AEU Longshore Blog ISSUE: Amendments to the Act – Part One

It’s been 100 years since the U.S. Supreme Court’s decision in Southern Pacific RR Co. v. Jensen, (244 U.S. 205 (1917)), established the “Jensen” line, limiting the coverage of states’ workers’ compensation laws to the landward side of the water’s edge and creating a gap in workers’ compensation coverage for employees working over the navigable waters of the U.S.  The decision ultimately led to the passage of the Longshore and Harbor Workers’ Compensation Act in 1927.

The Longshore Act was significantly amended in 1972 and 1984.  Since 1984 there have been several unsuccessful attempts to add amendments (and, of course, one success, amending the recreational vessel exclusion in 2009).

Previous unsuccessful amendments, in my opinion, can be grouped into two categories.

First, listed here in Part One, are significant changes that should be made in the interest of equity and to match broad changes that have been enacted in many state workers’ compensation laws.

Second, to be listed in Part Two, are changes that would be welcomed by the insurance carrier/maritime employer/self-insured employer community rationalized as restoring balance in the administration of the Act.

Part One – Significant changes

The intoxication defense in section 903(c) should be amended to strike the requirement for a successful defense that the injury must be occasioned “solely” by the intoxication of the employee.  Simply remove the word “solely”.  A corresponding change would have to be made in section 920(c) that creates a rebuttable presumption in favor of the injured worker.

The last maritime employer doctrine should be addressed.  The Act can be amended to reflect liability for intervening, post maritime employment.  Suggested language proposed in the past has been along the lines of, “Intervening Employment – If the last employment exposure that contributed to an injury or death was the result of employment that was not covered under this Act, no benefits shall be payable under this Act for the injury or death.”

The problem of concurrent Longshore Act and state act jurisdiction in many states should be addressed.  Section 905(a) can be amended to reflect that state workers’ compensation laws are expressly preempted by the Longshore Act.  Procedures can be provided in section 905 for the maritime employer to enforce this preemption of state laws.

The free choice of physician provision in section 907 should be addressed.  Previous proposals have reflected changes in many state laws that provide that insurance carriers may designate participating networks of health care panels that would be the obligatory choice for medical services and supplies for injured workers.

With regard to hearing loss several changes should be considered.  A combination of the aggravation rule and the last maritime employer rule has maritime employers frequently paying for hearing loss that they did not cause.  One change would involve language to remove the effects of lifestyle and aging from awards for hearing loss.  For example, the employer would not be liable for any part of an employee’s hearing loss caused by presbycusis, non-occupational causes, and documented pre-employment hearing loss.  The employer should only be liable for the percent of hearing loss for which it is responsible.  Pre-employment and post-employment should also be accounted for in a more equitable manner than in the current jurisprudence.

The time limits for notice of injury and filing a claim in sections 912 and 913 should be amended to reflect outside time limits.  The employer should be protected against claims filed years after an alleged workplace injury or exposure.

Past draft amendments have included a proposed change to section 921(b)(3) dealing with the payment of benefits in disputed cases.  Current language reads, “The payment of the amounts required by an award shall NOT be stayed pending final decision in any such proceeding unless ordered by the Board.  No stay shall be issued unless irreparable injury would otherwise ensue to the employer or carrier” (emphasis added, and a stay is virtually never issued).  Proposed new language would read something along the lines of, “Disputed amounts required by an award shall be stayed”.

An attempt should be made to improve the methodology for calculating the injured worker’s Average Weekly Wage.  Current methods under section 910(a) inflate the compensation rate calculation by a judicially created presumption that a worker who works 75% of the year preceding his injury is credited with a full year.  Also, section 10(c), the very broad and discretionary calculation provision, has resulted in workers receiving credit for part-time jobs, short overseas assignments that inflate weekly wages by a factor of three times or more and assorted other methods of inflating an injured worker’s wage earning “capacity” at the time of the injury.

The 20% penalty provision in section 14(f) should be amended.  An amendment should provide that payment under an award is due within 10 business days after receipt by the employer or carrier of a priority delivery or communication containing the award.

