corps. of Engineers and the Coast Guard has it listed as navigable under their separate criteria.

This “navigable in fact” test seems like a straightforward, workable approach.  And it usually is.

Situs questions, however, occasionally come up that involve unusual situations.  There are cofferdams, bayous, industrial flumes, reservoirs, dams, marshes, lakes, swamps, all sorts of natural or unnatural, temporary or permanent diversions of otherwise navigable waters that test the limits of “navigable in fact”.

I thought that I would look at a few of these unusual situations and try to identify some general principles that can be used as other situations arise.

First, let’s consider bayous, swamps, and marshes together since they share common characteristics relevant to the “navigable in fact” test.

Bayous, swamps, and marshes frequently are tributaries to, connected with, or adjacent to, larger bodies of water.  They are usually characterized by shallow water and thick vegetation, and activity is often conducted by specialized vehicles that may or may not be “vessels”.   The question is, are these bodies of water navigable at the location where the injury occurred?  You have to apply the “navigable in fact” test.  Is waterborne activity only possible by the most specialized of vehicles and then with difficulty only within restricted areas?  Or does the area, or could the area, actually serve as a highway of interstate commerce?  It’s a case by case test.  Hint:  If your “vessel” has treads, is continuously getting stuck in the weeds, or has to be carried in to the area and assembled there in order to operate, you are most likely not on the navigable waters of the United States.

Next, let’s look at cofferdams.  What is a cofferdam?  I consulted a dictionary, because my personal vague impression was simply that a cofferdam is an area that is temporarily dry because the surrounding water has been pumped out and blocked off so that things like piers and bridges can be built.

I was pretty close.  My dictionary says that a cofferdam is, “1.  a temporary watertight enclosure for construction or repairs in waterlogged soil or under water, 2. a sealed void between two bulkheads that prevents the escape of liquids, heat, etc.”

So what about situs when an injury occurs within a cofferdam, an area that is temporarily dry but surrounded by navigable waters?  It may depend on the temporary nature of the seal and the fact that the area will be flooded and navigable again in the future, and on whether or not the project within the cofferdam involves the construction of an inherently maritime structure.  For example, a dry dock has a maritime purpose, but a bridge usually is not considered to be a maritime structure.

Situs may depend on whether the area temporarily withdrawn from navigable waters will be re-flooded at the end of the project and returned to navigability.  If this is the case, and the project involves a maritime purpose or structure, then I think that an injury within the cofferdam will meet situs.

What about lakes?  The question of Longshore Act situs on a lake simply comes down to the question of whether or not the lake is contained completely within a single state with no access from the lake to other bodies of water and other states.  If the lake is completely intra-state then it is not a navigable water of the United States.  Just make sure that you cannot travel by water from the lake to other bodies of water that are geographically inter-state or international, or that the lake is not on a border between states.

The body of water in question must be part of a, “continued highway over which commerce is or may be carried on with other States or foreign countries ….”

How about the many varieties of water diverted from otherwise navigable waters for man made contrivances and purposes?

This includes water from adjacent navigable rivers diverted to circulate into and out of the heating and cooling systems of industrial plants, or to form industrial reservoir tanks for storage or manufacturing purposes, sewage treatment operations, and any other variety of diverted water systems or pools.  Once underground pipes or vents remove the water from the navigable waterway it is likely that this is where navigability ends.  The water in these industrial water systems can be considered to have been permanently removed for the purpose of carrying interstate commerce.

Reservoirs and dams can be tricky, but the key remains interstate or international commerce.  First determine if the body of water dammed to form the reservoir is capable of carrying interstate commerce.  Then you have to determine what stretches of that body of water may no longer be navigable due to the formation of the dam and reservoir.   If the reservoir is landlocked within a single state then it is not a navigable water of the United States.  Watch out for a reservoir (or lake) on the border between two states.  That’s interstate.

An unusual situation arises when a project involves work beneath the sea or river bed, such as the digging of tunnels.  Work on or in the navigable waters of the United States meets situs.  What about underneath?  I think this probably would not meet situs.

Remember, we’re only discussing situs in the context of whether or not a body of water qualifies as “navigable waters of the United States”.  If you rule out situs on this basis, you still have to consider whether situs is met under the alternative grounds of whether the injury occurred on an enumerated site or on an “other adjoining area customarily used” for maritime employment.

