ISSUE: 2014 Part Two

Jack_crop 300dpiI mentioned last time that calendar year 2014 was relatively quiet for Longshore Act jurisprudence at the federal appellate level.  There were no decisions at the U.S. Supreme Court. There were, however, a few interesting (to me) Longshore and Jones Act cases at the Courts of Appeal.

Steven Lincoln v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Ceres Marine Terminals, Inc., 4th Cir., 3/12/14

This case involved two perennially contentious issues: attorney fees and hearing loss.

The Benefits Review Board (the Board) had found that the employer was not liable for the claimant’s attorney fee, as the requirements for fee shifting under section 28(a) of the Act (33 U.S.C. 928(a)) had not been met.  The Fourth Circuit Court of Appeals denied the claimant’s petition for review of the Board’s Order.

FACTS:  Timing is important under section 28(a).  Based on a 4/11/11 audiogram, the claimant filed a claim for hearing loss on 5/24/11, which the employer controverted on 5/26/11.  The employer received written notice of the claim from the U.S. Department of Labor (DOL) on 6/14/11, and on 7/7/11 the employer voluntarily paid $1,256.84 in compensation, which was the equivalent of one week’s compensation at the maximum weekly rate.

In controverting, the employer acknowledged that there was workplace noise induced hearing loss, but that additional information was needed before it could determine the correct compensation payment.  (The case was eventually settled on 10/4/11 for a 10% binaural hearing loss.)

The claimant’s attorney filed a fee petition on the basis of section 28(a), which, under certain circumstances, shifts the obligation to pay an attorney fee from the successful claimant to the employer.

Section 28(a) states, “If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the deputy commissioner on the ground that there is no liability for compensation within the provisions of this chapter and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim …” then the employer may be liable for the claimant’s attorney fee.

In this case, the DOL’s District Director had ruled that the employer was not liable for the claimant’s attorney fee.

The claimant appealed the District Director’s denial to the Board, arguing that the payment of only one week of compensation does not satisfy section 28(a)’s requirement for the payment of “any compensation” and further arguing that “any compensation” means all compensation due.

The Board affirmed the denial of an employer paid attorney fee.  It held that the term “any compensation” is unambiguous and plainly encompasses an employer’s partial payment.  The Board noted that the employer’s refusal to pay compensation must be absolute in order for it to face possible fee liability under section 28(a).  In this case, the employer had controverted, but it had admitted liability and paid one week’s compensation.

The Board recognized that the medical evidence often cannot be ascertained with any degree of certainty within 30 days of receipt of the claim.  Thus, fee shifting under section 28(a) may not occur if the employer agrees that some amount is due and tenders “any compensation”.

Note:  The employer in this case did pay some compensation, raising the issue of fee shifting under section 28(b), but this section did not apply in this case.  It only applies when the employer initially pays voluntary compensation and a subsequent dispute arises about the total amount of compensation due, with the further requirement that an informal conference be held, that the employer refuse to accept the written conference recommendation, and that the employee procures the services of an attorney to obtain a greater award than what the employer was willing to pay following the written recommendation.  There was no informal conference in this case.

Two points:

The payment of one week’s compensation, in the opinion of the Fourth Circuit, was directly tied to the alleged injury and was not merely an obvious attempt to avoid fee shifting under section 28(a).

Controversion does not trigger fee shifting under section 28(a).  The only trigger is the refusal to pay “any compensation” within 30 days of receiving the claim from DOL.

The employer in this case found a way to avoid attorney fee liability under section 28(a).

Larry Naquin, Sr. v. Elevating Boats, LLC, 5th Cir., 3/10/14

This case involves another frequently litigated issue, the question of whether an injured worker qualifies for the seamen’s remedies under the Jones Act and General Maritime Law as a member of a crew of a vessel, or whether he is a non-seaman covered by workers’ compensation.

The injured worker in this case had the job title of vessel repair supervisor.  Although we know that job titles do not resolve a coverage issue, in this case the title accurately reflected the duties.  The worker supervised the maintenance and repair of employer’s mostly docked and moored fleet of lift boats.  He spent about 70% of his work time on board the vessels, although as mentioned, the vessels were almost always docked or moored in a shipyard canal.

His duties consisted of inspecting, cleaning, painting, replacing defective or damaged parts, performing engine repairs, going on test runs, and operating the vessels’ marine cranes and jack up legs.  The remaining 30% of his work time was spent in the shipyard’s fabrication shop or operating its land based crane.  He was injured while operating the land based crane.

The jury at trial in federal district court found that the worker met seaman status, and this finding was affirmed by the Fifth Circuit Court of Appeals.