Finally, the issue of reduction or offset against disability payments based on receipt of retirement income from Social Security or retirement benefits furnished by the employer should be considered.

These are what I consider to be the most important, significant changes to be considered in amending the Longshore Act.

In Part Two, we’ll review further changes that would be welcomed by insurance carriers, maritime employers, and self-insured employers alike.

 

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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: Annual Increase & Attorney Fees

ANNUAL INCREASE

By Industry Notice No. 162, dated September 12, 2017, The U.S. Department of Labor, which administers the Longshore Act, has announced the new National Average Weekly Wage (NAWW) effective October 1, 2017, and consequently the new maximum and minimum rates for weekly benefits derived from the NAWW under Section 910(f) of the Longshore Act.

The new NAWW effective for the period October 1, 2017, through September 30, 2018, is $735.89.  This represents a 2.46% increase over the October 1, 2016, NAWW.  All beneficiaries receiving permanent total disability or related death benefits as of September 30, 2017, receive a 2.46% increase in their weekly rate.

The weekly rates for temporary total disability and permanent partial disability are subject to the maximum rate that is applicable on the date of injury.  These benefits are not increased annually.

The new NAWW provides the new maximum and minimum weekly rates.   Effective October 1, 2017, the maximum weekly rate under the Longshore Act is 200% of the NAWW, or $1,471.78.  The new minimum weekly rate is 50% of the NAWW, so it is $367.94.

Note on calculating the weekly compensation rate:  The weekly rate for permanent total disability and temporary total disability and for permanent partial disability based on the schedule in Section 908(c) is two-thirds of the worker’s Average Weekly Wage (AWW).  The weekly rate for permanent partial disability based on a loss of wage-earning capacity is two-thirds of the difference between the AWW and the post-injury wage-earning capacity.  The weekly rate for a widow is fifty percent of the AWW.  The AWW is established as of the date of the injury.

The minimum weekly rate does not apply in Defense Base Act cases.

ATTORNEY FEES

Section 28(a) of the Longshore Act 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’s fee.

In the case of Steven Lincoln v. Director, Office of Workers’ Compensation Programs, U.S. Department of Labor; Ceres Marine Terminals, Inc., decided March12, 2014, the federal Fourth Circuit Court of Appeals affirmed a Benefits Review Board’s (Board) decision denying an employer paid attorney fee.

In the Lincoln case, 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 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 and was paid within the 30 day time limit of Section 28(a). 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 Board held that the term “any compensation” in Section 28(a) is unambiguous and plainly encompasses an employer’s partial payment.  The Fourth Circuit affirmed that the payment of one week’s compensation was directly tied to the alleged injury and was not merely an attempt to avoid fee shifting.  Thus, under the terms of Section 28(a), the employer was not liable for the claimant’s attorney’s fee.

The Lincoln case did not mention medical benefits (whether they constitute “compensation”) in relation to the phrase “any compensation”.   Now we have a case that deals with medical benefits and Section 28(a).

The case is Arthur B. Taylor v. SSA Cooper, L.L.C. and Homeport Insurance Company and Director, Office of Workers’ Compensation, U.S. Department of Labor, Benefits Review Board No. 16-0174, issued June 30, 2017.

In the Taylor case, the employer paid medical benefits within the Section 28(a) thirty-day time limit but did not pay weekly disability compensation.

The employer argued that it satisfied the Section 28(a) requirement of “any compensation” by the payment of medical benefits and should not be liable for the claimant’s attorney’s fee.

The issue, thus, was whether the employer’s payment of medical benefits within the thirty day period constitutes payment of “any compensation” such that the employer cannot be held liable for an attorney’s fee, even though the claimant was successful in obtaining disability benefits after using the services of an attorney.

The Administrative Law Judge (ALJ) denied an employer paid attorney’s fee, finding that the phrase “any compensation” includes medical benefits, and in this case, the employer paid medical benefits and thus did not decline to “pay any compensation” within thirty days.

The Board reversed the ALJ’s decision.

