RECREATIONAL VESSEL AMENDMENTS
The New Year begins with the Final Rule implementing the amendments to the Longshore and Harbor Workers' Compensation Act passed as part of the American Recovery and Reinvestment Act, “ARRA”, in 2009. http://www.gpo.gov/fdsys/pkg/FR-2011-12-30/pdf/2011-32880.pdf
We may sympathize with the Department of Labor. It takes time to publish a regulation, no matter how necessary and how uncontroversial. The steps that the department has to follow, and the stranglehold of certain interests, ensure that nothing will ever happen quickly. Except, of course, legislation.
The legislative change was incorporated into the ARRA, apparently as a cost saving to employers servicing large recreational vessels, (owned, it is to be presumed, by the well-to-do), who would otherwise face competition from overseas yards offering similar services at a lower price. There had been hearings before Congress on the subject, and evidence presented relating to the cost of longshore cover at the time. I am unable to trace any published evidence other than the original hearings before 2005. (I would be grateful to anyone who points me to them). There were apparently efforts made to quantify the difference in benefits between Longshore and various state compensation statutes. The Department of Labor does not appear to have been invited to give evidence, nor was any other government agency that might be affected.
In explaining the change, the House Report remarks: “This provision extends the current Longshore and Harbor Workers’ Compensation Act (LHWCA) exemption for recreational marine workers, thus eliminating these duplicate payments for employers in this industry.”
It did not explain what it meant by “recreational vessels”, “recreational marine workers”, “duplicate payments” nor that it must have eliminated benefits for employees. The bland assumption that the “problem” of foreign competition is cured by the elimination of workers’ benefits is akin to suggesting curing the problem of speeding motorists by eliminating the speed limit.
Trying to make sense of the statute as written, the Department issued a Notice of Proposed Rulemaking on August 17, 2010. The comments were closed on November 17, 2010. The authors of the amendment, one of whom is now the chair of the Democratic National Committee, submitted a three-page objection to the proposed rule.
The exclusions from the Longshore and Harbor Workers' Compensation Act work only “if the individuals described … are subject to coverage under a State workers’ compensation law”. This proviso was not addressed by the new regulations.
The current regulation at 20 C.F.R. § 701.401, “Coverage under state compensation programs”, dates back to 1985, and reads:
“(a) Exclusions from the definition of “employee” under §701.301(a)(12), and the employees of small vessel facilities otherwise covered which are exempted from coverage under §702.171, are dependent upon coverage under a state workers' compensation program. For these purposes, a worker or dependent must first claim compensation under the appropriate state program and receive a final decision on the merits of the claim, denying coverage, before any claim may be filed under this Act.
(b) The intent of the Act is that state law will apply to those categories of employees if it otherwise would. Accordingly, not withstanding any contrary state law, claims by any of the categories of workers excluded under §701.301 or 702.171 must be made to and processed by the state and a merit decision denying coverage on jurisdictional grounds must be made before coverage or benefits under the Act may be sought.
(c) The time for filing notice and claim under the Act (see subpart B of part 702) does not begin to run for purposes of claims by those workers or dependents described in §701.301(a)(12) and §702.171, until a final adverse decision denying coverage under a state compensation act is received.”
The key words of the LHWCA for these purposes are “subject to coverage”. Since 1949, all states have had workers’ compensation statutes. As a matter of fact, therefore, all workers are “subject to coverage” under a statute. The regulations, instead of defining “subject to coverage”, state that the exclusions are “dependent upon coverage” in paragraph (a). This is ambiguous, since “subject to” and “dependent upon” can mean quite different things. Paragraph (b) adds a further caveat, that “state law will apply….if it otherwise would”. The meaning of “otherwise” is not clear.
Similarly, and confusingly, three different locutions are used to describe the threshold requirement for three different situations. Under §(a), “a worker ...must …receive a final decision on the merits of the claim, denying coverage, before any claim may be filed under this Act”. Under §(b), “a merit decision denying coverage on jurisdictional grounds must be made before coverage or benefits under the Act may be sought.” Under §(c) the time for filing a claim does not begin to run “until a final adverse decision denying coverage under a state compensation act is received.”
If it is the intent that a worker denied recovery under a state act is included under LHWCA, the regulations should say so. A worker might be denied recovery because he suffered an injury compensable under LHWCA but not under state law. This would not be a denial on jurisdictional grounds, but merely a difference in conditions.
If the exclusion is one on “jurisdictional” grounds, the regulations should say so. It is hard to see how there can be a “jurisdictional” denial of cover, unless the worker is excluded from the state act. Most states are “concurrent” jurisdiction states, allowing recovery under the state act, with a credit for amounts paid under other workers’ compensation programs. Other states exclude recovery under the state act if the worker is covered under a federal statute.
The Florida statute reads in part:
“440.09 Coverage.—
(2) Benefits are not payable in respect of the disability or death of any employee covered by … the Longshoremen’s and Harbor Worker’s Compensation Act.”
If a recreational vessel repair worker is injured, there is a clear dilemma. The LHWCA is conditional on cover under the state act, and the state excludes for workers covered by the LHWCA. This circular reference appears to have no solution. Since both Washington and Florida are (a) states with much recreational vessel activity and (b) states that exclude LHWCA employees, this is likely to lead to litigation.
It is to be hoped that the OWCP will address this when they also make their “[f]urther investigation into the industry’s needs” in relation to walking in and out of qualifying maritime employment.
We leave to another day consideration of that conundrum.
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