ISSUE: Civil Penalties- Going Up

On July 1, 2016, the U.S. Department of Labor (DOL) published an “interim final rule” in the Federal Register. It announced the upward adjustment of the amounts of civil penalties assessed or enforced in its regulations.  The Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 requires agencies to adjust the levels of civil monetary penalties for inflation.  These adjustments apply to any penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015.

In case you’re still reading, these adjustments affect several provisions of the Longshore and Harbor Workers’ Compensation Act and its extensions, the Defense Base Act, the Outer Continental Shelf Lands Act, and the Nonappropriated Fund Instrumentalities Act.

To make a long story short, here’s how the Longshore Act is affected:

Form LS-202, Employer’s First Report of Injury – the current maximum penalty amount for late reporting is $11,000 per occurrence. Effective August 1, 2016, the new maximum penalty amount is $22,587 per occurrence.

Form LS-208, Employer’s Final Report of Payment – the current maximum penalty amount for late reporting is $110 per occurrence. Effective August 1, 2016, the new maximum penalty amount is $275.

Discrimination under section 48(a) (33 U.S.C. 948(a)) (old section 49) – the current minimum penalty amount is $1,100 and the current maximum penalty amount is $5,500. Effective August 1, 2016, the new minimum penalty amount is $2,259 and the new maximum penalty amount is $11,293.

To place this information in context, I’ve summarized below my previous blog discussions with regard to Form LS-202 and Fines and Penalties.

Form LS-202, Employer’s First Report of Injury or Occupational Illness

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.

More on Form LS-202.

This is from the Procedure Manual for Claims Examiners in the Division of Longshore and Harbor Workers’ Compensation in the U.S. Department of Labor (DOL):

“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) ten 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.

 

PENALTY

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.

The maximum penalty for failing to file Form LS-202 within 10 days was set in the 1984 amendments at $10,000 per occurrence. Then, effective November 17, 1997, the maximum was increased to $11,000 under the provisions of the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Debt Collection Improvement Act of 1996. Effective August 1, 2016, the maximum penalty amount is $22,587.

Fines and penalties assessed under various provisions of the Act go into the Special Fund, but raising money for the Fund is not the purpose of the penalty provisions. Far less than 1% of Special Fund receipts in any given year are due to fines and penalties.  The Section 30(a) requirement in particular and DOL’s current compliance initiative are intended to improve the administration of the Act.

ISSUE: Fines and Penalties

There 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.”

Effective August 1, 2016, the maximum penalty amount is $275.

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(a) –  See discussion regarding Form LS-202 above.

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)

“Sec. 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.”

Effective August 1, 2016, the minimum penalty amount is $2,259 and the maximum penalty amount is $11,293.

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.

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.

Longshore Act Question Number 10

How Do You Measure the 10 Day Rule For Paying Formal Awards Under Section 914(f)?

Section 914(f) of the Longshore and Harbor Workers’ Compensation Act states,

“Additional Compensation for overdue installment payments payable under terms of award. 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….”

Seems simple. If you pay late it’ll cost you an additional 20 per cent.

But, what’s an “award”? When is it “due”? When does the “ten days” start to run? How long is ten days? When is the award “paid”? We could even get into what is “compensation”, but we’re only dealing with the time issue right now.

Questions: What if the payment is received on the tenth business day which is the thirteenth calendar day (business days don’t count holidays and weekends)? What if you mail the payment on the seventh day, but it isn’t received by the injured worker until the eleventh day? Can you send the payment to the injured worker’s attorney? What if you timely mail the payment in good faith to an incorrect address supplied to you by the injured worker and as a result the payment arrives after ten days? What if your overnight delivery service messes up and delivers the payment on the eleventh day?

It seemed simple, but got complicated. And maybe expensive. A $200,000 lump sum settlement under section 908(i) will cost you another $40,000 if paid late. So let’s make sure that we can count to ten.

By “award” we’re talking about formal Compensation Orders issued by District Directors, Administrative Law Judges, and the Benefits Review Board under the provisions of the Longshore Act.

Payment is “due” when the Order is “filed” in the District Director’s office pursuant to section 919(e).

What does “filed” mean? Well, neither the statute nor the regulations defines it. The Supreme Court has offered a not very helpful definition – “A paper is filed when it is delivered to the proper official and by him received and filed”.

The regulations implementing the Longshore Act (at 20 C.F.R. 702.349) provide that, “Upon receipt thereof, the District Director shall formally date and file the transcript, pleadings, and compensation order in his office. Such filing shall be accomplished by the close of business on the next succeeding working day, and the District Director shall, on the same day as the filing was accomplished, send by certified mail a copy of the compensation order to the parties….”

So, let’s take this to mean that “filing” actually means an affirmative act by the District Director, which is completed on the workday after he receives the Order in his office. So, payment is “due”, and the “ten days” begin to run on the working day after the District Director receives the Order. (The Benefits Review Board serves its own Orders, so the ten days begin to run when the Order is filed by the Clerk of the Board. Otherwise the same ten day rule applies.)

Now we’re getting somewhere. Now, how long is “ten days”? Do you mean ten business days or do you mean ten calendar days? We’re going to go with ten calendar days (which every one agrees on except the federal Fifth Circuit Court of Appeals, comprising the states of Texas, Louisiana, and Mississippi, which still goes with ten business days).

This is where the questions can stop. Payment must be in the hands of the injured worker (not just put in the mail) by the tenth calendar day beginning the day after the District Director receives the Order. If not, then you owe 20 per cent more. A check is okay as long as it doesn’t bounce. There’s no discretion. No excuses. Eleventh day? 20 per cent. Good faith bad address? 20 percent. FedEx makes a mistake? 20 per cent. Sent to attorney instead of claimant? 20 per cent. Etc.? 20 per cent. The ten days begin to run before you even receive the Order? Blame Congress.

Presumably you might, in an appropriate case, be able to avoid the section 914(f) penalty by proving outright fraud on the part of the injured worker making timely delivery impossible. But this would be a very unusual case.

This is black and white and mandatory yet it continues to come up regularly as an issue, usually where a carrier thinks it has a good equitable case for missing the ten days. There’s no equity in Longshore. The rule is: money in the claimant’s hands in ten days.

The Special Fund administered by the U.S. Department of Labor is also subject to section 914(f). The Fund is on an automated fourteen day pay cycle. When I was there I would have the District Directors fax any Orders to me that required payment by the Fund so that I could get them paid manually to make sure that we never had any 914(f) problem.

Summary: To avoid the section 914(f) penalty have the payment in the claimant’s hands by the tenth calendar day after the District Director files the Order (beginning the next business day after the District Director receives the Order).

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.