So, I was looking for general principles to apply in unusual situs situations.  There’s really only one.  Since situs is determined at the moment of injury, the general principle is whether or not that situs presently carries, or is capable of carrying with reasonable improvements, interstate or international commerce.

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: Fines and Penalties

Jack_crop 72dpiThere 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.”

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(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)

“Se. 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.”

General Notes to Fines and Penalties:

The Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Debt Collection Improvement Act of 1996 has the effect of periodically changing the amounts of civil penalties provided for in the Act.  For example, the maximum penalty for failing to file Form LS-202, Employer’s First Report of Injury, within 10 days was set in the 1984 Amendments at $10,000.  Effective November 17, 1997, the maximum was increased to $11,000.

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.

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: Presumptions

Jack_crop 72dpiSection 20 of the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. 920) contains several key presumptions.  It states:

In any proceeding for the enforcement of a claim for compensation under this Act it shall be presumed, in the absence of substantial evidence to the contrary –

  1. That the claim comes within the provisions of this Act.
  2. That sufficient notice of such claim has been given.
  3. That the injury was not occasioned solely by the intoxication of the injured employee.
  4. That the injury was not occasioned by the willful intention of the injured employee to injure or kill himself or another.

What Is a Presumption?

A presumption is a procedural tool that shifts the burden of proof.  It is not evidence.  It does not strengthen a party’s case.  What it does do is advance a party’s case by shifting the burden of proof on an issue to the other party.  The section 20 presumptions are for the claimant’s benefit in Longshore cases.

Rebuttable Presumptions

The section 20 presumptions are “rebuttable”.  The employer can rebut each of the presumptions by providing “substantial evidence” to the contrary.  “Substantial evidence” is “sufficient to support a rational conclusion by a reasonable person”.  It does not have to be sufficient to decide an issue by a “preponderance” of evidence.  The employer does not have to provide sufficient evidence to defeat the claim at the rebuttal stage (but the employer can lose at this stage).  The employer must produce “substantial evidence” to remove the presumption from the case.

Once a presumption is rebutted it drops from the case, and the issue in question must then be decided by a preponderance of the evidence based on consideration of the record as a whole.

The Section 20(a) Presumption

“(a) That the claim comes within the provisions of the Act.”

I discussed this presumption back on April 19, 2012, so this will merely be a summary.

This presumption arises at the point at which the claimant makes his prima facie case.  To do this, the claimant must show that he has suffered some harm or pain and that an accident occurred or working conditions existed that could have caused the harm.  Subjective complaints of pain, standing alone, are sufficient to establish the prima facie case.  The claimant is not required at this stage to produce any additional evidence, medical or otherwise.  He does not have to trace his injury or harm to a specific time, or diagnose the source of his pain.

At this point the section 20(a) presumption comes into play and provides the claimant with a rebuttable presumption that the injury is causally related to his employment.

The employer must then try to rebut the presumption by providing substantial evidence that the alleged accident did not happen, or by providing substantial evidence that severs the connection between the alleged disability and the work environment.  The employer needs a combination of medical evidence (an unequivocal medical opinion that the injury or harm could not have been caused by the work environment), a favorable credibility determination by the Administrative Law Judge, or negative evidence (records do not corroborate the claimant’s version of events).

The section 20(a) presumption has limits.  It does not apply to:

  1. Establish the fact of injury,
  2. Establish jurisdiction or coverage,
  3. Establish nature and extent of disability,
  4. Establish a loss of wage earning capacity.

NOTE:  In spite of frequent references to a “presumption of coverage” in the Longshore Act, there is, in fact, no such presumption in the law.  There is, however, the section 20(a) presumption of causation.

The section 20(a) presumption establishes a causal connection between the harm and the claimant’s job.  If the employer is unable to rebut the presumption then the claimant wins on the issue of causation.  If the employer successfully rebuts the presumption then the issue of causation must be decided based on consideration of the record as a whole with the claimant bearing the burden of proof.

The Section 20(b) Presumption

“(b) That sufficient notice of such claim has been given”.

There are two particular timeliness provisions with regard to claims in the Longshore Act.

Section 12(a) states that, “Notice of an injury or death in respect of which compensation is payable under this Act shall be given within thirty days after the date of such injury or death ….”

