Division of Longshore and Harbor Workers' Compensation (DLHWC)
CHAPTER 8-302 LATE REPORT: SECTION 30(E) PENALTY
- Purpose and Scope. This Chapter provides guidelines and procedures for assessing penalties for late reports of injury or death.
- Authority. Under Section 30(a) of the Act, an employer must, within ten days from the date of any injury which causes loss of one or more shifts of work, or death (or from the date that the employer has knowledge of a disease, or infection as a result of such injury), furnish an employer's report of injury or death to the DD in the appropriate DO. In the event that the employer does not have immediate knowledge of the injury, the ten day period begins to run from the date that the employer obtains such knowledge.
- Report Requirements.
- An employer must file a notice of injury in all cases where the injury results in loss of one or more shifts of work. The employer may also file a notice of injury in cases where the employee suffers a permanent impairment covered by the schedule in section 8(c) of the Act. In such cases the report should not be filed until it has been established that the injured employee has suffered a permanent impairment which would result in an award under the schedule contained in section 8(c) of the Act.
- The reporting requirements are met by timely mailing of Form LS-202, Employer's First Report of Injury or Occupational Illness (Exhibit 16, PM 10-200). The information to be reviewed for determining whether a report is timely or is a "late report" are: date of injury, date employer knew of accident, date disability began, and date of the report, plus the postmark on the envelope. (Also see paragraph 10, below.)
- The Ten Day Period. Under the provision of Section 30(d), injury reports are timely so long as they are mailed within the time allowed. This ten day period is, in most instances, adequate for an employer to obtain the facts of an injury, and prepare and mail the report to the DD. In some circumstances the report may not reach the DO within the ten day period due to delay in mail service or other circumstances beyond the control of the employer. If the report is received in the DO after the expiration of the ten day period, but the postmark shows it was mailed on or before the deadline, the report is timely. The envelope should be retained until this issue is resolved. If this is not feasible because multiple reports are received in the same envelope, and the compliance with section 30(a) may be questioned, the mail clerk will make this notation on the form: "Postmarked December 3, 20XX" followed by the clerk's initials.
- Late Reports. If the report arrives at the DO bearing a postmark date more that ten days past the date of injury/disability or the employers awareness of it, it is a late report under section 30(a). It is vitally important, therefore, that all incoming reports be date-stamped by DO personnel on the date the material is received. This will eliminate uncertainty about the date the reports were actually received by the DO.
- Initial Action.
- When a late report, as defined above, is received by the DO, the mail clerk or CE will notify the DD of the name of the employer and the circumstances of the late report.
- When a pattern of late reports by one employer emerges the DD will instruct all CEs to release Form Letter LS-548 (Exhibit 48, PM 10-200) in all cases with a late report from that employer. This form letter explains an employer's responsibility for filing reports on time and affords him/her an opportunity to explain the delay. The letter should be released within ten working days after it is determined that a report is late. In instances where the DO is aware of an injury but the employer has not submitted Form LS-202, Form Letter LS-512 (Exhibit 41, PM 10-200) should be used instead of the LS-548. (See paragraph 11, below.)
- The 1984 Amendments to the Act changed the basis for the assessment of a penalty to a knowing and willful failure or refusal to file a required notice of injury. Therefore, DO personnel must make an effort to establish the reason that the LS-202 was not submitted or submitted late. This can be accomplished by use of Form Letter LS-548 or LS-512. The DD should determine whether this Form Letter should be sent certified mail, so that a record of receipt can be established.
- Employer's Explanation of Delay.
- If the employer replies to the inquiry within the thirty days
allowed by the LS-548 or LS-512 letter, the case file and correspondence will
be referred to the DD who will carefully consider the employer's explanation
for failure to file the report on time. An explanation is insufficient as a
basis for waiving the penalty if it is based solely on one or more of the
- Employer's office personnel failed to complete and/or mail the report on time.
- Employer was not aware of the filing requirement.
- Employer was short of staff at the time.
- The delay was occasioned by routing the reports through the insurance carrier's office.
- The report was sent to the insurance carrier and it failed to submit it on time.
- The DD should at all times take into consideration whether the employer has acted in good faith and whether compensation has been paid timely before assessing a penalty. The DD should also give consideration to the employer's past performance in submitting Form LS-202 on time. An employer with a good record of timely reporting should not be assessed a penalty for rare or single instance of late reporting. However, the DD should not utilize the "good faith" consideration to waive penalty assessments as a matter of policy, if penalties should be assessed in accordance with the criteria set forth above. In addition, the "good faith" consideration should be tempered by the extent such action may adversely affect the prompt reporting of future cases.
- If the DD determines that the employer's explanation is acceptable, the employer should be notified by a brief narrative letter. This letter should explain that no penalty is being assessed and caution the employer about prompt reporting in the future.
- In the event that the employer's explanation is not acceptable, or if no response is received, the DD shall assess a penalty, utilizing Form Letter LS-551 (Exhibit 49, PM 10-200). This action should be taken within thirty days after receipt of the employer's explanation or, where no explanation is received, within 30 days after the expiration of the 30-day response period allowed by the LS-548 or LS-512.
