The Resurgence of the Defense Base Act

The Defense Base Act is federal law that extends the Longshore and Harbor Workers' Compensation Act (LHWCA) to apply to certain categories of employees working overseas. The three general divisions of covered employees are (1) those working on military bases acquired from a foreign government after 1940, (2) employees of contractors and subcontractors engaged in public work projects for the U.S. government outside the continental United States, and (3) individuals employed outside the continental United States by a U.S. employer whose purpose it is to provide welfare or other such services to the Armed Forces as approved by the secretary of defense.

With much work continuing in war-torn places like Iraq and Afghanistan, the number of Defense Base Act (DBA) claims remains steady, and continues to grow. The DBA covers the following employment activities:

• Work for private employers on U.S. military bases or on any lands used by the U.S. for military purposes outside of the United States, including those in U.S. Territories and possessions


• Work on public work contracts with any U.S. government agency, including construction and service contracts in connection with national defense or with war activities outside the United States;


• Work on contracts approved and funded by the U.S. under the Foreign Assistance Act, which among other things provides for cash sale of military equipment, materials, and services to its allies, if the contract is performed outside of the United States;


• Work for American employers providing welfare or similar services outside the United States for the benefit of the Armed Services, e.g. the United Service Organizations (USO)

If any one of the these criteria is met, all employees engaged in such employment are covered under the DBA. As the Employer, you should ensure that you carry appropriate and adequate insurance coverage.

Additionally, please sure that you understand and adhere to the procedural dictates of the DBA. For example, under the DBA, a company must report any injury or death to OWCP's Division of Longshore and Harbor Workers' Compensation within 10 days, and any knowing and willful failure to report subjects the employer to a civil penalty, just as The Sandi Group/Corporate Bank Financial Services discovered not too long ago when it was fined $75,000 by the US DOL for failure to report injuries and death subject to the provisions of the DBA.

You should also be aware of DBA Waivers. Upon the written request of the head of any department or other agency of the United States, the Secretary of Labor may waive the application of the Defense Base Act with respect to any contract, work location, or class of employees. The request for waiver must be made by the government agency to the Department of Labor (DOL), OWCP. It is Department of Labor policy that the waiver does not apply to citizens or legal residents of the U.S. or to employees hired in the U.S. Once granted, the waiver is only valid if alternative workers' compensation benefits are provided to the waived employees pursuant to applicable local law.

If you have any questions, or think you may be subject to the Defense Base Act and need further information, please contact an experienced attorney to protect your company's interests.

   

Issues in Workers' Comp: Legislative Update

Here is a first look at some legislative changes that may be coming our way in the workers' compensation world. We will keep you updated. And as always, if you have any questions or concerns about these potential Bills, please contact us.

HB 1285 Workers' compensation; definition of employee; property owners' associations.

Chief patron: Scott

A BILL to amend and reenact § 65.2-101 of the Code of Virginia, relating to the Virginia Workers' Compensation Act; definition of employee; property owners' associations.

15100389D

Summary as introduced:
Workers' compensation; definition of employee; property owners' associations. Amends the definition of employee within the Virginia Workers' Compensation Act to exclude noncompensated employees, directors, and executive officers of any entity that constitutes a property owners' association under the provisions of the Property Owners' Association Act.

09/19/14 House: Prefiled and ordered printed; offered 01/14/15 15100389D
09/19/14 House: Referred to Committee on Commerce and Labor

HB 1372 Workers' compensation insurance; use of experience rating, loss limitation.

Chief patron: Webert

A BILL to amend and reenact § 65.2-817 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 38.2-1908.1, relating to workers' compensation insurance; use of experience rating; loss limitation for not-at-fault motor vehicle accidents.

15100792D

Summary as introduced:
Workers' compensation insurance; use of experience rating; loss limitation for not-at-fault motor vehicle accidents. Directs the State Corporation Commission (SCC) to adopt regulations that establish standards for determining a loss limitation to be included in the calculation of workers' compensation insurance experience modifications when a motor vehicle accident is determined to be a not-at-fault motor vehicle accident. The bill requires the SCC to establish how all loss experience remaining after such deduction of the loss limitation should be distributed among workers' compensation classifications. The SCC is also required to ensure that the amount, if any, by which an employer's experience rating would otherwise be modified as the result of a motor vehicle accident in which an employee is injured or killed shall be reduced if the accident was a not-at-fault motor vehicle accident.

12/07/14 House: Prefiled and ordered printed; offered 01/14/15 15100792D
12/07/14 House: Referred to Committee on Commerce and Labor

HB 1486 Workers' compensation; exclusivity of remedy.

