To those of us working with the act, labor, employers, and the Deputy Commissioners, the present limitation is problem enough. The majority of unscheduled disability claims are based on subjective complaints not confirmed by objective medical findings and not supported by actual loss of wages. The Deputy Commissioner, who, fortunately, is usually a very clever fellow, is faced with the very difficult task of coming up with a nonexistent but theoretical wage loss upon which to base a weekly compensation payment fair to all parties and insurable. At least now he has a $24,000 ceiling to work with. Should he become convinced that the rehabilitated man is limited by 10 percent, he now has a figure to take 10 percent of, and he somehow manages to work it into a weekly permanent partial disability compensation payment. This may work out until the next time the man gets an unscheduled disability injury.

Regarding compensation at the end of the scheduled award (sec. 6 of S. 2485), I believe this would destroy the scheduled award system and greatly increase insurance costs.

What is the purpose of a scheduled award if it is open ended? Again, one is not talking about actual loss of wages. We are talking about a theoretical loss of wage-earning capacity. It is quite common under the present act for a rehabilitated injured employee to receive payment for loss of wage-earning capacity when he is actually earning more postinjury than he was prior to the injury. This is a very common problem now in unscheduled disabilities. The typical back case returns to work without loss of wages. In order to obtain compensation for loss of wage-earning capacity, he has only to say, "I hurt and due to this hurt I cannot volunteer for extra work which I would have been available for if I didn't hurt." It is very difficult to medically prove that a back really doesn't hurt.

Regarding injury following previous impairment (sec. 7 of S. 2485), we frankly confess we do not understand the proposed amendment or the reason for it. Existing section 8(f) of the act has acquired a fairly clear meaning: In cases where a second injury combines with a prior disability to produce total disability, our responsibility is to pay compensation only for the second injury. If the proposed amendment is that our liability for the second injury is either the scheduled compensation award of 104 weeks of compensation, we can live with it. However, we are not certain of the situation if the second injury is an unscheduled one, such as to the back, and it looks to us as though the door is being opened so that we will be, in effect, made responsible for paying permanent and total disability with no ceiling on the amount thereof, even though the second injury, but for the prior impairment, would not have brought about a condition of permanent and total disability.

Regarding augmented compensation for dependent and student benefits (sec. 8 of S. 2485), I believe that it is unreasonable and out of line with most other workmen's compensation acts. I believe it would greatly increase insurance costs, and it would promote malingering. Considering that workmen's compensation disability payments are nontaxable, the raising of disability payments from two-thirds of average weekly earnings to 75 percent would make it unprofitable for a man to terminate his disability. Further, this is a Workmen's Compensation Act and not a welfare program. The purpose of this

act is to rehabilitate an employee to a gainful occupation, not to guarantee that Junior goes to college. Most of our States have tuition-free schools.

Regarding the amendment on time for notice of claims (sec. 11 of S. 2485), this, in effect, repeals the Statute of Limitations. I believe the insurance companies would be very wary in quoting rates on such a situation as they would never be able to close their books. The Longshoremen's and Harbor Workers' Compensation Act is designed to handle claims informally. Frankly, I do not know how you could handle such language as "reasonable diligence should have been aware” in an informal procedure.

Regarding the amendment of fees for services (sec. 12 of S. 2485), I believe the resulting consequence would be the moving away from the informal type of handling presently being done by the Bureau of Employees' Compensation, and a step toward the formal hearing procedure which already burdens us in many State jurisdictions. Certainly the cost of Department of Labor administration would be greatly increased. In my long experience in San Francisco and southern California, the union welfare office, with the assistance of the administrative deputy commissioner, usually does a better job for the longshoremen and harbor workers than the average attorney. The act was originally designed so that the injured man would not need an attorney. However, this amendment will attract attorneys and within 5 years we will have unnecessary litigation to the point where we will need 10 extra deputy commissioners in each district.

PROPOSED SPECIAL CHARGES TO BE PAID BY THE INDUSTRY

In regard to the amendment on special fund (sec. 13 of S. 2485), I have no particular objection to increasing the payment from $1,000 to $5,000.

