in full, according to what Congress has set as the value of his hand or of the value of his arm, or whatever partial loss he has had, that then it will be necessary to start paying on a weekly basis for whatever loss of wage-earning capacity the Deputy Commissioner may conclude that he has, as a result of the lost use of this arm or this leg. Here, again, experience under the act indicates that a permanent partial disability rating to a specific member of the body, in my opinion, will in most instances result in an award for partial loss of wageearning capacity to a longshoreman, once the specific period of weeks have been paid out.

This is simply because most Deputy Commissioners, in my experience, believe that if a man has a 25-percent physical disability to an arm or to a leg, that it must, of necessity, handicap him insofar as his earning capacity is concerned.

Here, again, if the $24,000 limit is taken off, as paragraph B of section 3 of the act contemplates, it once again does away with the certain and limited liabilities of the employers that Secretary Peterson referred to repeatedly in the course of her testimony.

It makes once again their compensation uncertain and unlimited. I feel very strongly that this should not be added to the act, and that Congress has kept current the sums payable for loss of specific members of the body, and has done a good job in this regard, so I do not believe that this is either necessary or fair.

It seems to me, if you are going to pay on a basis of a partial loss of wage-earning capacity, it ought to be done on that basis only, and the employer should not be required to pay both for a specific period of weeks and then for loss of wage-earning capacity on top of that.

I would like to specifically call to the committee's attention the facts that if this particular subdivision is inserted in the act as proposed by the present bill, that there are at least three other paragraphs then in this same section that have to be amended to recognize this change, or we are going to have substantial troubles and difficulties in the administration of this act.

Now, turning to section 7 of the bill, the so-called second-injury provision of it, this particular amendment

Senator MORSE. May I interrupt to ask counsel for the committee, both majority and minority, to pay very close attention to the three items which you point out would have to be added to the bill. I think counsel should be ready to advise us in regard to those items as well.

Mr. VICKERY. I believe that the Bureau of Employees' Compensation would probably agree that all three of those, that it is an inadvertent omission from the bill. I feel that this would be the case.

Section 7, the second-injury provision of the act, needs to be clarified, at least insofar as the second portion of it is concerned.

The first portion of it that deals with total permanent disability cases, where specific members of the body are involved, such as the loss of a leg or an arm, or something of this nature, is reasonably clear, and is understandable.

The insertion of the minimum period of 104 weeks, I think, is quite in order, and gives certainty to this particular section of the act. However, it is in the second section of the act then were they attempt to

deal with injuries to the body as a whole. What we refer to as "general efficiency" injuries.

This would be an injury to a man's back or to his shoulder, or to his head, or something of this nature, where payment is made on the basis of a partial loss of wage-earning capacity. Perhaps it is because I am somewhat dense that I cannot understand how this would work in practice, by taking hypothetical cases and attempting to apply it, as you will see from my attempt to explain it in my prepared statement. I just believe that the Bureau should be asked to explain the purpose of the amendment, and how the amendment would actually work as they have it in this bill.

I, frankly, cannot figure this out. It provides for payment of compensation for the second injury, on the basis of a partial loss of wageearning capacity, where you have a general injury.

If you take off all the monetary limits of $24,000, this would mean that the employer at the time of the second injury would have to pay compensation for the rest of his life. And how can he pay compensation for the rest of the man's life, and then pay for an additional 104 weeks?

It is just impossible, and this is what the bill as it now reads, Senator Morse, would call for. So if the monetary limit is taken off, something has to be inserted in this particular section of the statute, or of the bill, to make it reflect exactly what the Bureau intends to happen when you are dealing with an injury to a part of the man's body that is not covered by one of the scheduled periods of weeks contained earlier in the section of the act.

Now in this regard, it was the department's testimony that the purpose of this amendment was to encourage the employment of handicapped workers, by providing a limited period of time in which the employer who employed a handicapped man would have to pay compensation.

Unless I am completely missing the boat as I read this amendment, it is in fact not going to encourage the employment of handicapped, it is going to discourage the employment of handicapped.

Now why do I say that this would be true? For the very simple reason that if you employ a man who already has a physical disability to his back, say of 25 percent, you are employing a man who is much more susceptible to injury.

