claim within 1 year or after the injury or within 1 year after the last payment of compensation or within 1 year after the date by which a person could have discovered the relationship between the injury and his death, with the exercise of reasonable diligence. This particular amendment as proposed in the bill is fraught with many problems and many difficulties, and in my opinion, will substantially do away the limitations provisions now contained in the act. If it is felt that 1 year is too short a period of time within which to require a claim to be filed, I respectfully submit that this period should be extended, possibly to 2 years. But I think that the very certainty and the very limited nature of the liability which Secretary Peterson was talking about in this act, is going to be done away with substantially by this amendment, insofar as the filing of claims is concerned. In reading her testimony, I had the impression her reference in one place was that perhaps 10 or 20 years later, medical science would discover that there was a causal relationship between an exposure to certain working conditions and a disability that manifested itself that far in the future. It seems to me that for the compensation act to have any certainty, or for it to be subject to any sort of reasonable administration or interpretations, that the flat period of limitation contained in the act should now be maintained, possibly extended to 2 years, but it does not seem fair or reasonable to me, Senator Morse, to say to an employer that anybody who works for you, and is subjected, say, in the loading of various types of cargo possibly to grain dust, or fertilizer, or in our area, sulfur dust, that if medical science 20 years from now discovers that your having worked for me in some way contributed, say, to your lung cancer, which disabled you, that your employer of 20 years before ought to have to pay workmen's compensation benefits. Now, this may sound like an extreme example, and perhaps it is, but even on a smaller scale, it still is fraught with many vices and many difficulties. I believe what this is going to do is in effect destroy the limitation provisions of the act. It is certainly going to lead to the filing of many doubtful claims, on which there is very little, if any, basis to claim a causal relationship, and I think it opens the act up to substantial claims involving in effect fraudulent claims under the act against the employers. I, therefore, respectfully submit that the insertion of a period of time after they reasonably should have discovered the relationship between the injury and the death should not be inserted in the act, but perhaps it would be advisable to increase it from a 1- to a 2-year limitation. Section 12 of the act provides that the deputy commissioner may award legal fees or fees for other services against the employer or its insurance carrier, in addition to the amount of compensation payable where the employee hires an attorney to represent him in connection with his claim. It was not possible for me to tell from the testimony of Secretary Peterson whether this amendment was designed to cover only those awards that are made on a formal basis, after a formal hearing, or whether the proposed amendment contemplates that any time an 88-651-68- -8 employee hires an attorney, the deputy commissioner can require the employer to pay the attorney's fee. I think that we are going to have much litigation over this, unless the amendment is clarified to make it perfectly clear just exactly what they are talking about. This is assuming that the committee concludes that this is an advisable provision to be inserted in the act. I respectfully submit that it is not, and it is not because it violates all concepts of fairness and justice as we know them in the American system; making a party pay attorney's fees for his adversary in order to have an opportunity to present his case in full is to me as a lawyer a shocking concept. It is similar to my being able to recover attorney's fees if I were to sue you, Senator Morse, in connection, say, with an automobile accident. In order to have your day in court, in order to prove your innocence in connection with the automobile collision, you would have to run the risk of having to pay my attorney's fees, in addition to my damages. I think that this is based on an erroneous assumption by the Department that and the erroneous assumption which I think they have made is that all of the formal hearings and all of the informal hearings and conferences which they have to hold in connection with this act are caused by employers and insurance carriers. This simply is not true. Many formal hearings are caused by the employees themselves; many informal conferences are caused by the employees themselves. The Deputy Commissioners call informal conferences on their own, and I think that the fact that under this act between 97 and 98 percent of all of the claims, year in and year out, are adjudicated on an informal basis, without any formal proceedings whatsoever, is a graphic illustration that the employers and the insurance carriers are cooperating fully with the administrative processing of these claims. The Department of Labor's Statistical Division has advised me that in 1966 there were a total of 232 formal hearings. This means, since there were approximately 11,000 disabling injuries in that year under the Longshoremen's Act, that only 2 percent of the injuries that were entitled to compensation had to be heard at a formal proceeding to determine the rights of the parties. Ι To me, I think this is a remarkable record. Out of 11,000 injuries, I guess I am