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the facts in regard to the practices in other divisions of the Federal Government and make certain there is really a sound basis for this recommendation in the bill.
I just want to file my caveat on it. I have some reservations about it. What I am asking for is the data that will help me reach a judgment. There are a lot of dangers, I think, in this section of the bill. Mr. Dewey has pointed out some of them.
I think, after all, it is up to the Federal Government to pay for the administrative costs, particularly those involving policing responsibilities in connection with the administration of Federal laws. After all, we have a lot of policing policies at the State and local levels. You pay for them through general taxes, not through those that are involved in the operation of the policing.
If I am right on the major premise, there is the question of whether or not we are dealing with a matter that is charged with public interest. I think there is a public interest involved here and public interest over and above the interest of the shipping companies, the steredoring companies, the longshoremen, and the other workers. There is an obligation here, it seems to me, for payment of the public interest aspect of it by the Federal Government and not by those who are involved in the effects of the policing.
I will change my mind if the memorandum of the committee presents facts that support this division of the bill. I have a lot of reservations on it offhand.
Senator YARBOROUGH. Senator Morse, I am glad you brought this up and pointed it out and put your finger on this problem. Since it involves me, I share your reservations. I recall a couple of years ago, on the budget, they tried to get us in Congress to take the entire cost of the meat inspection law away from the Government and put it on the packinghouses. For your information, all of the meat packinghouses that sold interstate, until we passed the meat inspection law last year, had no inspection. The meat inspection law that we had up until that year was so weak. This was passed under the urgence of President Theodore Roosevelt back in the early years of this, and there has been no provision updating until 1967 or 1968. It was very reak. They recommended that we take that, that the plant being inspected pay for the inspection. I didn't think that was for the protection of the American people. It is properly the job of the Government to police it. I voted against it, and we finally got that portion passed at Government cost. I am glad you pinpointed that.
As chairman I will call for a careful study of this by the staff.
If you have counsel or other advisers with you, economists—you will find in the Senate we have to employ economists as well as economies.
Proceed, Mr. Robertson.
STATEMENT OF DONALD B. ROBERTSON, VICE PRESIDENT, METRO
POLITAN STEVEDORE CO., WILMINGTON, CALIF. Mr. ROBERTSON. Distinguished Senators and counsel, it is a pleasure to be here. Seeing the snow on the ground this morning was really something to a southern Californian. I enjoyed it very much.
Senator MORSE. You can rent skis up here.
Mr. ROBERTSON. My name is Donald B. Robertson. I am from Los Angeles-Long Beach, Calif., harbor areas and am the vice president of Metropolitan Stevedore Co. I have been in the stevedoring industry for 30 years, principally dealing with insurance and claims matters, and have been asked to testify before you today mainly because I am a layman who, on a day-to-day and week-to-week basis, works with the Longshoremen's and Harbor Workers' Compensation Act, and with third-party lawsuits in this field.
The Longshoremen's and Harbor Workers' Compensation Act, like many laws, was a very good one at its inception, but through amendment, the advent of third-party suits, and changing times, it now needs a complete overhauling. It is only because of the fact that over the years the Bureau of Employees' Compensation has been staffed with dedicated, knowledgeable people that the act remains as workable as it is.
One of those very knowledgeable people, Deputy Commissioner O'Leary, is in our audience today.
The initial reaction of myself and others in industry to the proposed amendments is that they appear to have been prepared without consideration to their financial impact on an already depressed industry, and I would add there is no testimony to date in these hearings or any other data that I know of which changes this view.
It would seem to me as a businessman just plain common sense, in view of the complexity of the conflicting interests and the potential of seriously harming an industry, for this subcommittee to set up a study committee to completely review the act and its relative problems over a period not less than 1 year, to hold public hearings in various areas where the act applies as Senate committees do in other industries, and to produce well-investigated and thought-out recommendations. I believe it is impossible to come up with all the right answers after a few days of subcommittee hearings.
There are many serious problems for our industry created or caused by the Longshoremen's Act which I am sure would disturb this subcommittee after a full study as outlined above.