Section 13(a) states that, “Except as otherwise provided in this section, the right to compensation for disability or death under this Act shall be barred unless a claim therefore is filed within one year after the injury or death ….” (two years in occupational disease cases)

The section 20(b) presumption places the burden of proof on the employer to rebut by substantial evidence the presumption that the claimant has met the notice and claim timeliness requirements.

NOTES regarding the section 20(b) presumption:

Even without the presumption, the employer will find it difficult to prevail on timeliness issues.  The U.S. Department of Labor (DOL) can excuse the untimely section 12 notice requirement unless the employer can show that it has been prejudiced by an untimely notice of injury, and the Administrative Law Judges and Benefits Review Board are reluctant to deny claims based on issues of untimeliness.

The federal circuit courts of appeal disagree on whether the section 20(b) presumption applies to both the sections 12 and 13 requirements.  The Benefits Review Board, however, applies the section 20(b) presumption to both the notice and claim filing requirements.

Before it can challenge timeliness, the employer must show that it satisfied the requirement in section 30(f) that the injury must be reported to DOL within 10 days on Form LS-202.  If Form LS-202 is not filed, then the timeliness requirement does not begin to run.

The Section 20(c) Presumption

“20(c) – That the injury was not occasioned solely by the intoxication of the injured employee.”

Section 20(c) must be read in conjunction with section 3(c).  The Longshore Act makes a defense available to the employer.  Section 3(c) states, “No compensation shall be payable if the injury was occasioned solely by the intoxication of the employee or by the willful intention of the employee to injure or kill himself or another.”

An employer asserting the section 3(c) intoxication defense must first rebut the section 20(c) presumption that the injury was not occasioned solely by intoxication if it is to prevail.

The requirement that intoxication be the “sole” cause of the injury places a heavy burden of proof on the employer even if it manages to rebut the presumption by producing substantial evidence that the claimant was intoxicated and that the injury was caused solely by the intoxication.  Practically speaking, the employer must conclusively rule out every other possible contributing cause of the accident.

This situation emphasizes the necessity for comprehensive and immediate accident investigation, including drug and alcohol testing, photographs, identification of witnesses, and preservation of physical evidence.

It is important to remember that while intoxication might be the primary cause of the death or injury, that does not mean that it is the “sole” cause.  If any other possible contributing factor is identified then the presumption is not rebutted and the 3(c) defense fails.

The Section 20(d) Presumption

“(d) – That the injury was not occasioned by the willful intention of the injured employee to injure or kill himself or another.”

Once again, the section 3(c) defense provides that, “No compensation shall be payable if the injury was occasioned solely by the intoxication of the employee or by the willful intention of the employee to injure or kill himself or another.”

Once again, an employer asserting this defense must first rebut the section 20(d) presumption that the injury was not occasioned by willful intent.

This presumption comes into play most frequently in cases involving fights at work or in cases involving the suicide of the injured worker.

If a claimant is involved in an altercation on the work premises, the presumption under section 20(d) is that any injury he suffers is not the result of his willful intent to injure himself or another.

Since an injured worker would be extremely unlikely to admit that he was injured in the course of willfully intending to injure another person (possibly exposing himself to collateral liability or criminal charges) it is difficult to rebut the presumption.  In the circumstances following a work fight, the injured worker will invariably claim that he was an innocent bystander or the victim of unprovoked aggression.  As will all others in attendance.

Cases involving suicide are more challenging on the issue of causation.

There are two presumptions available to the claimant in this circumstance.  The section 20(a) presumption of causation applies as well as the section 20(d) presumption against willful intent.

So, in basic terms, the survivor who files a claim for benefits under the Act has two presumptions in his/her favor:  1) that the death is related to work, and 2) that the death was not the result of willful intent on the part of the deceased to injure or kill himself or another.

The employer may rebut either of the presumptions by producing substantial evidence to the contrary.  If the presumptions are rebutted, they drop out of the case, and the issues are then decided on the record as a whole by a preponderance of the evidence.

The employer may then try to defend the claim under section 3(c), by establishing that, in the event of suicide, that the suicide was the result of willful intent on the part of the deceased.

The first question that may arise is, can suicide not be the result of willful intent, especially where there is a “suicide note” left behind, or there are other indications of pre-planning?  The mere fact of suicide, however, does not establish willful intent.

