The Longshore and Harbor Workers' Compensation Act (LHWCA) was passed by U.S. Congress in 1927 after courts denied state workers compensation benefits to maritime employees. LHWCA provided both compensation and medical benefits to maritime employees who suffered a work-related injury, disability, or death while upon the navigable waters of the United States. This had several problems. Mainly that the original legislation did not clearly delineate federal and state jurisdictional boundaries. For example, a maritime worker that stepped into land to perform his employment duties was no longer under the LHWCA and now under the state workers' compensation system. Additionally, workers who were injured onboard a ship and filed for benefits with LHWCA could also sue the ship owner under federal maritime law claiming "unseaworthiness" of the vessel.
In 1972, Congress amended LHWCA and effected a compromise between the interests of the parties. The 1972 amendments prohibited the injured workers under the LHWCA from suing the owner of the vessel on the basis of "unseaworthiness" of the vessel (with exception of negligence), made contractual agreements with employees holding the ship owner harmless in case of an injury unenforceable, prohibited third-party over suits (practice of ship owner suing the employer on the grounds of contributory negligence), increased LHWCA benefits, and established the "status" and "situs" tests.
The "status test" defined an employee as "any person engaged (in whole or in part) in maritime employment, including any longshoreman or other person engaged in longshoring operations, and any harbor worker including a ship repairman, ship builder, and shipbreaker but such term does not include a master or member of a crew of any vessel, or any person engaged by the master to load or unload or repair any small vessel under 18 tons net or any officer or employee of the United States or any agency thereof or any state or foreign government or any political subdivision thereof."
The "situs" test attempted to resolve the jurisdictional problem by extending jurisdiction to injuries occurring in "adjoining area" used in the course of "maritime employment", "including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing, or building a vessel."
Congress passed additional amendments in 1984 which limited the scope of the kind of employees who are eligible under the act by excluding certain types of workers from the definition of "employee." For example, individuals employed exclusively to perform office clerical, secretarial, security, or data processing work, and individuals employed to build, repair, or dismantle any recreational vessel less than 65 feet in length were excluded.
Amendments to the American Recovery and Reinvestment Act of 2009 expanded the already existing but excluded group of recreational-vessel repairers and employees who dismantle those vessels for repair. It provides that "[t]he term 'employee' does not include individuals employed to build any recreational vessel under sixty-five feet in length, or individuals employed to repair any recreational vessel, or to dismantle any part of a recreational vessel in connection with the repair of such vessel." The Department of Labor published regulations implementing the 2009 amendments in 2011. The new regulation clarifies the definition of "recreational-vessel" by excluding from coverage individuals employed to repair or dismantle any recreational vessel regardless of vessel length. These individuals must be covered by a State's workers' compensation law in order to be excluded from LHWCA. A recreational-vessel is defined as "a vessel that is manufactured or operated primarily for pleasure or leased, rented, or chartered to another for pleasure."
On three occasions, Congress has extended the provisions of LHWCA to other groups of workers. The Outer Continental Shelf Lands Act extends to coverage to workers injured or killed upon fixed structures permanently attached to the outer continental shelf for the purpose of natural resource exploration or development. The Defense Base Act extends coverage to civilian employees doing work at any military, air, or naval base that was acquired after January 1, 1940, from any foreign government. The act was amended include public works contracts for building of non-military projects outside the continental United States. The Nonappropriated Fund Instrumentalities Act extends coverage to civilian employees of certain instrumentalities of the United States under the jurisdiction of the armed forces conducted for the pleasure and improvement of armed forces personnel (e.g. civilian employees of the military Exchanges).
