Division of Longshore and Harbor Workers' Compensation (DLHWC)
CHAPTER 6-201 SECTION 8(F)
1. Purpose and Scope. This Chapter contains the procedures associated with requests for relief under section 8(f) of the Act. These procedures cover: the request for relief, section 8(f)(3) and 20 C.F.R. section 702.321(b); the application, 20 C.F.R. section 702.321(a); and the consideration of the application by the DO.
a. Absolute Defense. Public Law No. 98-426, the Longshore and Harbor Workers' Compensation Act Amendments of 1984, made a significant change in how the issue of section 8(f) relief is handled. Section 8(f)(3) of the Act now reads:
Any request . . . for apportionment of liability to the special fund established under section 44 of this Act for the payment of compensation benefits, and a statement of the grounds therefore, shall be presented to the deputy commissioner prior to the consideration of the claim . . . .
Failure to comply with this requirement will be an absolute defense to the liability of the Special Fund.
When section 8(f) of the Act was amended Congress intended:
to encourage employers to raise the special fund issue early in the claims adjudication process, in order to assure the deputy commissioner and the Director of OWCP the opportunity to examine the validity of the employer's basis for seeking special fund relief. H. R. Rep. No. 1027, 98th Cong. 2d Sess. 31 (1984).
The regulations developed by the Department to implement this section of the Act, 20 C.F.R. section 702.321, are meant to insure that the accompanying statement of the grounds is complete enough so that the DD, and the Director, OWCP have sufficient evidence to examine the validity of the request for relief. In formulating these regulations the Department wanted to balance the needs of the claimant for a speedy formal hearing where benefits are not being paid and the needs of the EC for adequate time to develop their section 8(f) application. When reviewing cases where section 8(f) relief is an issue the DO is to apply the regulations and these procedures in a manner consistent with the Congressional intent noted above and consistent with the Department's desire to mediate the apparently conflicting needs of the claimant and the EC.
b. Combining Section 8(f) Relief with Settlement Under Section 8(i). Section 8(f) relief is not appropriate where the parties have entered into a section 8(i) settlement (see section 8(i)(4)). However, some district offices have been presented with applications for section 8(f) relief for hearing loss combined with section 8(i) settlement for the employer/carrier for their portion of the hearing loss. This situation has been reviewed and it has been determined that approval of such applications conflicts with the statute. Section 8(i)(4) precludes an employer or carrier from seeking relief from the Special Fund after reaching settlement with a claimant in a case that would ultimately be assigned to the Fund.
In enacting section 8(i) Congress expressed its specific intent to overturn the decision in Brady v. J. Young & Co., 16 BRBS 31 (ALJ) 1983 (See also 17 BRBS 46). This decision ordered the Fund to reimburse the employer for all sums paid to the claimant under the approved settlement, minus 104 weeks of compensation, finding the employer otherwise entitled to such relief. Congress added section 8(i)(4) to the statute to prohibit Special Fund contributions to section 8(i) settlements and thereby reduce the possibility of collusion or fraud between the settling parties and to ensure that the employer acknowledges its actual liability to the claimant before it requests section 8(f) relief.
Of course, an employer is always free to settle a claim. However, a section 8(i) settlement, which discharges the employer's potential liability, also discharges the potential liability of the Special Fund, which is only derivative.
The objection that may be raised when we deny these applications is that we may prevent a claimant from receiving any compensation at all, since an employer may be willing to pay a reduced amount in order to avoid litigation, but unwilling either to pay the full amount of compensation or to give up relief under section 8(f). But whether or not litigation might be avoided in a particular case, it is our role to ensure that the statutory prohibition against fund contributions to settlements be followed. It is also our role to administer the Act in as even-handed a manner as possible, and thus to ensure both that claimants receive the benefits they are entitled to, and to ensure that claims not be improperly placed in the fund, where costs are spread over the industry rather than borne by an individual employer without the findings required by section 8(f).
