"Compensation" Under the Longshore Act

The Benefits Review Board recently published a new decision addressing “compensation” under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”): Wheeler v. Newport News Shipbuilding & Dry Dock Co. In Wheeler, the BRB determined that, for purposes of modification under Section 22 of the LHWCA, the term “compensation” did not include the payment of medical benefits.

The term “compensation” has been defined differently by different courts.  The Supreme Court of the United States previously stated that “compensation” did not include the payment of medical care for purposes of Section 13(a) of the LHWCA.  Marshall v. Pletz, 317 U.S. 383 (1943).  In the Court’s opinion, Sections 2(12), 6, 8, 10, and 14 of the LHWCA used the term “compensation” to refer to periodic money payments, but not an employer’s expense of medical care.

Later courts and administrative bodies have interpreted “compensation” broadly.  See, e.g., Lazarus v. Chevron USA, Inc., 958 F.2d 1297 (5th Cir. 1992).  In Lazarus, the Fifth Circuit restricted its holding to the LHWCA’s Section 18(a), which deals with enforcement of awards.  If a Claimant was awarded reimbursement of amounts he expended for medical care, then those amounts may be considered “compensation.”  Further, as noted by the BRB in Wheeler, the holding in Lazarus was limited to cases “in which the employer refuses or neglects to furnish medical services, and the employee incurs expense or debt in obtaining such services; in such a case, an award of medical expenses obtained by the employee against the employer was held to be ‘compensation’…”

Reading Pletz and Wheeler together indicates that Sections 2(12), 6, 8, 10, 13, 14 and 22 of the LHWCA uses the term “compensation” to mean “periodic money payment.”

What is the War Hazards Compensation Act?

In modern warfare, military contractors play a large and vital role in support of the United States military. Based upon the greater presence of contractors, the War Hazards Compensation Act (“WHCA”) has become an important vehicle for insurance companies to secure reimbursement of amounts paid on account of “war-risk hazard” injuries.

Since 1942, the WHCA has provided a compensation and reimbursement system whereby the United States government essentially self-insures the losses occasioned to employees working abroad, under contracts entered into by the United States.  The WHCA applies to foreign local nationals (e.g., Iraqi or Afghanis), third country nationals (e.g., South Africans or Fijians), as well as citizens of the United States.  The main requirement of the WHCA is that a “war-risk hazard,” as defined by the United States Code, caused the employee’s injury.

A war-risk hazard includes any hazard arising from (1) the discharge of any missile, or the use of any weapon or explosive by a hostile force or person or in combating an attack or even an imagined attack by a hostile force or person or in combating an attack or even an imagined attack by a hostile force or person; (2) an action of a hostile force or person, including rebellion or insurrection against the United States or its allies; (3) the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person; (4) the collision of vessels in convoy or in operation of vessels or aircraft without running lights or without other customary peacetime aids to navigation; or (5) the operation of vessels or aircraft in a zone of hostilities or engaged in war activities.  42 U.S.C. § 1711.

In most instances, following a war-risk hazard incident, an injured employee’s claim falls within the jurisdiction of the Defense Base Act, an extension of the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).  Indemnity and medical benefits are paid in accordance with Sections 7 and 8 of the LHWCA.  Death benefits are paid in accordance with Section 9 of the LHWCA.  Following conclusion of the Defense Base Act portion of the claim, the insurance carrier may request reimbursement from the Department of Labor, Division of Federal Employees’ Compensation under the jurisdiction of the WHCA.

Reimbursement is a document intense process which must be started immediately after an injury or death. Like a typical LHWCA scenario, incident reports and medical records must be obtained.  The difference, however, is that the documents collected for a WHCA claim must also demonstrate that a “war-risk hazard” took place and that “hostile forces or persons” caused the “hazard” which led to an employee’s injury or death.

Pursuant to the United States Code, an insurance company can expect reimbursement for all indemnity and medical expenses, as well as reimbursement for attorneys fees, court and litigation costs, witness and expert expenses, examinations, autopsies, and any expenses reasonably incurred in determining liability under the Defense Base Act.  Further, an insurance carrier may also collect unallocated claims expenses totaling 15% of the sum of the indemnity and medical benefits paid.

A FELA/LHWCA Distinction?

Employee worked as a railroad switchman or conductor for Norfolk Southern Railway Co.  As he spotted coal-filled rail cars at a dock in Virginia, he fell from a car and injured himself.  He sued Norfolk for damages in Missouri State court under the Federal Employers Liability Act (“FELA”).  Norfolk removed the action to federal court, claiming that jurisdiction was proper under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”) and not FELA.  The district court disagreed and remanded the matter back to state court for further proceedings.

On appeal to the U.S. Eighth Circuit Court of Appeals, Norfolk claimed that the LHWCA should control, because its employee was engaged in maritime employment at the time of his accident, namely spotting coal-filled rail cars about to be loaded onto ocean-going vessels.  Although it was disputed that the employee’s accident occurred at a maritime situs, Norfolk argued that the employee’s job of switching railroad cars onto the correct tracks and in the correct sequence was essential to the vessel loading process.  The Eighth Circuit found that the employee did not assist in the loading process, because he had nothing to do with preparing the rail cars for their descent to the docks for unloading onto the vessels.  The employee’s job involved the rail cars before the vessel loading process began.  Consequently, the employee was not a maritime employee for purposes of the LHWCA and the district court’s judgment was affirmed.

In re: Norfolk Southern Ry. Co., 592 F.3d 907 (8th Cir. 2010).

Annual Longshore Conference

The Annual Longshore Conference, presented by Loyola University New Orleans College of Law and the U.S. Department of Labor, is scheduled for March 18-19, 2010.  The ALC will be held at the Sheraton New Orleans, 500 Canal Street, New Orleans, Louisiana  70130.  A link to Loyola’s brochure, which identifies the specific lectures and presenters, is here.