Recent Revisions Made to Mandatory DOL Forms

Recently, the Department of Labor revised two mandatory forms filed in claims arising under its jurisdiction. The amendments of Form LS-202, Employer’s First Report of Injury or Occupational Illness, and Form LS-206, Payment of Compensation Without Award provide more stringent requirements for the employer and carrier.

A few revisions were made to Form LS-202.  Beginning with Item 6, if an injury arises under the Defense Base Act, the Employer is now required to enter the name of the contracting agency (i.e. which governmental agency issued the contract) and the contract number. Furthermore, Section 28 is now divided into two parts. The additional requirement here is to verify whether the employer has issued Form LS-1, Request for Examination and/or Treatment, to the claimant’s choice of physician. Finally, Item 38 requires a submission of a contact phone number along with the name of the employer’s representative preparing the Form LS-202.

The Department of Labor considers the use of the newly revised Form LS-202 as a requirement, effective immediately.  It should be treated as such. Furthermore, penalties are being issued for the late filing of an LS-202 submission – up to an $11,000.00 civil penalty.

The new Form LS-206 should be used effective November 1, 2011 per the Department of Labor’s instruction.  The “Note” at the top of Form LS-206 was amended from “This Notice is to be filed with the District Director when the first payment is made” to “This Notice is to be filed with the District Director not later than the same day that first payment is made.”  Also, Items 9a. and 9b. were added to the form. Item 9a. requires the employer’s and carrier’s representative, in a DBA claim, to state whether the employer is continuing to pay a claimant’s salary. And if so, 9b. requires a determination if salary is being paid in lieu of compensation payments.

New OWCP Bulletin Addresses War Hazards Compensation Act Procedure – Part 2

This post continues the review of OWCP Bulletin No. 12-01, which was issued on October 6, 2011.  The Bulletin focuses on the direct payment provisions of the War Hazards Compensation Act (WHCA) and how those provisions are administered for claims originating under the Defense Base Act (DBA).

Compensation for Disability and Permanent Impairment:

The Division of Federal Employees Compensation (DFEC) pays benefits in accordance with the Division of Longshore and Harbor Workers’ Compensation’s (DLHWC) compensation order, and the amount of benefits paid by DFEC cannot be changed absent a Section 22 modification.  If a claimant requests a change in the benefit amount, he will be referred to the DLHWC for modification.  If DFEC disagrees with the claimant’s request, it “will outline the rationale for its disagreement and attach any applicable documentation.”  In the event that DFEC, itself, obtains evidence that demonstrates a modification may be required, it may notify the DLHWC which, if in agreement, can unilaterally initiate modification proceedings.

In the event that an overpayment is made, DFEC will seek guidance from the DLHWC.  It is the DLHWC that will determine whether there was an overpayment and whether a credit will be taken.  DFEC retains the right to arrange independent medical examinations and require completed Form LS-200s to support ongoing claims for disability benefits.

Note: DFEC’s ability to prepare a written rationale for its disagreement with a claimant’s compensation rate increase poses an interesting question.  If a carrier must present any and all viable defenses to protect its right for reimbursement, then must it litigate DFEC’s written rationale as if that rationale was the carrier’s defense?

Compensation in Death Cases:

DFEC pays death benefits in accordance with the DLHWC compensation order, and a change to the benefits payment can only be made following the entry of a modified order.  Pursuant to Section 9 of the Longshore and harbor Workers’ Compensation Act, DFEC does not have to seek modification in the event that the decedent’s widow or widower remarries.  In the event of remarriage, DFEC will make a lump sum payment representing two years of benefits less any overpayment credit.  Further, modification does not have to be sought when the decedent’s minor child reaches 18 or is no longer a full-time student.  Finally, in the event that an injured worker receiving benefits dies as a result of his injuries, DFEC will direct any potential death benefits claimant to the DLHWC.  This is not a modification proceeding, however, because the potential claimant is seeking death benefits in their own right.  If death benefits are awarded, a carrier may request reimbursement and direct payment of those benefits.

DLHWC Determinations and DFEC’s Role:

Even though DFEC may pay benefits directly to a claimant by virtue of the WHCA, the claimant still remains a Defense Base Act claimant.  Therefore, when modification may be warranted, and the claim is referred back to the DLHWC, DFEC will “maintain active oversight” over the DBA claim.

Note: In this section of the Bulletin, there is no indication that the carrier will again become involved in the claim, but it is more likely than not that the DLHWC will either request or require the carrier’s involvement.

DBA Decisions:

OWCP Bulletin No. 12-01 contains a brief discussion of the legal consequences of a DBA compensation order.  If a District Director at the DLHWC issues a compensation order, it is usually because the parties agreed to all pertinent issues.  When no agreement is reached, a case may proceed to litigation at the Office of Administrative Law Judges, and can be appealed to the Benefits Review Board and then federal courts.  In any event, once the order issued by these adjudicatory bodies becomes final, “it is binding and DFEC must proceed accordingly, e.g. increasing the benefit level, paying an additional award, accepting a new medical condition, etc.”