NOTE:  The appellate court pointed out that the standard of review for a jury’s factual findings is whether there is a reasonable evidentiary basis for the verdict, reviewing the evidence in the light most favorable to the verdict, reversing “only when there is a complete absence of probative facts to support the conclusion reached ….”

This decision undeniably represents a broad interpretation of the phrase, “master or member of a crew of any vessel”.   Although the original intent of the General Maritime Law and even the Jones Act in 1920 was to protect seagoing sailors from the dangers inherent in their exposure to the perils of the sea and the consequences of being stranded sick or injured in foreign ports, I think that we can now conclude that exposure to “perils of the sea” in the conventional sense is no longer a material consideration if Naquin becomes the law.

According to the Supreme Court’s two part test for seaman status (Chandris v. Latsis, 1995) a seaman 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, we have the 30% rule.  The “substantial nature” part of the employment connection is a problem.  It is self-evidently difficult to quantify.

So we have a ship repair and maintenance employee of a shipyard who is a “Jones Act” seaman.

Perils of the Sea?  What “perils”?  The Naquin court, perhaps somewhat impatiently, points out, “Courts have consistently rejected the categorical assertion that workers who spend their time aboard vessels near shore do not face maritime perils.”  Apparently this applies also to moored vessels in canals.

“Ship repair” is an enumerated occupation in the Longshore Act as an example of a land based maritime employee?  No help.  Even an employee in one of the Longshore Act’s enumerated occupations can qualify as a Jones Act seaman (Southwest Marine, Inc. v. Gizoni).

Injured on land, operating a land based crane?  Activity at the moment of injury is irrelevant.  The Jones Act seaman test is status based, and it does not focus on the employee’s activity at the time of the injury.

Under the Chandris substantial nature test, ship repair is doing the ship’s work, supplying the necessary employment connection and conferring seaman status.

It remains to be seen whether this decision will have persuasive authority going forward, even in the Fifth Circuit, or whether it will simply stand as an “outlier” as the courts navigate around in the “uncertainty zone” between the Longshore Act and the Jones Act.

It is worth noting that there was a dissent in this case on the issue of seaman status.  In the view of the dissenting judge, Mr. Naquin did not satisfy either the duration or nature components of the second prong of the Chandris test.  Simply put, “… land-based employees like Naquin are not seamen.”

NOTE:  Although the status issue was affirmed, this case was remanded because it was not clear to the appellate court to what extent the lower court’s damage award was “tainted” by “non-compensable considerations”.  Emotional damages resulting purely from another person’s injury and not a fear of injury to one’s self are not compensable under the Jones Act.  In this case, the incident that resulted in the claimant’s injury also resulted in the death of the claimant’s cousin’s husband.  Damages to the claimant as a result of this aspect of the event are not compensable.

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: Attorney Fees, Part Two

Jack_crop 72dpiTwo weeks ago I discussed sections 28(a), (b), (c), and (e) of the Longshore Act. We considered under what circumstances liability to pay the claimant’s attorney’s fee is shifted to the employer and when the fee is payable by the claimant as a lien on compensation.

Now it’s time to discuss the manner in which the amount of the approved fee is derived. The first thing we notice is that the word “reasonable” figures prominently in the discussion. The approved fee must be “reasonable”, based on consideration of a number of factors, all of which are based on reasonableness.

So, what is a reasonable fee based on? And how do you approve an hourly rate in the “relevant market”, for “necessary” work, to come up with a “reasonable” fee award?

It’s not as easy as it used to be. Up until just a few years ago all that was necessary in approving a fee award under the “abuse of discretion” standard of review was for the adjudicator to cite hourly rates in fee awards in recent Longshore Act cases and the job was pretty much done. Not anymore. Attorney fees have been hotly contested in recent years, and the “relevant market” is no longer simply prior Longshore cases.

First, the burden of proof to support a fee request is on the fee applicant (claimant’s lawyer), and the employer has a reasonable (that word again) time to respond and file objections. The adjudicator, whether the District Director, administrative law judge, Benefits Review Board, or court must then determine a “reasonable” fee that is in line with the prevailing hourly rate in the relevant community for similar services by lawyers of reasonably comparable skill, experience and reputation, that is reasonably commensurate with the necessary work done, and that takes into account the quality of the representation, the complexity of the legal issues involved, and the amount of benefits awarded.

Although the standard for review is “abuse of discretion” and, in fact, there is wide discretion in considering the various factors in evaluating the fee application, the adjudicator must specifically consider all of the evidence submitted by the fee applicant, as well as all objections filed by the employer. As I said, it’s no longer simply a matter of referring to fees awarded in prior Longshore cases.

