Longshore and Harbor Workers' Compensation Act and Related Statutes

DEPARTMENT OF LABOR

Employment Standards Administration

20 CFR Parts 702 and 703

RIN 1215-AA92

Longshore and Harbor Workers' Compensation Act and Related

Statutes

AGENCY: Employment Standards Administration, Labor.

ACTION: Final rule.

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SUMMARY: On May 8, 1995, the Department of Labor published a proposal

to amend the regulations implementing the Longshore and Harbor Workers'

Compensation Act. The amendments are designed to improve administration

and clarify existing policy by: Providing that the district

jurisdictional boundaries would be changed by direct notice to affected

parties; eliminating the requirement for using certified mail in most

circumstances; clarifying that the Office of Workers' Compensation

Programs fee schedule would be used to determine the reasonable and

customary medical charge where there is a dispute; and modifying the

requirement that an employer with geographically different work sites

within one compensation district have only one insurance carrier. The

final rules are being published essentially unchanged from the

proposal.

Effective Date. The rule is effective on November 1, 1995.

FOR FURTHER INFORMATION CONTACT:

Joseph Olimpio, Director for Longshore and Harbor Workers'

Compensation, Employment Standards Administration, U.S. Department of

Labor, Room C-4315, Frances Perkins Building, 200 Constitution Avenue

NW., Washington, DC 20210; Telephone (202) 219-8721.

SUPPLEMENTARY INFORMATION:

Introduction

The Longshore and Harbor Workers' Compensation Act (LHWCA; 33

U.S.C. 901, et seq.) establishes a federal workers' compensation system

for certain workers in covered employment and sets forth 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. The preamble to the proposed rule published

May 8, 1995 (60 FR 22537) sets forth in detail the bases for the

changes to the existing rules, which streamline and improve certain

administrative functions under the LHWCA.

The authority for the administration of the LHWCA granted to the

Secretary of Labor has been delegated to the Office of Workers'

Compensation Programs (OWCP). This authority includes 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. In brief, the changes to the rules affect:

Compensation Districts

The rules will now provide that changes in the administrative

compensation districts can be made by notice to all affected parties

and not through a change in the regulations. This will ensure that, in

this period of rapid change in the way government performs its

functions, the program can rapidly reposition its resources as needed.

Certified Mail

The rules remove the requirement that the appropriate office

(either the Longshore district office or the Administrative Law Judges

(ALJs)) serve via certified mail the notice of deficiency of settlement

applications (702.243(b)); Memoranda of the informal conference

(702.316); and the notice of

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claim given to the employer (702.224). This is an expensive and time

consuming process which has been proven to be unnecessary.

Use of OWCP Fee Schedule

The rules make clear what has been the practice since the 1984

amendments to the Act: that the OWCP fee schedule may be used in

determining the prevailing community rate for the purposes of enforcing

the provision that authorizes OWCP to-direct a change of physician or

the debarment of the physician who submits bills for medical treatment

where the charge exceeds the prevailing community rate for such

service.

Insurance Policies

The rule requiring an employer operating within any one OWCP

compensation district to insure all operations within that district

through a single insurance carrier has been eliminated. Each LHWCA

district is comprised of a number of different states (see current 20

CFR 702.101), while insurance carriers, which are regulated by the

individual states, may not do business or write LHWCA coverage in every

state conforming to the LHWCA compensation districts in which an

operator may have facilities. The result is that an employer's choice

in carriers is limited and the employer could potentially be left

uninsured for a portion of its operations.

Analysis of Comments

Two comments were received. One employer objected to the

elimination of the certified mail requirement, and an individual raised

general concerns with the rules and requested that they be made

effective only prospectively.

The employer commented that the use of certified mail helps ensure

that the employer is not subject to the fines and penalties provided in

the LHWCA for failure to conform with various time requirements. The

commentor suggests that if the Department is removing this requirement,

then it should be the Director's burden to demonstrate when notice was

accomplished.