Note: One issue that arises in DBA/WHCA claims is whether a factual finding made by a District Director regarding the fact of injury is binding on DFEC.  The WHCA regulations state that the order will be prima facie evidence of the claimant’s right to the benefits awarded.  DFEC maintains that it gets to make the ultimate determination as to whether a claim was caused by a “war-risk hazard.”  Yet, if the DLHWC has made a finding that a particular injury occurred a particular way, it remains to be seen how that finding could be disagreed with by another division of the Office of Workers’ Compensation Programs.

Attorney Fees:

In certain situations, a claimant’s attorneys fees can be paid under Section 28 of the LHWCA.  Before payment is made, however, the DLHWC must review the claimant’s attorney’s fee petition.  If an attorney submits a fee petition to DFEC, then DFEC will direct the attorney to the appropriate adjudicatory body.  DFEC reserves the right to object to and challenge the attorney’s fee petition, but it must do so in accordance with LHWCA provisions.

Note: What about work that a claimant’s attorney performs before DFEC?  The WHCA provisions contain a regulation for attorney’s fees, but the Bulletin suggests that only LHWCA provisions will apply.

Notice to Employer/Carrier:

When DFEC accepts a claim for direct payment, it will notify the employer and carrier.  If the employer and carrier object to any of DFEC’s proposals, it must file an objection within 15 days and then take “appropriate action in furtherance of its objection.”

Note: This is an extra-regulatory requirement that may prove too onerous.  First, 15 days is too short a time to lodge an appropriate objection, unless DFEC is satisfied with a general objection.  The time limit should be at least 30 days, and the clock should not start until the employer or carrier receives DFEC’s direct payment notice.  Second, because there is no statute or regulation supporting this objection requirement, this requirement most likely cannot be enforced.

Miscellaneous:

OWCP Bulletin No. 12-01 closes with a warning to employers and carriers.  An employer and carrier must present all meritorious defenses against a DBA claimant without regard to whether the case is eligible for WHCA reimbursement.  To be sure, this is a regulatory requirement.  The fact that DFEC repeated this warning multiple times throughout the Bulletin means that DFEC is quite serious about this requirement.  Interestingly, however, DFEC also states that “overly zealous representation” may be a ground “for denying all or some portion of a request for WHCA reimbursement.”

Note: It is not clear what constitutes “overly zealous representation,” but because the statement is directed to employers and carriers, it likely refers to an “overly zealous” defense of a claim.  With this undefined statement, DFEC has defined the scope of an employer’s and carrier’s defense in a DBA claim that will eventually qualify for WHCA reimbursement.  An employer and carrier should present any and all meritorious defenses (i.e. a defense going to the merits, substance, or essentials of the case), but not to the point that they become “overly zealous.”

New OWCP Bulletin Addresses War Hazards Compensation Act Procedure – Part 1

On October 6, 2011, the Department of Labor issued OWCP Bulletin No. 12-01, which supplements information contained in the Federal Employees’ Compensation Act (FECA) Procedure Manual and OWCP Bulletin No. 05-01.  The stated purpose for the new OWCP Bulletin, which addresses the Defense Base Act (DBA) and War Hazards Compensation Act (WHCA), is to “provide specific guidance on the interplay between” the Division of Federal Employees Compensation (DFEC) and the Division of Longshore and Harbor Workers’ Compensation (DLHWC), and to explain ”the responsibilities of each program in the administration of DBA/WHCA reimbursement cases with ongoing entitlement.”  This may be the most significant development in WHCA administration in years.

First, some background.  Some DBA claims–typically those involving injuries occasioned by “war-risk hazards”–are also WHCA cases.  Benefits are paid to an injured claimant pursuant to the DBA, and the employer, fund, or insurance carrier that paid the benefits retains the right to request reimbursement for all benefits paid, as well as associated claims expenses.  In certain cases, DFEC will pay benefits directly to injured workers, as authorized by 42 U.S.C. § 1704 and 20 C.F.R. § 61.105.  Direct payment is only available when the rate of compensation and the period of payment have become relatively fixed and known.  Although there is no statutory or regulatory requirement to do so, DFEC more or less requires a compensation order from DLHWC before it will accept the claim for direct payment.  And the direct payment of benefits is not limited to indemnity benefits.  Medical benefits will also be paid to the injured worker, but those benefits will be furnished under the FECA guidelines.  One caveat of the direct payment provisions is that DFEC retains the right to transfer a case back to a carrier so that it can continue paying benefits.

It is important to remember that a direct payment case, though paid for by DFEC, remains a DBA case subject to the provisions of the Longshore and Harbor Workers’ Compensation Act (LHWCA).

OWCP Bulletin No. 12-01 is divided into numerous sections, the highlights of which are presented below–along with a few comments.  Based on the length and scope of the Bulletin, we are presenting this article in two parts.