(1) Contingent Relief. Thus, if an employer applies for section 8(f) relief but is unwilling to agree to the entry of a compensation order, or to pay the full amount of benefits claimed without such an order, and it is otherwise appropriate to grant such relief, section 8(f) relief may be granted CONTINGENT ON THE ENTRY OF A COMPENSATION AWARD FOR PERMANENT DISABILITY. The following language is suggested to be used in referral letters when contingent relief is appropriate if the case is appealed to the OALJ:
Section 8(f) has been considered and in the event the Administrative Law Judge assigned the case determines that a compensation order, awarding benefits for permanent disability (excluding a nominal award), is appropriate, the Director agrees to the application of section 8(f) relief and payment by the Special Fund. See Todd Shipyards Corp. v. Director, OWCP (Poras), 792F.2d 1489 (9th Cir. 1986) (an employer is not entitled to section 8(f) relief from a nominal award because, as a matter of law, any pre-existing permanent partial disability can not materially contribute to the current disability.) In such event, payment by the Special Fund should commence 104 weeks(or the appropriate period if a scheduled award) after the date the evidence establishes that the claimant reached maximum medical improvement. In no event does the Director agree to the application of section 8(f), or payment by the Special Fund, in any settlement of the claim. 33 U.S.C. 908(i)(4).
While it may be appropriate to determine that the requirements for such relief have been established, it is nevertheless also always necessary to defer actual approval until compensability has been determined and embodied in a compensation award, or until the employer has agreed to pay the full amount of benefits claimed. If the parties, in good faith, want to compromise on any of the findings underlying section 8(f) relief, including the nature and extent of the claimant's disability, and the settlement is approved under section 8(i), the employer has no entitlement to section 8(f) relief.
If the parties cannot agree to the entry of a section 8(i) award, because the claimant believes he is entitled to the full-uncompromised award, the case must be referred to formal hearing. If section 8(f) would be otherwise appropriate in the absence of a section 8(i) settlement of the claim, the Solicitor's office should be alerted to inform the ALJ that the Director agrees to section 8(f) relief contingent upon an award of permanent disability.
(2) Hearing Loss Cases. In hearing loss cases, you may enter a compensation award that grants section 8(f) relief, based upon a stipulation of facts that you approve. The award, however, should not be based on a compromised disability rating for less thatthe record reflects simply because one side theorizes that it can seek another audiogram which will show the compromised rating. Instead, the district office should make a factual determination, based on the evidence, regarding the appropriate level of compensation. For example, if audiogram X establishes the preexisting hearing loss; audiogram Y establishes an increased disability rating; but audiogram Z indicates a lesser amount of disability than audiogram Y, it is up to you as the fact finder to determine which of these audiograms is reflective of the degree of hearing loss or whether an amount in between may be the appropriate amount. If the parties agree with your assessment of the appropriate amount, you may then issue a compensation order which also grants section 8(f) relief, allocating the amount payable by the employer and the Special Fund. In such instance, because you have resolved the issue by findings of fact and not by approving a compromise of liability, this is not a settlement and should not be characterized as a section 8(i) order, or an approval of a section 8(i) agreement.
When the parties request approval of a settlement agreement order based upon a preexisting audiogram and a subsequent audiogram, if you determine that the stipulated amount is not adequate, deny the request for approval. Your referral to the OALJ should, of course, explain why the stipulated amount is inadequate. The referral to the OALJ should also state that although section 8(f) relief is not appropriate unless the ALJ first finds that the claimant has a compensable permanent disability, the employer met the requirements for such relief in all other respects. Further explain, explicitly, that if a section 8(i) agreement is approved, the Fund cannot be liable and that section 8(f) relief must be denied if a section 8(i) agreement is approved. Again, the Solicitor's office should be alerted to set forth this position to the ALJ.
The Associate Solicitor has notified the Regional Solicitors of this policy. The Associate Solicitor has also advised the Regional Solicitors that a case should be referred to the Employee Benefits Division in SOL's National Office for consideration of appeal upon your request if an ALJ grants an employer's application for section 8(f) relief in conjunction with the entry of a section 8(i) order.
(3) Section 10 (h). For similar reasons, a section 8(i) settlement agreement that provides for continuing payments by the Special Fund of annual increases pursuant to section 10(h) should not be approved. Since a section 8(i) settlement discharges the employer's liability, it also discharges the Fund's derivative liability and continuing payments are not consistent with that discharge of liability.Section 8(i)(4) precludes the Fund from liability for "any sums paid or payable" under a section 8(i) settlement, whether the amounts agreed to are based on section 8(f) or section 10(h) of the statute.