For instance, the advent of the third-party suit has, for all practical purposes in the day-to-day work world I live in, repealed the Longshoremen's and Harbor Workers' Act in injuries of any serious magnitude. Today, regardless of the liability picture, there is a third-party action.
Recently, in chiding a well-known plaintiff's attorney as to the weakness in his case of liability, he told me that this was not a matter of real concern to him in this kind of case because whenever there was a serious injury the sympathetic jury would find liability. And speaking of plaintiff's injury attorneys, I wonder if this subcommittee is aware of the fact that the third-party business in the southern California area is sufficiently attractive and profitable that within a few blocks of the union hiring hall you will find branch offices of many of the big name plaintiff's personal injury attorneys. I can assure you that very few major disability cases, if any, slip through their nets to normal compensation benefits.
In the first 10 months of 1967, 34 percent of our company's personal injury cases with temporary disability of 1 day or more have had to
be reserved as third-party-indemnity-over cases. By this I mean that these particular accidents have or most probably will result in thirdparty actions being filed against the shipowner, and under the existing law whereby the shipowner can obtain almost automatic indemnity against us, we have had to establish insurance reserves to protect us against this liability exposure. In the same period, in those cases with temporary disability of 4 weeks or more, 48 percent are reserved as third-party-indemnity-over cases.
I understand on the east coast, gentlemen, the percentage is markedly increased over this particular study.
What does this mean? It means that where the lawmakers originally planned a simple administrative Workmen's Compensation Act to provide benefits without litigation, we now must in a great percentage of our cases involve at least three sets of attorneys, two insurance carriers, the U.S. Department of Labor, a State or Federal judge, and probably a jury:
This is expensive to all parties concerned, including the American taxpayer, and it is terribly inefficient. Very often 6 months after the judgment the injured man is out of funds and in need of benefits. The only ones with money left are the respective attorneys.
If such cases were left under the watchful eye of the Bureau of Employees' Compensation as originally intended by the act's authors, the injured man would have been protected and rehabilitated back to gainful employment.
I can assure you that individuals in our industry, whose job it is to be concerned with safety and with employees who may be involved in accidents, view third-party actions and the subsequent indemnity lawsuits as a monster created by and for attorneys, in many cases at the expense of the injured, and always at the expense of an already hard-pressed maritime industry.
Over the years the legal doctrine of unseaworthiness, which has been developed in these third-party actions, has been broadened to the point where it amounts to a ship's being held liable without reasonable fault. This liability is then passed on by the ship to the stevedore. As a result, it has repealed, in fact, the Longshoremen's and Harbor Workers' Compensation Act, as far as stevedores are concerned, but it is less controllable.
For contracting stevedores it has become increasingly more difficult to buy third-party-indemnity-over insurance. Our company has been self-insured under the Longshoremen's and Harbor Workers' Compensation Act since its inception. We have no problem with the
purchase of excess coverage for workmen's compensation. However, the thirdparty-indemnity-over coverage market becomes thinner each year. American companies shy away from such underwriting, and very often one must go to London for coverage. The London market is also concerned as to developments.
Now I would like to review with you the amendments to the act which are proposed in S. 2485, which I think of as falling in three categories: those increasing existing benefits, those adding new benefits, and those which would impose new charges or costs upon the entire industry.
Initially, please understand that our company believes that there are provisions in the present act which need to be updated in accordance with current conditions.
We have been in business since 1852, and as long as I can remember, which is 30 years last January 15, the rule has been : When the accident happens in spite of safety efforts, make certain the injured man gets the best of care. We now provide the best medical treatment available to injured employees for injuries in the course of employment and also injuries off the job.
In regard to increasing maximum and minimum weekly compensation benefits (sec. 3(a) of S. 2485), which both the Department of Labor and the AFL-CIO have testified they view as the most important provision in this bill, we recognize that the sum of $70 as the maximum weekly temporary disability compensation is not enough. It should be increased in accordance with the specific recommendations which I would like to leave with you.
However, we feel that the $70 rate for permanent disability is adequate and is a higher rate than almost all State jurisdictions allow. We fully appreciate the fact that the act as presently written, establishes the same maximum weekly disability rate regardless of whether temporary or permanent disability is involved.