Contrary to the implication in this comment, the LHWCA does not

condition the employer's obligation to pay benefits (section 14(e)) or

to controvert entitlement to compensation (section 14(d)), on its

receiving written notice of the filing of a claim. Quite to the

contrary, those obligations arise as soon as the employer has knowledge

of the injury or death. Our experience indicates that receipt or non-

receipt of written notice from the district directors, has little to do

with an employer's timely compliance with the statutory obligations.

Further, our experience does not support the assertion that

certified mail is necessary to protect an employer from an unjustified

or unwarranted decision requiring it to pay claimant's attorney fees.

An employer can protect itself from this liability by paying

compensation no later than 30 days after receiving the written notice

from the district director. Prior to receipt of such notice, an

employer cannot be held liable. See: Watkins v. Ingalls Shipbuilding,

Inc., 26 BRBS 179 (1993), appeal dismissed No. 93-4367 (5th Cir.

December 9, 1993).

In general, the postmark showing the date of mailing (and/or date-

stamp showing receipt) may be used to establish a general time frame

within which correspondence was received, if this is necessary to

resolve disputes where time is relevant. For example, we are not aware

of such penalties incurred as a result of not having the conference

recommendation sent by certified mail. The commentor argues that

receipt of notice of a deficiency in a settlement application must be

timely, or the employer could pay the settlement, then not be able to

recoup it. The scenario painted by the commentor (that the deficiency

notice is not received in a timely manner because it is not sent by

certified mail) simply is not relevant. Any delay could exist, whether

or not certified mail is used, and the same problem with recoupment

would exist, whatever the reason for the delay in receipt of notice of

deficiency.

The remotely possible scenarios used to support the employer's

objections are not sufficient to overcome the distinct advantages,

particularly the savings in staff resources and mailing costs,

associated with dropping this requirement. As noted in the preamble to

the proposed rule, 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

recipients should see an improvement in the level of service as

resources now dedicated to certified mailings can be used elsewhere.

The individual, in his comments, requested that the regulatory

changes be applicable only prospectively and that they not apply to

injuries sustained or claims filed before the proposed rules were

published in the Federal Register. It is not the intent of the

Director, that the changes deleting the certified mail requirement be

applied to relieve a party of liability already incurred or to impose

liability where none existed. However, the Director does believe that

it will be appropriate to apply the OWCP fee schedule to pending claims

where such application will assist in resolving outstanding issues. For

these reasons, no change needs to be made to the rules as written.

Conclusion

For the reasons set out in the preamble to the proposed rule, as

amplified by these comments, the Department has determined to finalize

the rule.

Statutory Authority

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

Paperwork Reduction Act

The information collection requirements entailed by the 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,

[[Page 51348]]

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, part 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 Part 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]

2. Section 702.101 removed and reserved.

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

paragraphs (a) and (b) are redesignated as paragraphs (b) and (c) and a

new paragraph (a) is added 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.''

Sec. 702.243 [Amended]

Sec. 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:

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 section 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 section 702.414 and to permit the

Director to direct the claimant to select another medical provider for

care to the claimant.

7. In section 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 section 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). 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.

(1) 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:

(i) where the actual procedure performed was incorrectly identified

by medical procedure code;

(ii) that the presence of a severe or concomitant medical condition

made treatment especially difficult;

(iii) the provider possessed unusual qualifications (board

certification in a specialty is not sufficient evidence in itself of

unusual qualifications); or

(iv) the provider or service is not one covered by the OWCP fee

schedule as described by 20 CFR 10.411(d)(1).

(2) The circumstances listed in paragraph (a)(1) of this section

are the only ones which will justify reevaluation of the amount

calculated under the OWCP fee schedule.

(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. 703.12 [Removed]

8. Section 703.121 is removed.

Signed at Washington, DC, this 22d day of September 1995.

Ida L. Castro,

Deputy Assistant Secretary for Workers' Compensation Programs.

[FR Doc. 95-24078 Filed 9-29-95; 8:45 am]

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