The concept of “irresistible suicidal impulse” has evolved in cases involving suicide.  If the decedent’s suicide was caused by an irresistible suicidal impulse resulting from an employment related condition then this overcomes willful intent and the section 3(c) defense fails.

Recently, the federal Ninth Circuit Court of Appeals has changed its focus in its causation analyses away from the question of the existence of an irresistible impulse resulting from employment related conditions into an analysis more in terms of a chain of causation based on whether the work injury and its effects precluded the formation of a rational and willful intent to commit suicide.

The Ninth Circuit states that a survivor’s claim in the case of suicide is compensable where there is, “a direct and unbroken chain of causation” between a compensable work related injury and the suicide where the injury and its consequences directly result in the claimant’s loss of normal judgment.  In the opinion of the Ninth Circuit, this approach better comports with modern psychiatry and the no-fault nature of the Longshore Act.

Once again, it is important to remember that the section 20 presumptions are rebuttable.  If the employer fails to rebut a presumption by producing substantial evidence, then the claimant will prevail on that issue.

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: Perini Coverage

Jack_crop 72dpiI think that this is a good time to mention again a longstanding but perennially overlooked coverage concept.  (I resisted the urge to use Perini-ally overlooked.  You’re welcome.)

It’s a straightforward coverage principle.

There is no maritime “status” requirement for an employee injured in the course of his employment over the navigable waters of the United States and who is not otherwise excluded by a provision of the Longshore Act.   Under these circumstances, “situs” confers “status”.

We’re referring to the U.S. Supreme Court’s 1983 decision in the case of Director, Office of Workers’ Compensation Programs v. Perini North River Associates (Churchill), 459 U.S. 297.

Let’s start at the beginning.  When the Longshore Act was enacted in 1927, and up until the 1972 Amendments, coverage under the Act was determined by the location of the injury.  If the injury occurred over the navigable waters of the U.S. or on a dry dock then the worker was covered by the Longshore Act, unless an express exclusion applied, such as “master or member of a crew of any vessel”.

Pre-72 Amendments coverage was simply a function of the location of the injury.  Any worker over the water, regardless of the work he was doing, was covered.

The ’72 Amendments expanded coverage landward and added a maritime “status” requirement, but nothing in the language of the Amendments withdrew coverage from any employee who had been covered prior to the Amendments.

This is the basis of “Perini” coverage.  As the Supreme Court held, Congress, in the 1972 Amendments, did not intend to withdraw coverage from any worker who would have been covered prior to the Amendments.  There is no “status” test for injuries occurring over the navigable waters.

In the 1984 Amendments Congress added certain exclusions for occupations or employees of certain types of enterprises as listed in sections 2(3)(A)-(F) (33 U.S.C. 902(3)(A)-(F)).  These exclusions apply even if the injury occurs over navigable waters.  There was nothing in the 1984 Amendments, however, that indicated that injuries occurring over the water did not remain covered.  In other words, Congress did not overrule Perini.

So, the usual maritime “status” issues that I have discussed many times are irrelevant when the injury occurs over the navigable waters.  I know that I keep repeating myself.  Perini coverage does not depend on the nature of the worker’s duties (unless, of course, an express exclusion applies).

There is one other issue (along with the question of the applicability of an exclusion) to be alert for when considering “Perini” coverage.

The question may arise whether a worker who commutes to and from land based work as a passenger on a boat over the water is eligible for “Perini” coverage if he is injured during the commute.

The issue is whether the worker was over the water transiently or fortuitously and not in the course of his employment.

What is “transiently or fortuitously”?  I don’t exactly know, but here’s a hint.  “A worker injured on the water who performs a ‘not insubstantial’ amount of his work on navigable waters is neither transient nor fortuitous.

How much is “not insubstantial”?  I don’t exactly know.  It must be “more than a modicum”.

How much is “more than a modicum”?  I don’t know.

Let’s say that if more than 5% of an employee’s regular duties require him to be over the water then this would be considered “not insubstantial” and “more than a modicum”.  This would separate the (transient and fortuitous) commuter from the worker eligible for “Perini” Longshore Act coverage.  As long as traveling over the water is a regular part of a worker’s job duties then you have a real issue of “Perini” coverage.  It’s working as opposed to merely commuting as a passenger.

So, don’t forget.  Work over the water is covered by the Longshore Act regardless of the maritime status of the worker.

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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