A compensation rate of $121.00 per week would not disturb the benefits of workers earning $153.00 per week, or less, but would, to some degree, alleviate the financial hardships of injured men and their families who are forced to adjust their living standards to a lower level.

We would also stress the point that the best way to eliminate third party suits lies in bringing compensation benefits up to the original intent of the Act, namely, two thirds of the average weekly wage.

One of the compelling reasons for an up-to-date compensation system in the longshore industry is the hazardous nature of the industry.

Over the years, joint efforts by the unions, the employers, and Federal and State agencies have helped to reduce the accident rate in the longshore industry. In calling attention to the hazardous nature of the industry, it must be noted that the U.S. Department of Labor, through its Bureau of Labor Standards, has done an outstanding job under Public Law 85-72 in establishing safety programs and in taking other steps for the purpose of reducing longshore accidents. This program was brought into existence by the 1958 amendments to section 41 of the Longshore and Harbor Workers Act to give the Department of Labor authority to establish an enforceable system of safety rules and regulations for cargo handling. The ILWU is proud of the fact that it pioneered this legislation and had constantly worked closely with the Department of Labor in effectuating safety programs. It is our hope that the accident frequency rate in longshoring can be brought down to a level close to that of the rate for manufacturing industry which in 1964 was 11.9. It is significant that the programs initiated by the Bureau of Labor Standards have brought a downward trend of accidents in the longshoring industry.

We are sure that everyone in the industry takes a great deal of satisfaction in the improved safety record of longshore. At the same time, we feel it only proper that savings of the employers, resulting from the decline of injuries, should now be used to improve the compensation benefits.

While the safety record for the industry has been improving, longshoring remains a most hazardous industry.

We respectfully urge the Subcommittee to give careful consideration to amending S. 2485 to raise the benefit figure to $121.00 per week.

AVERAGE LONGSHORE HOURS AND EARNINGS FOR THE YEAR 1966 BY AREA AND FOR THE COAST [Earnings include vacation pay. Number of men excludes those with no hours)

Senator YARBOROUGH. Senator Morse.

Senator MORSE. Either or both of you can answer my questions if you have a comment you wish to make.

I understood you to say, Mr. Stern, that the primary concern of the union is to get the benefits up, and that you are more interested in the

benefit issue than you are in the other amendments that are to be found in the bill. That does not mean, does it, that you have changed your position with respect to any of the amendments that you have offered within the bill? You are standing on those amendments?

Mr. STERN. We are standing on the amendments. We just wanted to emphasize our main concern is the increased benefits.

Senator MORSE. What about some of those other amendments? That is where I wanted to direct some questions. What about the $24,000 limit item; what is your position on that?

Mr. STERN. Obviously, we feel that the Bureau of Employees Compensation certainly will contact your counsel and if it is around twothirds or, let's say, $121 a week, then it will have been increased to the limit of around $40,000 to $45,000. It goes without saying. We didn't have a figure because we know it would be somewhere around that figure. That is in section 14 (m) of the act.

Senator MORSE. Rather than an unlimited ceiling you want a fixed ceiling, but you are advocating an increase in the $24,000 ceiling? Mr. STERN. That is correct. You see, if you have an unlimited ceiling, we know the hardship it puts on the carrier. We don't particularly care because on a nonscheduled disability it would be pretty hard to get rid of a case, so we will in that particular instance go along with the carriers, provided they agree on a figure that we think is adequate or around $40,000.

Senator MORSE. You are not ready this morning to make any recommendation for a specific figure for the ceiling?

Mr. STERN. This is how we figure. If a man loses his arm he gets 31 weeks at $121 a week. The computation is pretty simple. If it is less than that, there would be a conflict.

Senator YARBOROUGH. If the compensation rate is raised from $70 a week to $105 a week, that is an increase of 50 percent. If we increased the limit of that maximum ceiling from $24,000, about 50 percent, to $36.000, would that protect the workers?

Mr. STERN. Of course, that would be satisfactory. We have no fixed figure and we are willing to leave it to counsel.

Senator YARBOROUGH. The objections we hear here on the unlimited is that leaves the insurance premium unlimited. With the astronomical premiums they would have problems getting coverage other than from Lloyds of London. You are experienced: Do you think they will have great difficulty if there is an open end unlimited amount of getting insurance at any reasonable premium?

