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.”

Jon Robinson
As a Member at Mouledoux, Bland, Legrand & Brackett, Jon Robinson focuses his practice on the representation of employers and carriers in matters arising under the Longshore and Harbor Workers' Compensation Act, the Defense Base Act, and the War Hazards Compensation Act. He can be contacted at (504) 595-3000 or by e-mail at jrobinson@mblb.com.
Jon Robinson