skeptical enough to think that you would almost have 2 percent about which there would be extreme doubt as to the basic validity of the claim, and this is the type of thing that basically is litigated under the Longshoremen's Act in these formal hearings. The same situation existed in 1964 and 1965; 97 percent of the claims were paid on an informal basis. I do not think that what the Bureau hopes to accomplish here, cutting down the number of formal hearings, is either necessary or will be accomplished by this amendment. I think once the deputy commissioner is put in the position of being able to assess attorneys' fees against the employer and the carrier in addition to weekly compensation, that you are going to find more lawyers coming in on behalf of the employees, you are going to find more employees being unwilling to accept informal adjudication of their claims, and you are going to find more of these cases being forced to formal hearings than we have at the present time. I think that this is going to work a substantial hardship insofar as the administrative processes under the act are concerned and, additionally, in my opinion, it gives to the deputy commissioner a tremendously powerful weapon to try to force employers and insurance carriers to make payments under the act which they do not believe are justified under the evidence or the facts of a particular case, under the threat, if they do not accept his informal recommendations, that they will tax the attorney's fees against the employer and the insurance carrier. The fact that they only have to try 2 percent of 11,000 injuries in the course of a year, is to me, graphic evidence of the fact that the deputy commissioners already have enough power to force informal adjudications, informal dispositions of the claim, which they consider to be fair and reasonable both to employee and employer, that this particular amendment to the act is not needed, and is not necessary, and I submit is contrary to all our basic concepts of justice, in our American systems. Senator MORSE. The Chair assigns to counsel of the committee the preparation of a memorandum dealing with this proposed amendment, and with the argument that counsel for the employers has made with respect thereto, the memorandum to cover the following points: Do the research necessary to advise the committee if such a provision exists in any comparable legislation, Federal or State; second, the history of that legislation, if such exists, and the experience that has been developed under it. I think we need to know more than the record shows yet as to the background of this amendment with the experiential precedents that exist relative to it. I think that is going to be needed for an intelligent discussion of it by the committee in the markup stage of the bill. (The memorandum subsequently supplied follows:) MEMORANDUM RELATING TO THE ADDITION OF ATTORNEY'S FEES TO COMPENSATION AWARDS PREPARED BY COMMITTEE STAFF Section 12 of S. 2485 provides that section 28 (a) of the Longshore Act shall be amended by adding a new sentence, as follows: "In cases where an award is made or increased after payment under the Act is resisted, a claim for legal services approved by the deputy commissioner or a court shall be added to the compensation award and become a lien upon such award in the amount so fixed." States With Laws Providing for Payment of Fee for Employee's Attorney by Employers or Insurers 1. North Carolina, 1931. Sec. 97, 88 General Statutes of North Carolina. Provides costs to the employee, including reasonable attorney's fee of unsuccessful review, or appeal proceedings brought by insurer, may be ordered to be paid by the insurer. 2. Florida, 1941. § 440.34 Florida Statutes. Provides reasonable fee for employee's attorney at expense of employer or insurer when payment of compensation is unsuccessfully resisted. 3. Nebraska, 1941. § 48-125 Nebraska Revised Statutes. Provides that whenever the employer refuses payment, or when the employer neglects to pay compensation for 30 days after the injury, and proceedings are held before the compensation court, a reasonable attorney's fee shall be allowed the employee by the court. 4. Idaho, 1945. § 72-611 Idaho Code. Provides that if employer or insurer contests claims without reasonable grounds fees for employee's attorney fixed by Industrial Board will be assessed against resisting party. 5. New Jersey, 1945. § 34-15-64 New Jersey Revised Statutes. Provides the Commission may allow a reasonable attorney's fee not exceeding 20 percent of the judgment. When, however, at a reasonable time prior to any hearing, compensation has been offered and the amount then due has been tendered in good faith or paid, the reasonable allowance for attorney's fees shall be based upon only that part of the judgment or award in excess of the amount of compensation already offered or paid. When excess if less than $200, an attorney's fee may be allowed not in excess of $50. 6. New Mexico, 1955. § 59-10-23 New Mexico Statutes. Provides fee for employee's attorney fixed by the court at expense of employer or insurer if employee collects compensation through court procedure in excess of that offered in writing by an employer 30 days or more prior to trial. 7. Alaska, 1959. § 23.30.145 Alaska Statutes, Alaska Workmen's Compensation Act. Provides on controversial claims, the Board may direct the fees to be paid by the employer or insurer in addition to award on amount of compensation controverted and awarded. 8. Arkansas, 1959. Sec. 81-1332, Arkansas Statutes. Provides on controversial claims, the Commission shall direct the fees to be paid by the employer or insurer in addition to award on amount of compensation controverted and awarded. 