Division of Longshore and Harbor Workers' Compensation (DLHWC)
CHAPTER 6-203 PAYMENT PROCEDURES
1. Purpose and Scope. This Chapter describes the procedures to be followed by the DO when submitting cases for payment from the Special Fund. In addition, it outlines the steps to be followed when changes are to be made in cases being paid from the Special Fund.
2. Notification of National Office. In those cases where an Order is filed by the DD, and payments are due from the Special Fund, the NO must be notified at the same time the Order is filed. This notification should be in the form of a memorandum which includes the information listed in paragraph 3, below. This information is not to be held until the LS-208 is received. Service of the compensation order is not sufficient to initiate this action. Orders awarding section 8(f) relief must be sent to the NO by facsimile and regular mail. Subsequent orders (from the ALJ, BRB, district and appellate courts) affecting the liability of the Special Fund must be transmitted in the same manner.
3. Information To Be Submitted to the National Office. It is not necessary for the DO to calculate the benefits payable by the EC and the Special Fund as the NO has the ADP capability to perform these calculations automatically. The NO is to be advised of the exact date payments should commence. An LCMS print-out for the case is to be attached together with the following information:
- Claimant's present address including zip code,
- Average weekly wage and initial compensation rate,
- Date the EC has or will suspend payments, if known,
- Amount of overpayment, credit or third party recovery,
- Whether the Holliday decision applies (see PM 3-202),
- The names, social security numbers, and ages of eligible dependents in death cases (please include the birth dates),
- Any other special payment instructions.
It is recognized that items c. and d. may not be available when the Order is filed. However, as with Form LS-208, the notification memorandum is not to be delayed. Any missing information should be forwarded as soon as possible.
4. Cases Are To Be Monitored by DO. The DO should closely monitor these cases to insure that the EC meets its statutory obligation to file a complete LS-208 in compliance with section 14(g). If an overpayment or credit is claimed by the EC, it must be fully documented as to the amount and periods paid. The EC must submit its correct address if there is to be a reimbursement. (See PM 6-300 for further information regarding the monitoring of Special Fund cases.)
5. Action by the National Office. Unless a complete and verified LS-208 is submitted, the initial payment from the Special Fund will not exceed two weeks of accrued compensation. Payments will be paid bi-weekly until the verified LS-208 is received. The claimant will be notified that only bi-weekly payments will be paid until the receipt of the LS-208. When the verified LS-208 is received, the NO will calculate the accrued compensation due and pay the balance to the claimant. A letter will be sent after this payment is made which outlines all payments due and paid to date and the rate of future payments. Any reimbursement due the EC will be made at this time. The EC reimbursement will be deducted from any accrued compensation due from the Special Fund. If the reimbursement exceeds this amount, the EC will be reimbursed out of the claimant's bi-weekly payments until the entire amount due is paid. This situation usually occurs when the EC has paid TTD or PTD benefits until the ALJ order is issued. The order may specify an award for PPD benefits. Thus, the EC has not only paid beyond its 104 week liability but has also paid the claimant at a higher weekly rate. This creates a large EC overpayment which is often in excess of the accrued Special Fund liability. Whenever this situation takes place the ALJ's order should be carefully reviewed to insure that the language ordering the Special Fund to reimburse the EC is consistent with NO policy which is to only reimburse the EC from the accrued Special Fund liability. Orders that specify a lump sum reimbursement of all amounts paid in excess of the EC's liability must be sent promptly to the Director, DLHWC so that a Motion for Reconsideration can be filed. If the EC's overpayment does not exceed the accrued liability of the Special Fund, Reconsideration will not be necessary.
6. Payment of Interest, Attorney Fees, and Other Costs.
a. Interest. Interest will be paid, to claimants and ECs, in accordance with 28 U.S.C. section 1961 when specifically assessed in the Order.
b. Attorney Fees. Attorney fees cannot be assessed against the Special Fund but may be paid as a lien on the claimant's compensation in accordance with section 28 of the Act.
