Longshore and Harbor Workers' Compensation Act and Related Statutes

SUMMARY: The Department of Labor proposes to revise the regulations

implementing the Longshore and Harbor Workers' Compensation Act to

improve administration and clarify existing policy. The regulations as

proposed would: provide that the jurisdictional boundaries will in the

future be changed by direct notice to affected parties; eliminate the

requirement for using certified mail in most circumstances; clarify

that the Office of Workers' Compensation Programs fee schedule is the

standard for determining what is a reasonable and customary medical

charge where there is a dispute; and modify the requirement that an

employer with geographically different work sites within one

compensation district have only one insurance carrier.

DATES: Written comments must be submitted on or before July 7, 1995.

ADDRESSES: Send written comments to Joseph Olimpio, Director for

Longshore and Harbor Workers' Compensation, Employment Standards

Administrative, U.S. Department of Labor, Room C-4315, Frances Perkins

Building, 200 Constitution Avenue NW., Washington, DC 20210; Telephone

(202) 219-8721.

FOR FURTHER INFORMATION CONTACT:

Joseph Olimpio, Director for Longshore and Harbor Workers'

Compensation, Telephone (202) 219-8721.

SUPPLEMENTARY INFORMATION: The Longshore and Harbor Workers'

Compensation Act (LHWCA) at 33 U.S.C. 901, et seq., establishes a

federal workers' compensation system for certain workers in covered

employment. The Act establishes the general parameters of the

compensation scheme, including the system for filing claims, the

benefit levels to be paid, and how the liability of the employer is to

be secured. In this connection the Secretary of Labor is given, among

other things, general authority for initial adjudication of disputed

claims, resolution of certain ancillary issues such as disputes

involving the amount charged for medical treatment, and responsibility

for authorizing private insurance carriers to underwrite coverage.

These proposed rules address issues relating to these subjects by: (1)

Clarifying that existing district office jurisdictional boundaries may

be changed by notice to the affected parties; (2) eliminating certain

requirements for using certified mail; (3) using the OWCP medical fee

schedule as a tool to resolve disputes over the amount of medical

bills; and (4) eliminating the requirement that an employer have only

one insurance carrier for each compensation district.

Compensation Districts

The Act (section 39(b), 33 U.S.C. 939(b)) requires that

compensation districts be established, and the regulations currently

contain a listing of the districts and the states covered by them.

These districts have jurisdiction over claims which arise in the states

which fall within that district. The jurisdictional boundaries have

changed periodically as work loads shift and other factors necessitate

a change in the rules to reflect the boundary modifications. The

modifications of the rules, however, have not always followed

immediately after the actual change. For example, two districts were

eliminated and the states therein incorporated into other districts

(see 50 FR, January 3, 1985), and while the changes were purely

administrative, only later were rules modified to reflect these

changes.

With the increasing effort to streamline government, OWCP

recognizes that the boundaries may need to be modified in the interest

of efficiency of operation, and that the process for changing the

boundaries should be flexible. By rescinding the existing description

and providing that any changes in the future will be made through

direct notice provision, the proposed rules would allow changes in the

boundaries to be made more efficiently (without requiring a

republication in the Federal Register), and more effectively (since all

interested parties will be notified directly).

The change represents no substantive change, nor should this

proposal be read as an indication that changes in existing boundaries

are presently being considered. If is merely an attempt to take

advantage of this opportunity to clarify and simplify the process.

Certified Mail

The current regulations require that the Longshore district office,

or Administrative Law Judges (ALJs), as appropriate, serve the notice

of deficiency of settlement applications 702.243(b)), memoranda of the

informal conference 702.316 and the notice of claim given to the

employer 702.224 via certified mail. The proposed rules would drop

these requirements for using certified mail.

While certified mail does not add significantly to the security of

the mail process, the requirement does increase costs and the amount of

staff time it takes to mail a document. Approximately 9,000 pieces of

mail per year must now be sent certified mail under these rules, at a

cost of over $9,000 in extra mailing charges and more in staff time to

complete the necessary Postal Service forms. The service to the

recipients should not be significantly reduced; indeed because it will

no longer be necessary for the staff to complete the mailing forms, the

recipients should see an improvement in the level of service.

Use of OWCP Fee Schedule

The LHWCA provides to the Secretary significant authority for

overseeing medical care of injured employees. The 1984 amendments to

the Act expanded this authority to include ordering a change of

physician or debarring a physician who submits bills for medical

treatment where the charge exceeds the prevailing community rate for

such service. The regulation implementing this provision (702.413)

provides that, where a dispute arises as to whether a bill exceeds the

prevailing community rate, it is resolved by the OWCP Director. The

regulations provide that ``state medical fee schedules for workers'

compensation charges may be [[Page 22538]] used'' (emphasis added) to

determine what is the prevailing rate, but does not bind the Director

or the parties to this methodology.