3. Request for Section 8(f) Relief. Consideration of the section 8(f) issue begins with a request for section 8(f) relief.
a. Time for Submission of the Request. The request should be made as soon as the permanency of the claimant's condition becomes known or is an issue in dispute. Where the claim is for death benefits, the request should be made as soon as possible after the date of death. This is intended to have ECs raise this issue early in the claims adjudication process, in order to assure that the DD, the DC and the Director, DLHWC have the opportunity to examine the validity of the request for section 8(f) relief. Events that give rise to the EC's obligation to raise section 8(f) are:
(1) The issue of permanency is raised at the informal conference;
(2) The EC is voluntarily paying permanent disability benefits; or
(3) The EC has knowledge that the claimant's condition is permanent (see Cajun Tubing Testors v. Hargrave, 25 BRBS 109 (CRT), 951 F.2d 72, 25 BRBS 109(CRT)(5th Cir. 1992)).
Where permanency is in dispute, this fact should not be used as a basis for denying section 8(f) relief. Rather, a determination as to appropriateness of section 8(f) relief should be made using the assumption that permanency has been established.
b. Permanency or Death Not An Issue. If permanency is not an issue, or if benefits are being paid for temporary disability, as opposed to permanent disability or death, the request need not be made until permanency or death becomes an issue. In all other cases, a request for section 8(f) relief, together with a complete application (described below) must be presented to the DD before the case is referred to the OALJ for a formal hearing.
4. Statement of the Grounds for Section 8(f) Relief.
a. The Application. Section 8(f)(3) of the Act requires that a statement of the grounds accompany any request for relief of liability. For purposes of these procedures this statement of the grounds is referred to as an application.
b. A Complete Application. An application must contain the following information:
(1) A specific description of the pre-existing condition relied upon as constituting an existing permanent partial disability including evidence that the condition was permanent prior to the second injury.
(2) The reasons for believing that the claimant's permanent disability after the injury would be less were it not for the pre-existing permanent partial disability or that the death would not have occurred but for that disability. These reasons must be supported by medical or vocational evidence as specified in (4) below.
(3) Evidence to show that the pre-existing permanent partial disability was manifest to the EC prior to the second injury, either actually or constructively. However, see Newport News Shipbuilding and Dry Dock Company v. Harris, 24 BRBS 190(CRT), 934 F.2d 548 (4th Cir. 1991), wherein the Fourth Circuit Court of Appeals limited the manifest requirement in post-retirement occupational disease cases.
(4) Documentary medical evidence to support the request for section 8(f) relief which should include impairments and the date of maximum medical improvement.
(a) If the current disability is total, the medical evidence must demonstrate that the disability is not due solely to the second injury (see Director, OWCP v. Luccitelli et al., 964 F.2d 1303 (2d Cir. May 1992); and LHWCA Circular No. 92-02.); and, that, in the absence of the pre-existing disability, the worker would otherwise be employable (see Director, OWCP v. Jaffe N.Y. Decorating, 25 F.3d 1080 (DC Cir. 1994).
(b) If the current disability is partial, the medical evidence must explain why the disability is not due solely to the second injury and why the resulting disability is materially and substantially greater than that which would have resulted from the subsequent injury alone. (See Newport News Shipbuilding and Dry Dock v. Director, [Harcum II] ___ F.3d ___, 31 BRBS 164(CRT)(4th Cir. 1997)
(c) If the injury is loss of hearing, the pre-existing hearing loss must be documented by an audiogram which complies with the requirements of 20 C.F.R. section 702.441 (see PM 3-401). It should be noted that the two most recent audiograms available can be utilized by the EC for asserting a claim for Section 8(f) relief. While the use of recent audiograms may place greater liability on the Special Fund than would otherwise be the case, the EC cannot be required to base its request for relief using only the oldest certified audiogram versus the most recent audiogram of record. Similarly, the employer cannot be required to base its request for relief using a pre-employment audiogram (see
Risch v. General Dynamics, 22 BRBS 251). Also relief cannot be denied where the employer administers audiograms to an employee and allegedly does not inform him of the results or file an injury report, but then uses those audiograms in connection with the request for Section 8(f) relief (see Skelton v. Bath Iron Works, 27 BRBS 28).
(d) If the claim is for survivor's benefits, the medical report must establish that the death was not due solely to the second injury. The District Office should obtain the death certificate and a copy of the autopsy report where available.
(e) If the EC claims entitlement to section 8(f) relief for both a disability and death claim, its application must satisfy the statutory requirements for both claims.
c. An Application Must Be Submitted In Duplicate. This is to insure that a copy can be used by the Solicitor's Office, in preparation for a hearing, while the original remains in the case file. If an application is not submitted in duplicate, DOs may need to reproduce the application which is an added unnecessary expense. The application is the burden of the EC who directly benefits from section 8(f) relief, and should therefore be submitted in duplicate. Where an application is determined to be deficient, a copy of the application should be kept in the administrative file and not returned to the EC. Should the case be referred for formal hearing, the copy may be needed for possible absolute defense purposes.
d. The DO Should Closely Monitor Section 8(f) Cases. It is important to insure that all applications are submitted in duplicate and contain all the information described above. Failure to monitor cases at the DO level will result in cases being returned by the NO for additional information.