Now under this section of the act, if he is making enough money to draw the maximum weekly compensation, and he gets another injury while working for you that makes him totally and permanently disabled, combined with his previous disability, the employer must pay $105 a week to that man for the rest of his life, under the provisions of the amendment.

Now as an employer, I don't want to take on this additional responsibility. I want to get men who are fully capable of performing my work, so that I won't have a man more susceptible to injury, when I am going to have to pay compensation if he is injured on my job, for the rest of his life.

Actually, taking off the $24,000 limit in section 3 of the bill, paragraph B, is also going to discourage the employment of handicapped workers. Nobody wants to take somebody on the job who has a previous physical impairment, if he receives an injury on their job, and

they are going to have to pay him compensation for the rest of his life, because everybody knows somebody with a previous back disability, or a previous head disability, is much more susceptible to injury, and it is going to expose them to substantially larger costs insofar as their compensation act is concerned.

The same thing is true as far as section 6 is concerned where you pay for partial loss of wages, after an injury to a specific part of a man's body. That section, too, is not going to encourage the employment of handicapped workers.

It in truth and in fact is going to discourage it. The more you make the liability of the employer uncertain and unlimited as section 3(b), section 6, and this particular section of the bill actually do, the more uncertain and unlimited you make it, the easier it is going to be for employers to say "I ought not to employ handicapped workers because they are more susceptible to injury, and I don't want to take on any of these uncertain and unlimited liabilities to these people who are already susceptible to injury."

There is one other portion of this proposed amendment which I think the committee ought to look at very closely, and that is whether the man's compensation rate is to be determined on his average weekly wages at the time of his second injury, or whether it is to be determined on the basis of his wage earning capacity.

This is particularly true if you have two injuries involved in these cases. For in some instances, the deputy commissioners have held a man's wage earning capacity to be actually less than he is making as a longshoreman. So if you base his compensation on the second injury, on the basis of average weekly wages, rather than on his wage earning capacity, you will wind up with the man receiving compensation for the same wage loss from two different employers.

So this can be cured insofar as this act is concerned by simply providing that the man's wage earning capacity at the time of the second injury will be the controlling factor in setting the compensation rate. The next section of the act, section 8, dealing with augmented compensation for students and other dependents which would in effect increase the benefits from two-thirds to 75 percent insofar as disabled employees are concerned is, in my opinion, in effect, increasing the compensation benefits payable in 90 to 95 percent of the cases to 75 percent of a man's average weekly wage.

As I pointed out in my statement, I think that once you consider social security and withholding tax, that if you pay him 75 percent of his average weekly wages, and he is making $100 a week prior to his injury, then he will be taking home within $7 or $8 a week of what he would have actually been making if he was still on the job.

Now then this sounds like it is a little bit coldblooded; and why should not he get it all? The simple fact is, if a man can take home within $7 or $8 of what he was taking home when he was having to work hard as a longshoreman, there is not going to be too much incentive for him to recover or to exert the maximum effort on his own behalf to rehabilitate himself and to get himself back on the job.

I think two-thirds is certainly a realistic figure, and the other compensation statutes in the other States actually confirm this. Only two State compensation acts at this time have a provision to augment

compensation i fthere are dependents and in both of these States, 65 percent of his average weekly wage is the maximum.

Only three States have a percentage of wages in excess of two-thirds, 22 States use less than two-thirds, and 25 States use 66% percent.

So I submit that insofar as this particular amendment is concerned, that there does not appear to be a reasonable basis in keeping the Longshoremen's Act in line with substantially all of the workmen's compensation acts of the other States for this amendment to be enacted.

Section 9 deals with death benefits and provides for increases in various percentages for widows and minor children, and also the augmented compensation.

I call the committee's particular attention to the fact that here again I question the advisability or the wisdom of increasing to 75 percent even in these death cases for these workmen's compensation benefits.

With the provisions of the Social Security Act as they now exist, it is my experience in actual cases in my area that with the compensation that is now being paid, even at the maximum rate of $70 a week, for a widow and two minor children, approximately, that with social security benefits, in many instances, the take-home pay, or the money actually received by the widow and minor children, exceeds the money that the longshoreman was able to make when he was alive and working, and in one case which I have recently handled and which is presently on appeal to the Court of Appeals for the Fifth Circuit, the widow and the minor children have an actual money income of more than $2,000 a year greater than they had when their husband and father was working as a longshoreman.