Chief patron: Habeeb

A BILL to amend and reenact § 65.2-307 of the Code of Virginia, relating to the Virginia Workers' Compensation Act; exclusivity of remedies.

15101541D

Summary as introduced:
Workers' compensation; exclusivity of remedy. Provides that if a court determines that an accident, disease, injury, or death is barred by the exclusivity provisions of the Workers' Compensation Act, then that finding shall be res judicata between the parties and estop them from arguing before the Workers' Compensation Commission that the accident, injury, or death did not arise out of and in the course and scope of the employee's employment. The measure also provides that if the Commission or a court determines that the accident, injury, or death does not arise out of or in the course and scope of such employee's employment, then that finding shall be res judicata and estop those same parties from arguing before a court that the accident is barred by the Act's exclusivity provisions.

01/05/15 House: Prefiled and ordered printed; offered 01/14/15 15101541D
01/05/15 House: Referred to Committee on Commerce and Labor

HJ 532 Virginia's workers' compensation system; JLARC to study.

Chief patron: Lingamfelter

Directing the Joint Legislative Audit and Review Commission to study Virginia's workers' compensation system. Report.

15101898D

Summary as introduced:

Study; JLARC to study the Virginia's workers' compensation system; report. Directs the Joint Legislative Audit and Review Commission (JLARC) to study Virginia's workers' compensation system. In its study, JLARC is directed to (i) examine whether claims are reviewed and processed in a timely and fair manner; (ii) assess whether the dispute resolution process is timely, effective, and fair and equitable toward all parties; (iii) compare the structure and administration of workers' compensation programs in other states with that of Virginia's; (iv) analyze the rate of growth in medical prices and examine any changes that occur in access to medical care in states that have adopted medical service fee schedules or treatment guidelines; and (v) review any other issues and make recommendations as appropriate.

12/23/14 House: Prefiled and ordered printed; offered 01/14/15 15101898D
12/23/14 House: Referred to Committee on Rules

SB 745 Workers' compensation; exclusion of certain truck owner-operators.

Chief patron: Cosgrove

A BILL to amend and reenact § 65.2-101 of the Code of Virginia, relating to the Virginia Workers' Compensation Act; exclusion for owner-operator of leased motor vehicle.

15102550D

Summary as introduced:
Workers' compensation; exclusion of certain truck owner-operators. Excludes any owner-operator of a motor vehicle that is leased with or to a common or contract carrier in the trucking industry from the definition of an employee for purposes of the Virginia Workers' Compensation Act, if certain conditions establish that the owner-operator is an independent contractor.

12/18/14 Senate: Prefiled and ordered printed; offered 01/14/15 15102550D
12/18/14 Senate: Referred to Committee on Commerce and Labor

SB 770 Workers' compensation; exclusivity of remedy.

Chief patron: McEachin

A BILL to amend and reenact § 65.2-307 of the Code of Virginia, relating to the Virginia Workers' Compensation Act; exclusivity of remedies.

15100341D

Summary as introduced:
Workers' compensation; exclusivity of remedy. Provides that if a court determines that an accident, disease, injury, or death is barred by the exclusivity provisions of the Workers' Compensation Act, then that finding shall be res judicata between the parties and estop them from arguing before the Workers' Compensation Commission that the accident, injury, or death did not arise out of and in the course and scope of the employee's employment. The measure also provides that if the Commission or a court determines that the accident, injury, or death does not arise out of or in the course and scope of such employee's employment, then that finding shall be res judicata and estop those same parties from arguing before a court that the accident is barred by the Act's exclusivity provisions.

12/23/14 Senate: Prefiled and ordered printed; offered 01/14/15 15100341D
12/23/14 Senate: Referred to Committee on Commerce and Labor

Civil Penalty Increased for Noncompliance with Virginia Workers' Compensation Insurance Laws

Uninsured employers shall be assessed a civil penalty, subject to a maximum of $250 per day of noncompliance and subject to a maximum civil penalty of $50,000.

The 2014 General Assembly approved an increase in the civil penalty imposed when an employer required to insure under the Workers’ Compensation Act fails to insure. The law change amended section 65.2-805 of the Workers’ Compensation Act, which previously imposed  which a civil penalty of at least $500 and up to $5,000 for each period of being uninsured. The new provision provides that employers shall be assessed a civil penalty of not more than $250 per day for each day of noncompliance, subject to a maximum penalty of $50,000, plus collection costs, which constitutes a significant increase in the potential penalty. The amendment was approved March 7, 2014 and became effective on July 1, 2014.