5. Submission of the Application.
a. General Guidelines. The DD sets the date for the submission of the fully documented application. In setting this date the DD should allow sufficient time for the EC to gather the necessary information while insuring that the claimant's right to a timely hearing is preserved. The DD should also try to have the application submitted prior to the expiration of the 104 week period. This is desirable because the Special Fund has been found liable for interest on reimbursements to ECs for payments made in excess of the 104 week period and we want to minimize this liability. Particular attention should be given to cases where the EC continues to pay benefits voluntarily and the natural tendency would be to allow the application process to be prolonged. These are general criteria which the DD should apply to the facts of each case. More specific guidance on the selection of the date for submission of the application follows. Also see 20 C.F.R. section 702.321(b).
b. Notice of the Informal Conference. Both 20 C.F.R. section 702.321(b) and section 702.313 require that the notice of the conference specify the matters to be discussed. Therefore, form LS-141, Notice of Informal Conference (See Exhibit 13, PM 10-200), is to include all the issues to be discussed at the conference. All parties are required to list issues reasonably anticipated to be discussed at the conference when the initial request for a conference is made and to notify all parties of additional issues which arise during the period before the conference is actually held.
c. Permanency Or Death An Issue Before Informal Conference. Where notice is given to all parties that permanency or death is to be an issue at an informal conference, the fully documented application shall be submitted at or before the conference. Therefore, if permanency or death is an issue, care should be taken in scheduling the conference since the complete application must be submitted at that time. In such cases the EC should be allowed sufficient time to gather the information necessary for a complete application.
d. Issue of Permanency Or Death First Raised At An Informal Conference. Where the issue of permanency or death is first raised at the informal conference and could not have reasonably been anticipated by the parties prior to the conference, the DD or CE shall interrupt the conference and set the date by which the fully documented application must be submitted and so notify the EC. With the concurrence of the parties the conference may be resumed. The date shall be set after reviewing the circumstances of the case and considering the factors listed in subparagraph 5f, below. In setting the date, the DD should attempt to balance the needs of the claimant for a speedy trial and the needs of the EC for sufficient time to develop its application.
e. Cases Where the EC Denies Any Disability. In cases where a claim is made for permanency but the EC maintains that there is no disability or that maximum medical improvement has not been reached, the DO should make a determination based upon the evidence of record. If additional medical evidence is needed an impartial medical evaluation should be scheduled. Based upon the evidence in the case file the DO should either set the date for submission of the application or indicate that the claimant has not reached maximum medical improvement.
f. Other Factors and Extensions.
(1) In fixing the date for submission of the application under circumstances other than those described above, or in considering any request for an extension of the date selected, the DD shall review all the facts of the case, including, but not limited to:
(a) Whether the claimant is being paid compensation and the hardship to the claimant of delaying referral of the case to the OALJ;
(b) The complexity of the issues and the availability of medical and other evidence to the employer;
(c) The length of time the employer was or should have been aware that permanency or death is an issue; and
(d) The reasons listed in support of a request, where the EC has requested an extension or a specific date.
(2) Extensions should only be granted for good cause and in such a way that the timely adjudication of the claim is not adversely affected. However, neither the date selected for submission of the fully documented application nor any extension therefrom can go beyond the date the case is referred to the OALJ for formal hearing.
g. Where Permanency Or Death Is Not An Issue. Where the claimant's condition has not reached maximum medical improvement or no claim for permanency or death is made by the date the case is referred to the OALJ, an application need not be submitted to the DD to preserve the EC's right to later seek relief under section 8(f).
h. Absolute Defense. It is important to set a firm date for the submission of the application. Once the date for submission of the application has passed, the EC should be advised in writing: that the claim for section 8(f) relief is denied due to its failure to file a timely application; that the absolute defense will be asserted; and, that the case will be referred for formal hearing. The Solicitor's Office should be notified and requested to assert the absolute defense. (See paragraph 9 below, and the case of Quinlan v. Dravo Corporation, 20 BRBS 802). Also, where a case involving potential 8(f) relief is referred for formal hearing, the transmittal memorandum to the OALJ should contain a specific statement as to whether section 8(f) relief has been raised by the EC. (see the case of Hawthorne v. Ingalls Shipbuilding, 29 BRBS 103).