The Board held that the term “compensation” in Section 28(a) should be read as “disability and/or medical benefits”.  The Board stated, “Its (compensation) precise meaning in the phrase “declines to pay any compensation” depends on what benefits are claimed and what benefits the employer paid or declined to pay in each case.  Whether a claimant files a claim for both disability and medical benefits or for only one or the other type of benefit, fee liability under Section 28(a) depends on whether there is success in obtaining the claimed but denied benefit”.

Essentially, if any type of claimed benefit is denied with no payment within 30 days of receipt of the claim from the DOL and legal services are necessary to obtain the denied benefit, the claimant will be entitled to an employer-paid attorney fee.

Doug Matthews, a New Orleans-based attorney at King Krebs & Jurgens who specializes in longshore cases, raised several questions related to this case.

For instance, if there are issues with regard to medical bills in the first 30 days after receipt of the claim from the DOL, is a direct analogy with the Lincoln case suggested?  Should the employer tender some amount “directly tied to the alleged injury” against potential medical liability to protect itself under Section 28(a)?

It’s not unusual for a decision to resolve the issues between the immediate parties, but in a broad sense, it seems to raise more questions than it answers. We’ll wait for future cases for clarification.

 

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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: Vessel in Navigation?

A recent decision by the Supreme Court of Texas offers a discussion of an issue that is important to employers (and insurance carriers) struggling to distinguish between liability for injured employees under the Jones Act/General Maritime Law and the Longshore Act.  The case is Helix Energy Solutions Group, Inc., Helix Well Ops, Inc., and Helix Offshore International, Inc. v. Kelvin Gold, (No. 16-0075 in the Supreme Court of Texas, June 16, 2017).  The issue was whether the vessel remained “in navigation” while undergoing an overhaul.

The seaman’s remedies under the Jones Act and the General Maritime Law are only available to members of a crew of a vessel in navigation.  The workers’ compensation remedy under the Longshore Act is only available to land-based maritime workers who are not crew members of a vessel in navigation, so the “in navigation” status of the “vessel” is a key element in determining the correct exposure.

There have been related issues arise on the question of vessel status.  For example, during the shipbuilding process, what is the point at which a vessel under new construction becomes a “vessel in navigation”?  The basic “what is a vessel” question has been addressed by the U.S. Supreme Court in the recent cases of Lozman v. City of Riviera Beach, FL (2013) and Stewart v. Dutra Construction Company (2005).  The Lozman case gives us the current test for vessel status: is the contrivance, viewed through the eyes of a reasonable observer, practically capable of serving as a means of transportation of people or things over water?  Then there’s our present issue: does a vessel remain “in navigation” when it is taken out of service to undergo repairs?

General Statement No. 1:  A vessel is in navigation, although taken to a dry dock or shipyard for repairs, if it remains in readiness for another voyage or is in preparation for making another voyage.  At some point, however, repairs may become sufficiently significant that the vessel can no longer be considered “in navigation” (Fousseini Tounkara v. Glacier Fish Co.; SeaBright Insurance Co., BRB No. 15-0217, January 28, 2016).

General Statement No. 2: “A vessel does not cease to be a vessel when she is not voyaging, but is at anchor, berthed, or dockside … or is taken to a dry dock or shipyard to undergo repairs in preparation to making another trip.” (Chandris v. Latsis, 515 U.S. 347 (1995))

General Statement No. 3: “Major renovations can take a ship out of navigation, even though its use before and after the work will be the same.” (Chandris, citing McKinley v. All Alaskan Seafoods, Inc., 980 F. 2d 567 (9th Cir. 1992))

How do we determine whether a vessel remains in navigation when it leaves the water for repairs?  The answer will usually determine the difference between whether the employer has liability for injuries to employees under the Jones Act or under the Longshore Act.

The Gold case involves the conversion of a drill ship into a well intervention ship servicing pre-existing offshore wells.  The conversion lasted 20 months and cost $115 million, during which the vessel was turned over to contractors and unable to navigate during the entirety of the plaintiff’s employment on board.

In defending the Jones Act lawsuit, the defendant’s burden of proof was to establish that the vessel was not a “vessel in navigation” at the time of the plaintiff’s injury.