- If the employer replies to the inquiry within the thirty days allowed by the LS-548 or LS-512 letter, the case file and correspondence will be referred to the DD who will carefully consider the employer's explanation for failure to file the report on time. An explanation is insufficient as a basis for waiving the penalty if it is based solely on one or more of the following reasons:
- Grounds for Assessing the Penalty.
- Background. The 1984 Amendments to the Act increased the
penalties provided for in section 30(e) to a maximum of $10,000. However,
effective November 17, 1997 the maximum penalty amount was increased from
$10,000 to $11,000. This increase came about as a result of the Federal Civil
Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt
Collection Improvement Act of 1996 (DCIA). The DCIA, amending the FCPIAA,
requires that the civil money penalties be adjusted by a cost-of-living
increase equal to the percentage, if any, by which the Department of Labor's
Consumer Price Index (CPI) for all urban consumers for June of the calendar
year preceding the adjustment exceeds the June CPI for the calendar year in
which the civil penalty amount was last set or adjusted. Due to inflation since
the LHWCA civil money penalties were last set or adjusted, the increase
effective on November 17, 1997 was the maximum 10% initially permitted under
the DCIA. The adjusted maximum penalty amount of $11,000 applies only to
violations occurring on or subsequent to November 17, 1997. The previous
$10,000 penalty amount applies to violations prior to November 17, 1997.
Under the 1984 Amendments to the Act, the grounds for assessment of this penalty were also changed from "a failure or a refusal to send any required report" to "knowingly and willfully" failing or refusing to send the report. The phrase "knowingly and willfully" imposes a two-prong test for determining whether a civil penalty should be assessed for violations of the section 30 reporting requirements. The first prong -- "knowingly" -- requires a demonstration that the EC knew or should have known that the Longshore Act applied and that it required the filing of timely reports. The second prong -- "willfully" -- requires a demonstration that the EC "either intentionally disregarded the statute or is plainly indifferent to its requirements". St. Louis & S.F.R. Co. v. United States., 169 Fed. 69, 71, quoted with approval in U.S. v. Illinois Cent. R. Co., 303 U.S. 239, 243 (1938).
It should be noted that no intent to defraud is required under Section 30(e); however, such intent is required for criminal prosecution under section 31(c) (i.e., "knowingly and willfully makes a false statement or representation for the purpose of reducing, denying, or terminating benefits . . ."). Consequently, an EC that has been advised of the statutory requirements and still fails or refuses to file a report in a timely manner would have violated Section 30(e). Section 30(e) also authorizes civil penalties when the EC "knowingly or willfully makes a false statement or misrepresentation in any such report". The same tests outlined above should be applied in determining violations of this section. Note that this portion of the section uses "or" in relation to false reports, thus indicating that OWCP need not find that such false report was both knowingly and willfully filed. However, we are of the opinion that this was a drafting oversight, and thus, the criteria noted above should be applied. Further support for this position can be found in the fact that the regulations at 20 C.F.R., Section 702.204 also uses the conjunction and instead of or when describing the penalty for false statement or representation under Section 30(e).
- Once an employer has been advised in writing of its responsibility to file a timely notice of injury, any further failure should be considered knowing and willful.
- It is recommended that the Regional Solicitor or the Associate Solicitor for Employee Benefits be consulted, as needed, before a final decision is made to assess a penalty. Enforcement of the penalty may involve a jury trial on the issue of whether a violation occurred. Input from the Solicitor will help insure that there are sufficient facts to support the assessment of a penalty and that the decision to assess the penalty will be sustained on appeal.
- Background. The 1984 Amendments to the Act increased the penalties provided for in section 30(e) to a maximum of $10,000. However, effective November 17, 1997 the maximum penalty amount was increased from $10,000 to $11,000. This increase came about as a result of the Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement Act of 1996 (DCIA). The DCIA, amending the FCPIAA, requires that the civil money penalties be adjusted by a cost-of-living increase equal to the percentage, if any, by which the Department of Labor's Consumer Price Index (CPI) for all urban consumers for June of the calendar year preceding the adjustment exceeds the June CPI for the calendar year in which the civil penalty amount was last set or adjusted. Due to inflation since the LHWCA civil money penalties were last set or adjusted, the increase effective on November 17, 1997 was the maximum 10% initially permitted under the DCIA. The adjusted maximum penalty amount of $11,000 applies only to violations occurring on or subsequent to November 17, 1997. The previous $10,000 penalty amount applies to violations prior to November 17, 1997.
- Suggested Penalties.
- Where the delay in submitting the report did not exceed thirty days from the date of injury or from the employer's first knowledge thereof, the suggested penalty should be in the range of $200. When the delay is between thirty and sixty days, the suggested penalty should be in the range of $500. For delays in excess of sixty days, the suggested penalty should be in the range of $1,000.
