Friday, April 25, 2014

Calculating The Average Weekly Wage On A Defense Base Act Claim

One of the most difficult and annoying problems under the Defense Base Act is calculating an Average Weekly Wage.  Not that it is exactly easy under the Longshore and Harbor Workers' Compensation Act, whose benefits are incorporated into it.  The Longshore and Harbor Workers' Compensation Act, originally passed in 1927, in section 10, provides for three methods of doing the sums.  The first two deal with five day a week and six day a week workers.  These need not detain us here.  The methods work well in a factory with a hierarchical structure.  For seven day a week or casual workers, not so much.  So the Act provides a third way, in section 10(c):

“If either [subsection 10(a) or 10(b)] cannot reasonably and fairly be applied, such average annual earnings shall be such sum as, having regard to the previous earnings of the injured employee and the employment in which he was working at the time of his injury, and of other employees of the same or most similar class working in the same or most similar employment in the same or neighboring locality, or other employment of such employee, including the reasonable value of the services of the employee if engaged in self-employment, shall reasonably represent the annual earning capacity of the injured employee.”

Which translated into English, means roughly “do the best you can”.   The difficulty with a Defense Base Act claim is that workers overseas, especially in war zones, are paid a much higher wage than equivalent workers in the U.S.  So, if someone who earns about $40,000 a year as a truck driver in the U.S. goes to Kuwait at a salary of $70,000 for a one year contract, what is his average weekly wage? 

One answer, of course, is $70,000 divided by 52.  Its what he is earning, and what all the other drivers are earing.  When he is injured, that’s what he is losing.  And if we are only talking about temporary disability, then probably there’s no real objection.  

But what if it isn’t just temporary?  Here we need to recall the rules of the Longshore and Harbor Workers' Compensation Act, extended to the Defense Base Act as they apply to loss of wage claims.  If a worker has a residual wage loss, then the employer pays two thirds of the difference between the average weekly wage and the residual wage.  So if the worker with the $70,000 annual wage (i) recovers from the injury, (ii) is precluded from returning to his overseas posting, but (iii) is able to work as a truck driver in the U.S earning $40,000 a year, then he is entitled to ($70,000 - $40,000) /(2/3) = $20,000 annual compensation.

However, since the $40,000 he is currently earning is in today’s dollars, that amount needs to be reduced to its level or value at the date of the injury.  This is done using the percentage increase in the National Average Weekly Wage, in reverse.  So, if there were two years between the two numbers, and the combined total increase was 5%, then (roughly, for we are demonstrating a point, not calculating an exact result,) his earnings of $40,000 will reduce to $38,000.  This means that the wage is loss is compared “like for like”, and the employer will have to pay $21,333.33 annually.  To someone earning exactly the same wages as they were before they went on their overseas adventure.  And, given the reduction in U.S. presence, the job, which was a one-year contract, might not have been extended, so the employee wouldn’t have gone back to his old job anyway.  Since these benefits are for as long as the disability lasts, the worker will likely be paid for life.  Some might find this an undesirable result.

Therefore, some have suggested, and some courts have accepted, that the “average weekly wage” should be a “blend” of the contract wage and the “previous earnings of the employee”, so avoid a possible “windfall” for the employee.

In February 27, 2014 Administrative Law Judge Lee Romero issued his Decision and Order in the case of Lopez v Dyncorp, Case 2012 LDA 00613.  One of the issues was the calculation of the average weekly wage.  There was no permanent disability, so there is little startling fuss to be made.  But since the case sets a precedent, and it is a matter of principle, it is worth at least examining it.

Lopez had worked in the U.S. in the same sort of job as the one he took with Dyncorp.  He started working for them on April 9, 2011, and was injured 30.14 weeks later, on November 5.  During that time his average weekly was $1,797.73.  The Judge decided it would be correct to use the blended approach, so he calculated the average annual wage for the four years before the accident, ($45,155.24, giving an average weekly wage of $868.37,) then added the current average of $1797.73, and divided by two.  He found the average week wage was $1, 333.05.