LHWCA Benefits and Coverage
LHWCA is administered by the Department of Labor (DOL) Division of Longshore and Harbor Workers' Compensation and all benefit costs are paid by employers and their insurance carriers. According to the Congressional Research Service, more than $1.4 billion in LHWCA benefits were paid in 2013. LHWCA requires employers to secure coverage through an insurance carrier approved by the Department of Labor or by getting Department of Labor's authorization to self-insurer. It also imposes a strict penalty for failure to do so, which subjects the employer to misdemeanor and a fine of up to $10,000, imprisonment of up to 1 year, or both. If the employer is a corporation, the president, secretary, and treasurer of the corporation are severally liable for this fine or imprisonment in addition to any fine levied against the corporation itself. These officers are also personally liable, jointly and severally, with the corporation for any compensation or benefit that may accrue under the LHWCA to an employee for a covered injury.
Compensation Rate: LHWCA provides compensation at the rate of 66 2/3 percent of the employee's average weekly wage with some limitations for the duration of the injury. Benefits for surviving spouse are paid at the rate of 50 percent of the average weekly wage. If there are surviving children, an additional 16 2/3 percent is payable on their behalf. For fiscal year 2017, the maximum weekly compensation was set at $1,436.48 and the minimum at $359.12.
Delay in Payments: LHWCA increases the compensation payable under an award by 20% to the unpaid installment if it is not paid within 10 days after it becomes due. LHWCA increases the compensation payable without an award by 10% to the unpaid installment if it is not paid within 14 days after it becomes due.
Choice of Physician: LHWCA provides the injured workers with a limited right to choose an attending physician. The injured worker is only allowed to choose a physician from a list authorized by the Secretary of Labor. The employer is allowed to select the attending physician if the employee cannot do so due to the nature of the injury requiring immediate medical treatment and care. Under the statute the Secretary is tasked with supervising the medical care and may "on his own initiative or at the request of the employer, order a change of physicians or hospitals when in his judgment such change is desirable or necessary in the interest of the employee or where the charges exceed those prevailing within the community for the same or similar services or exceed the provider's customary charges." LHWCA provides that "an employee may not change physicians after his initial choice unless the employer, carrier, or deputy commissioner has given prior consent for such change."
Disability Benefits (Durational caps):
1. Temporary Total Disability (TTD) continues until the employee is able to return to work or is found eligible for permanent total or permanent partial benefits.
2. Temporary Partial Disability (TPD) payments are disbursed when an employee returns to less than full-time employment prior to reaching maximum medical improvement. TPD benefits cannot exceed five years.
3. Permanent Total Disability (PTD) payments are disbursed when an injured worker sustains injuries (including occupational diseases) which totally disable them for an indefinite period of time. Payments are made during the continuance of such total disability.
4. Permanent Partial Disability (PPD) payments are disbursed for a disability partial in character but permanent in quality. Payments for PTD are made in addition to compensation for temporary total disability or temporary partial disability. Section 8(c)(1)-(20) of the LHWCA provides a list of schedule award benefits for various types of permanent partial impairments based on a number of weeks of compensation. The following are some examples of schedule awards for the loss of a body part:
" Arm lost, three hundred and twelve weeks' compensation.
" Leg lost, two hundred and eighty-eight weeks' compensation.
" Hand lost, two hundred and forty-four weeks' compensation.
" Foot lost, two hundred and five weeks' compensation.
" Eye lost, one hundred and sixty weeks' compensation.
" Thumb lost, seventy-five weeks' compensation.
Additionally, LHWCA provides some compensation for partial loss of earning capacity not covered under the schedule (e.g. back injury) and for workers with an occupational disease which did not immediately result in disability before a voluntary retirement.
Anti-retaliation: It us unlawful for an employer to discriminate or discharge an employee for claiming or attempting to claim compensation, or for participating in a proceeding under the LHWCA. A violation of this rule could result in a fine of $1000-$5000 that has to be paid by the employer and not its insurance carrier.
Intoxication: LHWCA provides that it shall be presumed in the absence of substantial evidence to the contrary "[t]hat the injury was not occasioned solely by the intoxication of the injured employee." The law shifts the burden of proof to the employer instead of the worker, as some state workers' compensation programs do. In affect this means that all doubtful fact questions are to be resolved in favor of the injured employee.
