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in a compensation order filed by the deputy commissioner" and if this is not what is meant by the proposed amendment then it should certainly be clarified as it will lead to much litigation as was true in Section 33 until the courts spelled out the meaning of it which was later made even more clear in an amendment to the Act itself. Certainly the Bill as now drafted would permit the argument to be made by the Bureau that once an attorney entered into the case and an award was made, whether formally or informally, that legal services for the employee could be ordered paid in addition to the compensation awarded.
Section 13: Special Fund-(a) Amends section 8(d) by adding a new paragraph (6) which provides for payment into the special fund described in section 44(a) of the Act, upon the death of the employee from any cause, when there are no survivors, of any disability compensation due to the employee under a schedule award.
(b) Amends section 44 (c) (1) by substituting $5,000 for $1,000 to be paid into the special fund upon the death of an employee resulting from injury when there are no survivors. Redesignates paragraph 44 (c) (2) as paragraph 44(c)(3) and adds a new paragraph 44(c) (2) providing for assessments for the special fund upon each insurance carrier and self-insurer prorated on the basis of the premiums collected by the insurance carriers from their risks, and in the case of the self-insurers on the premiums they would have paid if they had purchased insurance.
(c) Redesignates the last sentence of section 44 (c) (1), pertaining to the uses to which the fund is put, as section 44 (h).
Comment: This section of the bill amending the Act provides for additional payments from employers and their insurance carriers. The first is to increase from $1,000 to $5,000 the amount to be paid into the special fund upon the death of an employee who leaves no survivors entitled to recover weekly compensation. This would probably not be too onerous an amendment, but the second phase of the amendment provides for the assessment of each insurance carrier and selfinsurer on the basis of premiums collected in any year in which the fund at the beginning of the year has less than $300,000 in it. The effect of this is to require the insurance carrier and self-insurer to serve as guarantors that the fund will have whatever money in it the Bureau wants to carry on the programs entrusted to it in the special fund. Basically, the special fund pays compensation where second injuries are involved and result in total permanent disability and for the maintenance of employees undergoing vocational rehabilitation and for the paying for medical services, prosthetic appliances, etc. for these workers.
The time in which to prepare for these hearings has been too short in which to develop the possible costs involved in this amendment. It is suggested that the Bureau of Employee's Compensation should furnish detailed information on the estimated amount of these proposed assessments for the next 2 or 3 years in order that the possible costs of this amendment may be ascertained. One of the principal problems in this proposed amendment is the extent to which the Bureau will expand the programs covered by the Special Fund if they are given the authority to spend unlimited amounts of money to be supplied by employers and insurance carriers when the employers and insurance carriers will have little, if anything, to say about how or how much money is spent. We believe it is basically unsound to supply any government agency with such a blank check authorization from any group of employers or businesses in this manner.
Section 14: Safety Program-User Charges-(a) Adds new section 41a to provide for an estimate of the cost of administering the safety program by the Secretary at the beginning of each fiscal year.
(b) Authorizes the Secretary to assess the carriers for such estimated costs and deposit collected assessments in a separate fund in the United States Treasury.
(c) Provides for notice of assessments to carriers and payment of assessments within prescribed time.
(d) Authorizes assessment upon carriers proportionate to compensation paid by each carrier in relation to total compensation paid by all carriers in preceding fiscal year.
(e) Provides method for assessments upon carriers who made no compensation payments during immediately preceding fiscal year.
(f) Authorizes adjustment of assessments upon carriers based on cost of administering safety program.
(g) Authorizes making of regulations to carry out the purposes of this section of the Act.
(h) Provides penalties against carriers for failure to keep records and file reports under this section of the Act.
(i) Specifically excepts certain employment from the provisions of this section of the Act.
(j) Requires appropriation before payment of expenses under this section of the Act.
