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CHAPTER 3-202 - SECTION 10(F)

1. Purpose and Scope. This Chapter provides the procedures for making the annual October 1 adjustments for those individuals receiving permanent total disability and death benefits. These individuals are entitled to have their weekly compensation benefits increased by a percentage determined by the Secretary of Labor based upon the increases in the National Average Weekly Wage (NAWW). These procedures apply to all cases entitled to October 1 adjustments whether payments are made by the Special Fund or by the EC.

2. Statutory Provisions.

a. Section 6(b)(3) of the Act provides that as soon as practical after June 30 of each year and no later than October 1 of each year, the Secretary shall determine the NAWW for the three consecutive calendar quarters ending June 30. This determination becomes the applicable NAWW for the period beginning October 1 of that year and ending with September 30 of the following year.

b. Section 10(f) provides that effective October 1 of each year, the compensation or death benefits payable for permanent total disability or death arising out of injuries subject to the Act shall be increased by the lesser of:

(1) A percentage equal to the percentage (if any) by which the applicable NAWW for the period beginning on such October 1, as determined under section 6(b), exceeds the applicable NAWW, as so determined, for the period beginning with the preceding October 1; or

(2) 5 percent.

c. Section 10(g) provides that the weekly compensation under section 10(f) shall be fixed at the nearest dollar. No adjustment of less than $1.00 shall be made, but in no event shall compensation for death benefits be reduced.

3. Cases to be Adjusted by National Office. On or about October 1 of each year, subsequent to the NAWW determination, the NO will compute and make adjustments on all cases on the Special Fund roll at that time. This will include sections 8(f), 18(b), and 10(h) cases (see PM Chapter 3-203 for further information). These individuals will receive direct adjustments from the Special Fund followed by a letter explaining the basis for the increase and the amount of the increase. A copy of the letter will be sent to the DO for review and filing. The DD should promptly notify the NO with respect to any discrepancies or changes. Such notification must be in writing.

4. Cases to be Adjusted by District Offices. During the month of October each DO, upon receipt of the necessary notification and information from the NO via a LHWCA Bulletin, will compute and have adjustments made for all permanent total disability and related death cases not listed in paragraph 3.

5. Procedures. The procedures described in the following paragraphs are to be followed in computing and implementing the annual section 10(f) adjustments. The steps included in these procedures are:

a. Annual Bulletin. Each year the LHWCA NO will issue a Bulletin providing the new NAWW, annual percentage increase and other information necessary to make the annual adjustments and distribution of Form Ltr. LS-521, Notice to Employer/Carrier and Payee/Beneficiary of Annual Adjustment in Weekly Compensation Rate (Exhibit 42, PM 10-200) revised for the current year's adjustment. The printed supply of the revised Form LS-521 will be sent to the DO in a separate mailing.

b. Notification of EC. Each DO notifies the appropriate Employer/Carrier of the section 10(f) increase and amount of adjusted weekly award and instructs them to pay the increased benefits (Form Ltr. LS-521 in duplicate). A thirty day call up will be placed on the case. The LS-521 will be sent to the local or regional office paying benefits. This form letter instructs the EC to return a copy of Form Ltr. LS-521 to the DO after filling in the certification portion on the reverse side of the letter. The information to be returned indicates that the adjustment has been made and the date of the adjustment payment. The DOs will verify that the certification has been made and the date of the adjustment made. The EC should promptly be notified if the certification portion is incomplete or not completed. (See paragraph 7, below.)

c. Notification of Chief Beneficiary/Payee. At the same time that the DO releases the LS-521 to the EC, a copy will also be released to the chief beneficiary/payee. While the contents of the letter are primarily directed to the EC, a paragraph has been included which indicates to the chief beneficiary or payee that a copy of this letter serves as notification of the annual adjustment.

6. Annual Section 10(f) Bulletin. A LHWCA Bulletin will be issued each year as early as possible before October 1 notifying the DOs of the NAWW for the period applicable to that date and other information for adjusting PTD and related death cases under section 10(f). Since the amount to be adjusted and the percentage by which benefits are increased vary each year, examples of the current section 10(f) increase, including calculations will be provided as an enclosure to the Bulletin.