6. Review of the Application.
(1) Although we do not condone nor encourage the filing of premature applications, there is no prohibition in either the statute or the regulations against an EC submitting an application before the issue is ripe for adjudication. If an EC submits an application for relief and the DO concludes that it is premature, i.e. permanency is not an issue, the application should not be returned to the EC. It should be placed in the case file and the EC so notified. Any evidence submitted with the application may be used in evaluating the claim for compensation.
(2) Upon receipt of the application the DD should review it to insure that all the required evidence was submitted. If any required evidence is missing or if the DD determines that additional evidence is necessary the EC should be notified and given the opportunity to submit the evidence. If the EC does not submit the evidence, or if the evidence submitted is found to be unsatisfactory, the DD is to deny the application.
(3) When the application is received, the DD or CE must enter the date of receipt and the code '8far' on the LCMS Diary Tab. This code, and the corresponding date, are also to be entered upon receipt of any additional evidence requested from the EC.
(4) If the application for relief does not specify whether it is for partial or total disability, the entire case file, including evidence submitted by the claimant, is to be evaluated in making this determination. Only by a reviewing all the evidence of record can the DO make a reasoned judgment concerning the nature and extent of the claimant's disability and the claimant's possible entitlement to benefits. This will also establish the basis for the request for section 8(f) relief which is contingent on the injured employee's claim for compensation.
(5) The DD should use the initial review of the application as an opportunity to provide technical assistance to the EC so that full compliance with the regulations and these procedures can be achieved. This is particularly important where the EC does not have much experience with the section 8(f) issue. Any deficiency in the application should be noted and the EC should be given the opportunity to correct the deficiency. This process is to be followed initially with all ECs. However, if an employer continues to submit deficient applications, the DD may act on the application as submitted.
(6) In reviewing these applications, the DD is acting on behalf of the Director, OWCP, who is the administrator of the Special Fund. Therefore, the DD is to consider how issues will impact on the position of the Special Fund.
(7) The DD should attempt to resolve all outstanding issues to the extent possible. Conflicts in medical evidence concerning the nature and extent of the claimant's disability or the pre-existing disability are to be resolved. Impartial medical evaluations are to be used in cases where the evidence does not conflict but, in the opinion of the DD, the evidence submitted by the parties is non-determinative. In arranging for an impartial medical evaluation, the DD should follow the procedures outlined in PM 5-200.10 and PM 5-400.10.
(8) The DD should make a determination, in occupational disease cases, whether the disease became manifest (i.e., significant symptoms) before or after retirement. This is important for consideration of the section 8(f) issue since it determines the level of benefits (i.e., partial or total) to which the employee is entitled and the corresponding medical evidence required in the EC's application (see subparagraph 4b(4)(a) or (b), above). Where the claimant's disability is first manifest after retirement, the claimant is entitled to benefits only for permanent partial disability based on a percentage of permanent impairment (see section 8(c)(23) and 20 C.F.R. section 702.601).
b. Time To Review The Application.
(1) The DD shall review the application (or have it reviewed by a CE) within forty-five days of receipt and take one of the following actions:
(a) Identify any deficiencies in the application or any other necessary evidence and return it to the EC for the submission of additional information (However, a copy of the application should be kept in the file.), or
(b) Make a recommendation for approval and transmit the case to the National Office for consideration, or
(c) Deny the application.
(2) When the EC submits additional evidence, the DD (or CE) shall review the application and either transmit the case to the National Office with a recommendation for approval or deny the application within forty-five days.
(3) Timely follow-ups on requests for additional information should be used so that the adjudication process does not lag. This is especially important in cases where the claimant is not being compensated. As noted above (subparagraph 5a) timely follow-up on deficient applications could lessen the amount of interest payable on reimbursements to ECs.
(4) It is important to set a firm date for submission of the additional information and to follow through if the information is not submitted by this date. This will enable us to assert the absolute defense in those cases where it is appropriate.
(5) Any special circumstances which caused the completed application to be submitted to the National Office later than forty-five days from receipt should be identified by the DD in the accompanying transmittal memorandum.
(6) When the case is reviewed, or when the DO requests the EC to submit additional information, this date and the code '8fds' are to be entered in the LCMS on the Diary Tab. This code, and the corresponding date, are also to be used when the DO reviews any additional information submitted by the EC.