Comment: This section of the proposed amendment is designed to pass on the costs of the government's safety program in the industry only to the insurance carriers. Obvious by their omission from this proposed amendment are the selfinsurers and whether this is an intentional omission by the Bureau or not, we are unable to say. We do not know of any reason why the self-insurers should not be required to participate in the cost of the safety program. Perhaps theoretically, self-insurers spend more money on safety programs than do those companies covered by insurance, but we doubt that this would be a logical basis on which to exclude the self-insurers from participating in these costs. Here again, the time in which to prepare for these hearings has been too short in which to develop the possible costs involved in this amendment, and it is suggested that the Bureau of Employee's Compensation should furnish detailed information on the estimated amount of these proposed assessments for the next 2 or 3 years in order that the possible costs of this amendment might be ascertained. Once again, one of the principal problems in this proposed amendment is the extent to which the Bureau will expand the safety program if they are given the authority to spend unlimited amounts of money to be supplied by employers and insurance carriers when the employers and insurance carriers will have little, if anything, to say about how or how much money is spent. We believe it is basically unsound to supply any government agency with such a blank check authorization from any group of employers or businesses in this manner.
Section 15: Administration Expenses-User Charges-(a) Amends section 45 to provide for determination of the cost of administration of the Act by the Secretary at the end of each fiscal year.
(b) Authorizes prorating administrative expenses of the Act among the earriers and self-insurers based on premiums collected by the carriers and the amount of premiums that would have been paid by the self-insurers if they had taken out insurance.
(c) Provides for assessment of such costs by written notice to carriers and self-insurers.
(d) Provides for payment of assessments by such carriers and self-insurers within a prescribed time after receipt of notice.
(e) Authorizes deposit of collected assessments in a separate fund in United States Treasury and expenditure of administrative expenses.
(f) Authorizes making of regulations to carry out the purposes of this section of the Act.
(g) Provides penalties against carriers for failure to keep records and file reports under this Act.
(h) Extends the provisions of this section of the Act to cover employees insured under the District of Columbia Compensation Act, the Defense Base Act, the Outer Continental Shelf Lands Act (67 Stat. 462), and the Nonappropriated Fund Instrumentalities Act (66 Stat. 139).
(i) Permits placing of funds in depository banks and investment of funds not needed for current requirements.
(j) Specifically exempts costs incurred in administering the safety and health provisions of the Act.
Comment: This section relates to requiring the insurance carriers and the self-insurers to pay the cost of administering the Act. One interesting feature here is that the expenses are to be prorated on the basis of premiums collected by the carriers or the amounts of premiums that would have been paid by self-insurers, whereas under the safety program the assessments upon the carriers for the safety program are to be made in proportion to the compensation paid by each carrier in relation to the total compensation paid by all carriers in the preceding year. Apparently this is some sort of an incentive program insofar as the safety user charges are concerned on the theory that the smaller amounts paid in compensation would result from cooperation in the safety program and therefore such carriers would be rewarded by not having to participate so heavily in the assessment for administering it. Putting the cost of administration on the employers will greatly increase the powers of the deputy commissioner to force employers to make payments which they believe are improper under the threat
of forcing them to go to formal hearings on a large number of cases. Aside from the fact that there is no control on the amount of money that might be spent in administration, making the incurring of costs of no significance or consequence to the deputy commissioner since he knows that in effect the employer will have to pay them gives him additional powers to force dispositions on an informal basis which he does not need as he already has more than enough power to accomplish these informal dispositions.
Once again, the time in which to prepare for these hearings has been too short in which to develop the possible costs involved in this amendment, and it is again suggested that the Bureau of Employees' Compensation should furnish detailed information on the estimated amount of these proposed assessments for the next 2 or 3 years in order that the possible costs of this amendment may be ascertained. Here again, one of the principal problems in this proposed amendment is the extent to which the Bureau will expand its staff and activities if they are given the authority to spend unlimited amounts of money to be supplied by employers and insurance carriers when the employers and insurance carriers will have little, if anything, to say about how or how much money is spent. We believe it is basically unsound to supply any government agency with such a blank check authorization from any group of employers or businesses in this
Section 16: Appropriation—(a) Amends section 46 of the Act to add a subsection (b) authorizing appropriation of $1,420,000 for the fiscal year beginning July 1, 1968 for the separate fund established under section 45 of the Longshoremen Act and (b) necessary sums in succeeding years, for administering the Act with respect to claims for which the Federal Government is liable and sums required whenever sufficient assessments are not collected from carriers and selfinsurers.