7. Procedures for Form Ltr. LS-521. Each year DOs will notify eligible beneficiaries and the EC of the appropriate section 10(f) adjustment. (See subparagraphs 5b and 5c, above.) The steps included in these procedures are:

a. Prepare Form Ltr. LS-521 in quadruplicate.

b. Provide all data required at the top of the Form Ltr. LS-521, including the amount of weekly increase and the amount of the adjusted weekly award.

c. Type Name and address of EC on Form Ltr. LS-521. Since a copy of this letter is also to be sent to the claimant, it may be desirable to also type name and address of the payee under that of the EC. However, this is optional since such action may preclude the use of window envelopes.

d. Send the original and one copy of Form Ltr. LS-521 to the EC. At the same time, send a copy to the chief beneficiary/payee.

e. Place the fourth copy of Form Ltr. LS-521 in the case file, indicating in some manner that Form Ltr. LS-521 was sent to both the employer/carrier and to the chief beneficiary/payee and the date sent.

f. Place thirty day call-up on the case file.

g. When the copy of Form Ltr. LS-521 has been received from the EC by the DO and the certification portion verified as properly completed, and noted on the copy of the form letter, place the copy in the case file.

8. Follow-Up on Form Ltr. LS-521. If the form letter is not returned by the EC within thirty days from the date of notification, the insurer shall be queried as to the action taken or reason for failure to take action. (See subparagraph 7f, above.)

9. Unrelated Death. Under the provisions of Pub. L. No. 92-576, which became effective on November 26, 1972, section 9 provided that "if the employee who sustains permanent total disability due to the injury thereafter dies from causes other than the injury "the survivors are eligible to receive death benefits. However, the Director accepted the position of the Benefits Review Board in Witthuhn v. Todd Shipyards, 3 BRBS 146 (1976) and Egger v. Williamette Iron and Steel, 2 BRBS 247 (1975), that annual adjustments under section 10(f) do not apply to death benefits if the death was not causally related to the employment injury. This provision is applicable to unrelated deaths that occur between November 26, 1972 and September 27, 1984. Public Law No. 98-426 which became effective on September 28, 1984 amended section 9. There is no provision in the amended section 9 for the payment of death benefits to survivors when the claimant dies from unrelated cause while receiving permanent total disability benefits.

10. Application of Holliday Decision. In the case of Holliday v. Todd Shipyards Corp., 13 BRBS 741, 654 F.2d 415 (5th Cir. 1981), the United States Court of Appeals for the Fifth Circuit held that the initial permanent total disability rate should include all intervening section 10 (f) adjustments occurring during the period of previous temporary total disability.

Holliday was reversed in the Fifth Circuit, Phillips v. Marine Concrete, 23 BRBS 36(CRT)(5^th Cir. 1990) and the Benefits Review Board found that it is no longer applicable in the D.C. Circuit, Bailey v. Pepperidge Farm, Inc., 32 BRBS 76. However, it still remains applicable to cases arising in the Eleventh Circuit. It is our policy to apply Holliday only to those cases governed by the Eleventh Circuit.

In order to calculate benefits in accordance with Holliday note the following example. A claimant is injured on August 1, 1981 with an average weekly wage of $300.00 per week. He/she reaches maximum medical improvement on August 1, 1984 and is declared permanently and totally disabled as of that date. The claimant is paid temporary total disability benefits from August 1, 1981 through July 31, 1984 at the rate of $200.00 (66 2/3% of $300.00). Effective August 1, 1984, the claimant receives the benefit of the annual adjustments for 1981, 1982 and 1983 and would receive $240.00 per week. Effective October 1, 1984 the rate would increase to $252.00 per week. If Holliday were not applied to the case, effective August 1, 1984, the claimant would still receive $200.00 per week and on October 1, 1984, the rate would increase to $210.00 per week. In both examples once the initial rate for permanent total disability is established, each October 1, thereafter, the claimant's weekly entitlement is increased by the percentage increase in the NAWW (limited to a maximum of five per cent).