Of course, what we immediately notice is that the Judge did not increase each of the four years’ wages by the percentage increase in the National Average Weekly Wage.  This seems to be a flaw in the calculations.  Calculating from the numbers provided in the Decision, but without any claim to precision, (lacking exact dates,) an “increased average annual wage” would be $47,203.93, an average weekly wage of $ 907.81, and a blended rate of $1,352.77.

If the four years wages are not increased, there should be a good explicit reason why not, and why the procedure should differ that of the loss of wage calculation.  The blended rate already ensures a reduced AWW; not to recognize annual increases is to reduce it further.  There is no policy reason to do that.

Sunday, March 23, 2014

A Car Park Injury In New Jersey – Thoughts From A Longshore Perspective

A Car Park Injury In New Jersey – Thoughts From A Longshore Perspective

It was just after 10.00 p.m. on the night of September 19, 2012 that a worker in New Jersey drove their car out of their employer’s parking lot onto a public highway.  As the car entered the highway, another car collided with it, striking the driver door, injuring the worker.  The picture below is included in the court’s decision.  The case is Carla Burdette v. Harrah’s Atlantic City, Superior Court of New Jersey, Appellate Decision.

It was not a decision related to the relative culpability of the drivers for the collision, as one might expect, but one determining whether the New Jersey Workers’ Compensation Act covered the injured worker.  The question was whether the worker was still in the course of their employment when the accident occurred.  The judge found that the worker’s car had left the car park, but not completely.  No matter how little or how much, the car was still in the car park, and, applying New Jersey precedent, that meant the worker was still in the course of their employment.  The employer, unsurprisingly, begged to differ, and appealed.  They maintained that the accident occurred on the highway, and the injuries resulting from the accident also occurred on the highway.  The appellate court remarked: “We disagree”.

The court wrote:
“The statute provides that "[e]mployment shall be deemed to commence when an employee arrives at the employer's place of employment to report for work and shall terminate when the employee leaves the employer's place of employment, excluding areas not under the control of the employer." N.J.S.A. 34:15-36.”
They further said that “[t]he circumstances of the present case plainly reveal that [the worker] never fully left [the] employer’s premises…We reject [the employer’s] ultra-rigid approach that focuses only on the colliding vehicles’ point of impact and the front seat location of [the worker]….Instead, applying common sense and the policies inherent in the Act, we subscribe to the judge of compensation’s viewpoint that the injuries suffered here were a result of [the worker’s] firm attachment to her place of employment, albeit while on her way home”.  De minimis curat lex, perhaps.

Presumably, had the accident occurred on the way to work, and the worker’s car been pushed a smidgeon over the line into the parking lot, resulting injuries would also have been compensable.

With no disrespect to the court, it is perhaps possible that another outcome might have been reached; and it is possible that “common sense and the policies inherent in the Act” might allow for different results, depending on whose “common sense” is used.  To call the employer’s argument “ultra-rigid” is at best unkind.  One might argue that it is “ultra-rigid” to construe “when the employee leaves” to mean “when the employee’s car has left” the premises.  But those of us battling the obscurity of federal law regard as very small beer the eccentricities of state laws.

Welcome to the wonderful world of the Longshore Act, (“LHWCA”), (codified for the curious at 33 U.S.C. §§901 et seq.).  The Act passed in 1926 because the Supreme Court of the United States decided in 1917 in the case of Southern Pacific Company v. Jensen, (244 U.S. 205) that States could not extend their workers’ compensation statutes to cover maritime employees injured on navigable waters.  Only a federal workers’ compensation statute would do.  So there was a line at the water’s edge, the “Jensen” line.  On the shore side, state law applied; on the seaward side, federal maritime law applied.  Thus, the Longshore Act was born with a boundary.  And with the boundary, obfuscation began even before the Act was passed.  Those in the know will be muttering the mantras of “maritime but local”, “twilight zone”, and “concurrent jurisdiction”.  Patience.  Those are for another day.