So under these, when these two acts are actually taken into consideration, as I think they must be, because the employers are paying 50 percent of the social security rate-it is true that the employee pays a portion of it, too-but when these two benefits are taken into consideration, both social security and weekly compensation, I think that the beneficiaries of deceased longshoremen are amply taken care of by the present percentages contained in the act.

Section 10 relates to the computation of benefits insofar as the payments to alien survivors are concerned. This is also contained in section 9 of the proposed bill.

Now the act provides that if the insurance carrier requests it, the bureau must commute future payments and permit the payments to be made on a lump sum. I think what the Congress should be aware of in connection with this is that if the bill is passed to amend this particular section, and to give the discretion to the bureau to commute these death benefits, not on the basis presently contained in the statute, but in their own discretion, that in fact you will find that there will be nothing conceded, other than the basic 4-percent discount provided by the act, and that if commutation is ordered it will be ordered in full on this 4-percent basis.

I have serious doubts, personally, about the wisdom of this sort of a course, but I am frank to say that I do not know the basis on which the original provision was placed in the act to begin with, and I am somewhat handicapped in commenting on this particular section of the bill.

Senator MORSE. In view of the counsel's comments I am going to ask counsel for the majority to take note of his last observation and supply the committee with a memorandum as to what the history of this particular provision is, and what the original intent of it was. (The memorandum subsequently supplied follows:)

MEMORANDUM ON PROVISION RELATING TO COMPENSATION FOR ALIENS, PREPARED BY COMMITTEE STAFF

"SEC. 9(g) [of the Act] Aliens: Compensation under this chapter to aliens not residents (or about to become nonresidents) of the United States or Canada shall be the same in amount as provided for residents, except that dependents in any foreign country shall be limited to surviving wife and child or children, or if there be no surviving wife or child or children, to surviving father or mother whom the employee has supported, either wholly or in part, for the period of one year prior to the date of the injury, and except that the Secretary may, at his option or upon the application of the insurance carrier shall, commute all future intallments of compensation to be paid to such aliens by paying or causing to be paid to them one-half of the commuted amount of such future installments of compensation as determined by the Secretary."

This section would be amended by section 9(e) [of the bill] to read as follows: "Section 9(g) of such Act is amended by striking the comma after "may" and the words "at his option or upon the application of the insurance carrier shall" and "one-half of".

History of Amendment: Section 9(g) appeared in the original Act of March 4, 1927.

The House bill considered by the House Judiciary Committee, H.R. 9498, did not contain any provision relating to commutation of compensation for aliens. The Senate bill, S. 3170, similarly did not contain this provision. The House Judiciary Committee, however, subsequently considering the Senate bill, substituted its language for that bill. The substitute bill contained section 9(g) as it appears in the present law. The report (H. Rept. 1767, 69th Cong. 2d Sess.) makes no explanation of the section.

Comment: Provisions of this kind are usually inserted to avoid the complications of periodic payments to former employees residing in foreign countries and to permit settlement in line with lower compensation standards in those countries.

Mr. VICKERY. Thank you. Coming from Texas where we have LatinAmerican workers in Brownsville, I would have suspected that I would have had some experience with these particular sections of the act. I have had almost none.

Section 11 of the bill deals with the time for the filing of notice and the filing of claim under the act. The act now provides that notice must be given within 30 days of the injury or the death, and that a claim for compensation must be filed within 1 year of the injury or death, or within 1 year after the last payment of compensation under

the act.

The proposed amendment is designed to provide that claim can be filed within one year after the injury or death, or within 1 year after the injured employee or his beneficiaries should have with reasonable diligence ascertained that there was a relationship between the injury and the death.

Senator MORSE. I am sorry that I have to declare a 10-minute recess. Mr. VICKERY. Yes, sir.

(Whereupon, a brief recess was taken.)

Senator MORSE. The hearing will reconvene.

You may proceed, Mr. Vickery.

Mr. VICKERY. We had just returned to section 11 of the bill, which deals with the notice of claim and the filing of claim in section 13 (a) of the act. The purpose of the amendment is to permit the filing of the