The trial court granted the defendant vessel owner’s motion for summary judgment dismissing the Jones Act and General Maritime Law lawsuits based on the fact that during the major overhaul the ship was not a “vessel in navigation”.  An appeals court then reversed and, finally, the state Supreme Court reinstated the trial court’s dismissal on summary judgment.

The Texas Supreme Court found that the vessel in navigation question can sometimes be answered as a matter of law, although it is usually a question of fact.  Conclusive evidence can establish that an extended, major overhaul can remove a vessel from navigation as a matter of law.  Thus, major overhauls that render watercraft practically incapable of transportation are sufficient to remove those craft from “vessel in navigation” status.  Whether a vessel is or is not “in navigation” for Jones Act purposes, while normally a fact-intensive question for the jury to decide, may be removed from the fact finder’s consideration where the facts and the law will reasonably support only one conclusion.

The analytical framework is based on the fact that the spectrum of repairs needed is broad, ranging from temporary routine repairs to complete overhauls. At what point along this spectrum do repairs become sufficiently significant that the vessel can no longer be considered in navigation?  The difference is one of degree.

The court noted that there is no uniform approach or comprehensive list of factors in determining where on this scale the vessel leaves “in navigation” status.  The yardstick of analysis is the “status of the ship, the pattern of the repairs, and the extensive nature of the work contracted to be done (West v. United States, 361 U.S. 118 (1959)).  This vague framework includes consideration of (a) the significance of the work performed, (b) the cost of the conversion relative to the value of the ship, (c) whether contractors exercised control over the work, (d) the duration of the repairs, and (e) whether the repairs took the ship out of service.

Also, there is no time limit for the out-of-service repairs as a matter of law.

In the final analysis, this case does not seem to have been a close call.  This vessel was not “in navigation” during the period of claimant’s employment (not limited to the moment of injury).  Thus, he was not a crew member of a vessel in navigation, and he had no Jones Act/General Maritime Law remedy.

Our lesson: The Longshore Act covers workers who repair or build vessels.  A vessel that is not “in navigation” means no Jones Act exposure to crew, but it does mean workers’ compensation exposure under the Longshore Act.

 

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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: Review of Status, Part Two: Construction Workers, Mail Clerks, and Truck Drivers, Foreign Workers and Bridge Workers

This is Part Two of a compilation of occupation-specific status discussions from past AEU Longshore blog postings.

 

Construction Workers

A few years back, we covered the Longshore Act status of construction workers.  These are workers who build, repair, renovate, or maintain buildings and equipment.  They are welders, electricians, roofers, sheet metal workers, carpenters, plumbers, etc.  They work on shipyard and terminal buildings at maritime locations as well as office and industrial buildings nowhere near any navigable water.  The problem is determining when these workers may be covered by the Longshore Act.

This is a status discussion, so let’s assume that the workers meet situs for Longshore Act coverage.

Construction work can be maritime employment based on the location and timing of the work and the nature, purpose, and use of the structures being worked on.

First, the structure must have a maritime purpose.  Construction work does not meet maritime status simply because it is done on a maritime situs.  The building or structure has to have a maritime connection, integral or essential to the loading/unloading of cargo, shipbuilding, ship repair or ship breaking.

Second, there’s a timing element.  The nature of the building, structure, equipment, etc. being built, maintained, renovated, or repaired has to be related to concurrent maritime activity.  Future intended maritime use may not be enough to confer status.

Two case examples illustrate this point:

  1. A pipefitter building a power plant at the Norfolk Naval Shipyard failed to meet Longshore Act status. Although the plant would eventually provide steam and electricity to shipbuilding operations, at the time that the claimant was on the site it was new construction and the building had never performed a maritime function.  When the job was finished the claimant would have been off the site and on to another construction project (Weyher/Livsey Constructors Inc. v. Prevetire, (27 F.3d 985 (4th 1994)).
  2. However, two maintenance workers at that same power plant at a later date did meet status. At the time of their injuries, the plant was operating and the steam and electricity were going to supply shipyard operations.  The employees were maintaining an operating, essential maritime facility, (Kerby v. Southeastern Public Service Authority, (31 BRBS 6 (1997)).

When it comes to coverage issues with regard to construction workers, the best approach is to analyze the timing and nature of the project looking for an essential maritime connection.

