Longshore Act Question Number 6

Is the Longshore Act fair to employers?

The Longshore and Harbor Workers’ Compensation Act, enacted in 1927, was part of a socially progressive era in the United States, when sweeping changes were made in the areas of child labor, minimum wage, working conditions, length of the workday, worker safety, unionization, etc. It is remedial legislation. And many courts to this day tend to interpret it that way. This is illustrated by two statements in a recent decision by the federal Fifth Circuit Court of Appeals. The court observed that, “…the LHWCA is to be construed liberally in favor of compensation.” And later, “…by the liberal construction we are instructed to employ in favor of LHWCA coverage.”

These sentiments, and words to the same effect, however questionable they may be, appear regularly in judicial language and express what many courts still understand to be the Congressional intent behind the Longshore Act.

You would think that this sentiment would have lost much of its legitimacy in the nearly twenty years since the U.S. Supreme Court expressly jettisoned the so called “true doubt rule” in Longshore cases (that is, in those cases where the evidence is evenly balanced, or in equipoise, the decision should be in favor of the claimant. This adjudicative approach is no longer valid.)

But still, the Longshore Act was written to favor the injured worker, and it still seems to be interpreted liberally by many courts.

But is it “fair” to employers?

The Act is administered by the Office of Workers’ Compensation Programs (OWCP) in the U.S. Department of Labor. OWCP offers informal dispute resolution services and medical management. Formal hearings are available at the Office of Administrative Law Judges with administrative appeal to the Benefits Review Board. Judicial review is available by appeal to the federal Circuit Courts of Appeal. All parties are afforded full due process, and their “day in court”.

So let’s start over again with a paradox.

Does the Longshore Act favor injured workers? Yes.

Is the Longshore Act fair to employers? Yes.

Can the paradox be resolved? I think so.

The fact is that the law puts most of the reporting, filing, and compliance burdens on employers and puts enforcement responsibility on OWCP, so naturally OWCP appears to be on the side of the injured worker.

Resolution of Paradox: The OWCP is not the advocate or champion of the injured worker. Its role is to resolve disputes as quickly as possible (in fact, this is the only measure on which the Office of Management and Budget evaluates the Longshore program’s performance). This can and does work for everyone.

Bear with me. I’m trying to resolve a paradox here. So anyway, here’s the OWCP trying to enforce the provisions of a liberally interpreted, remedial statute in an adversarial environment. Since most compliance provisions are aimed (by Congress) at the employers and enforcement is with the OWCP, OWCP appears to favor the claimant. But think about it.

Section 930(a) says that in the event of a lost time injury the employer must file Form LS-202 within ten days or be subject to a penalty. I think that you’ll admit that the OWCP has never been overzealous in enforcing section 930(a) (Interestingly, on the issue of timely filing, the DOL has recently embarked on a project to monitor the filing of Forms LS-202, Employer’s First Report of Injury or Occupational Disease) .

Section 914(g) says that Form LS-208 must be filed within sixteen days of the final payment of compensation or the employer shall be assessed a penalty. Again, I don’t believe that the enforcement of 914(g) has been overzealous.

Section 938(a) provides for criminal prosecution of employers who fail to satisfy the insurance requirement of section 932(a). There has never been a prosecution.

Section 914(f) states that an employer must pay an award within ten days or pay a 20% penalty (see Question Number 10). The OWCP doesn’t call the injured worker on the eleventh day to ask if he has received his payment.

Section 907(b) gives the injured worker his choice of treating physician. This is one of the key, liberal provisions of the Act. It isn’t something that OWCP dreamed up. Congress put it in the law.

The key to resolving the paradox and making the system work is dispute resolution. OWCP wants to resolve disputes, at the informal level. This is taken very seriously, because OMB takes it seriously, and OMB is the office that approves budgets for every program. OWCP can do this better with the help of employers who in good faith identify issues early and cooperate in resolving disputes.

So there’s my answer. The Longshore Act is undeniably liberally written and (at this point somewhat questionably) liberally interpreted, but it is administered fairly, and the enlightened employer can make it work.

Note: I worked at the OWCP in DOL for many years, and for part of that time I was the District Director in DOL’s New York claims office. I do believe that the OWCP administers the Longshore Act in an evenhanded manner.

I’m pretty sure that I didn’t change many minds out there in the defense community. But this is the best I can do with this one.

Longshore Act Question Number 13

What Is a Subdivision of a State Government?

This question concerns employees who may or who may not be covered by the Longshore and Harbor Workers’ Compensation Act, depending on who the employer is. As we know from previous discussions, the maritime employer must get its coverage right or face serious consequences, so this type of question is important.