The Benefits Review Board and Courts of Appeal have consistently held that attorney's fees may not be assessed against the Special Fund under section 28. However, it has been held in a limited number of cases that costs may be assessed against the Special Fund under section 26 where it is found the Director's non-participation caused unnecessary litigation. We will request Solicitor representation in any section 28 action.
c. Penalties. It has been consistently held that the section 14(e) penalty (10%) cannot be assessed against the Special Fund. The question of whether the section 14(f) penalty (20%) is to be paid by the Special Fund must be reviewed on a case by case basis. All such inquiries must be referred directly to the NO for consideration and action.
7. Death of the Special Fund Recipient. If the claimant dies while receiving benefits from the Special Fund, the DD should notify the NO in writing. This notification should include the exact date of death and whether there is a potential death claim. Death benefits will not be paid until a compensation order is issued awarding death benefits from the Special Fund. This order may not be issued without the prior agreement of the NO. Thus, the DD must submit a specific recommendation to the NO. If the NO agrees, the DD will be advised to prepare the appropriate order. The DD will submit the order in the same manner as all initial payment cases. The DD must also notify the NO in writing whenever there is a change in status of any beneficiary receiving benefits from the Special Fund. Thus, if a widow or widower dies, the NO is to be notified. If a child, entitled to benefits, reaches the age of eighteen or if the child's student status changes, the NO is to be notified. (See also PM 3-302.)
a. The employer/carrier remains a party in interest and must concur with the issuance of a compensation order awarding death benefits.
b. Funeral expenses are not considered "compensation" under section 8(f) as that section is intended to limit the employer's liability for periodic payments only. See Bingham v. General Dynamics, 20 BRBS 198, 205 (1988). The EC is to be charged with the payment of funeral expenses in Special Fund orders awarding death benefits.
8. Hearing Loss Cases. In hearing loss cases, the compensation order is to specify the date of maximum medical improvement and the date the Special Fund's liability commences. If the Order awarding benefits specifies a payment date in the future, the NO must also be notified at the time the Order is filed as to the exact date that payments are to be made from the Special Fund. These cases will automatically be picked up by the Fund. (See also PM 3-401.)
9. Address Changes and Missing Checks. The Special Fund recipient must notify the NO Fiscal Officer, in writing, of any address change or change in payment instructions. With respect to non-receipt of a check, the recipient must also advise the NO Fiscal Officer in writing. This notification must include the date of the missing check and should not be submitted until the check is seven calendar days overdue. It must be stressed that all such changes or requests must be in writing from the payee. Telephone messages will not be honored.
10. Direct Deposit of Compensation Checks. Claimants may have their payments paid by direct deposit into their checking or savings account. Any interested claimant should be directed to write to the National Office and request a Direct Deposit Sign Up Form. Form SF-1199 may also be obtained from the financial institution.
11. Garnishment. Benefits paid out of the Special Fund are subject to garnishment for child support and alimony. The Social Security Act Garnishment provision (42 U.S.C.§ 659(a)) enacted in 1975 provides that:
Notwithstanding any other provision of law...moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, [emphasis added] the United States or the District of Columbia (including any agency, subdivision, or instrumentality thereof) to any individual, including members of the Armed Forces of the United States, shall be subject, in like manner and to the same extent as if the United States or the District of Columbia were a private person...to any...legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony.
Also, the Office of Personnel Management promulgated a regulation that expressly provides that LHWCA benefits are subject to garnishment pursuant to the SSA Garnishment provision. See 5 C.F.R. § 581.103(c)(5) which authorizes the garnishment of "[b]enefits received under the Longshoremen's and Harbor Workers' Compensation Act".
In the case of Moyle v. Director, Office of Workers' Compensation Programs, 147 F.3d 116, 32 BRBS 107(CRT) (9th Cir. 1998), cert. denied, 119 S. Ct. 1454 (1999), the United Court States of Appeals for the Ninth Circuit held that the later-enacted SSA garnishment provision impliedly repealed and anti-alienation provision of Section 16 of the LHWCA. As a result, benefits paid by the Special Fund are considered benefits payable by the United States and are subject to garnishment for delinquent spousal or child support. Garnishment is limited to benefits paid by the Special Fund and in no way affects benefits paid by the employer or carrier. In those instances, the anti-alienation provision of Section 16 of the LHWCA still applies.