Comment: This section is simply to provide the necessary funds for the administration of the Act and theoretically at least to pay the portion owed by the Federal Government for administering the compensation acts for which they are liable. Only the adequacy of the appropriation for administering the government's phase of the Act would seem to be a real issue here if user charges for administering the Act are to be passed on to the industry.
Section 17: Repeal and Renumbering-Repeals section 47, relating to availability of appropriations, and renumbers sections 48, 49 and 50, as 47, 48 and 49. Comment: If user charges for the administration of the Act are passed on to the industry, then it would be proper to repeal this section 47 of the Act which relates to the availability of appropriations for the purpose of administering the Act at this time.
Section 18: Technical Amendment-Makes grammatical change of substituting "or" for "nor" in section 3 (a) (1) of the Act.
Comment: This is simply to correct a grammatical error in the statute and does not make any change in the law.
Section 19: Effective Date-Provides that amendments made by sections 14, 15 and 16 of this Act shall become effective July 1, 1968, and all other amendments six months after the date of enactment.
Comment: The effective date of the amendments provided to become effective on July 1, 1968 are those sections relating to user charges for the safety program (section 14), user charges for the administration of the Act (section 15), and appropriations to establish the fund and to pay the government's share for the cost of administering the Act (section 16). All of the other changes other than the user charges would therefore become effective six months after the date of enactment.
The amendments should also make it clear that the amendments relate only to injuries sustained after the effective date of the amendments and only to death resulting from injuries sustained after the effective date of the amendments. This to eliminate any possibility of a contention being made that the increased benefits are owed on injuries sustained prior to the effective date or to death resulting from injuries sustained prior to the effective date, even though the death may occur after the effective date of the Act.
As the Committee can readily see, much needs to be done before a final decision on the advisability of the amendments proposed by S. 2485 can be made. They require the most careful elimination and/or substantial revision if fair and reasonable amendments which we are certain this Committee seeks, are to be made.
We now turn to a discussion of other areas in which amendments are needed to achieve a fair and reasonable application of the Act to both employees and employers.
ADDITIONAL AMENDMENTS TO THE ACT WHICH SHOULD BE CONSIDERED
The short period of time given in which to prepare for these hearings has not permitted me to attempt to draft the specific language which should be contained in the amendments which should be considered in order to eliminate inequities in the Act. However, I will briefly indicate for the committee those areas in which we believe amendments are needed, and if the committee or its counsel desire for me to attempt to draft the specific language for such amendments, I would be pleased to do so upon receipt of a request from the committee or its counsel. No attempt is made to list such needed amendments in any order of priority or preference except as to the first one which is paramount and absolutely essential. 1.
I have already alluded to the need for amendments to be made to various sections of the Act particularly Section 5 dealing with the allegedly exclusive liability of the employer which has been emasculated and made substantially meaningless by the Courts. They are vitally needed to eliminate the favored treatment now given to persons covered by this Act where they receive not only their compensation but also any damages of an unlimited nature over and above their compensation benefits in most instances from their own employer. The Courts have made the Longshoremen's Act inferior to the employee's rights to recover unlimited damages, and in effect the Act is primarily the means by which the injured employee is able to finnace his law suit either directly against his employer if he is also the shipowner or indirectly against his employer if the employer is an independent contractor. Thus by court interpretation the Longshoremen's Act has substantially become simply a means by which most longshoremen are able to stay off of work until such time as they have finished prosecuting their claim for unlimited damages against their employer either directly or indirectly. As previously mentioned Mr. Scanlan whose testimony will come later in these hearings will deal with the many ramifications of this problem and the much needed solution to them. Suffice it to say that the already over-burdened American maritime industry is in dire need of relief from the inequities being done it directly contrary to the plainly expressed intent of the Congress in the Longshoremen's Act. The employers of persons covered by this Act are subjected to these substantial additional costs and remedies in a manner which is absolutely and completely unknown in any other employer-employee relationship covered by a compensation act. No logical reason or explanation exists for this favored treatment to this one particular class of workers.
While we cannot bring ourselves to believe this Committee will ignore the inequities visited upon the American maritime industry by the courts in the Ryan and YAKA cases previously mentioned, if nothing is done in these areas, other amendments are vitally needed in other sections of the Act to meet many other problems brought about by these decisions which are the subject of continuing litigation.