Section 903(b) (33U.S.C. 903(b)) of the Longshore Act states:

“No compensation shall be payable in respect of the disability or death of an employee of the United States, or any agency thereof, or of any State or foreign government, or any subdivision thereof.”

You will not be surprised to learn that the Longshore Act does not define “subdivision” of a state government, and the U.S. Department of Labor’s Regulations at 20 C.F.R. 701 and following offer no help.

It’s usually self-evident who is an employee of a U.S. Government agency, or of a state government, or of cities and towns. Most of the time we even know who is working for foreign governments. But, not always, and like we’ve said many times, there are numerous instances where it depends on the facts of the case.

It can get tricky when you are talking about employees of a port authority, a state university, or of the wide variety of quasi-governmental operations.

So, in fact dependent cases like these, courts usually come up with a list of “quack like a duck” questions to help to determine the outcome.

The list of questions in a section 903(b) case usually involves some or all of the following in one form or another:

– Who directs the organization and how are these persons appointed and removed,
– Are required reports filed with the government and does the government have a veto over decisions,
– Does it operate on a profit or non-profit basis,
– How is its property and revenue taxed, or is it tax exempt,
– Does it have the power of eminent domain,
– Is money appropriated to it by the government,
– Who pays its employees, and provides fringe benefits,
– Does it have the power to assess or collect taxes,
– Are its operations subject to open, public hearings,
– Are its records open to the public,
– Does it have the power of subpoena,
– What is its status under state law?

Theoretically, the answers to a list of questions like this tell you everything you need to know. The answers don’t have to be consistent or unanimous one way or the other. The issue will be decided by analyzing the responses and determining which way a majority of the answers tend.

If the determination is that the organization is a subdivision of a state then under section 903(b) its employees are not covered by the Longshore Act because they are government employees. If the employees are not government employees then the employer must provide Longshore Act insurance if the status and situs requirements for coverage are met.

Longshore Act Question Number 11

Can Small Employers Opt Out of Coverage Under the Longshore and Harbor Workers’ Compensation Act?

There are some states where small employers as defined in the state insurance law, or even large employers under certain conditions, can “opt out” of the states’ workers’ compensation system.

Is this ever an option under the Longshore Act? Don’t even think about it.

Under section 932 of the Longshore Act, an employer has two choices with regard to the insurance requirement. The employer can purchase first dollar coverage from an insurance carrier authorized by the U.S. Department of Labor to write Longshore Act coverage, or it can obtain the authorization of the U.S. Department of Labor to self-insure its Longshore Act obligations. An employer can obtain self-insurance authorization individually, or it can satisfy the self-insurance option through membership in a DOL authorized group self-insurance fund such as The American Longshore Mutual Association). These are the maritime employer’s only choices.

An “employer” is defined in section 902(4) of the Longshore Act:

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 (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel}.

In other words, if a worker is a maritime worker then his employer is by definition a maritime employer. And the maritime employer is subject to the section 932 insurance requirement.

An “employer” in section 902 of the Longshore Act is not defined by size or type of business organization, and there are only two insurance options offered in section 932.

So, no exceptions. Get the coverage.

Top Ten Longshore Questions

As I’ve said, over the years the same Longshore questions have been coming up again and again, and now with AEUs Longshore BLOG there’s a source where these questions can be answered. So here’s my list of the “Top Ten” recurring Longshore questions:

16. Does the Longshore Act apply only to U.S. citizens?

15. Does the Longshore Act apply overseas?

14. What are the “navigable waters of the United States”?

13. What is a subdivision of a state government?

12. Can you exclude corporate officers under the Longshore Act?

11. Can small employers opt out of the Longshore Act?

10. How do you measure the 10 day rule for paying Formal Awards under §914(f)?

9. Does the Longshore Act apply in Guam? In Puerto Rico? In the Virgin Islands? In

the Commonwealth of the Northern Marianas?

8. What does “joint and several” liability mean? And what does “several not joint”

liability mean? And why is this very important?

7. Why is Longshore Act insurance so expensive?

6. Is the Longshore Act fair to employers?

5. What’s the difference between the Longshore Act and the Jones Act?

4. What is a vessel? What is a crewmember?

3. What is the difference between state act comp and the Longshore Act?

2. Where can I buy Longshore Act insurance?

1. Do I need Longshore Act insurance?

The answers to these, and any other questions introduced by BLOG visitors, will be offered in upcoming postings. In the meantime, if there’s a particular question you are interested in please leave a comment with your question.