Why Amending the Defense Base Act with H.R. 5721 Is a Bad Idea

On November 17, 2014, Representative Stephen F. Lynch (MA) introduced H.R. 5721, the Overseas Security Personnel Fairness ActRep. Lynch’s news release states that the purpose of H.R. 5721 is to “remove a significant penalty in federal law that currently prohibits the families of overseas federal contractors who are killed in the line of duty from receiving full death benefits if the deceased employee is unmarried with no children or other dependents.”  To achieve his its goal, H.R. 5721 proposes an amendment to the Defense Base Act (“DBA”).  Ultimately, H.R. 5721 appears destined to fail.

The Reason for H.R. 5721:

Representative Lynch proposed H.R. 5721, the Overseas Security Personnel Fairness Act, to address an issue that arose from the September 2012 terrorist attack on the U.S. Consulate in Benghazi, Libya.  Glen Doherty, a security contractor and former Navy SEAL, was killed during the attack.  He was unmarried, with neither children nor other dependents.  Yet, he had activated a mandatory Defense Base Act insurance policy before deploying to Libya wherein he had designated a beneficiary.

The Text of H.R. 5721:

The Overseas Security Personnel Fairness Act is short.  It states, in full:

A BILL

To amend the Defense Base Act (42 U.S.C. 1651 et seq.) to require death benefits to be paid to a deceased employee’s designated beneficiary or next of kin in the case of death resulting from a war-risk hazard or act of terrorism occurring on or after September 11, 2001.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1.  SHORT TITLE.

This Act may be cited as the “Overseas Security Personnel Fairness Act”.

SECTION 2.  DEFENSE BASE ACT AMENDMENTS RELATING TO DEATH BENEFITS

The Defense Base Act (42 U.S.C. 1651 et seq.) is amended by adding at the end of the following new section:

“SEC. 6. DEATH BENEFITS.

“(a) In General.–In the case of a person covered by this Act who dies as a result of a war-risk hazard or act of terrorism, if there is no person eligible for a death benefit of the deceased under section 9 of the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. 909), then the benefits provided under section 9(b) of such Act to a widow or widower of the deceased shall be paid–

“(1) to a beneficiary designated by the deceased; or

“(2) if there is no designated beneficiary, to the next of kin of the estate of the deceased under applicable State law.

“(b) Payment of Benefits.–Benefits found to be due under this section shall be paid from the compensation fund established pursuant to section 8147 of title 5, United States Code.

“(c) War-Risk Hazard Defined.–In this section, the term ‘war-risk hazard’ has the meaning provided in section 201(b) of the War Hazards Compensation Act (42 U.S.C. 1711(b)).

“(d) Effective Date.–The death benefit payable under this section shall apply with respect to deaths occurring on or after September 11, 2001.”.

Implicated Statutory Schemes:

Phew.  There is a lot going on in H.R. 5721.  It references the Defense Base Act, the Longshore and Harbor Workers’ Compensation Act, the War Hazards Compensation Act, and by reference to 5 U.S.C. 8147, the Federal Employees’ Compensation Act.

To understand what H.R. 5721 is doing, start at section 9 of the Longshore Act.  In the event of a work-related death of an employee covered by the Longshore Act, benefits are paid according to section 9.  Potential beneficiaries are defined by statute, with some classes of beneficiaries (e.g., widow and kids) preferred over other classes of beneficiaries (e.g., parents).  If a preferred class exists, then the preferred class takes benefits to the exclusion of the less preferred classes.

The Defense Base Act is an extension of the Longshore Act that applies to overseas federal contractors.   It has equal force for citizens of the United States and non-citizens, non-residents of the United States.  The DBA applies the Longshore Act exactly as the Longshore Act is written, except where the Defense Base Act says differently.

H.R. 5721 proposes adding a section to the DBA that would create more potential death benefits beneficiaries.  But the new beneficiaries would only receive benefits if (1) there are no statutory beneficiaries as defined by the Longshore Act and (2) the death was caused by a “war-risk hazard.”

