AEU Longshore Blog ISSUE: Review of Fines and Penalties

The blog post from February 9, 2017 included a discussion of the U.S. Department of Labor’s Industry Notice No. 160, which announced the latest increase in the amounts of civil penalties under the Longshore Act.

Below is a more comprehensive, section-by-section review of the various civil penalty and criminal fine provisions in the Act.

Section 8(j) (added by the 1984 Amendments)

“(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 (Form LS-200).

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

 

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” here as elsewhere in the Act means District Director.
  • Nonpayment may be 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 (Form LS-208), 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.”

Note on Section 14(g):

Effective January 13, 2017, the maximum penalty amount is $279.

 

Section 15(a)

“(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) (added by the 1984 Amendments)

“(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.”

 

Section 30(e)

“(e) Any employer, insurance carrier, or self-insured employer who knowingly and willfully fails or refuses to send any report (Form LS-202) 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 on Section 30(e):

  • The blog post from February 9, 2017 contained a full discussion of Form LS-202.
  • Effective January 13, 2017, the penalty amount was increased again to a new maximum of $22,957.
  • The 1984 Amendments added the “knowingly and willfully” language.

 

Section 31(a)(1)

“(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.”

Note on Section 31(a)(1):

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

 

Section 31(c) (added by the 1984 Amendments)

“(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.”

 

Section 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 on Section 37:

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)

“(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 on Section 38(a):

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 on Section 38(b):

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)

“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…”

Notes on Section 48(a):

  • The 1984 Amendments raised the range from $100/$1,000 to $1,000/$5,000 and added the phrase, “The discharge or refusal to employ a person who has been adjudicated to have filed a fraudulent claim for compensation is not a violation of this section.”
  • Effective January 13, 2017, the minimum penalty amount is $2,296 and the maximum penalty amount is $11,478.

 

Final Note:  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.

 

 

jack_crop-72dpi

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.

AEU Longshore Blog ISSUE: Civil Penalties – Going Up Again; Review of Fines and Penalties

The U.S. Department of Labor, Office of Workers’ Compensation Programs, which administers the Longshore and Harbor Workers’ Compensation Act, has released Industry Notice No. 160, dated January 25, 2017.

The purpose of Notice No. 160 is to announce the latest increase in civil monetary penalties effective as of January 13, 2017.

Subject: 2017 Increase of civil monetary penalties in accordance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (sic).  This Act requires federal agencies to adjust the levels of civil monetary penalties for inflation.  These adjustments affect several provisions of the Longshore Act and its extensions, the Defense Base Act, the Outer Continental Shelf Lands Act, and the Nonappropriated Fund Instrumentalities Act.

Here is a brief summary of the changes.

  1. Section 14(g) of the Longshore Act: Failure to Report Termination of Payments (Form LS-208).  The regulation at 20 C.F.R. 702.236 now states:

“Any employer failing to notify the district director that the final payment of compensation has been made as required by section 702.235 shall be assessed a civil penalty in the amount of $279 for any violation for which penalties are assessed after January 13, 2017.”

The amount is increased from the previous amount of $275, which had been effective August 1, 2016.

  1. Section 30(e): Penalty for Late Report of Injury or Death (Form LS-202).  The regulation at 20 C.F.R. 702.204 now states:

“Any employer, insurance carrier, or self-insured employer who knowingly and willfully fails or refuses to send any report required by section 702.201, or who knowingly or willfully makes a false statement or misrepresentation in any report, shall be subject to a civil penalty not to exceed $22,957 for each such failure, refusal, false statement, or misrepresentation for which penalties are assessed after January 13, 2017.”

The amount is increased from the previous amount of $22,587, which had been effective August 1, 2016.  This is the maximum penalty amount.  There is a graduated penalty schedule beginning at $500 based on the facts of each case.

  1. Section 49 (33 U.S.C. 948(a)): Discrimination Against Employees Who Bring Proceedings. The regulation at 20 C.F.R. 702.271(a) now states:

“Any employer who violates this section, and has penalties assessed for such violation after January 13, 2017, shall be liable for a penalty of not less than $2,296 or more than $11,478 to be paid (by the employer alone, and not by a carrier) to the district director for deposit in the special fund described in section 44 of the Act, and shall restore the employee to his or her employment along with all wages lost due to the discrimination unless the employee has ceased to be qualified to perform the duties of employment.”

The penalty range is increased from the previous range of $2,259 to $11,293.

Following is additional information with regard to filing Form LS-202.

  • Employer’s First Report of Injury or Occupational Disease

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

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

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

  • “Timely Reporting” of Injuries to the DOL

This is from the Procedure Manual for Claims Examiners in the Division of Longshore and Harbor Workers’ Compensation, Office of Workers’ Compensation Programs.

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

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

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

This Notice did not add any new reporting requirements nor change in any way the Section 30(a) 10 day requirement.  Rather, it reflected the DOL’s intent to improve the industry’s compliance with the existing standard.  This initiative by DOL is in conformance with the requirements of the Government Performance and Results Act of 1993 (GPRA), which requires that agencies set goals and measure progress against those goals.

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

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

Keep in mind:

– The report must be mailed within 10 days. Don’t wait to verify all of the information or to complete an investigation.  It is more important to report the injury timely.The Form LS-202 is not “evidence” of any fact stated in the report. The employer can describe reported events as “alleged” if it wishes, but it’s not necessary.

– The statute of limitations for filing a claim does not begin to run until the employer files the Form LS-202. If the employer never files the Form LS-202, the claim filing time requirement never begins to run against the injured worker.

-It is the employer’s obligation to file the Form LS-202, not the insurance carrier’s. If the employer sends the report to its insurance company within 10 days, and the insurance company then files it with the DOL too late, the employer has failed to comply with the requirement.

-The information on the Form must be accurate. Incorrect statements can be inconvenient to explain later on, and there are harsh provisions in the Act to deal with intentional false statements.

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

Our next post will provide a more detailed outline of the various civil and criminal fine and penalty provisions of the Act.

jack_crop-72dpi

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.