On the basis of my experience in the field, and again I am only speaking in the capacity of a layman who has had to live and work with these problems for many years, I would suggest to this subcommittee that the time has come to rethink out the matter of having the same rate for temporary and for permanent disability. The place where the workingman truly needs an increase is in his temporary disability rate. This is the time when he is unable to work and requires compensation benefits in lieu of his wages. Permanent disability awards, whether for scheduled or unscheduled injuries, only come into play after the man has returned to work, and in this area I would say to you that the employees subject to the act are being treated fairly today.
Regarding the amendment on disfigurements (sec. 5 of S. 2485), we agree that it is appropriate to liberalize the areas of compensable disfigurement provided that statutory language is added to the effect that disability payments be deferred until such time as there is a demonstrable actual loss of earnings attributable to the disfigurement. This amendment was probably added for the benefit of District of Columbia coverage rather than for the benefit of longshoremen. In my experience with longshoremen, I recall very few disfigurement cases and no complaints regarding limitations to the present areas.
Regarding the amendment to increase death benefits (sec. 9 of S. 2485), we would again agree that the levels of maximum and minimum death benefits should be increased in relationship to the increases to be made in temporary payments. However, there are two points which I would like to make about the increased death benefits.
First, in the proposed amendments, the framers of this legislation are endeavoring to get away from the fundamental concept upon which the act was predicated, namely, that compensation benefits should approximate two-thirds of an employee's average weekly earnings, and are proposing to increase this ratio to 75 percent. Although I realize that we are more or less playing the numbers game in this regard, I
know of no particular reason why we should get away from the twothirds concept and into the 75 percent concept insofar as death benefits are concerned.
Secondly, I believe that there should be a limit on death benefits such as there is under most State workmen's compensation acts. It seems unfair to an employer without fault to burden him with lifelong death benefit payments to augment social security benefits. Social security was designed to take care of lifelong needs, and that is where the obligation should probably rest. I am in favor of a statutory maximum on death benefits to be included in the Longshoremen's and Harbor Workers' Compensation Act. The State of California, which is considered a progressive State, has a maximum death benefit for a widow with one or more dependents of $20,500. If we are going to go along with the concept that longshoremen and harbor workers are entitled to better benefits than workers in other occupations, possibly there should be a limit of $25,000. We must keep in mind that the Longshoremen's and Harbor Workers' Compensation Act calls for liability without fault. If we are going to confuse workmen's compensation death benefits with social welfare benefits such as social security, should we then not effect a combined limit? Does a person widowed as a result of an industrial death have greater needs than the widow whose husband died in bed as the result of a heart attack?
The proposed legislation appears to embody eight new benefit provisions for employees, six of which I would view as being of a major nature and two of a minor nature.
Taking the minor ones first, with respect to the cost of reexamination (sec. 4 of S. 2485), our company is willing to agree that such cost should be paid for by the carrier or self-insurer. In fact, I don't recall ever refusing to pay such costs in the past. I believe it is the normal practice, at least in our district. However, if the original examination was done by a specialist in the specific field of medicine, and if said specialist was taken from a panel approved by the Deputy Commissioner, then reexamination should not be allowed at the employer's expense. It is conceivable that without the foregoing limitations the Deputy Commissioner would be allowed to shop for medical reports acceptable to claimants.
As for the other relatively minor change as to time for commencement of compensation (sec. Z of S. 2485), we feel that the 28-day waiting period is adequate and should not be changed. However, we would have no objection to eliminating the waiting period entirely in those cases where the injured employee is hospitalized in excess of 24 hours. This would take care of the legitimately disabled longshoreman and give some relief from the malingerer.
We do have malingering on the west coast due to a shortage of registered longshoremen and the fact that the normally unemployed and the strikers from other industries are allowed by the union to work as extra longshoremen for an occasional day or two of work. Wages are high enough to deter malingering among the regulars.
Turning to the major new changes proposed, the most serious one is undoubtedly the one involving the elemination of maximum compensation benefits (sec. 3(b) of S. 2485), which under the present act calls for a $24,000 limitation on compensation benefits payable for any disability less than total permanent disability (the latter having no ceiling and being paid for life).