Longshore & Harbor Workers Act vs. Mass Workers Compensation

Introduction

According to the United States Department of Labor, the Longshore and Harbor Workers Act (LHWCA) provides employment-injury and occupational-disease protection to approximately 500,000 workers who are injured or contract occupational diseases while working on the navigable waters of the United States, or in adjoining areas, and for certain other classes of workers covered by extensions of this Act.

Massachusetts workers compensation coverage provides medical benefits, cash benefits, and vocational rehabilitation benefits to injured workers in the state. All injury-related medical costs will be paid by the insurance company, and an injured worker may receive a weekly cash payment up to 60% of their average weekly wage for temporary disability. Lifetime workers compensation benefits may be available to someone who is permanently and totally disabled. The tradeoff is that workers covered by workers compensation waive their right to sue their employer for job related injuries, except in limited circumstances.

Definitions & Applications

Since the LHWCA was enacted in 1927, Congress has extended it to include other types of employment and workers to the same benefits and claims processing as the Longshore Act. The following are the extensions of the LHWCA:

•    Defense Base Act, which applies to employees at overseas military bases of the United States and to employees of U.S. government contractors working outside the United States in public work projects or in national defense and military operations

•    Outer Continental Shelf Lands Act, which applies to employees working on the Outer Continental Shelf of the United States in the exploration and development of natural resources, such as off-shore oil drilling rigs

•    Non-appropriated Fund Instrumentalities Act, which applies to civilian employees of non-appropriated fund instrumentalities of the Armed Forces, such as military base exchanges and morale, welfare, and recreational facilities

Those excluded from coverage under the LHWCA include seamen (masters or members of a crew of any vessel, employees of the U.S. government or of any state or foreign government, employees whose injuries were caused by their own intoxication or due to their own willful intention to harm themselves.

The Office of Workers Compensation Programs (OWCP) oversees four federal workers compensation programs, including the LHWCA. Within the OWCP, the Division of Longshore and Harbor Workers Compensation (DLHWC) administers the LHWCA.

Massachusetts workers compensation law covers most employees in the state. Massachusetts General Law c. 152, Sec. 1 (4) states that an employee is “every person in the service of another under any contract of hire, express or implied, oral or written.” Exceptions include but are not limited to:

•    Railway workers, led by their unions, rejected inclusion in workers compensation programs at the turn of the 20th century

•    Seamen engaged in interstate/foreign commerce

•    Salesmen of real estate or consumer goods who work on a commission, or buy/sell basis, other than in a retail establishment, (with a written contract stating they are not treated as an employee under federal tax law)

•    Taxi drivers who lease their cabs on a fee basis not related to fares collected (and who are not treated as an employee under federal tax law)

•    Persons engaged in interstate/foreign commerce that is covered by federal law for compensation for injury or death.

Massachusetts employers are required to notify their employees of the name of the workers compensation insurance carrier, and a “Notice to Employees” poster must be posted in a common area of the workplace in English and other appropriate languages. Failure to post this information may subject the employer to a fine of $100. In Massachusetts, the Department of Industrial Accidents (DIA) is responsible for overseeing the workers compensation system.

What’s the difference between the Longshore and Harbor Workers Act and Workers Comp?

In order to qualify for benefits under the LHWCA, an employee must be or have been a longshore or harbor worker who suffers from a work-related injury or illness; a widow or widower whose deceased family member died due to a work-related injury; or an employee or survivor as defined in the extension to the Act.

All employers in Massachusetts are required by law to have workers compensation insurance for their employees, with a few exceptions. Employees who have work-related injuries or illness are eligible for workers compensation benefits. Coverage starts the first day on the job. Undocumented workers are eligible.

Am I covered under Mass Workers Compensation, or do I have a Longshore and Harbor Workers Act case?

The LHWCA covers employees in traditional maritime occupations including longshore workers, ship repairers, shipbuilders, ship breakers, and harbor construction workers. Injuries must occur on the navigable waters of the U.S. or in the adjoining areas, including piers, docks, terminals, wharves, and those areas used in loading and unloading vessels. Non-maritime employees may also be covered if they performed their work on navigable waters and their injuries occurred there.

The LHWCA compensates for lost wages, medical benefits, and rehabilitation services to longshore, harbor and other maritime workers who are injured during their employment or who contract an occupational disease related to employment.

All employees in Massachusetts are entitled by law to have workers compensation insurance coverage. The only exceptions are 1) Members of a Limited Liability Company (LLC), partners of a Limited Liability Partnership (LLP), and partnerships or sole proprietors of an unincorporated business are not required to carry workers compensation insurance for themselves, but may choose to purchase Workers Compensation insurance coverage for themselves, and 2) Any corporate officer who owns at least a 25% interest in the corporation may exempt themselves from the provisions of the Workers Compensation Act. However, such an exemption does not apply to employees of a corporation who are not listed as corporate officers. All exceptions must be approved by the DIA.