- When an employer fails to submit a report within sixty days, refuses to submit a report, or does not answer correspondence, larger penalties may be appropriate. Assessments of a penalty in excess of $2,000 must have the concurrence of the National Office and should be made only when the employer has repeatedly failed to meet the statutory requirement and penalties have previously been assessed, or if the DD considers the violation to be in total disregard or defiance of the requirements of the Act. However, it is suggested that recommendations of $11,000 be made only if there are recorded more than five violations by the employer in a twelve month period.
- If the DD determines that a penalty over $2,000 is appropriate, the case should be referred to the National Office for consideration. The case should be accompanied by a memorandum, which discusses the facts of the present case as well as any other case where the employer did not comply with the reporting requirements of section 30.
- In determining the gravity of the violation and the amount of penalty to assess, the DD should consider the following factors: how late the report was filed; how many reminders were required or how many misstatements were in the report; the size of the business; and the employer's history of previous violations.
- Small Business Regulatory Enforcement Fairness Act (SBREFA). SBREFA requires agencies to consider the waiver or reduction of civil penalties for violations of statutory requirements by small businesses (See Chapter 9-700 for a full discussion of SBREFA). Section 30(e) is a civil penalty under the LHWCA. However, Section 30(e) indicates that if it is determined that a violation has occurred (including the two-prong test of "knowingly and willfully" fails or refuses to send the report), the violator "shall be" subject to the civil penalty. Thus, there is no allowance under the LHWCA for waiver of this penalty once the "knowingly and willfully" determination has been made. However, since the LHWCA does not specify a fixed amount of penalty for violations under Section 49, the provisions of SBREFA for reduction of this civil penalty for small businesses may be applied. No fixed amount of reduction is specified. Taking into consideration gravity of the violation and the range in amount of penalties which may be assessed under Section 30(e), the District Director should also consider the size of the business before determining the penalty amount to be paid by the employer to the Special Fund. The Small Business Act's Standard Industrial Classification codes (SIC), giving size standards for small businesses, may be helpful in considering the size of the reduction in penalty for a small business (see PM 9-700.3). One half of the suggested penalty amounts listed in paragraphs 7a. and b., above, may be an appropriate reduction for a SBREFA "small business" under section 30(e), among other suitable considerations by the district director.
- Transmittal of Penalty Check to National Office. Upon receipt of the penalty check, the DD shall immediately forward it, together with a copy of the penalty letter and a DL Form 1-303, Cash Transfer Receipt (Exhibit 57, PM 10-200), to the Director, DLHWC, for deposit in the Special Fund. A copy of the penalty letter should be placed in the claim file with notation of the date this action was taken.
- Penalty Log. Each DO shall maintain a log (Exhibit 20, PM 10-300) recording each penalty assessment, with information as to the outcome of the action in each instance a penalty is assessed. Note the requirement on the log for indicating whether or not the penalty is being assessed against a small business, as required under SBREFA. Any payments received shall also be recorded on the Cash Receipt Register (see PM 1-200.9).
- Inaction by EC.
- No Reply. If the employer submits the report but makes no reply to the penalty letter within thirty days, the DD should write a narrative letter to the employer and again request the penalty payment or a written explanation for the failure to make payment. If no reply is received to this follow-up request, a second follow-up letter should be sent to the employer. If no reply is received within thirty days to this second letter, the DD shall notify the National Office as outline in subparagraph b, below. Prompt follow-up is essential.
- Refusal to Pay Assessment. In the event the employer replies and refuses to pay the assessment, the DD shall promptly notify the NO by a brief transmittal memorandum to which is attached the administrative file. Any unique replies should be outlined in the transmittal memorandum.
- Repeated Violations. If an employer repeatedly fails to comply with the reporting procedures, the DD should notify the NO, providing all the details concerning the employer's lack of compliance.
- LS-202 Not Submitted.
- Alternate Forms. In some instances, the DO receives information that an injury has occurred from other sources than an LS-202, i.e., receipt of a Form LS-203, LS-206, LS-208 (Exhibits 17, 19, and 21, PM 10-200), medical report or state workers' compensation forms. Under such circumstances, Form LS-202 should be requested immediately by telephone or by releasing Form LS-216 (Exhibit 25, PM 10-200). If no response is received within thirty days, release Form Letter LS-512 (Exhibit 41, PM 10-200).
- Follow-Up. When Form LS-202 is received, the DD will evaluate the record to determine whether a penalty is applicable and, if so, will proceed as described in paragraphs 4 through 7.
- Employer Refusal. If the employer refuses to submit Form LS-202, the DD shall proceed to assess a penalty as outlined in this chapter.
- Action by National Office.
- Upon receipt of a copy of the penalty letter and payment check, the check will be processed for deposit into the Special Fund. The copy of the penalty letter, check and certificate of deposit will be maintained in the National Office files. A signed receipt (pink) copy of DL Form 1-303 will be returned to the DO.
- In the event that the employer refuses to make payment or reply to the assessment letter, the NO will, upon notification by the DD, refer the matter to the Associate Solicitor for Employee Benefits requesting appropriate action.