Mr. STERN. It would make it hard for the insurance company to set a reserve on an injury if there wasn't any limit.

Senator YARBOROUGH. Where there is an open end and no limit? Mr. STERN. That is correct, sir.

Senator MORSE. One problem that bothers me at the moment. In the course of your testimony you said, in effect, that a good many of the parts of this bill were recommended by the union. I am sure there will be many parts of the bill that will be recommended by the administration under the Department of Labor, but on this particular item of the $24,000, is my understanding correct that neither the employers nor the union want an unlimited amount, and that the fact that the bill does not contain a ceiling must mean that that is the position that was taken by the Department? Am I right in my understanding?

Mr. STERN. The Department in 1955 took the same position. They didn't want a ceiling on 14 (m), and there was a ceiling that has worked pretty well. We don't think it will enhance anything by removing the ceiling at this particular time. There are a couple other things, Senator, if I may, for example, we agree with the employers on the user charge. Senator MORSE. That was my next question. What is your position on the user charge?

Mr. STERN. We feel that the Federal agency should be independent and they wouldn't be able to do an effective job if somebody else is paying the bill, other than the Government and the taxpayers. We feel that the one who pays the bill certainly has a voice in the administration. If the carriers have a voice in the administration of the bill it wouldn't work independent of an injured man.

Senator MORSE. What is your position on the attorney's fee issue? Mr. STERN. I will have to get in a little conflict with the bar association, but we take the same attitude of the employer. An attorney's fee isn't necessary. There aren't that many conflicts, especially on the

west coast.

Senator MORSE. You keep on this bargaining between us and we may get this narrowed down.

What is your position on the statute of limitations issue?

Mr. STERN. We don't care what it is, because I will file a claim for everybody, even if it is 2 years, so I don't mind. You see, we told the employers when we file a claim he has to set up a reserve on a case. It would be cheaper for them to voluntarily extend the statute than have us come into it. Our offices are told to file a claim for everybody. We don't care if the statute is 6 months; once you file a claim the case is open indefinitely. The burden of proof might shift after a year or two. Senator MORSE. What about the people with latent injuries that are not discovered until sometime after? The claim that you file doesn't cover those?

Mr. STERN. Our experience has shown that if a man does not come up with an injury within a year, even a disease, and I have a year to file a claim, if it comes up after that the burden of proof shifts upon us. We have a lot of proving, and in most instances we are unable to prove that after a year he will suffer some effects.

Senator MORSE. You say you file a claim in any event, automatically; that is your practice. We have a bill here that is going to apply around the country to the gulf, and the east coast. That gives me some concern as to the statute of limitations section. I don't know what their practice is. Do they do the same thing in the gulf and east coast?

Mr. STERN. No; they all have attorneys. That is the reason the premiums are so much higher there than they are here.

Senator MORSE. Because of your practice in filing claims, you are saying that you don't consider it very important what the limit of the statute of limitation would be in the bill?

Mr. STERN. That is correct. For example, if the east coast, if the I.L.A. wanted to extend it 2 or 3 years, we would certainly go along with them, but we don't have a definite position on it.

Senator MORSE. I have a blanket question for the record. What other sections of the bill on which the employers have taken a position with respect to amendments, either their proposals or proposals in the bill. itself, are you in agreement with?

Mr. STERN. There is one other section we are in agreement with, and that is the one that deals with the wage loss after a person receives a rating for permanent partial disability, loss of wage earning capacity. That is in this bill and it would tend to keep a man coming back for years and years for the same injury. We would be unable to effectively close a case. You see, under the Longshoremen's Act there is no settlement except under one peculiar section, 8(i). It is hard to come by. There are ratings, so when we have a rating for an injured man for permanent partial disability of one kind or another, for all intents and purposes we are finished with that particular case, but under this section, a man would have a rating and be able to come back every 6 months for loss of wage earning capacity. Our office wouldn't be able to handle these kinds of cases. An insurance carrier would have the same problem and it wouldn't help the injured man, because then he would have to figure out, is it an old injury or a new injury.

