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.

Issue: Presumptions

Jack_crop 72dpiSection 20 of the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. 920) contains several key presumptions.  It states:

In any proceeding for the enforcement of a claim for compensation under this Act it shall be presumed, in the absence of substantial evidence to the contrary –

  1. That the claim comes within the provisions of this Act.
  2. That sufficient notice of such claim has been given.
  3. That the injury was not occasioned solely by the intoxication of the injured employee.
  4. That the injury was not occasioned by the willful intention of the injured employee to injure or kill himself or another.

What Is a Presumption?

A presumption is a procedural tool that shifts the burden of proof.  It is not evidence.  It does not strengthen a party’s case.  What it does do is advance a party’s case by shifting the burden of proof on an issue to the other party.  The section 20 presumptions are for the claimant’s benefit in Longshore cases.

Rebuttable Presumptions

The section 20 presumptions are “rebuttable”.  The employer can rebut each of the presumptions by providing “substantial evidence” to the contrary.  “Substantial evidence” is “sufficient to support a rational conclusion by a reasonable person”.  It does not have to be sufficient to decide an issue by a “preponderance” of evidence.  The employer does not have to provide sufficient evidence to defeat the claim at the rebuttal stage (but the employer can lose at this stage).  The employer must produce “substantial evidence” to remove the presumption from the case.

Once a presumption is rebutted it drops from the case, and the issue in question must then be decided by a preponderance of the evidence based on consideration of the record as a whole.

The Section 20(a) Presumption

“(a) That the claim comes within the provisions of the Act.”

I discussed this presumption back on April 19, 2012, so this will merely be a summary.

This presumption arises at the point at which the claimant makes his prima facie case.  To do this, the claimant must show that he has suffered some harm or pain and that an accident occurred or working conditions existed that could have caused the harm.  Subjective complaints of pain, standing alone, are sufficient to establish the prima facie case.  The claimant is not required at this stage to produce any additional evidence, medical or otherwise.  He does not have to trace his injury or harm to a specific time, or diagnose the source of his pain.

At this point the section 20(a) presumption comes into play and provides the claimant with a rebuttable presumption that the injury is causally related to his employment.

The employer must then try to rebut the presumption by providing substantial evidence that the alleged accident did not happen, or by providing substantial evidence that severs the connection between the alleged disability and the work environment.  The employer needs a combination of medical evidence (an unequivocal medical opinion that the injury or harm could not have been caused by the work environment), a favorable credibility determination by the Administrative Law Judge, or negative evidence (records do not corroborate the claimant’s version of events).

The section 20(a) presumption has limits.  It does not apply to:

  1. Establish the fact of injury,
  2. Establish jurisdiction or coverage,
  3. Establish nature and extent of disability,
  4. Establish a loss of wage earning capacity.

NOTE:  In spite of frequent references to a “presumption of coverage” in the Longshore Act, there is, in fact, no such presumption in the law.  There is, however, the section 20(a) presumption of causation.

The section 20(a) presumption establishes a causal connection between the harm and the claimant’s job.  If the employer is unable to rebut the presumption then the claimant wins on the issue of causation.  If the employer successfully rebuts the presumption then the issue of causation must be decided based on consideration of the record as a whole with the claimant bearing the burden of proof.

The Section 20(b) Presumption

“(b) That sufficient notice of such claim has been given”.

There are two particular timeliness provisions with regard to claims in the Longshore Act.

Section 12(a) states that, “Notice of an injury or death in respect of which compensation is payable under this Act shall be given within thirty days after the date of such injury or death ….”

Section 13(a) states that, “Except as otherwise provided in this section, the right to compensation for disability or death under this Act shall be barred unless a claim therefore is filed within one year after the injury or death ….” (two years in occupational disease cases)

The section 20(b) presumption places the burden of proof on the employer to rebut by substantial evidence the presumption that the claimant has met the notice and claim timeliness requirements.

NOTES regarding the section 20(b) presumption:

Even without the presumption, the employer will find it difficult to prevail on timeliness issues.  The U.S. Department of Labor (DOL) can excuse the untimely section 12 notice requirement unless the employer can show that it has been prejudiced by an untimely notice of injury, and the Administrative Law Judges and Benefits Review Board are reluctant to deny claims based on issues of untimeliness.

The federal circuit courts of appeal disagree on whether the section 20(b) presumption applies to both the sections 12 and 13 requirements.  The Benefits Review Board, however, applies the section 20(b) presumption to both the notice and claim filing requirements.