 

Mail Clerks and Truck Drivers

In the past, we have also addressed in general terms the coverage issues related to the maritime status of mail clerks and truck drivers (see parts one and two of that discussion).  This included consideration of the “vendor exclusion” of section 2(3)(D) as it may apply to truck drivers.  This exclusion is narrower than generally believed, therefore it may be worth revisiting those discussions.

About a year ago, we reviewed a then-new truck driver case of Abdulaziz A. Ahmed v. Western Ports Transportation, Inc., (BRB No. 16-0067, 9/21/16).  This decision contains a good discussion of the issues of situs as well as status.

In addressing the status issue, the BRB reviewed a number of its prior truck driver cases.  It considered several situations where drivers, much like the driver in this case, transported cargo between port terminals and facilities located outside the port.  These drivers were involved in the land-based stream of commerce rather than cargo handling. The key point is that the drivers were transporting sealed containers, loaded onto the trucks by others, to destinations outside the port area.  Since the driver in this case was transporting containers between the port and an inland intermodal facility, he was involved in land transportation and did not meet status under the Longshore Act.

 

Special Status

An example of a special status issue is the situation where status is actually irrelevant.  On several occasions, notably on September 23, 2010 and January 27, 2015, the AEU Longshore Blog referenced Perini coverage.  It’s a very simple principle.  According to the U.S. Supreme Court, any work over the navigable waters of the United States is covered by the Longshore Act, unless an express statutory exclusion applies.  Situs over the water confers status; the nature of the work doesn’t matter.

 

Foreign Workers

The Longshore Act status of foreign workers has also been discussed on several prior occasions, notably on February 14, 2012 and July 1, 2015.  The coverage provisions of the Act, sections 2(3) (status) and 3(a) (situs), comprise the tests for coverage.  With the exception of the section 3(b) exclusion of employees of a foreign government, there is no nationality or citizenship component to Longshore Act coverage.

For example, if a domestic U.S. company hires foreign workers to work in the U.S., either permanently or temporarily, these workers are covered if they meet Longshore Act status and situs.  Likewise, if a foreign company sends employees to work in the U.S. these workers are also covered if they meet situs and status.

In the July 1, 2015 post, the point was made that the same considerations also apply to workers in the U.S. illegally.  The definition and coverage provisions in the Longshore Act do not contain citizenship, nationality, or immigration status conditions.

 

Bridge Workers

Cases involving bridge workers involve issues of both situs and status, as we discussed back on July 13, 2010.  Status is usually a secondary consideration in bridge cases.  If you meet the situs element for coverage then you will often satisfy status by virtue of Perini (work over the water) coverage.

Work on a bridge does not usually meet situs since bridges are considered extensions of land and are not “enumerated sites” under section 3(a).  Situs issues usually include instances where the worker is not working on the bridge itself but from a barge or work platform (watch out for MEL exposure here), or where the bridge is incomplete, or the bridge is floating, not permanently affixed to land, or any number of circumstances which affect the question of whether the bridge is permanently affixed to land.

But back to status. If the worker meets situs and Perini doesn’t apply because the injury does not occur over the water then you have to sort out status.

Is work on a bridge considered maritime employment?  You need a strong maritime connection to have an argument for Longshore coverage.  For example, what effect will the work have on water borne commerce?  If you can make a strong argument that the purpose of the work is to aid, regulate, or otherwise influence maritime commerce, such as work on a drawbridge that will improve the flow of commerce, then you may have status.  In some federal circuits if you are unloading construction materials at the job site this may give you status.

Conclusion: Work on completed bridges permanently affixed to land is not generally considered to meet situs or status under the Longshore Act, but all facts should be considered for any duties or circumstances that could implicate Longshore coverage.  For example, is the worker loading and unloading construction materials from vessels, or is he working from a floating work platform or barge?  Might he be considered a “harbor worker”, based on the effect of his work on water borne commerce?  One must look closely at all circumstances before concluding that bridge work is not covered by the Longshore Act. We’ll cover the various nuances of bridge worker coverage in an upcoming post.

 

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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.