Cost

The LHWCA requires that maritime employers, including sole proprietors who are employees of their own company, obtain insurance for all employees; officers of a corporation are not exempt from LHWCA coverage. The insurance commissioners in the states in which they operate regulate all authorized carriers, and coverage costs vary.

The Massachusetts Division of Insurance sets rates for job classifications based on the likelihood of injury. The rates are paid on each $100 of weekly wages. Many businesses are also “experience rated,” meaning that yearly premiums are adjusted by the number of claims or the amount of losses. Workers compensation insurance can be purchased through any insurance agent or broker who handles business insurance or through a direct writer of insurance.

Compensation
All compensation benefits paid under LHWCA are based on the employee’s average weekly wage at the time of injury.  There are several methods used to determine the AWW; each method takes the employee’s average annual earnings and divides that figure by fifty-two (52) to obtain an average weekly wage.  If wages in the 52 weeks prior to injury do not reflect the claimant’s true earning capacity because of promotion, reduction in force (RIF), illness, or lack of work, or if the employment has not been permanent and continuous, there are other methods to calculate the average weekly wage.

Compensation payable under the LHWCA is subject to the maximum (max) and minimum (min) rates. The max and min are determined annually on October 1 and are based on the national average weekly wage determined by the DOL using national wage data published by the Bureau of Labor Statistics. The max equals 200% of the NAWW; the min equals 50% of the national average weekly wage.  If two-thirds (2/3) of the average weekly wage falls below the min, compensation is paid at the min. If the average weekly wage is below the min, compensation is paid at the average weekly wage. The min does not apply to compensation paid under the Defense Base Act.

The LHWCA provides that an injured employee is entitled to reasonable and necessary medical, surgical, and hospital treatment and other medical supplies and services required by the work-related injury or illness, such as prescription medications, diagnostic tests, physical therapy, prostheses, hearing aids, attendant care, and the cost of travel for such treatment. An injured employee is entitled to select a physician of his/her choice to provide medical treatment for the work injury.

Under the LHWCA, survivor benefits are also provided if the work-related injury or disease causes the employee’s death. These benefits are paid directly by an authorized self-insured employer, through an authorized insurance carrier, or in particular circumstances, by an industry financed Special Fund.

Under the LHWCA, the employer or insurance carrier is required to pay compensation within 14 days of receiving Notice of Injury, except in cases where the employer or insurance carrier disputes liability for benefits and files a Notice of Controversion, Form LS-207. Benefits under the LHWCA may be paid in a variety of ways:

•    Directly by an authorized self-insured employer

•    Through an authorized insurance carrier

•    By a special fund administered directly by the Division of Longshore and Harbor Workers Compensation, Office of Workers Compensation  Programs within the U.S. Department of Labor, in certain circumstances.

A workers compensation case is established through filings from employers, insurance companies, attorneys and third party providers under the provisions of MGL c. 152. When an employee is incapable of earning full wages for five or more full or partial calendar days due to an occupational injury or illness, the employer must file the original Employer’s First Report of Injury or Fatality (Form 101) with the DIA and send a copy to their insurance carrier, a copy to the injured worker and a copy for their records. This form must be sent within seven calendar days (not including Sundays and legal holidays) from the fifth day of full or partial disability.

Once the insurer receives the form, they have 14 calendar days to pay benefits on an Insurer’s Notification of Payment (Form 103) or notify the employee and the DIA that they are denying the claim by sending an Insurer’s Notification of Denial (Form 104). The insurance company can pay on a claim for up to the first 180 days following the initial injury or illness without accepting liability for the claim. During this 180 day “Pay Without Prejudice” period, the insurer can stop or modify the payments after giving a seven-calendar day notice to the injured worker and the DIA.

The insurer, with the consent of the injured worker and approval of the DIA, can extend the initial 180-day period for another 180 days on an Agreement to Extend 180-Day Payment Without Prejudice Period (Form 105). After the initial 180-day period has passed, the insurer can stop or reduce payment only for reasons specified by the Workers’ Compensation Act and regulations.

Under Massachusetts workers’ compensation law, injured workers receive an insurance card with a claim number to use when they receive workers’ compensation medical treatment. Workers have the ability to choose their own doctor. Cash benefits are paid by check or direct deposit. Workers’ compensation benefits are not taxable.

Litigation Process
After receiving notice of an injury and disability, if the employer or insurance carrier denies responsibility to provide benefits under LHWCA, they are required by law to state the reasons for the denial by filing Form LS-207, Notice of Controversion of Right to Compensation, with the OWCP. The OWCP will send a copy of that form to the employee with instructions on what to do if the employee disagrees with the denial.

When claim disputes arise, the OWCP assists the parties to resolve the disputes by conducting informal conferences and making written recommendations on benefit entitlement. If the parties cannot resolve their differences and any party requests a formal hearing before the Office of Administrative Law Judges, the OWCP refers the case for a formal hearing.