(7) When an application is premature; that is, maximum medical improvement has not been reached, it is not in posture for review. The DD shall advise the EC by written correspondence that the application is premature, and the reason for which it is premature. The EC should be instructed to resubmit the application when permanency becomes an issue.
(1) Where EC has established the statutory requirements, the DD has the authority to approve section 8(f) relief in those cases which involve a loss of hearing both as the pre-existing condition and as the second injury.
(2) All other cases must have the concurrence of the Director, DLHWC before a compensation order can be issued awarding section 8(f) relief. In order to secure the concurrence of the Director, the case must be referred to the National Office for review in accordance with paragraph 7 below.
(3) When a claimant, who was receiving disability benefits from the Special Fund, dies, payment for any death claim will not be made from the Fund without the concurrence of the EC. In such cases, the DO should request a death certificate and determine whether the death was related to the accepted condition. The DO should make a recommendation on the payment of the death claim from the Special Fund and request the concurrence of the EC. When this concurrence is received, the matter should be referred to the National Office for review. (See PM 6-203, and paragraph 4b above.)
(1) Section 702.321(c) of the regulations allows for the delegation of the authority to deny the application for section 8(f) relief. This authority was delegated to the DDs effective April 17, 1987. (See Longshore Memorandum No. 17, April 17, 1987, a copy of which can be obtained from the National Office if needed.)
(2) Our present policy is that the EC must be informed in writing of the deficiencies in the application before it can be denied. The EC must be given a reasonable amount of time to submit additional evidence to correct the deficiencies in the application. This must be done in every case, and can be an opportunity for the DO to provide technical assistance to the EC so that full compliance with the regulations and procedures can be achieved. This will also give us a firm basis to assert the absolute defense. If an EC repeatedly submits deficient applications and previous letters have been unsuccessful in obtaining compliance with the regulations and procedures, the DD may deny the deficient application without further correspondence. However, the letter of denial must clearly list the reason(s) for the denial. The DD should recommend the absolute defense against these applications. When requesting Solicitor participation in these cases, a history of the EC's previous noncompliance should be included. (See subparagraph 9b, below.)
(3) If an EC has been informed in writing of the deficiencies in the application for relief, and the EC has not corrected those deficiencies, the application may be denied. The application may also be denied where the EC has made a good faith effort to correct the deficiencies but the facts of the case do not warrant section 8(f) relief. For these purposes, a deficient application may be considered as one where the evidence submitted by the EC fails to relate to or discuss one of the three criteria for relief. The fact that the DO is not convinced by the EC's evidence does not necessarily render the application incomplete or deficient. In cases where the application meets the minimum requirements of the regulations but the DO determines that it does not support the administrative approval of section 8(f) relief, the application should be denied, but the absolute defense should not be asserted. In addition, where the EC makes a good faith effort to submit a complete application but the DO determines that the evidence does not support section 8(f) relief, the absolute defense should not be asserted. Instead, the application should simply be denied.
(4) The denial of the application is to be issued as a letter over the signature of the DD.
(5) The fact that the issue of nature and extent of the claimant's disability is in dispute is not an appropriate basis to deny the application. Furthermore, it is not our policy to deny the application merely because the parties have failed to agree on the nature and extent of the claimant's condition. In cases where this issue is in dispute, the DO should assist the parties in the resolution of the dispute. This should be done, where possible, by means of informal conferences, impartial medical evaluations and rehabilitation evaluations.
(6) If the DO denies the application and requests Solicitor participation at the hearing, evidence must be provided to support the denial. It is responsibility of the DO to see that this evidence is developed. Where an independent medical opinion is solicited, the DO should identify in the file the specific medical records that are sent to the physician, which form the basis for the doctor's opinion.
7. Referral to the National Office.
a. Transmittal Memorandum.
(1) All cases referred to the National Office for review must be accompanied by a memorandum over the signature of the DD which fully discusses the facts of the case. A form has been developed for this purpose. (See Exhibit 12, PM 10-300.) If this form is not used, or if it is not fully completed, the case will be returned to the DO.
(2) It is important for the transmittal memorandum to contain a narrative discussion in Items 13 through 16 in addition to referencing medical reports and EC exhibits. It is also important that a comprehensive discussion of any contested issues which impact on the section 8(f) issue, such as jurisdiction or nature and extent of disability, be included under Item 17. A discussion of the grounds for approval should also be included in Item 17.
(3) If the parties have stipulated to contested issues, the DO should fully explain how the stipulations were arrived at.