According to the War Hazards Compensation Act, a “war-risk hazard” includes:

(1) the discharge of any missile (including liquids and gas) or the use of any weapon, explosive, or other noxious thing by a hostile force or person or in combating an attack or an imagined attach by a hostile force or person; or

(2) action of a hostile force or person, including rebellion or insurrection against the United States or any of its allies; or

(3) the discharge or explosion of munitions intended for use in connection with a war or armed conflict with a hostile force or person as defined [in the WHCA] (except with respect to employees of a manufacturer, processor, or transporter of munitions during the manufacture, processing, or transporting thereof, or while stored on the premises of the manufacturer, processor, or transporter); or

(4) the collision of vessels in convoy or the 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.

So, if a death is caused by one of these things, and there are no other beneficiaries, then a beneficiary designated by the deceased could receive benefits.  But not from the employer or carrier.  And not from the Special Fund maintained by the Division of Longshore and Harbor Workers’ Compensation Act–the agency that administers the Defense Base Act.  Instead, the designated beneficiary would be paid by the Employees’ Compensation Fund, which is the fund managed by the Division of Federal Employees’ Compensation–the agency that administers the War Hazards Compensation Act.

Why H.R. 5721 Won’t Work:

Really, a law review essay could be written about the reasons why H.R. 5721 will not work.  For this blog post, I will pose just a few of the problems:

First, why is Representative Lynch trying to amend the Defense Base Act instead of amending the War Hazards Compensation Act–and only the WHCA?  If the Defense Base Act does not apply to a particular claimant, yet the injury was caused by a “war-risk hazard,” then that claimant may file a claim for benefits pursuant to Section 101(a) of the WHCA.  If H.R. 5721 requires payment out of the Employees Compensation Fund instead of payment from a Defense Base Act insurer pursuant to a DBA insurance policy, then the problem that Representative Lynch is trying to solve should be limited to the WHCA.  In my opinion, H.R. 5721 goes out of its way to amend the DBA when the DBA should not have been implicated in the first place.

Second, what about aliens and nonnationals?  Section 2(b) of the Defense Base Act, which addresses death benefits to foreign nationals, limits beneficiaries to the “surviving wife and child or children, or if there be no surviving wife or child or children, to surviving father or mother….”  Does H.R. 5721 have any affect on the rights of aliens and nonnationals who may also designate a beneficiary?

Third, why is H.R. 5721 limited only to “war-risk hazard” deaths?  Based on the language used, H.R. 5721 would not apply to the death of a DBA contractor unless the death was caused by a “war-risk hazard” or act of terrorism.

Fourth, retroactive to September 11, 2001?  This would involve reopening closed cases where the applicable statute of limitations–section 13 of the Longshore Act–has long expired.

The Better–and Simpler–Course of Action:

Instead of amending the Defense Base Act, Representative Lynch should have taken a closer look at the War Hazards Compensation Act.  Section 101(a) allows WHCA benefits when an employee specified in section 1(a)(5) of the DBA is injured or killed, yet no compensation is payable with respect to the injury or death.  Further, section 102(a) of the WHCA provides information for the payment of death benefits, stating that “the scale of compensation benefits and the provisions for determining the amount of compensation and the payment thereof as provided in sections 8 and 9 of the Longshoremen’s and Harbor workers’ Compensation act . . . can be applied under the terms and conditions set forth therein . . . .”

All things considered, Representative Lynch could achieve the same result by amending only section 102 of the WHCA.  Although the Division of Federal Employees’ Compensation may have a headache or two applying the amendment, at least Representative Lynch could avoid turning the Defense Base Act on its ear with respect to death benefits.

Conclusion:

I doubt that H.R. 5721 will pass, despite the sympathetic reasons that led to Representative Lynch’s introduction of the Bill.  Still, though, Representative Lynch could consider proposing new legislation in the future that amends section 102 of the WHCA, thus accomplishing the same results.

Finally, here is a hyperlink to the Glen Doherty Memorial Foundation.  With the holiday season upon us, it is a good time for donating to the foundation.

BRB Weighs Widow Status, Remands for Justifiable Cause and Conjugal Nexus Determination

Decedent worked as a crane operator for twenty years, including six years for Employer.  He retired in 2004 because of orthopedic problems.  In 2008, Decedent was diagnosed with lung cancer.  Following his death in 2009, which was caused by non-small cell lung carcinoma with contributing causes of chronic obstructive pulmonary disease, hypertension, and pulmonary embolus, Claimant filed a claim for death benefits.  The issue was whether Claimant qualified as a “widow” under the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

Pursuant to Section 2(16) of the LHWCA a “widow” includes a decedent’s wife who was “living with or dependent for support upon [the decedent] at the time of [the decedent’s] death; or living apart for justifiable cause or by reason of [the decedent’s] desertion at such time.”