However, that portion of the amendment providing for assessment for the special fund on each insurance carrier and self-insurer I feel to be extremely unfair and burdensome to the industry. Where now the special fund is watched very carefully by the Bureau, they would suddenly be provided with unlimited funds supplied by industry, and, therefore, could certainly become more liberal. The special fund can be used for purposes not related to the original injury, and I don't believe the Bureau should be given carte blanche spending authority for irrelevant purposes.

I believe that the special fund should be supported mainly from tax

moneys.

As for our industry having to pay for the costs of administering the act as well as for the cost of the safety program (secs. 15 and 16 of S. 2485), I will leave this to other witnesses more eloquent than I am to point out to you the basic unfairness of any such proposals.

RECOMMENDED CHANGES IN S. 2485

In summary, our company most certainly goes along with the Department of Labor and with the longshore unions in its belief that the Longshoremen's and Harbor Workers' Compensation Act should be further improved in those instances where, by reason of changes

in our economy, it is out of line with the fundamental requirements for compensation.

As we see it, there are two primary areas for such liberalization. First, weekly compensation for temporary disability should be increased, though there is no proven need for any increase in the compensation for permanent disability; and secondly, death benefit weekly compensation payments should also be increased but should include a maximum dollar amount. In addition, if the 1-year statute of limitations is presently giving rise to difficulties, as one would infer from the proposed bill, then we would suggest extending the time within which to file claims under the act to 2 years.

As I indicated earlier in my statement, there has not been the time nor have the facilities been available to make cost studies of the effect of the many increases proopsed by S. 2485. Nor have I had an opportunity to undertake a cost study of the effect of the changes which we are suggesting to you.

However, it would be our calculated guess that premium increases due to the increased benefits could be kept to a minimum if our industry was accorded needed changes in the act in other respects. In other words, we are suggesting to you that if the act can be amended and clarified in certain areas which are proving not only difficult to administer but of questionable value when weighed against the cost to the industry as a whole, we can then live with liberalization of temporary disability and death benefits, which, after all, is the main goal labor is interested in. We would, therefore, propose to you that you amend the act in the following respects:

1. Curtail third party actions under section 33 of the act insofar as involving the vessel on which an employee is working and reestablish the basic principle in section 5 of the act that the providing of medical care and compensation benefits is the only and exclusive liability of an employer.

2. Amend sections 8 and 9 of the acts to allow for apportionment for preexisting pathology in determining temporary, premanent, or death benefits with respect to a compensable injury. Only in this way can our industry afford to hire the handicapped and will not have to buy the same disability more than once, as we are now doing.

3. Amend section 8 of the act in various respects in order to get away from the elusive and theoretical concept of "loss of wage earning capacity" and in lieu thereof substitute the concept of "actual wage loss".

4. Defer permanent disability payments or awards until such time as the rehabilitated worker shows an actual wage loss. Exceptions should be made for amputations.

5. Amend section 8 of the act so that a higher compensation rate is established for temporary total disability benefits than for permanent partial disability benefits. Temporary disability and permanent disability benefits are separate entities answering separate needs. They have been locked together too long in the act, and the time has now come to separate them.

6. Amend section 8 (i) of the act to allow the parties in disputed. cases to enter into settlements approved by the district deputy commissioner and thus reduce expensive litigation.

In conclusion, I earnestly recommend to you that your consideration of this bill be held in abeyance pending a study by technicians designated by the Department of Labor, labor unions, insurance companies, and self-insurers, and legal counsel specializing in this field. We have no doubt but that such a group would come up with a package bill which your subcommittee would be proud to sponsor and with which labor and industry could live in mutual satisfaction.

Thank you for your courteous attention, and I will be happy to answer any questions which you may have.

Senator YARBOROUGH. Mr. Robertson, you have a very clear statement where you have broken down your analysis of this bill, the cost part of it, into three areas: that of increasing existing benefits, new benefits, and imposing new parts of costs. You have stated your objections to certain of these and your proposals for changing those. I note with great interest that it is recognized by everyone here present as to weekly payments that some legislation is needed.