Workers’ compensation coverage requirements are complex, but focus on the number of employees. Employers in Virginia are required to insure when they regularly employ three or more employees. It is important to be aware that an “employee” is defined broadly under the Act and includes every person in the service of another under any contract of hire, written or implied. “Employee” includes statutory employees (subcontractor’s employees), corporate officers, minors, undocumented workers, working family members, apprentices, temporary and seasonal employees. A business that doesn’t count all of its employees may not realize it is required to carry coverage.

Employers should also be aware, designating a worker as an “independent contractor” does not necessarily mean they are not an employee. Workers’ compensation looks to whether the business exerts control over the manner and means of how the work is performed. In the event of a claim, the facts of the work circumstances will determine if the individual is covered for workers’ compensation, regardless of payment on a 1099 designation.

Please contact an attorney or the Virginia Workers’ Compensation Commission to check your coverage and avoid coverage gaps. Uninsured employers and new businesses are urged to familiarize themselves with workers’ compensation insurance coverage requirements, obtain coverage when required, be compliant and avoid a penalty. Workers’ compensation is mandatory coverage. It is required by state law, and no other form of insurance may substitute. Failure to have coverage due to lack of knowledge is not a valid excuse for failure to insure.

New Virginia Laws Address Medical Provider Billing

On July 1, 2014, new laws go into effect in Virginia to address medical provider billing in state workers' compensation cases.  The changes include additions to Virginia Code Section 65.2-605 which limit the amount that medical providers may charge for the services of nurse practitioners, physician's assistants and assistant surgeons during surgery.  Additionally, the changes limit the ability of physicians to bill separately for multiple surgical procedures completed on a single surgical site.


New rules were also added to assist in the collect payments and resolution of billing disputes in a timely manner.  Virginia Code Section 65.2-605.1 requires payment within 60 days after receipt of an itemized billing, but allows the employer or carrier to contest the bill if notice is given within 45 days after receipt of the itemized billing, provided that the notice contains certain detailed information.  Payments not timely made or contested are subject to interest at the judgment rate of interest.  The new rules also provide a one year window for carriers to seek recovery of payments made to health care providers and for medical providers to challenge the sufficiency of payments made.

Paying Workers to Attend Medical Appointments

An injured worker is entitled to reimbursement for mileage expenses when traveling to and from related medical appointments. But, is that employee also entitled to receive wage loss benefits for the time missed from work while attending related medical appointments? That answer is not as easy.

It is certainly reasonable to expect, and even require the injured employee to schedule medical appointments around his work schedule so as to avoid disrupting the workday . Of course, health care providers often have the same "work hours" as the rest of us. Thus, there will inevitably arise instances when a worker must miss work to attend medical appointments. However, before compensating him for this missed time, there are some questions that should be asked and answered. 

A claimant does not have the unfettered right to schedule a medical appointment during work time. The Commission requires proof that the claimant reasonably had to miss work in order to attend the medical appointment. In so finding, the Commission has ruled that a claimant who schedules a required medical appointment on a workday, or during work time, may receive temporary total or partial benefits if it is shown

(1) that the medical condition required the appointment during work hours;

(2) that scheduling the appointment at a non-work time would interfere with obtaining favorable work assignments; or

(3) that scheduling the appointment at a non-work time would cause substantial hardship.

The burden is on the claimant to show why his appointment could not have been scheduled on a non-work day or time. Generally, the Commission will find the burden met where there is evidence that the worker tried, unsuccessfully, to schedule appointments around work, the provider has limited office hours available, and/or there is significant travel time involved.

So, before agreeing to compensate workers for attending medical appointment, be sure to confirm the facts. Advise the worker that he must put forth a good faith effort to avoid missing work to attend medical appointments; advise the employer to try to accommodate medical appointments by adjusting work schedules if feasible. If it appears to be a recurring problem with a particular claimant, ask him to make the required showing or effort and necessity before agreeing to pay compensation. Often, this will prompt the worker to miraculously obtain appointments outside of work time without any undue hardship. 

Do I Have to Include That? . . . Calculating AWW

 

Must you include non-Longshore wages when calculating the pre-injury Average Weekly Wage (AWW) for a claim pursuant to the Longshore & Harbor Workers' Compensation Act (LHWCA)? In a nutshell - YES. 