(4) Under Item 18, the DO should provide the basis for computing the compensation rate in PPD cases based upon a loss of wage earning capacity (LWEC). The claimant's pre-injury wage should be included as well as the actual or projected post-injury wage which forms the basis for the LWEC determination. If an estimated wage is used, the DO should explain how it was established.
(5) If all outstanding issues have been addressed in a recent conference memorandum, that memorandum may be attached and referenced.
(6) The transmittal form is an internal form and it is to be completed only by DO personnel. Under no circumstances is it to be released to ECs for completion by them.
b. The Case File Must Accompany the Transmittal Memorandum. In addition, if the application concerns several injuries which were covered by the Act and the DO has case files on the injuries, these case files should also accompany the transmittal memorandum.
c. Duplicate Applications. Since the application may be voluminous it will not be necessary to send the duplicate copy to the National Office. The case file should be marked to indicate that a duplicate application was received and retained in the DO.
d. All Issues Should Be Resolved. If the DO recommends approval of the application, the case should not be referred to the National Office with unresolved issues. As with other cases, we expect the DO to informally assist in the resolution of all disputed issues. This should be done, where appropriate, by means of informal conferences, impartial medical evaluations, and rehabilitation evaluations. The DO should attempt to get the agreement of the parties on all issues, including the amount of the claimant's earning capacity, before the case is referred to the National Office. If the parties are unable to agree on any issue, the DO should still make a recommendation.
8. Action by the National Office.
a. The Initial Review. At the time of receipt in the National Office, the case file and transmittal memorandum will be reviewed to insure that all applicable procedures have been followed. If it is found that these procedures have not been followed, the case file and section 8(f) application will be returned to the DO for further action.
b. The Review of the Issues. The Director, OWCP is a party in interest to all claims. This authority, as well as the authority to review section 8(f) applications, has been delegated to the Director, DLHWC. The National Office may also determine that further development of some issues may be necessary before the application can be fully considered.
c. Additional Development. If the case file contains unresolved issues or if it appears that the evidence of record does not support or explain the stipulations of the parties, the case will be returned to the DO. The case may also be returned if the National Office determines that additional evidence is necessary. The DO should attempt to obtain the additional evidence as quickly as practicable so that any delay in the adjudication of the case can be minimized. The time frames listed above, in subparagraph 6b, should be observed.
d. Approval of the Application.
(1) If the evidence in the case file and the application support section 8(f) relief, the Director will advise the DD to issue a compensation order embodying the agreement of all the parties. Once this compensation order is issued, the DO should initiate the payment of benefits by following the procedures outlined in PM 6-203. If section 8(f) is an issue in a case, a compensation order should not be issued until all issues, including section 8(f), have been resolved.
(2) The "Fund First" rule provides that the Special Fund should receive credit for prior payments on an injury rather than giving it to the employer as the credit would result in a payment for less than the statutory obligation for the second injury. In the case of Director, OWCP v. Bethlehem Steel Corp., 868 F.2d 759, 22 BRBS 47 (CRT)(5th Cir. 1989), aff'g in part and rev'g in part Brown v. Bethlehem Steel Corp., 19 BRBS 200 and 20 BRBS 26 (1987), the court held that when a second scheduled injury (i.e., an injury which falls with section 8(c)(1) to 8(c)(20)) increases a claimant's pre-existing permanent partial disability and where this second injury alone results in over 104 weeks of compensation, then whenever a credit for previous compensation paid as a result of the initial injury is available to offset the present amount due claimant, that credit shall first reduce the total award before there is any allocation of liability under Section 8(f). This reduction in the total award due as a result of the second injury will effectively apply the credit to the Special Fund's liability first, with any credit remaining to be applied against the employer's liability. The court further held that the amount of the credit to be allowed against the total award shall be the actual dollar amount of payment that was previously made to claimant as a result of the initial injury.
e. Denial of the Application. If the evidence does not support the application, section 8(f) relief will be denied by the Director. The Director is not bound by the stipulations of the other parties, and will not accept these stipulations if they are unreasonable or not supported by the evidence of record. If the application is denied, the DD will be informed by memorandum from the National Office. This memorandum is not to be released to the parties. The DD may use information from this memorandum when advising the parties of the reason(s) for the denial. The EC may then request a formal hearing. When the case is referred- to the OALJ, the DO is to notify the Solicitor's Office as outlined in paragraph 9 below.