While the district office may issue a written recommendation based upon the evidence submitted, that recommendation is not binding on the parties. If either party disagrees with the recommendation, the next step is a formal hearing before a Department of Labor Administrative Law Judge who has the authority to award benefits or to deny claims.

Either party may request a hearing before an Administrative Law Judge by submitting Form LS-18, (Pre Hearing Statement) to the district office with a copy to all other parties. The district office will review the LS-18 before referring the case to the Office of Administrative Law Judges for hearing.

While consulting with an attorney may be advisable, an injured worker is not required to do so. The claimant may negotiate a settlement directly with the insurance carrier’s claims adjuster, and the OWCP cannot advise or assist them in settling the claim. Instead, the District Director or the Administrative Law Judge is required by law to evaluate all settlement applications to determine whether the amount of the settlement is adequate to compensate for the disability and future medical needs.

The DIA is the court system that hears and resolves disputed workers’ compensation claims in Massachusetts.  If a worker’s claim is denied by the insurer or if they do not receive all the benefits they feel that they are entitled to, the DIA helps with the claim process.

When a claim is denied, the employee can file an employee’s claim (Form 110) to request a conciliation, the first step in the dispute resolution process. A conciliation is an informal meeting between the insurance company and the employee and/or the employee’s attorney. At conciliation, an attempt is made to settle the issues in dispute. If an agreement is not reached, the claim is referred to a conference, the second step in the dispute resolution process.

The conference is an informal proceeding before an administrative judge. At the conference, the employee needs to show that they are disabled, that the injury or illness was work related, and that any disputed medical bills were for reasonable and necessary treatment. Following the conference, the judge issues an order of payment or denial, which either side may appeal within 14 calendar days. If the conference order is appealed, it proceeds to the hearing stage.

At the hearing, the same administrative law judge who presided at the conference holds a formal proceeding. After considering the evidence, the judge will issue a written decision. Either party who disagrees with the decision has 30 calendar days from the filing date of the decision to file an appeal to the reviewing board.

The reviewing board is made up of six administrative law judges, three of whom will examine the hearing transcripts. They can reverse the decision of the administrative judge, remand a case back to the hearing stage before the same administrative judge, or uphold the Administrative Judge’s decision if they find there were no errors of law made. Decisions can be appealed within 30 days to the Massachusetts Appeals Court.

General Case Expectations

The insurance claims adjuster may deny a LHWCA claim because they do not have documents necessary to pay benefits. The injured employee may need to contact the claims adjuster to ask what additional information the adjuster needs to accept and pay the claim. If the claimant disagrees with the reasons for the denial, they may also write to the OWCP giving the reasons why they disagree.

The claimant should also provide the OWCP with documents to support their claim, including a statement of how the injury occurred, their earnings records or wage statements, and medical reports from the doctor. Copies of all medical documents and correspondence should be sent to both the OWCP and the insurance claims adjustor. Copies of all documents, forms, reports, and correspondence should be kept. If a claimant is unsure about what documents are required, they may contact the local Longshore district office for guidance.

For injuries occurring after January 1, 1986, the time limit for filing a workers compensation claim in Massachusetts is four years from the date of injury. The four-year period may be extended in the case of an employee who had reason to be unaware of the connection between his disability and his job, as with certain types of occupational disease caused by exposure to toxic materials including asbestos, lead, welding fumes, formaldehyde, toluene, solvents, and radiation, because symptoms took more than four years to manifest. In these situations, the four-year period starts when the employee learns (typically from a diagnosing doctor) that there has been a compensable injury from exposure on the job.

It is estimated that half of all workers compensation claims are disputed by an insurer or employer. If a claim is disputed, it may be advisable to seek legal counsel to protect your rights and interests, due to the complexity of Massachusetts workers compensation law. Employees of the DIA are not permitted to make attorney referrals; however, the Massachusetts Bar Association can refer injured workers to attorneys who handle workers’ compensation cases.

Conclusion

The Longshore and Harbor Workers Compensation Act (“LHWCA”) is a federal law that provides for the payment of compensation, medical care, and vocational rehabilitation services to workers disabled from injuries on the job and that occur on the navigable waters of the United States, or in adjoining areas customarily used in the loading, unloading, repairing, or building of a vessel. The LHWCA also provides survivor benefits to dependents if a work injury caused, or contributed to, the employee’s death. LHWCA benefits are typically paid by the self-insured employer or by a private insurance company on the employer’s behalf. The term injury includes occupational diseases, hearing loss and illnesses arising out of employment.

All employers in Massachusetts are required to carry workers compensation insurance covering their employees, including themselves if they are an employee of their company. This requirement applies regardless of the number of hours worked in any given week, except that domestic service employees must work a minimum of 16 hours per week in order to necessitate coverage. Only two types of employees, seafarers and railway workers, are exempt from Massachusetts workers compensation laws and thus, able to sue employers for job injuries.