The State Historical Society of Wisconsin in their Wisconsin Magazine of History Vol. 57, No. 2, Winter, 1973-1974, published a history of the State’s workers’ compensation statute of 1911, by Robert Asher.  It includes a photograph of stevedores unloading a freighter in the port of Milwaukee between 1905 and 1910.  Three men in suits are watching two men in overalls heave a barrel on a hand truck up a (rather dilapidated) gangplank onto a (rather dilapidated) pier.  The worker at the front, pulling the cart, has the sole of his left foot on a plank on the pier.  His left heel seems raised, but over the water.  His head is over the pier, but his shoulders and chest appear to be half over the pier and half over the gangplank, over navigable waters.  Is he covered by state law or by federal law?  In such cases, as we noted before, de minimis curat lex.  It is on small differences that large results turn.  His companion, shoving the load from behind, is clearly on the gangplank, over navigable waters and so would be covered by federal maritime law, rather than by the state law of 1911 enacting workers’ compensation in Wisconsin.  But that was not known at the time.  Christian Jensen, the worker whose name is used for the supposed line of demarcation, was killed in 1912.  (He appears to have been working in a somewhat similar situation.  He was driving an electric truck on the gangplank of the El Oriente and hit his head on the opening into the vessel, broke his neck and died, in much the same place as the second worker in the picture).  It was not until 1917 that the Supreme Court announced the Jensen decision.

The rigid line, later embalmed in the Longshore Act, lead to some interesting results.  A worker fell from the ship, and died when he hit the pier.  He was held covered under state law.  A worker fell from the pier into the harbor.  He was held covered under the Longshore Act.  Which Act was more beneficial to the worker?  I have not studied the relative values under the various acts.  But since 1972, when the Longshore Act was amended, it is likely that most workers would, if killed or seriously injured, be better compensated under LHWCA.  (Those that did better under state acts, probably did worse after the reforms of the various states passed since 1980.  But this too is a discussion for another day).

Looking at the picture, we can see that they will both be covered under the state act when they reach the pier and wheel the barrel to its point of rest on the pier or in the warehouse.   They will return to maritime law as they step onto the gangplank to get the next barrel, and into state cover again as they unload it.  They will walk (or struggle – these barrels are not light) in and out of cover all day.  To fix this problem, Congress amended the LHWCA to extend its reach landward.  They limited the landward reach to accidents occurring “upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, of other adjoining area customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel).”  So now both workers would be covered by the LHWCA all day.  Of course, a line still remains.  It has simply moved landward.  Could the New Jersey case occur under the LHWCA?  Of course it could.  But there would be an added twist.  Not only must there be an employer-employee connection at the time of the accident.  The accident itself must also be on a covered location.  So if the car park had been owned by the employer, but located on the other side of a highway, the worker would have to prove the car park was an “adjoining area”.  And the answer would have us going round in Circuits.  Different circuits, different results.  The only certainty is that there will be uncertainty.

Tuesday, January 28, 2014

Recreational Vessels, yet again. A further inconsistency

Recreational Vessels Again.

Representative Debbie Wasserman Schultz has introduced a bill, H.R. 3896, to amend the Longshore and Harbor Workers' Compensation Act.  In fact, the amendment really modifies the regulations at 20 C.F.R. §701.501, the definition of “recreational vessel”.


The ARRA Act of 2009 amended the definition of “employee” to exclude “individuals employed to build any recreational vessel, 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”. 

Subsequently the Department of Labor issued regulations, which defined the term “recreational vessel”, and established effective dates for the changes depending on the injury.  The fundamental definition of “recreational vessel” in the regulations was taken from the Coast Guard definition, and will be embalmed in statute, if the bill is enacted.

20 C.F.R. §701.501 contained three subsections.  Subsection (a) contained the definition.  Subsection (b)(2) contained some exclusions based on other statutes, and, at (b)(3) contained a paragraph “deeming recreational” public vessels, i.e. a vessel owned by the United States, or by a State or political subdivision thereof.  Subsection (c) adopted subsequent amendments to the statutes listed in (b)(2).

H.R. 3896 has one section.  Subsection (a) amends the current statute by redesignating Section 2(22) as section 2(23), and adding a new section 2(22).  The new Paragraph 22 has two sub-paragraphs. 