Before it can challenge timeliness, the employer must show that it satisfied the requirement in section 30(f) that the injury must be reported to DOL within 10 days on Form LS-202.  If Form LS-202 is not filed, then the timeliness requirement does not begin to run.

The Section 20(c) Presumption

“20(c) – That the injury was not occasioned solely by the intoxication of the injured employee.”

Section 20(c) must be read in conjunction with section 3(c).  The Longshore Act makes a defense available to the employer.  Section 3(c) states, “No compensation shall be payable if the injury was occasioned solely by the intoxication of the employee or by the willful intention of the employee to injure or kill himself or another.”

An employer asserting the section 3(c) intoxication defense must first rebut the section 20(c) presumption that the injury was not occasioned solely by intoxication if it is to prevail.

The requirement that intoxication be the “sole” cause of the injury places a heavy burden of proof on the employer even if it manages to rebut the presumption by producing substantial evidence that the claimant was intoxicated and that the injury was caused solely by the intoxication.  Practically speaking, the employer must conclusively rule out every other possible contributing cause of the accident.

This situation emphasizes the necessity for comprehensive and immediate accident investigation, including drug and alcohol testing, photographs, identification of witnesses, and preservation of physical evidence.

It is important to remember that while intoxication might be the primary cause of the death or injury, that does not mean that it is the “sole” cause.  If any other possible contributing factor is identified then the presumption is not rebutted and the 3(c) defense fails.

The Section 20(d) Presumption

“(d) – That the injury was not occasioned by the willful intention of the injured employee to injure or kill himself or another.”

Once again, the section 3(c) defense provides that, “No compensation shall be payable if the injury was occasioned solely by the intoxication of the employee or by the willful intention of the employee to injure or kill himself or another.”

Once again, an employer asserting this defense must first rebut the section 20(d) presumption that the injury was not occasioned by willful intent.

This presumption comes into play most frequently in cases involving fights at work or in cases involving the suicide of the injured worker.

If a claimant is involved in an altercation on the work premises, the presumption under section 20(d) is that any injury he suffers is not the result of his willful intent to injure himself or another.

Since an injured worker would be extremely unlikely to admit that he was injured in the course of willfully intending to injure another person (possibly exposing himself to collateral liability or criminal charges) it is difficult to rebut the presumption.  In the circumstances following a work fight, the injured worker will invariably claim that he was an innocent bystander or the victim of unprovoked aggression.  As will all others in attendance.

Cases involving suicide are more challenging on the issue of causation.

There are two presumptions available to the claimant in this circumstance.  The section 20(a) presumption of causation applies as well as the section 20(d) presumption against willful intent.

So, in basic terms, the survivor who files a claim for benefits under the Act has two presumptions in his/her favor:  1) that the death is related to work, and 2) that the death was not the result of willful intent on the part of the deceased to injure or kill himself or another.

The employer may rebut either of the presumptions by producing substantial evidence to the contrary.  If the presumptions are rebutted, they drop out of the case, and the issues are then decided on the record as a whole by a preponderance of the evidence.

The employer may then try to defend the claim under section 3(c), by establishing that, in the event of suicide, that the suicide was the result of willful intent on the part of the deceased.

The first question that may arise is, can suicide not be the result of willful intent, especially where there is a “suicide note” left behind, or there are other indications of pre-planning?  The mere fact of suicide, however, does not establish willful intent.

The concept of “irresistible suicidal impulse” has evolved in cases involving suicide.  If the decedent’s suicide was caused by an irresistible suicidal impulse resulting from an employment related condition then this overcomes willful intent and the section 3(c) defense fails.

Recently, the federal Ninth Circuit Court of Appeals has changed its focus in its causation analyses away from the question of the existence of an irresistible impulse resulting from employment related conditions into an analysis more in terms of a chain of causation based on whether the work injury and its effects precluded the formation of a rational and willful intent to commit suicide.

The Ninth Circuit states that a survivor’s claim in the case of suicide is compensable where there is, “a direct and unbroken chain of causation” between a compensable work related injury and the suicide where the injury and its consequences directly result in the claimant’s loss of normal judgment.  In the opinion of the Ninth Circuit, this approach better comports with modern psychiatry and the no-fault nature of the Longshore Act.

Once again, it is important to remember that the section 20 presumptions are rebuttable.  If the employer fails to rebut a presumption by producing substantial evidence, then the claimant will prevail on that issue.

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.