I might point out, Senator, for instance, you have heard about back injuries, nonscheduled disability. Let's say a man sprains his back, is off a while and receives a couple thousand dollars. He goes back to work. You all know what longshore work is. A man earns his living with his muscles and back. An incident happens on the job. He makes out a report. The doctor he goes to for this accident puts it on the first injury, and the doctor who treated him for the first injury puts it on the second injury. There is always a conflict. It is something we can't resolve, and as far as medical science is concerned, they are at a loss, too. Under the circumstances, we don't want to compound anything like that, and that is one of the reasons that on the west coast we like to settle these back cases for an adequate sum, something that is fair to the man, to get rid of it.

Senator MORSE. Settle them for a lump sum?

Mr. STERN. That is correct, sir. But you see, under the Compensation Act now he can't get paid for future payments. He can't get his money for future payments. In order to get a lump sum, he would have to be off for quite a while and be working for quite a while, because there are no settlements under the Longshoremen's Act, except in certain instances.

Senator MORSE. The record will show I was talking about a hypothetical situation without any qualification on my own part to render valued judgment. I was seeking information. The point was made that where you have a worker who was injured, resulting in a partial permanent injury, his chances of getting reemployed, after he recovered as much as he could recover from that first injury, were not too good because the employer hesitates to take that type of a handicapped employee on because he may get a second injury. That second injury may be of the nature which, when added to the first injury, makes his further employment impossible as far as employment is concerned, and he then becomes permanently disabled for employment.

Thinking aloud, I threw out a hypothetical. I don't think it makes very much sense, probably, but nevertheless I want your comment on it. In order to avoid the employer being put in a position where you add the two injuries together and you get a permanent disability, is there any way that it can be worked out so that the second injury would be considered independent of the first injury and his compensation for the second injury would be as though it were the first injury, as far as

that particular injury is concerned? Then the employer does not run the risk, if he employs that handicapped person, of ending up with a total disability award, but the man would be receiving compensation for both injuries.

It might very well be, I suppose, in a hypothetical, that the first injury was with "X" company and the second injury with "Y" company. Can you clarify my thinking in regard to this matter and tell us what the union's position is? Do you share the recommendation that was put to us yesterday by the employers?

Mr. STERN. No, sir; I don't. For example, on the west coast the employers keep a master list of all injuries. Let's say a man has an injury to his arm and he receives 15 percent loss of the use of the arm. and goes back to work. A permanent partial disability. In a few years he hurts that same arm. He files a claim in the second case, and there is a thing called apportionment. The employer who is stuck with the second injury to his arm isn't going to pay for the total injury; it is apportioned. The man can't get paid for his old injury again. He has already received 15 percent, so let's say the man sustained the second injury with 25 percent loss of the use of the arm. The second employer only pays 10 percent, because the man has already received. 15 percent.

Every longshoreman is a handicapped worker. Every longshoreman gets hurt to some degree. You file a claim, sometimes it might be off a day, 2 days, sometimes a few months. But you cannot work in this industry without sustaining some injuries.

Senator MORSE. Are you saying to me, Mr. Stern, that the concern I developed in this testimony is without foundation and fact? Suppose there is a handicapped employee who is getting some compensation, we will say for an arm or leg injury or any other injury, and he is hired. That compensation for the injury continues. Then if he gets a second injury, the employer under whom he is working is only responsible for the second injury? He isn't involved in a total disability payment? Mr. STERN. No, sir. There are only two that are nonscheduled disabilities, and those are head injuries and back injuries. They come in a nonscheduled class, and there is no apportionment.

Let's say, for example, a man has an injury to his arm of 30 percent, and then sustains a second injury and he can't work any more. Under the Longshoremen's Act now there is a subsequent injuries claim where the Government, because a man dies and leaves no dependents, the carrier puts a thousand dollars in the fund. He will receive permanent total disability as long as he lives, but not at the expense of the carrier. That comes out of a special fund, but the carrier, in any event, only pays for that particular injury that he is responsible for.

Senator MORSE. Mr. Murnane, you are welcome to supplement anything Mr. Stern says, if something comes to your mind.

Mr. MURNANE. Senator, I never interfere with success. He is doing a good job.

Senator MORSE. You heard our discussion yesterday in regard to this matter of payment by way of pension for partial permanent injury. I think the record shows that it was the position of the employers that they had great reservations about pension payments. Apparently they think there should be lump sum payments. What is your position in regard to a hypothetical where a man is injured and it is a partial