9. Referral to the Solicitor's Office.
a. Solicitor Defends the Denial. If the application is denied, either by the DD or the Director, and the case is referred for a formal hearing, the DD should request Solicitor participation at the hearing to defend the denial. The Solicitor's Office has decentralized this responsibility to the Office of the Regional Solicitor. However, District Office 40 should continue to send their requests for representation to the Associate Solicitor for Employee Benefits in Washington, D.C.
b. Memorandum to the Solicitor's Office. A request for Solicitor participation at a formal hearing should be in the form of memorandum to the appropriate Solicitor's Office. This memorandum should include:
(1) A copy of the application for section 8(f) relief together with the evidence submitted in support of the application,
(2) A copy of the DD's denial memorandum, or a copy of the DD's approval memorandum and a copy of the Director's denial,
(3) A copy of the DD's request for an impartial medical evaluation and a copy of the physician's response, and
(4) Any additional information considered necessary to defend the denial of relief. Since the Solicitor's Office may depend on the DD's memorandum of denial or approval for an analysis of the case, this memorandum should be as complete as possible. The DD should also include copies of pertinent evidence from the case file which will assist the Solicitor's Office. As noted in subparagraph 6d(6) above, it is the responsibility of the DO to insure that there is sufficient evidence for the Solicitor to use to support the denial of section 8(f) relief. If necessary, the DO must develop this evidence. A copy of the memorandum requesting Solicitor participation, without the attachments, should be sent to the Director, DLHWC, at the time of referral.
c. Time of Referral. The memorandum requesting participation at the formal hearing should be sent when the case is referred to the OALJ. It is not necessary to refer cases to the Solicitor's Office before a denial is issued or before the case is terminated. However, the DD may discuss the facts of the case with the Solicitor's Office and attorneys in that office may review the file. The DD should not permit this consultation period to delay the referral of the case.
d. Action by the Solicitor's Office. Since the DO will be dealing directly with the Regional Solicitor's Office it is important to develop a good working relationship. The DD (or CE) should be prepared to discuss the denial, and any additional development needed to prepare the case for formal hearing. Any necessary development is to be done by the DO. The Solicitor's Office may determine that the testimony of an expert witness, or additional evidence, is necessary to defend the Special Fund. In such cases, the DO should, upon request, cooperate in identifying potential witnesses. The cost of the expert testimony will be charged to the Longshore Program's budget. Questions concerning the form for submitting this type of bill should be referred to the National Office. At the time of referral for an impartial medical evaluation, the DD should advise the physician that he or she may be called on to be a witness at a formal hearing.
If in the course of discovery and preparation for trial, the employer/carrier develops additional factual, medical, or vocational evidence sufficient to overcome the deficiencies of the original application for Special Fund relief, the District Director, in consultation with the RSOL staff, may accept the claim for relief upon consideration of such evidence. It is not necessary to submit the case file or the new evidence to the National Office for reconsideration of the application for section 8(f) relief, although the National Office staff is always available for consultation and guidance. (See PM 6-201.10(c) below.)
10. 8(f) First Raised While Case Pending at OALJ.
a. If the issue of Section 8(f) relief is raised for the first time while the case is pending at the OALJ, e.g., permanency is reached after referral, the ALJ, not the DD, has authority to decide the issue. The case need not be remanded by the ALJ to the DO, however, the EC must notify both the DD and the RSOL that it intends to seek Section 8(f) relief, and submit a copy of the 8(f) application to both.
b. If an 8(f) application is submitted to the DO while the case is pending before the ALJ, it should be treated as a request for relief from the ALJ to which the Director, as a party to the ALJ proceeding, must respond. Upon receipt of the application, the DO must review it on the merits in accordance with the regulations at 20 CFR § 702.321 and with PM 6.201.4. As soon as practicable, the DD must inform the RSOL of the Director's position as to whether 8(f) relief is appropriate. RSOL will notify the ALJ of the Director's position, and will represent the interest of the Special Fund in the ALJ proceeding.
c. If the DD determines that 8(f) relief should be granted, concurrence of the Director, DLHWC is not required. The DO need not refer the case to the National Office for approval, although the NO is available for consultation. If the DD determines that Special Fund relief is not warranted, either because the application is untimely or that one or more of the criteria for relief has not been met, the DD should work closely with RSOL to co-ordinate the defense of the Special Fund as necessary.
d. In the event that the 8(f) application is sent to the RSOL but not to the DO, the RSOL should immediately forward a copy to the DD and ascertain the Director's position on the issue.