Section 8(h) which specifically provides how the wage-earning capacity of an employee is to be determined needs to be amended in view of the interpretation made of it by the deputy commissioners under the Act. Section 8(h) provides his "wage-earning capacity . . . shall be determined by his actual earnings if such actual earnings fairly and reasonably represent his wage earning capacity." One would expect from reading this that it was designed to permit the deputy commissioners to find an employee's wage earning capacity to be greater than his actual earnings if he felt the employee was not working as much as his disability would permit. In actual practice the deputy commissioner seldom, if ever, finds a wage-earning capacity in excess of a man's actual earnings. Contrary to its obvious purpose, the deputy commissioners have interpreted this section to permit them to hold that a man's wage-earning capacity is really less than he is actually earning. Thus it has been held, and approved by the Courts, that a deputy commissioner may hold a man's wage-earning capacity to be only, say $50 per week, when in fact he is actually earning more than that, say $100 per week, working as a longshoreman. Such a fictitious finding of a $50 wage-earn-.
ing capacity thus requires the employer to pay compensation for a $50 per week loss of wage earning capacity which the man himself has demonstrated does not in fact exist. Section 8(h) should be amended to prohibit this gross inequity.
Under the Act as now interpreted by the Courts a deputy commissioner is permitted to disregard all medical testimony even when it is all one way and rely on his own observations of the claimant in evaluating his disability. There is no other area in American jurisprudence where a judge or jury is permitted to ignore all of the uncontradicted evidence and decide a controversy on the basis of their own experience alone. Deputy commissioners are neither doctors nor experts in evaluating physical disabilities and the Act should be amended to specifically require their disability ratings to be based on the evidence and not on their own personal feelings unsupported by any evidence.
Section 3 of the Act needs to be amended to specifically provide that compensation is not payable if the injury occurs on a dock or pier which is physically or permanently attached to the land. Attempts are now being made to extend the jurisdiction of the Act to piers and docks on the theory that if there is any water under the pier or dock where the injury occurred the injury occurred "upon the navigable waters" which would give Longshore Act jurisdiction. Only this year two such cases were decided by the Court of Appeals for the Fifth Circuit and much more litigation is in the offing if such an amendment is not passed.
Section 21 relating to the very limited review of compensation orders and particularly that portion which gives the Federal Court the right to enter an interlocutory injunction staying payments of a compensation award is virtually meaningless. This section requires the court to find that irreparable damage to the employer will occur if payments are made and as interpreted by the courts this means the employer will have to show that it will put him out of business if he is required to make the compensation payments while he is accorded due process of law on the appeal. Thus regardless of the meritoriousness of the appeal which the employer may desire to take to the Federal Court, as a practical matter the stay of weekly compensation payments is almost never granted. Although on rare occasions some injunctions are entered staying the payment of the total amount of compensation that has accrued to the date of the order but requiring payment of weekly compensation while the order is on appeal, even here the Bureau and the Department of Justice vigorously contend and in most cases the courts have supported them, that unless making the payments of compensation will virtually make the insurance carrier and the employer insolvent, that the payments cannot be stayed.
This section of the statute should be changed to provide that an injunction can be issued by a United States District Judge where, in his opinion, the stay of such compensation payments pending the appeal is in the best interest of justice when the rights of all parties involved are considered. We have seen compensation orders entered which in our opinion were entered for the sole purpose of requiring the employer to pay compensation until such time as they could prosecute an appeal. The purpose being to put money in the hands of a claimant or his beneficiaries at least for the period of time it would take an employer or an insurance carrier to go to the courthouse and establish that as a matter of law the claimant or the beneficiaries were not entitled to the compensation, money to which the claimants were not legally entitled and which of course the employer cannot recover. Surely we can rely on the United States District Judges to issue these interlocutory injunctions staying compensation payments only when they feel that it is in the best interest of justice when the rights of all parties involved are considered.
Some amendments need to be made in the time periods allowed in Section 14 of the Act with respect to the penalty provisions and particularly in 14(f) where a 20% penalty is provided unless compensation is paid within ten days after it becomes due under a compensation order unless an injunction staying the