Clarification of DBA Decisions:

DFEC retains the right to seek clarification regarding the terms of a compensation order from the applicable DLHWC District Director.  If necessary, a new order can be issued.  Further, a claimant can have multiple injuries where only some of the injuries qualify for WHCA reimbursement.  In these situations, the carrier can be asked to identify and substantiate the costs associated with only the covered injuries.

Note: Interestingly, the Bulletin states that “clarification of the DLHWC Informal Conference Memorandum or Compensation Order may be required.”  The reason this is interesting is that OWCP Bulletin No. 05-01 specifically prohibits the use of informal conference memoranda as the basis for a direct payment claim.

Disagreement with or Modification of a DBA Decision:

For the most part, DFEC will accept a compensation order without additional review.  Nonetheless, DFEC retains the right to challenge a compensation order when it is believed that there is a mistake of fact or a change in circumstances.  In these situations, DFEC will notify the DLHWC of the perceived problems.  If the DLHWC agrees that modification is warranted, then it will initiate modification proceedings under Section 22 of the LHWCA.  DFEC retains the ability to transfer a case back to the carrier for these proceedings.

Note: This is an interesting provision because, for the most part, direct payment requests are made very soon after the entry of a compensation order.  As such, any challenge would be made soon after the DBA case resolved.  DFEC’s position hints that it could force an employer and carrier to take a defense in future litigation under a modification proceeding despite concessions and stipulations made by the parties in the DBA suit.

Medical Treatment:

As explained earlier, when DFEC accepts a claim for direct payment, it may furnish medical treatment in accordance with the regulations governing medical treatment under FECA.  Because FECA regulations control, carriers should endeavor “to identify the specific medical conditions associated with the DBA claim.”  This list of covered conditions can be included in Stipulations resolving the underlying claim, and the list should be included in an application for reimbursement and direct payment.

When changes in treatment and medical conditions occur, DFEC will process the change under the following steps:

(1) If the new condition is a consequence of the earlier covered condition, then DFEC has to determine whether the medical evidence supports covering the alleged consequential injury.  If so, modification proceedings before the DLHWC may be necessary.

(2) If the new condition is completely new, DFEC will advise the claimant to file a claim for medical benefits with the DLHWC or seek modification.  More DBA litigation will be necessary in this event.

(3) If a claimant requests a change in physicians, DFEC will determine if the change is necessary and, if so, authorize the change.  If DFEC believes that the change may not be warranted, it will refer the claimant back to the DLHWC for an adjudicatory decision.

Note: DFEC can refer a claim back to the DLHWC, but it takes the position that it is not a party to the subsequent litigation that could ensue.  And even though it is not a party, DFEC cautions carriers that “a failure to present any and all viable defenses to [a] claim may result in a subsequent denial of its reimbursement claim under the WHCA.”  This statement, which springs from 20 C.F.R. § 61.102, will undoubtedly create additional litigation for fear that a claim will not be reimbursed.

Part Two of this blog entry will be posted soon…

Longshoreman Who Fell Through Ladder Opening Was 50% At Fault

Claimant, a crane mechanic, filed a Section 905(b) suit after being injured while working on an offshore drilling rig.  His injury occurred when he fell through an open ladder cover.  The injury prevented his return to work as a crane mechanic, but his employer paid him crane mechanic wages while he worked in a clerical capacity.  After a magistrate trial, the owner of the drilling rig was found to have failed to exercise ordinary care and committed negligence per se by violating 33 C.F.R. § 142.87.  Pursuant to that regulation, “[o]penings in decks accessible to personnel must be covered, guarded, or otherwise made inaccessible when not in use.  The manner of blockage shall prevent a person’s foot or body from inadvertently passing through the opening.”  The district court determined that Claimant was 50% at fault for his injuries, and that his employer and its carrier were entitled to reimbursement for benefits payments advanced to Claimant while he worked in the clerical capacity. 

On appeal, Claimant argued that his comparative fault should not have been considered in a Longshore and Harbor Workers’ Compensation Act case.  The United States Court of Appeals for the Fifth Circuit dispatched this argument by citing Neal v. Saga Shipping Co., 407 F.2d 481, 486 (5th Cir. 1969) (plaintiffs who are not Jones Act seaman do not enjoy the benefit of the rule barring application of contributory negligence in Jones Act cases).  Further, the court rejected Claimant’s argument that the negligence per se finding required allocating all fault to the rig owner.  While 33 C.F.R. § 142.87 “requires that there be covers for such openings and makes vessels generally responsible for ensuring that the covers remain closed outside of the brief periods when openings are in use”…”[i]t does not require that deck openings be fool proof, or relieve a longshoreman of his own duty of care regarding coverage of a deck opening he has just used.”

Baham v. Nabors Offshore Corp., No.10-30924, 2011 WL 4928979 (5th Cir. Oct. 18, 2011).