The administrative law judge (“ALJ”) determined that Claimant was not a “widow.”  According to the ALJ, Claimant and Decedent had legally separated; there was no evidence of reconciliation; and the conjugal nexus had severed when Decedent filed for divorce.

On appeal to the Benefits Review Board, Claimant argued that she was a “widow” because she was dependent upon Decedent for support or, alternatively, she was living apart from Decedent for justifiable cause.  Claimant alleged she was dependent because of her receipt of the community portion of Decedent’s retirement pension, and Decedent’s continued health insurance coverage for Claimant.  The problem, however, was that Claimant did not raise this argument in front of the ALJ.  Accordingly, Claimant was required to show that she lived apart from Decedent for “justifiable cause” and that a “conjugal nexus” remained between Decedent and Claimant at the time of Decedent’s death…five years after they began living separate and apart from one another.

The alleged “justifiable cause” for living separate and apart was that Decedent had abused Claimant and that Decedent consumed too much alcohol.  The ALJ did not make a “specific finding regarding any justifiable cause for the separation, and addressed only whether a conjugal nexus existed at the time of death.”  Because the justifiable cause analysis was incomplete, the BRB vacated the ALJ’s denial of benefits and remanded the case with specific instructions:

On remand, if the administrative law judge finds evidence that, at the time of decedent’s death, there no longer was justifiable cause for claimant and decedent to be living apart, see Henderson, 204 F.2d at 179, claimant cannot be decedent’s widow and benefits should be denied.  If, however, he finds that the original justification persisted to the date of death, then he must consider whether the conjugal nexus had been severed.

The BRB also had instructions for the ALJ with respect to the conjugal nexus inquiry:

On remand, the administrative law judge must assess the weight and credibility of this, and any other, relevant testimony and evidence, as well as resolve conflicts in the evidence, in order to determine if claimant’s conduct maintained or severed her conjugal nexus with decedent.  The administrative law judge should re-examine the case precedent in view of the proper focus on claimant’s actions in maintaining or severing the conjugal nexus.  If the administrative law judge finds that the conjugal nexus between claimant and decedent had been severed, claimant is not decedent’s “widow,” and she is not entitled to death benefits.  If the administrative law judge finds that a conjugal nexus between the two existed at the time of decedent’s death, then claimant is decedent’s “widow” under the Act.  He then must address whether decedent’s death was work-related such that claimant is entitled to death benefits.

Johnston v. Hayward Baker, BRB No. 14-0032 (2014).

PA Court Requires Use of Longshore Benefits to Pay Spousal Support

On November 5, 2014, the Superior Court of Pennsylvania issued Uveges v. Uveges, a published opinion that addresses the intersection of family law and the Longshore and Harbor Workers’ Compensation Act’s (“LHWCA”) anti-assignment provision, 33  U.S.C. § 916.

The Facts–A Typical Family Law Case with a LHWCA Component:

The facts are fairly straight-forward.  The parties were married in 1972 and divorced in 2011.  While the divorce was pending, the parties entered into an alimony agreement whereby Husband would pay Wife “the sum of $2,500 per month for permanent alimony, modifiable only by remarriage, cohabitation, or the receipt by Wife of social security disability payments.”  Roughly six months after the divorce became final, Wife filed a petition to enforce the alimony agreement.  The trial court entered an order that “among other things provided for the attachment of Husband’s monthly benefits under the [LHWCA].”

Less than a month later, Husband’s prior Employer filed a petition for special relief, arguing that LHWCA benefits are exempt from attachment.  After a year-and-a-half of litigation, the trial “concluded on January 15, 2014 that the law permits an ex-spouse in Wife’s position to attach the [LHWCA] retirement or disability benefits of an ex-husband who has been found to be in contempt.”

The Law–LHWCA’s Anti-Assignment Provision:

The LHWCA’s anti-assignment provision is 33 U.S.C. § 916, which states:

No assignment, release, or commutation of compensation or benefits due or payable under this Act, except as provided by this Act, shall be valid, and such compensation and benefits shall be exempt from all claims of creditors and from levy, execution, and attachment or other remedy for recovery or collection of a debt, which exemption may not be waived.