In the interest of time I will forego any questions and instruct the staff to prepare a table showing the recommended changes. Objections to certain parts of these are given careful consideration. When the testimony is all in, printed, and the printed volumes are distributed, then we go into an executive session. Under our rules, we must have a majority full subcommittee there. They can't vote by proxy until after you get a majority. After you get the bodies, as it is called, present in majority, then the absent ones can vote by proxy, but not until we have a majority of the subcommittee present.

Senator MORSE. I would like to suggest that we recall Mr. Robertson at 2 o'clock. I have some questions that I will ask him then. We can

recess now.

Senator YARBOROUGH. Can you come back at 2 o'clock?
Mr. ROBERTSON. Yes. I am sorry I took so much time.

Senator YARBOROUGH. We followed you in reading this.

Gentlemen, counsel have conferred with me in the setting up of this matter. The witnesses, that is, most of those from California, have been called first to permit you to catch planes. We hope that the necessary postponement to 2 o'clock will not cause any of you to miss your planes. If it does, we might consider at 2 o'clock for someone else to go before him, thereby not causing anyone to miss a plane.

The hearing will be recessed until 2 o'clock this afternoon.

(Whereupon, the subcommittee recessed at 12:15 o'clock p.m., to reconvene at 2 o'clock p.m.)

AFTERNOON SESSION

Senator YARBOROUGH. The subcommittee will come to order and hearings are resumed on S. 2485 to amend the Longshoremen's and Harbor Workers' Compensation Act.

Mr. Robertson, when we recessed, Senator Morse had a few questions he wanted to ask.

Senator MORSE. Not so much questions as asking Mr. Robertson to supplement the record.

The main thing for the committee is to be sure we have everything in the record we think we will need for the markup executive session. In the course of the early part of your statement you talked about the

insurance cost, difficulty in getting insurance, and the higher premiums required for protection in the case of third party accidents.

I made a note to suggest to Mr. Robertson that he or counsel be sure that they file for this record factual information bearing upon your statement of what the insurance costs are in connection with the third party actions. I think we probably may have it before the afternoon is over, but it occurred to me as you were testifying. We want to know what the evidence is as to what the extra insurance costs are.

Then regarding the amendment on disfigurement you say:

*** 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.

Will this be easy to establish? Isn't there some basis for the allegation that will be made that this compensation is to compensate in part for the disfigurement? I just wanted you to expand that point. I think you ought to go into it in great detail. I should think to demonstrate the actual loss because of the disfigurement wouldn't be so easy to do. But if you think it is, show me how it can be done, how you are going to cover the case in which he seeks a job, doesn't get the job, and while nobody says he doesn't get it because of the disfigurement, he says, “I know why I didn't get the job-they didn't want to have me around with a disfigurement."

Speaking for myself, the committee has to go into the question of what are all the reasons for the compensation for disfigurement. You talk about loss of limbs, but is it sort of a taking of judicial notice that the disfigurement is bound to have an effect on the employability of the individual in some instances?

I am just throwing these out as hypothetical suggestions. I do think that part of your testimony needs to be expanded.

You speak several times about malingering. I respectfully suggest that you file a supplemental statement giving us some data from your files, if you have it, as to how much malingering you really think exists and whether there is a greater amount of malingering in the case of these extra longshoremen that you hire just for short periods of time, or in the case of your regular employees and just how serious a problem it is. We need some specific data rather than the allegation in the testimony.

I want to join the chairman in saying that I think you have provided a very effective contribution in the points you have made for changes in the bill.

That is all, Mr. Chairman.

Senator YARBOROUGH. Are there any questions by minority counsel? Mr. MITTELMAN. I have a few questions.

Mr. Robertson, have you costed out the various provisions of S. 2485 as to how much an increase of premium will cost insurers on each of the proposed amendments?

Mr. ROBERTSON. No, I haven't. I haven't had the facilities to do that. On the temporary rate, the $105 would be a 50-percent increase in thesay, if it were limited to temporary disability it would be a 50-percent increase, and I think the normal insurance underwriter attaches to