The question of hourly rates has been a contentious issue in recent years, and the subject of its own “cottage industry” of litigation. As a result, hourly rates have risen for successful claimant attorneys under the Longshore Act over the past five years, mostly due to the broadening of the concept of relevant community.

Remember, fee shifting under the Longshore Act uses the Lodestar method, i.e., hourly rate times work done usually expressed in quarter hour increments. The Supreme Court has identified twelve factors that are relevant to setting reasonable hourly rates under the Lodestar method. Some of the relevant factors are the attorney’s customary fee, the rate he would be paid in non-Longshore cases, the experience, reputation, and ability of the attorney, the novelty and difficulty of the issues in the case, and the amount involved and the recovery obtained. The point is that skilled attorneys must be willing to take on Longshore cases on behalf of claimants, so the hourly rates must be competitive for legal services in the market and commensurate with the attorney’s reputation and ability.

A fee applicant may submit local, regional, or otherwise appropriate, relevant surveys of legal fees, as well as affidavits of other attorneys in the relevant community who are familiar with his skill and experience, affidavits attesting to the prevailing rates in the community for comparable attorneys for similar services, as well as his own affidavit of what fees he charges in other Longshore cases, as well as information with regard to fees he receives in non-Longshore cases. The burden is on the fee applicant to produce evidence that his rates are in line with those prevailing in the relevant community for similar services by lawyers of comparable skill and experience.

If the fee applicant does not provide sufficient evidence to establish his desired market rate, the adjudicator may derive an appropriate market hourly rate based on fee awards in other Longshore Act cases.


In evaluating a fee application, the adjudicator will consider the novelty of the case and the complexity of the issues in relation to the number of hours expended, not the hourly rate.

The prohibition against fee agreements, the use of the Lodestar method as opposed to a percentage of the recovery method, and the specialization of the Longshore market all result in making it difficult to establish a prevailing market rate and to judge the reasonableness of the work done.

There is no uniform standard among the federal circuits as to what constitutes the relevant community or what a reasonable hourly rate is.

Filing a Notice of Controversion, Form LS-207, does not trigger section 28(a) fee liability; the only trigger is “declining” to pay “any” compensation within 30 days of receiving the notice of the claim.

Traditional clerical type duties performed by clerical employees are not compensable (they are considered to be overhead built into the hourly rate), but work done by paralegals and law clerks, travel time, and time spent preparing, and defending if necessary, the fee application, are compensable if reasonably necessary.

The attorney fee is not payable until the case is finally adjudicated, i.e., all appeals are concluded. So the successful attorney sometimes has to wait quite a while to be paid. If it’s an “unreasonably” long time, the fee may be enhanced. The courts have agreed that an adjustment in the amount is an appropriate factor to consider for a reasonable fee in cases of delayed payment. The measure is the delay between the date that the services were rendered and the date that the fee order is issued. Of course, there is no consensus as to how long the delay must be to trigger enhancement. Two years is probably not long enough, seven years is, and somewhere in between is when you start to consider fee enhancement.

The District Directors, Administrative Law Judges, and the Benefits Review Board are not required to do a full blown analysis with regard to each and every fee petition in each and every case, but the analysis will have to be done frequently enough so that the hourly rate is current for each relevant market.

So, anyway, you get the idea, although we’ve barely scratched the surface. The idea is that there should be reasonable fees paid to successful claimant attorneys in Longshore cases, in accordance with the going rates for comparable work in the relevant market and in view of the results achieved. In this way, skilled attorneys will be willing to take on Longshore cases.

ISSUE – Attorney Fees, Part One

Jack_crop 72dpiThe so-called “American Rule” requires that litigants in U.S. courts bear their own expenses, including attorney fees. The Longshore Act, however, contains a “fee shifting” provision, whereby, under certain circumstances, the employer is liable for the injured worker’s “reasonable” attorney’s fee. Section 28 of the Longshore Act governs attorney fees (33 U.S.C. 928).

Section 28(a) states:

“If the employer or carrier declines to pay any compensation on or before the thirtieth day after receiving written notice of a claim for compensation having been filed from the (district director), on the ground that there is no liability for compensation within the provisions of this Act, and the person seeking benefits shall thereafter have utilized the services of an attorney at law in the successful prosecution of his claim, there shall be awarded, in addition to the award of compensation, in a compensation order, a reasonable attorney’s fee against the employer or carrier in an amount approved by the (district director), Board, or court ….”

So section 28(a) shifts fee liability to the employer unless the employer pays “any” compensation within 30 days of receiving written notice of the claim from the U.S. Department of Labor. This presents a challenge to the employer, since the Act does not require that a claim include specific evidence as to what the injured worker is actually claiming. A valid claim is a written expression of the intent to assert a right to compensation. It does not have to initially include evidence of disability or impairment. The notice of claim alone starts the thirty days.