Other state courts that previously analyzed the LHWCA’s anti-assignment provision determined that attachment was not allowed in a family court setting.  For instance, in Thibodeaux v. Thibodeaux, the Louisiana Supreme Court expressly stated that a wife could not garnish her ex-husband’s LHWCA benefits for past due child support.  See Thibodeaux v. Thibodeaux, 454 So. 2d 813 (La. 1985).  Then, in Spitalieri v. Spitalieri, 593 N.Y.S.2d 172, the Supreme Court of New York Richmond County, expressed sympathy for the plaintiff’s plight but nonetheless determined that LHWCA benefits could not be assigned.

At least one state court–before Uveges v. Uveges–allowed attachment of LHWCA benefits for child support purposes.  The District Court of Appeal of Florida, Third District, determined that child support payments could be withheld, and that the LHWCA’s anti-assignment provision was inapplicable to child support arrearages.  See Cigna Property & Casulaty v. Ruiz, 834 So. 2d 234 (Fla. 3 Dist. Ct. App. 2002).

The Reasoning–Why Uveges v. Uveges Allowed Attachment:

The Uveges court was persuaded by a Ninth Circuit decision, Moyle v. Dir., OWCP, and the Florida state appellate court’s Ruiz decision to support its conclusion that Wife could claim a portion of Husband’s LHWCA benefits.  In Moyle, the Ninth Circuit affirmed an administrative law judge’s decision that “disability benefits could be garnished to satisfy the recipient’s delinquent spousal support obligation.”  And, as mentioned before, the Ruiz court determined that Section 16’s anti-assignment provision applied to “claims of creditors” or “collection of a debt,” but a child support obligation was not a “debt.”

According to the Uveges court, Pennsylvania law has recognized that a spouse’s alimony or support obligation is not a “debt.”  As such, it follows that delinquent spousal support is not money owed to a “creditor,” and the delinquent money cannot be considered a “debt.”  As the court concluded:

In sum, because Husband’s LHWCA benefits are paid to him pursuant to federal law, and because Wife is not a “creditor” and Husband’s alimony obligation is not a “debt” under 33 U.S.C. section 916, the LHWCA benefits may be attached.  Additionally, we note our decision today is consistent with the historical treatment by Pennsylvania appellate courts of anti-attachment clauses vis-a-vis a claim for support or alimony.  We therefore affirm the trial court’s January 21, 2014 order attaching Husband’s LHWCA benefits for the payment of alimony.

Uveges v. Uveges, — A.3d —- (Pa. Super. Ct. 2014).

Is Sarbanes-Oxley Really This Fishy?

Next week the Supreme Court will hear arguments in Yates v. United States, a Sarbanes-Oxley anti-shredding case.  The Sarbanes-Oxley Act was enacted after the Enron scandal.  One of the provisions of the Act is commonly known as the “anti-shredding provision,” which criminalizes knowingly altering, destroying, mutilating, concealing, covering up, falsifying, or making a false entry in “any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration” of any federal matter.

Why am I mentioning Sarbanes-Oxley on a maritime blog?  Because Yates v. United States involves the federal government’s application of the “anti-shredding provision” to a commercial fisherman who directed his crewmen to throw undersized fish back into the sea, after receiving a civil citation and being told to bring the fish to dock to be destroyed.  That’s right…throwing fish back into the sea landed one fisherman in the Sarbanes-Oxley anti-shredding net.  Since then, the fisherman has lost his license, his boat, and his livelihood.

Take a look at this video from the National Association of Criminal Defense Lawyers (NACDL).  Really, take a look.  It’ll only take two minutes, and the video is really good:

Oral argument will be held on November 5, 2014.  So far, the fisherman has lost at the district court and the Eleventh Circuit.  Will the Supreme Court overturn?

For those who are interested in more reading, here are some links:

Brief of Petitioner, John L. Yates

Brief of Respondent, United States

Reply of Petitioner, John Yates

Mark Walsh, Fisherman convicted of violating Sarbanes-Oxley will be heard by the Supreme Court (published by the American Bar Association)

Tip of the hat to the NACDL, SCOTUSblog, and the ABA Journal.