Sub-paragraph (A) recites the definition of a recreational vessel from 20 C.F.R. §701.501, thus confirming the definition proposed and adopted by the Department of Labor.  

Sub-paragraph (B) enacted rules for applying the definition of “recreational vessels”. 
Clause (i) deals with vessels being manufactured or built and is identical to §701.501(b)(1).

Clause (ii) is new.  It replaces 501(b)(2) with a positive rule for vessels being repaired in language similar to clause (i).  There are no longer any of the exclusions.
Clause (iii) provides the rule for public vessels, and is substantially similar to 501(b)(3).

Section 1(b) is entitled “Regulations” and requires the Department of Labor, within 90 days of enactment of the bill, to amend 20 C.F.R. §701.501 “by deleting the text of sub-sections (a) and (b) of such section and replacing it with only the text of the definition of recreational vehicle [sic] in section 2(22) of the Longshore and Harbor Workers' Compensation Act, as added by subsection (a);” and requires the Department of Labor to make no further modification to such definition in another regulation or any administrative directive.


Note two apparent inconsistencies.  The reference to “recreational vehicles” should clearly be “recreational vessels”, and to the requirement to delete sub-sections (a) and (b) should be added sub-section (c), which refers to the now deleted sub-section (b).


Sunday, January 26, 2014

Recreational Vessels Under the Longshore Act. Again.

Representative Wasserman Schultz has introduced a new amendment to the Longshore Act.

The Bill, HR 3896, seeks to revise the previous definition of “Recreational Vessel” in the Regulations.  The entire Bill has one section, with two subsections.  Section 1(a) is titled “Definitions”, and Section 1(b) is titled “Regulations”.

The Regulations provision requires the Department of Labor to amend the regulations in section 701.501 by replacing the current subsections (a) and (b) with “only the text of the definition of recreational vehicle [sic] in section 2(22) of the Longshore and Harbor Workers' Compensation Act, as added by subsection (a)…”

Apart from the misprint, (“vehicle” should be “vessel”), can the Department actually make the changes within 90 days, given all the restraints on regulating and procedures required under the various statutes seeking to prevent rapid rule making?

Monday, November 11, 2013

No Intentional Tort Exception Under the Outer Continental Shelf Lands Act

Latimer v. Chet Morrison Contractors, No. 11-CV-806, (W.D. La. 10/09/13)

Jon Robinson writing on the Mouledoux Bland Blog, 

drew my attention to this interesting case under the Outer Continental Shelf Lands Act. 

On July 16, 2009, Latimer’s first day of work on the rig, he was carrying a lifeline rope from one area of the platform to another. He had the rope wrapped around his shoulders and trailing behind him. Latimer alleged that Defendant Charles Endom “intentionally stepped on the rope,” jerking Latimer backward. When Endom removed his foot from the rope, Latimer allegedly stumbled forward and slipped in a wet and dirty depression on the platform floor. Latimer alleged that as a result of the incident he sustained injuries to his neck, left shoulder, low back and left knee.

Latimer claimed that the “intentional act” of Endom removed the case from the Outer Continental Shelf Lands Act, under an as yet undeclared by the Fifth Circuit exception to the exclusivity provision of the Longshore and Harbor Workers' Compensation Act.  The Court had no problem in dismissing this argument, and the related argument that the incident was not an “accidental” injury because it was intentional.  The Court also noted the “horseplay” cases in connection with the requirement that an injury so caused arises out of employment.

What was not argued was the slightly different requirement under the Outer Continental Shelf Lands Act, that the injury must occur “as a result of operations” on the Shelf.  In the light of the Vallodolid case, might the employer be able to argue that (a) the horseplay arise out of employment, but (b) it had nothing to do with the operations on the shelf.  In that case, might the employer be able to plead that respondeat superior does not apply, and escape all financial obligations to the worker?  Of course that would leave the co-worker unprotected by §§905(a) and 933(i) of the Longshore and Harbor Workers' Compensation Act, and exposed to liability for the consequences of his actions.