Since these regulations were put into effect, the OWCP itself has

devised a medical fee schedule which the Department now proposes to use

to determine the LHWCA prevailing rate. The OWCP fee schedule was

enacted in 1986 and establishes a schedule of maximum allowable charges

for most medical services provided to injured workers under the Federal

Employees' Compensation Act (FECA), 5 U.S.C. 8101 et seq. See 20 CFR

10.410 and 10.411 and 51 FR 8276, for a complete explanation of the

background and purpose of the schedule.

In brief, under the fee schedule and billing system, individual

procedures are assigned a descriptor code using the Physicians' Current

Procedural Terminology (CPT) scheme developed by the American Medical

Association. Each code is then assigned a relative value unit (RVU)

reflecting the relative skill, effort, risk, and time required to

perform the procedure. The maximum allowable amount payable for a given

service is calculated by multiplying the RVU by a conversion factor

(CF). This product is in turn multiplied by a geographic index (GI)

which allows for regional variations in medical costs (down to

Metropolitan Statistical Areas) using the Urban Institute's Geographic

Practice Cost Indices (GPCIs).

The OWCP fee schedule has proven itself over time as an efficient

benchmark for determining the prevailing community rate. Indeed, it has

in practice been used by district medical directors in determining

prevailing community rates in LHWCA cases. This rule change, therefore,

merely formalizes an existing practice.

Insurance Policies

The current rules require an employer operating within any one OWCP

compensation district to insure all operations within that district

through a single insurance carrier. Each LHWCA district is comprised of

a number of different states (see current 20 CFR 702.101), the

boundaries of which were drawn for internal administrative purposes.

Insurance carriers, however, are regulated by the individual states and

therefore may not do business or write LHWCA coverage in every state

conforming to the LHWCA compensation districts in which an operator may

have facilities. As a result, the rule requiring only one carrier

severely limits the field from which an employer may choose a carrier,

and could potentially leave an employer uninsured for a portion of its

operations (since, for example, where may be no single insurance

carrier operating in all the states in a district in which the employer

has facilities). See Simpson & Brown, Inc. v. Travelers Insurance

Company. CA No. 93-5287 (D. N.J. 1994) (regulation places the burden of

obtaining one carrier per compensation district upon the employer and

not upon an insurer).

The genesis of the rule appears to be limitations on record

keeping, limitations which have long since been overcome through data

processing and other improvements. OWCP recognizes the difficulties the

existing rule may present and therefore proposes to abolish the

requirement.

Statutory Authority

Subsections 39(a) and 39(b) of the Act, 33 U.S.C. 939(a) and (b),

provide the general statutory authority for the Secretary to prescribe

rules and regulations necessary for administration and enforcement of

the Longshore and Harbor Workers' Compensation Act. 33 U.S.C. 907(a)

provides that the Secretary of Labor may supervise the medical

treatment and care, including determining the appropriateness of

charges.

Classification

The Department of Labor has concluded that the regulatory proposal

is not a significant regulatory action under the criteria of section

3(f) of Executive Order 12866.

Paper Reduction Act

The information collection requirements entailed by the proposed

regulations have previously been approved by OMB.

Regulatory Flexibility Act

The Department believes that the rule will have ``no significant

economic impact upon a substantial number of small entities'' within

the meaning of section 3(a) of the Regulatory Flexibility Act. Pub. L.

No. 96-354, 91 Stat. 1164 (5 U.S.C. 605(b)). Although this rule will be

applicable to small entities it should not result in or cause any

significant economic impact. The elimination of the requirement for

insurance underwriting will provide increased flexibility and

opportunity for covered employers to effect savings. The provision for

determining medical charges is not expected to result in a significant

difference in the outcome from that in the present method. The

Secretary has so certified to the Chief Counsel for Advocacy of the

Small Business Administration. Accordingly, no regulatory impact

analysis is required.

List of Subjects

20 CFR Part 702

Administrative practice and procedure, Claims, Insurance,

Longshoremen, Vocational rehabilitation, and Workers' compensation.

20 CFR Part 703

Insurance, Longshoremen, Workers' compensation.

For the reasons set out in the preamble, parts 702 and 703 of

chapter VI of title 20 of the Code of Federal Regulations are amended

as follows:

SUBCHAPTER A--LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT AND

RELATED STATUTES

1. The authority citation for parts 702 and 703 are revised to read

as follows:

Authority: 5 U.S.C. 301, 8171 et seq.; Reorganization Plan No. 6

of 1950, 15 FR 3174, 3 CFR, 1949-1953, Comp. p. 1004, 64 Stat. 1263;

33 U.S.C. 939; 36 D.C. Code 501 et seq.; 42 U.S.C. 1651 et seq.; 43

U.S.C. 1331; Secretary's Order 1-93, 58 FR 21190.