9. Indiana, 1965. § 40-1516 Indiana Statutes. Provides where Industrial Board determines upon hearing of a claim that employer has acted in bad faith in adjusting and settling an award or whenever Board shall determine upon hearing that employer has not pursued settlement of claim with diligence and compensation has been awarded, Board shall fix the amount of claimant's attorney's fee against employer or insurer. 10. Connecticut, 1967. § 31-300 Connecticut General Statutes. Provides when claimant prevails and Commission finds that employer or insurer has unsuccessfully contested liability, the Commission may allow to the claimant a reasonable attorney's fee. History History of the State legislation regarding attorney's fees is not available. The following excerpt from Larson's Workmen's Compensation Law, § 83.11, may be helpful in revealing the theory guiding employer liability for employee's attorney fees. "When this practice [payment of attorney's fees] is superimposed upon a closely calculated system of wage-loss benefits, a serious question arises whether tht social objective of the legislation may to some extent be thwarted. The benefit scales are so tailored as to cover only the minimum support of the claimant during disability. There is nothing to indicate that the framers of the benefit rates included any padding to take care of legal and other expenses incurred in obtaining the award.” Relevant Experience as to Attorney's Fees Under State Workmen's Compensation Law The 1965 Annual Report of the Florida Industrial Commission indicates the following: Amount of fees for employees' attorneys paid in 1965- Number of cases contested_ $3,578, 649 6.523 20.827 Average amount of fee- Total number of injuries reported-- $549 243.129 Mr. VICKERY. I believe there is one State that has such a provision. I believe Florida is the only one I am aware of, but I would not want either the committee or its counsel to accept that as being the only State. I am aware that there is such a provision in Florida. The next section of the bill deals with the special fund which is set up to pay compensation in total permanent disability cases, where second injuries are involved, and to pay for certain vocational rehabilitation costs, and medical prostheses and supplies, under certain circum stances. The proposal in the bill, as introduced, increases the present $1,000 to be paid upon the death of an employee who leaves no survivors entitled to weekly compensation up to $5,000, and further for the assessment of each insurance carrier and self-insurer, in such a way as to maintain the fund at the beginning of each year at not less than $300,000. In effect, this requires the insurance carriers and self-insurers to serve as guarantors that the fund will have whatever money in it the Bureau of Employees' Compensation wants to carry on the programs which have been entrusted to it in the special fund. Here the cost factors are also in the process of being determined. One of the principal problems in this proposed amendment involves the extent to which the Bureau of Employees' Compensation would expand the present programs covered by the special fund, if they are, in fact, given unlimited amounts of money from insurance carriers and self-insurers, under the act, which as now drafted would give these carriers and employers absolutely nothing to say about how or how much money is spent. The associations which I represent believe it is basically unsound to supply any governmental agency with such a blank-check authorization to draw on the funds of any group of employers or businesses in this manner, and the bill as now drafted does exactly this. I think the solution to the problem of the special fund being administered by the Bureau can be handled very simply without the assessment which is proposed in the present bill, and this, by increasing the $1.000 now ordered to be paid where there are no surviving beneficiaries to a figure of $3,000 to $4,000, provided this is coupled with some substantial changes and revisions in the administration of the special fund by the Bureau of Employees' Compensation. This fund, the cost of administering this fund, in the last 6 years, has been staggering. During the last 6 years, the administrative costs of this fund have been $392,000. The benefits paid to injured longshoremen for whom this fund was set up totaled $211,000. For every $1 of benefits paid out of this special fund in the last 6 years, the Bureau has spent $1.90 in administering the fund. It seems to me that this is a rather shocking and a staggering statistic and figure. Senator MORSE. It certainly is a figure that causes this chairman to seek explanation. You may not know, but others that have appeared before me from time to time do know, that when I run hearings, I run seminars, and I have a habit of assigning term papers with very short terms. So I am only making the assignments this morning, thus far, Mr. Vickery, to our counsel, but I certainly want another memorandum, and I want you to know that you are not excluded from this assignment, I say to our able minority counsel. I would like a memorandum on this matter. I think you should include in that memorandum a request to the Bureau itself for explanation of this administrative cost, based upon this testimony, and also add to the memorandum whatever else you think would be helpul to the committee in understanding this administrative cost. I want Mr. Vickery to know that although at this point I am not assigning a term paper to him, we would be very glad to receive any additional memorandum |