Monday, July 15, 2013


In my previous blog I managed to leave off the link to the Order.  Here it is:

When is a settlement adequate?

On June 24, 2013, Judge Rosenow, of the Covington Office of Administrative Law Judges, issued an Order Approving Settlement in a Longshore and Harbor Workers' Compensation Act case, number 2013-LHC-01317.  Not exactly an unusual event for any day of the week.  This approval, however, was five pages long.  The District Director had disapproved the 8(i) settlement of the case.  The case was then sent to the OALJ for a formal hearing, and the parties submitted an amended settlement agreement, for $500.00 more than the old one.  They conceded that this in all probability would not have changed the District Directors mind, and, as a practical matter, did not reflect a meaningful increase at all.  The Regional Solicitor’s Office appeared to defend the District Director.

I believe as a matter of principle, that whether you support the Judge’s decision or not, the case needs to be reviewed by the Benefits Review Board, and by the Circuit Court.

The statute allows contested cases to be settled under §8(i) of the Act.  The District Director or Administrative Law judge “shall approve the settlement within thirty days unless it is found to be inadequate or procured by duress”.  If both parties are represented by counsel, then agreements shall be deemed approved unless specifically disapproved within thirty days after submission for approval.  If the District Director disapproves the settlement s/he must issue a written statement containing the reasons for disapproval.  The parties may then seek a hearing, and the Administrative Law Judge shall enter an order approving or rejecting the settlement.

The regulations, at §702.242 (6), require the parties to include “A statement explaining how the settlement amount is considered adequate” and at §702.243(f): “When presented with a settlement, the adjudicator shall review the application and determine whether, considering all of the circumstances, including, where appropriate, the probability of success if the case were formally litigated, the amount is adequate. The criteria for determining the adequacy of the settlement application shall include, but not be limited to:
            (1) The claimant's age, education and work history;
            (2) The degree of the claimant's disability or impairment;
            (3) The availability of the type of work the claimant can do;
            (4) The cost and necessity of future medical treatment (where the settlement includes medical benefits).”

The Claimant, the Employer and the Solicitor submitted letter briefs to the Judge, who also had the benefit of the settlement application.   The Claimant cites no case law in support of his client. The Employer merely cites the regulations §702.243(g), which explain the actuarial formula for commutation.  The Solicitor cites the statutory history of the section, the regulations, the Fifth Circuit case, Oceanic Butler, Inc. v. Nordahl, and three Benefits Review Board cases. 

The Judge does not discuss any of the cases cited by the Solicitor’s office.  His decision makes much of the distinction between represented and unrepresented claimants; and asserts a presumption, or deference, to represented claimants.  However, the distinction in section 8(i) has nothing to do with deference; it is merely a procedural difference.  If the claimant is unrepresented the District Director must approve, but if the claimant is represented he does not have to do this paper work.  In both cases, the presumption is in favor of settlement.  There is no difference. 

Although the Judge asks the question of the standard of review of a denial of an application, the Judge does not answer the question.  It is a question that needs to be answered.
The Employer states that were the case to go to trial, it might get another medical opinion that might show that the claimant might have been or might at the time of the opinion be able to return to her old job.  However, the regulations call for a determination of adequacy based on certain criteria at the time of the application.  If there is a medical report that states that recovery in the future is possible, that is something that the decision maker can consider.  The suggestion seems be similar to an attempt to rebut the 20(a) presumption on the grounds that the employer might have evidence to rebut it later.

The Judge does not look at the criteria listed in §243(f) and discuss them.  He should do so, if only to guide future applicants in the correct method of weighing the various indicia of adequacy in the future.  In supporting a deferential standard of review of an application he does not give any indication of what might validate a disapproval of a settlement where both sides are represented.  It might seem that he believes there is no such possibility.  However, were Congress to have wished to waive the possibility of disapproval, they could have done so by simply removing it.  Since they left the possibility open, we should have the guidance of at least the Benefits Review Board on the matter.

I urge all parties to press the Solicitor to enter an appeal, and to join in “amicus” briefs to help the Benefits Review Board in their decision.