Division of Longshore and Harbor Workers' Compensation (DLHWC)
CHAPTER 7-200 COVERAGE - GENERAL
1. Purpose and Scope. This chapter contains guidelines, policies, and other general requirements applicable to employers under the Act, and describes the means by which employers may secure their obligation to provide compensation and medical benefits. The functions described are performed by the National Office, DLHWC.
2. Authority. Each employer who has employees covered by the Longshore Act or one of its extensions must secure its obligation to provide compensation and medical benefits in accordance with section 32 of the Act. A contractor must secure the obligation of its subcontractor unless the subcontractor has secured his own obligations under the Act(s).
- The Director for DLHWC is responsible for administering provisions of the Acts pertaining to the authorization of insurance carriers and self-insured employers and for establishing the policy for card reports of coverage and certificates of compliance.
- The DD of the District Office is responsible for administering provisions requiring card reports of coverage and issuing certificates of compliance in accordance with the procedures and policies established by the DLHWC. It is the DD's responsibility to see that all employers having employees covered by any of the Acts under his/her jurisdiction have the required insurance coverage in accordance with the requirements of the Acts and regulations.
4. Employer Options. Every employer carrying on covered employment is required to secure its obligation to pay compensation and provide medical care to injured employees by either:
- Insuring with any insurance company authorized by OWCP, or
- Becoming an authorized self-insured employer.
5. Authorization of Insurance Carriers. To receive initial authorization under the Longshore Act or one of its extensions, an insurance company should have five years' experience in writing workers' compensation coverage and be listed in BEST's INSURANCE REPORTS, with a rating of "B+" or better.
6. Authorization of Self-Insurers . OWCP, in accordance with the Act, will authorize an employer to self-insure obligations when the company has established:
- That it has ample financial resources to meet all obligations in regard to its potential liability under the Act.
- That it has obtained adequate excess or catastrophic loss insurance.
- That it has made adequate arrangements to provide promptly all necessary medical care.
- That it has made a deposit in the name of the OWCP in the manner and amount prescribed by the OWCP.
- That it has agreed to carry out all requirements of the Act(s) and the regulations for administering the Act(s).
7. Uninsured Employers.
- The LHWCA requires every employer subject to the Act to secure payment of compensation either by insuring with an authorized company or by obtaining self-insurance authorization. Section 38(a) of the Act provides that any covered employer failing to secure compensation shall be guilty of a misdemeanor and upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment of not more than one year, or both.
- An “uninsured employer” situation can arise in a variety of ways. For example:
(1) Form LS-570, Card Report of Insurance (Exhibit 52, PM 10-200) is received naming an unauthorized insurance carrier as having issued a workers’ compensation insurance policy endorsed for Longshore Act coverage:
(2) Form LS-202, Employer’s First Report of Injury or Occupational Disease (Exhibit 16, PM 10-200) is received naming an unauthorized insurance carrier or from an employer who is not an authorized self-insurer and for whom there is no Form LS-570 on file;
(3) A credible source contacts the DO to report that an employer is operating in the Compensation District without the required Longshore Act insurance coverage;
(4) An injured worker contacts the DO to request assistance in filing a claim for benefits, and the DO does not have a report of injury from the employer and cannot otherwise identify the employer.
- There are other ways in which this issue will arise. Once a DD identifies that an employer is involved who has not complied with the insurance provisions of the Act, the following actions are recommended:
(1) The form letter provided by the National Office (Exhibit __, PM 10-300), and modified by the DD as necessary to reflect unique circumstances, should be sent to all parties. It is important that this letter be distributed as widely as possible. This includes copies to the claimant, his attorney, and, in particular, the corporate officers of the uninsured employer.
This letter should be used whenever and wherever there is a credible indication that an employer is operating without required Longshore Act insurance coverage.
Note that the recommended form letter contains an optional paragraph for use whenever there is a general contractor standing behind the uninsured subcontractor.
(2) Where there are repeated instances of the same employer failing to meet the insurance requirement, with knowledge of the Act’s application to its operations, or where the employer has large scale operations, the DD should consider making a recommendation to the Director, DLHWC, regarding prosecution under section 38(a). The recommendation should be accompanied by full information concerning the employer, and a record of contacts between the employer and the DD. If determined appropriate, the Director, DLHWC will seek prosecution through the office of the U.S. Attorney.
8. Penalties. The exclusivity of (workers’ compensation) remedy, provided for in section 5(a) of the Act, does not apply “if an employer fails to secure payment of compensation as required by this Act.” In such a situation an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under the Act, or to maintain an action at law or in admiralty for damages on account of such injury or death.