Occupational Disease: LHWCA provides compensation and medical benefits if a worker's illness is related to on-the-job exposure to harmful conditions or substances. LHWCA does not exclude a worker if their symptoms or disability occur after retirement. But the claim has to be filed within two years of the date the worker first becomes aware of the relationship between the occupational disease, disability, and the employment, or within one year of the date of the last payment of compensation, whichever is later. There is no time limit for filing for medical benefits.
AMA Guides for Evaluation of Permanent Impairment: LHWCA mandates the use of Guides for Evaluation of Permanent Impairment as promulgated by American Medical Association (AMA Guides) in only two situations: assessing hearing loss claims and the occupational disease claims. Its use in other situations is voluntary and courts have upheld a judge's decision not to follow the AMA Guides.
Contractor/Subcontractor liability: A contractor is liable for and is required to secure payment of compensation if the subcontractor fails to secure the payment of compensation.
Attorney Fees: LHWCA does not impose a cap on attorney fees, but it requires an attorney's fee to be reasonable. Additionally, LHWCA does not allow attorneys to collect retainers or to receive a contingency fee. It requires that all requests for attorney fees to be submitted to Office of Workers Compensation Program, Office of Administrative Law Judges, or to the courts for approval. The fine for a person who receives a fee, gratuity, or other consideration on account of services rendered as a representative of a claimant without prior approval is $1000 or less, imprisonment of one year or less, or both.
In some situations, the employer or its insurance carrier is liable for attorney fees. For example, an employer or an insurance carrier that initially refused to accept liability can be required to pay the attorney fees if the Benefits Review Board or the courts later rule against them.
Special Fund (Second Injury Fund): Treasury of the United States has established a special fund administered by the Secretary of Labor. All of the money in the fund is held in trust and is not considered to be the money or property of the United States. Administrative services for operating the Special Fund are provided through direct Federal Appropriations, and majority of the revenue of the Special Fund is generated through annual recurring assessments paid by self-insured employers or insurance carriers.
In some situations (e.g. pre-existing impairment), the employer or its insurance company will pay compensation benefits for only the first 104 weeks of permanent disability and the Special Fund then pays the compensation for the duration of the disability. The employer or its insurance company remain liable for paying the medical expenses related to the injury. However if the employer and its insurance carrier are insolvent or bankrupt, payments may be made from the Special Fund.
Pre-existing Condition: Unlike many state workers' compensation systems, there is no "apportionment" of disability under the LHWCA. An injured worker is still eligible for full compensation for an aggravation of a prior injury or pre-existing condition. However, an employer's workers' compensation liability can be reduced when an employee's pre-existing disability causes the workplace injury to be greater than it would be without the pre-existing disability.
Time to File: Generally, claims have to be filed within one year after the injury or death with some exceptions (e.g. occupational disease, incompetents, or minors). The time for filing a claim starts running "when employee or beneficiary is aware, or by the exercise of reasonable diligence should have been aware, of the relationship between the injury or death and the employment." LHWCA however specifies that failure to file a claim within the period prescribed "does not bar filing of a claim unless objection to such failure is made at the first hearing of such claim in which all parties in interest are given reasonable notice and opportunity to be heard."
Industry Criticism of LHWCA
The industry criticism of LHWCA mainly focuses on employer costs. According to a report by the Coalition for Longshore Act Reform (CLAR), LHWCA is the most expensive workers' compensation program in the United States, which is due to its more generous benefit structure. This is partly because LHWCA has not followed the state workers' compensation programs in their race to the bottom. According to CLAR, [in 2005?] a California heavy construction contractor paid $28.04 per $100 of payroll for LHWCA coverage compared to $4.12 per $100 under California's workers' compensation program. Additionally, LHWCA has a much higher wage replacement benefit than of state workers' compensation programs. For example, maximum wage replacement benefits under state workers' compensation programs generally are capped at 100 percent of the state average weekly wage, compared to LHWCA, which is capped at 200 percent of the national average weekly wage. The industry argues that the higher rate of coverage under the LHWCA will affect U.S. exporters, the U.S. competitiveness in international trade, and also increase the overall expense of building U.S. Navy warships.