PART 702--ADMINISTRATION AND PROCEDURE

Sec. 702.101 [Removed and Reserved]

2. Section 702.101 is removed and reserved.

3. Section 702.102 is amended by revising the section heading and

by redesignating paragraphs (a) and (b) as paragraphs (b) and (c) and

by adding a new paragraph (a) to read as follows:

Sec. 702.102 Establishment and modification of compensation districts,

establishment of suboffices and jurisdictional areas.

(a) The Director has, pursuant to section 39(b) of the Longshore

and Harbor Workers' Compensation Act, 33 U.S.C. 939(b), established

compensation districts as required for improved administration or as

otherwise determined by the Director (see 51 FR 4282, Feb. 3, 1986).

The boundaries of the compensation districts may be modified at any

time, and the Director shall notify all interested parties directly by

mail of the modifications.

(b) * * *

(c) * * *

Sec. 702.224 [Amended]

4. Section 702.224 is amended by removing the word ``certified.''

Secs. 702.243 and 702.316 [Amended]

5. Sections 702.243(b) and 702.316 are amended by removing the

words ``by certified mail.''

6. Section 702.413 is revised to read as follows: [[Page 22539]]

Sec. 702.413 Fees for medical services; prevailing community charges.

All fees charged by medical care providers for persons covered by

this Act shall be limited to such charges for the same or similar care

(including supplies) as prevails in the community in which the medical

care provider is located and shall not exceed the customary charges of

the medical care provider for the same or similar services. Where a

dispute arises concerning the amount of a medical bill, the Director

shall determine the prevailing community rate using the OWCP Medical

Fee Schedule (as described in 20 CFR 10.411) to the extent appropriate,

and where not appropriate, may use other state or federal fee

schedules. The opinion of the Director that a charge by a medical care

provider disputed under the provisions of Sec. 702.414 exceeds the

charge which prevails in the community in which said medical care

provider is located shall constitute sufficient evidence to warrant

further proceedings pursuant to Sec. 702.414 and to permit the Director

to direct the claimant to select another medical provider for care to

the claimant.

7. In Sec. 702.414, paragraphs (a) and (c) are revised to read as

follows:

Sec. 702.414 Fees for medical services; unresolved disputes on

prevailing charges.

(a) The Director may, upon written complaint of an interested

party, or upon the Director's own initiative, investigate any medical

care provider or any fee for medical treatment, services, or supplies

that appears to exceed prevailing community charges for similar

treatment, services or supplies or the provider's customary charges.

The OWCP medical fee schedule (see Sec. 702.413) shall be used by the

Director, where appropriate, to determine the prevailing community

charges for a medical procedure by a physician or hospital (to the

extent such procedure is covered by the OWCP fee schedule). A claim by

the provider that the OWCP fee schedule does not represent the

prevailing community rate will be considered only where the following

circumstances are presented: (1) Where the actual procedure performed

was incorrectly identified by medical procedure code; (2) that the

presence of a severe or concomitant medical condition made treatment

especially difficult; (3) the provider possessed unusual qualifications

(board certification in a specialty is not sufficient evidence in

itself of unusual qualifications); or (4) the provider or service is

not one covered by the OWCP fee schedule as described by 20 CFR

10.411(d)(1). These are the only circumstances which will justify

reevaluation of the amount calculated under the OWCP fee schedule. The

Director's investigation may initially be conducted informally through

contact of the medical care provider by the district director. If this

informal investigation is unsuccessful further proceedings may be

undertaken. These proceedings may include, but not be limited to: An

informal conference involving all interested parties; agency

interrogatories to the pertinent medical care provider; and issuance of

subpoenas duces tecum for documents having a bearing on the dispute.

(b) * * *

(c) After any proceeding under this section the Director shall make

specific findings on whether the fee exceeded the prevailing community

charges (as established by the OWCP fee schedule, where appropriate) or

the provider's customary charges and provide notice of these findings

to the affected parties.

PART 703--INSURANCE REGULATIONS

Sec. 703.121 [Removed]

8. Section 703.121 is removed.

Signed at Washington, DC., this 1st day of May, 1995.

Ida L. Castro,

Deputy Assistant Secretary for Workers' Compensation Programs.

[FR Doc. 95-11149 Filed 5-5-95; 8:45 am]

BILLING CODE 4510-27-M