 

The scenario is not at all uncommon when it comes to Longshoremen and other maritime workers who qualify for LHWCA benefits following an industrial injury. It is a cyclical, transient, even sporadic way to earn a living for many. In the year preceding an injury, an employee may work for several different employers, both in Longshore and non-Longshore jobs. So how do we calculate the pre-injury AWW for purposes of determining or paying benefits for lost wages? 

 

Under Section 10 of the LHWCA, there are three methods of calculating AWW. The first method applies to workers who have worked for most or all of the previous year in the Longshore employment. The second method applies to workers who have not worked most of the previous year, but the employer has the records of a similar employee upon which it can base a wage calculation. If neither of the first 2 methods fairly or reasonably approximate the actual pre-injury earning capacity of the injured worker, the judge will resort to the third method located in §10(c) of the LHWCA. This statute is sometimes referred to as the "catch all" provision. 

 

Under §10(c), the judge considers many factors in attempting to approximate an entire year of work for the claimant. It is important to note that the judge has broad discretion under §10(c). For instance, he or she may go back in time beyond one year to determine the worker's actual earning capacity at the time of the injury; and the judge may consider, among other things, the following:

• Actual earnings of the claimant at the time of injury
• Average annual earnings of other similar employees
• Earning pattern of the claimant over a period of years prior to the injury
• Claimant's typical wage rate multiplied by a time variable
• All other sources of income, including earnings from non-longshore employment
• Probable future earnings of the claimant
• Any other fair or reasonable alternative 

 

Using the above factors, the ALJ will arrive at a figure approximating claimant's annual earnings. That figure will then be divided by 52 to reach the AWW. In the case where a claimant has worked both Longshore and non-Longshore employment sporadically for the past year, the ALJ almost certainly will include the non-Longshore wages in order to determine the claimant's actual earning capacity. 

 

One important caveat is that if the employee has wages earned in other employment that are unaffected by the claimant's injury, those wages are excluded from the calculation of annual wage earning capacity. The ALJ must determine whether the injury disables the claimant from all sources of income, or only from his Longshore employment. 

 

The calculation of the AWW is critical in determining the amount of compensation benefits a claimant may be entitled to receive. Therefore, it is important to carefully and accurately calculate the AWW as early as possible once a claim for benefits has been made. 

Back to Basics: Recalling Perini

Coverage under the Longshore and Harbor Workers Compensation Act has a somewhat tortured history. In today's application, we throw around words like "situs" and "status," but when a tough case comes along, it can help to recall the origins of the buzz words by tracing the history of Longshore coverage to see where your scenario fits in - if at all.  

 

How many of you have heard of "Perini coverage?" Do you really know what it is? In need of a quick refresher? Here goes.

 

When the Longshore Act was enacted in 1927, and up until the 1972 amendments, coverage under the Act was determined by the situs of the injury.  If a worker suffered a work related injury upon the navigable waters of the United States, or on a dry dock, regardless of what his job was, he was covered by the Longshore Act.

 

The 1972 amendments expanded coverage landward, “upon the navigable waters of the United States (including any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, building, or repairing a vessel).” The 1972 amendments also added a “status,” or maritime employment, requirement to limit coverage to only maritime employees in the newly expanded “situs.” 

 

But the question arose: is a worker injured upon navigable water, who would have been covered prior to the 1972 amendments, no longer covered unless he can establish that he meets the new “status” requirement?

 

In Perini the Supreme Court held that Congress, in the 1972 amendments, did not intend to withdraw coverage from any worker who would have been covered prior to the amendments.  This is regardless of occupation.  If you are injured in the course of employment "upon the navigable waters of the United States," or on a dry dock, then you are covered by the Longshore Act.  There is no “status” test. This is "Perini coverage." 

 

There are two 'exceptions' to Perini coverage. The first is where the worker is excluded from coverage by an express statutory exception as found in Section 2(3) of the Act. Examples include clerical workers, security guards, and Jones Act seamen. These exceptions were added in the 1984 amendments; if Congress had wanted to overrule Perini, it could have done so at this time, but it chose not to. 

 

The second is a judicial "exception" that has been carved out to varying degrees by the Circuit Courts. It concerns workers who are upon navigable water "transiently or fortuitously" when injured. If the injured worker's connection to the water is tenuous, under certain circumstances, courts have denied Longshore coverage. This a factual inquiry and the outcome can vary by judge, court, and circuit. 

 

So, the bottom line is, if the worker was injured "upon the navigable waters of the United States," and his regular job duties require that he be there, and  he is not excluded by a specific statutory exclusion, then he is covered by the LHWCA.