ISSUE: Modification Under Section 22

Jack_crop 72dpiI recently referred to a case which involved modification under section 22 of the Longshore Act (33 U.S.C. 922).  In this case, the federal Fifth Circuit Court of Appeals confirmed that modification of a final Award may be available for a mistake of fact, not only based on new evidence, but on evidence that was available at the time of the original hearing and Compensation Order.

I’d like to take another look at section 22.  Once again, it states:

“Upon his own initiative, or upon the application of any party in interest … on the ground of a change in conditions or because of a mistake in a determination of fact by the (ALJ), the (ALJ) may, at any time prior to one year after the date of the last payment of compensation, whether or not a compensation order has been issued, or at any time prior to one year after the rejection of a claim, review a compensation case … and issue a new compensation order which may terminate, continue, reinstate, increase, or decrease such compensation, or award compensation.”

Section 22 modification provides the only means for changing a final decision.  It is very liberally interpreted to favor accuracy over finality.  A prominent commentator states that section 22 provides, “perhaps the most permissive ‘mistake’ reopening rule on record”.

We know that to obtain modification based on a mistake of fact a party does not need new evidence.  It may present evidence that was available at the time of the first hearing.

Section 22 also liberally permits modification based on “change in conditions”, or changed circumstances.  This most frequently involves changes in the claimant’s medical or economic condition, wage earning capacity, or ability to work.  It potentially covers a wide range of circumstances and events subsequent to the Award.  Here are just a few of many possibilities.

Scenario One – based on surveillance video and a functional capacity evaluation, the employer believes that a totally disabled claimant receiving benefits pursuant to an order is no longer totally disabled.  The employer requests modification under section 22 based on a labor market survey.  The employer is seeking to change the award from total disability to partial disability based on the claimant’s ability to work.

The employer presents evidence of a wage earning capacity based on its evidence of suitable alternate employment, i.e., realistically available jobs within the geographic area where the claimant resides which he is capable of performing considering his age, education, work experience and physical restriction, which he could secure if he diligently tried.

Scenario Two – a claimant has a compensation order awarding a scheduled award based on a 15% permanent loss of use of the left leg.  Within one year of the payment of the scheduled award in a lump sum, the claimant writes a letter to the U.S. Department of Labor’s District Director requesting additional compensation.  He presents a medical report showing deterioration in his medical condition.  He is non-specifically claiming either a larger scheduled award or total disability.

This letter will very likely be considered as a request for modification under section 22.

Scenario Three – a claimant is receiving benefits pursuant to a compensation order awarding permanent partial disability based on a loss of wage earning capacity.  The employer believes that the claimant’s earning capacity has increased due to additional skills, training, and experience that he has acquired since the Award was issued in his case.  The employer requests modification based on a change in condition, i.e., a higher wage earning capacity.

Note:  Increased earnings due strictly to COLA’s or seniority raises will probably not be considered as an increase in the worker’s earning capacity.

Essentially, modification can be requested based on changed conditions in a variety of situations, seeking to change total disability to partial, or partial disability to total, or to increase or decrease wage earning capacity, or to modify in any other way an otherwise final compensation order, including an order denying benefits.

Miscellaneous considerations relating to section 22:

Modification must be requested prior to one year from the last payment of compensation under a compensation order, or one year from the denial of a claim.

If a claim is denied then the time to request modification begins to run on the date that the order becomes final, at the conclusion of the appellate process.

Payment of medical benefits under section 7(a) does not constitute the payment of “compensation” for purposes of the section 22 time limit.

Section 22 cannot be used to correct legal mistakes or errors in strategy.  Legal errors may only be challenged by a timely motion for reconsideration or by appeal.

A lump sum settlement under section 8(i) cannot be modified under section 22 once the compensation order approving the settlement is final.

As the Fifth Circuit acknowledged, there is the potential for abuse here for both parties.

For example, successive modification petitions may be filed as long as each one is filed within 1 year of the rejection of the previous claim.  Once a party requests modification it is entitled to the same procedures available in an original claim, including a de novo hearing before an Administrative Law Judge, review by the Benefits Review Board, and an appeal to the federal Court of Appeals.  The employer must defend each request for modification.

New evidence is not required.  Modification may be based on further reflection of the evidence initially submitted, or by the introduction of evidence available but not presented at the time of the original adjudication.

Clearly there is the potential for an interminable series of modification requests under a provision that strongly emphasizes accuracy over finality.

While the potential is there, there does not seem to have been widespread abuse of the modification provision.

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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