The employer must immediately investigate the claim to determine if “any” payment is due. It doesn’t seem fair, but failing to pay because of lack of information provided by the claimant will likely be construed as “declining” to pay. Fair or not, the employer has 30 days under section 28(a) to investigate the claim and make a payment or risk liability for paying the claimant’s attorney fee if the claim is successful, regardless of how sketchy and contradictory the initial information might be.

“Any compensation” doesn’t mean that the employer must pay the equivalent of everything ultimately determined to be due and payable. But the tactic of paying $1.00 won’t avoid liability under section 28(a), since this will not be considered to be “compensation”, but rather a transparent attempt to avoid fee liability. On the other hand, there is good faith action that an employer can take in those thirty days that may avoid fee liability. For example, admitting liability and paying one week of compensation at a rational average weekly wage toward a possible scheduled award may avoid attorney fee liability under section 28(a).

Review: before the claimant’s attorney fee is assessed against the employer/carrier under section 28(a), there must be a claim filed with the U.S. Department of Labor’s District Director, the employer must receive written notice of the claim from the District Director, the employer must then allow thirty days to pass without “any” payment, and the employee must “thereafter” use an attorney to prosecute his claim successfully.

Section 28(a) issues turn into section 28(b) issues when the employer initially pays voluntary compensation within thirty days but a subsequent dispute arises about the total amount due (or a variety of other issues).

Section 28(b) states:

“If the employer or carrier pays or tenders payment of compensation without an award… and thereafter a controversy develops over the amount of additional compensation, if any, to which the employee may be entitled, the (district director) shall set the matter for an informal conference and following such conference the (district director) shall recommend in writing a disposition of the controversy. If the employer or carrier refuse to accept such written recommendation, within fourteen days after its receipt by them, they shall pay or tender to the employee in writing the additional compensation, if any, to which they believe the employee is entitled. If the employee refuses to accept such payment or tender of compensation, and thereafter utilizes the services of an attorney at law, and if the compensation thereafter awarded is greater than the amount paid or tendered by the employer or carrier, a reasonable attorney’s fee based solely upon the difference between the amount awarded and the amount tendered or paid shall be awarded in addition to the amount of compensation.”

So there are four conditions that have to be met before the employer is liable for the claimant’s attorney fee under section 28(b): 1) there must be an informal conference, 2) followed by a written recommendation by the District Director, 3) the employer refuses to adopt the recommendation, and 4) the employee procures the services of an attorney and achieves a greater award than what the employer was willing to pay following the written recommendation.

NOTE: the strict condition of an informal conference followed by a written recommendation may not be required in the federal Ninth Circuit court of appeals, but the Benefits Review Board will apply the literal requirements of section 28(b) in all of the federal circuits.

If the conditions for an attorney fee assessed against the employer/carrier as spelled out in sections 28(a) and (b) are not met, the successful attorney can still get paid for his “reasonable and necessary” work. Section 28(c) provides that an attorney fee “may” be approved payable by the claimant as a lien on compensation (as opposed to the mandatory “shall” language of sections 28(a) and (b)). Section 28(c) also applies in those cases where the claimant is represented by a non-attorney.

Section 28(c) states:

“In all cases fees for attorneys representing the claimant shall be approved in the manner herein provided. If any proceedings are had before the Board or any court for review of any action, award, order, or decision, the Board or court may approve an attorney’s fee for the work done before it by the attorney for the claimant. An approved attorney’s fee, in cases in which the obligation to pay the fee is upon the claimant, may be made a lien upon the compensation due under an award ….”

In all cases, the claimant’s attorney must file an application for approval of his fee for his work at each level of proceedings. The application must describe the work that was performed, specifying the number of hours and the hourly rate of the person performing the work. The fee is never simply a percentage of the benefits awarded. The award is calculated under what is called the “Lodestar method”, which multiplies a reasonable hourly rate by the number of hours reasonably expended, taking into consideration various discretionary factors, including the results obtained.

The guiding principle of fee shifting is that “reasonable” fees are to be calculated according to the prevailing market rates in the relevant community.

Note: no contract pertaining to the amount of an attorney fee will be valid. The attorney must follow the application procedures spelled out in the Longshore Act regulations at 20 C.F.R. 702.132 and 20 C.F.R. 802.203.

Section 28(e) states, “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 (district director), 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.”

Now that we have some idea who pays the claimant’s attorney’s fee and why, we can discuss how the amount of the fee is derived.

But that discussion is for Part Two.