A-36421, MAY 8, 1931, 10 COMP. GEN. 512

A-36421: May 8, 1931

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CONTRACTS - PANAMA CANAL - WORKMEN'S COMPENSATION INSURANCE THERE IS NO AUTHORITY OF LAW TO INCLUDE IN THE SPECIFICATIONS AND CONTRACT FOR THE CONSTRUCTION OF THE MADDEN DAM IN THE CANAL ZONE. WHICH IS APPLICABLE TO THE PANAMA CANAL. SPECIFICATIONS ARE BEING PREPARED AND INVITATIONS FOR BIDS WILL SHORTLY BE ISSUED FOR THE CONSTRUCTION OF THE MADDEN DAM. THERE IS QUOTED BELOW A PROVISION PROPOSED FOR INSERTION IN THE SPECIFICATIONS REQUIRING THE CONTRACTOR TO FURNISH MEDICAL. THE AMOUNT SO UNPAID MAY BE WITHHELD FROM ANY PAYMENT DUE THE CONTRACTOR UNDER THE CONTRACT UNTIL EVIDENCE OF THE PAYMENT OF SUCH COMPENSATION SHALL HAVE BEEN FURNISHED TO THE CONTRACTING OFFICER. BEFORE FINAL PAYMENT IS MADE UNDER THE CONTRACT.

A-36421, MAY 8, 1931, 10 COMP. GEN. 512

CONTRACTS - PANAMA CANAL - WORKMEN'S COMPENSATION INSURANCE THERE IS NO AUTHORITY OF LAW TO INCLUDE IN THE SPECIFICATIONS AND CONTRACT FOR THE CONSTRUCTION OF THE MADDEN DAM IN THE CANAL ZONE, A PROVISION REQUIRING THE CONTRACTOR TO FURNISH THE BENEFITS OF WORKMEN'S COMPENSATION INSURANCE, INCLUDING MEDICAL SERVICES AND SUPPLIES, TO HIS EMPLOYEES AND TO THE EMPLOYEES OF HIS SUBCONTRACTORS ENGAGED UNDER THE CONTRACT.

COMPTROLLER GENERAL MCCARL TO THE GOVERNOR OF THE PANAMA CANAL, MAY 8, 1931:

CONSIDERATION HAS BEEN GIVEN TO LETTER DATED APRIL 24, 1931, FROM THE CHIEF OF OFFICE, THE PANAMA CANAL, WASHINGTON, D.C., AS FOLLOWS:

THAT PART OF THE WAR DEPARTMENT APPROPRIATION ACT MAKING APPROPRIATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 1932, APPROVED FEBRUARY 23, 1931, WHICH IS APPLICABLE TO THE PANAMA CANAL, AUTHORIZES THE GOVERNOR OF THE PANAMA CANAL TO ENTER INTO CONTRACTS FOR CONTINUING THE CONSTRUCTION OF THE MADDEN DAM TO AN AMOUNT NOT TO EXCEED $11,250,000.

AS THUS AUTHORIZED, SPECIFICATIONS ARE BEING PREPARED AND INVITATIONS FOR BIDS WILL SHORTLY BE ISSUED FOR THE CONSTRUCTION OF THE MADDEN DAM. THERE IS QUOTED BELOW A PROVISION PROPOSED FOR INSERTION IN THE SPECIFICATIONS REQUIRING THE CONTRACTOR TO FURNISH MEDICAL, SURGICAL, AND HOSPITAL SERVICES AND SUPPLIES AND TO PAY COMPENSATION IN CASES OF INJURY OR DEATH OF EMPLOYEES ENGAGED ON THE WORK, IN CONFORMITY WITH THE TERMS AND CONDITIONS OF THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT, APPROVED MARCH 4, 1927.

"ITEM--- LIABILITY FOR INJURY COMPENSATION.--- THE CONTRACTOR SHALL BE LIABLE FOR AND SHALL FURNISH MEDICAL, SURGICAL, AND HOSPITAL SERVICES AND SUPPLIES AND SHALL SECURE THE PAYMENT OF COMPENSATION TO HIS EMPLOYEES AND TO THE EMPLOYEES OF HIS SUBCONTRACTORS ENGAGED ON WORK UNDER THIS CONTRACT, FOR INJURIES AS DEFINED IN, AND TO THE EXTENT, FOR PERIODS AND UNDER CONDITIONS PRESCRIBED IN, AND AT THE RATES PAYABLE IN ACCORDANCE WITH THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT, APPROVED MARCH 4, 1927. THE PAYMENT OF COMPENSATION AND THE FURNISHING OF MEDICAL, SURGICAL, AND HOSPITAL SERVICES AND SUPPLIES SHALL BE SECURED BY INSURING AND KEEPING INSURED THE PAYMENT OF SUCH COMPENSATION AND THE FURNISHING SUCH SERVICES AND SUPPLIES WITH ANY STOCK COMPANY OR MUTUAL COMPANY OR ASSOCIATION AUTHORIZED UNDER THE LAWS OF THE CANAL ZONE TO INSURE WORKMEN'S COMPENSATION; OR THE CONTRACTOR MAY, WITH THE APPROVAL OF THE CONTRACTING OFFICER, BE A SELF-INSURER AS DEFINED IN SAID ACT FOR THE PURPOSE OF FURNISHING SUCH MEDICAL, SURGICAL, AND HOSPITAL SERVICES AND SUPPLIES, AND IN ADDITION, FOR THE PAYMENT OF SUCH COMPENSATION. SHOULD THE CONTRACTOR ELECT TO BE A SELF-INSURER AND SHOULD HE FAIL TO FURNISH THE MEDICAL, SURGICAL, AND HOSPITAL SERVICES AND SUPPLIES FOR SUCH PERIOD AS THE NATURE OF THE INJURY OR THE PROCESS OF RECOVERY MAY REQUIRE, SUCH SERVICES AND SUPPLIES MAY BE FURNISHED BY THE CONTRACTING OFFICER AND THE COST THEREOF CHARGED AGAINST THE CONTRACTOR AND BE DEDUCTED FROM ANY AMOUNTS DUE HIM OR BE COLLECTED FROM THE CONTRACTOR OR HIS SURETIES; AND SHOULD THE CONTRACTOR FAIL TO PAY COMPENSATION PERIODICALLY, PROMPTLY, AND DIRECTLY TO THE PERSON ENTITLED THERETO, THE AMOUNT SO UNPAID MAY BE WITHHELD FROM ANY PAYMENT DUE THE CONTRACTOR UNDER THE CONTRACT UNTIL EVIDENCE OF THE PAYMENT OF SUCH COMPENSATION SHALL HAVE BEEN FURNISHED TO THE CONTRACTING OFFICER. BEFORE FINAL PAYMENT IS MADE UNDER THE CONTRACT, IF THE CONTRACTOR IS A SELF-INSURER, THE AMOUNT WHICH WILL BE SUBSEQUENTLY PAYABLE IN CASES OF INJURY OR DEATH MAY BE DETERMINED, AND SUCH AMOUNT EITHER WITHHELD FROM FINAL PAYMENT UNDER THE CONTRACT UNTIL EVIDENCE IS FURNISHED THE CONTRACTING OFFICER THAT THE AMOUNTS DUE FOR INJURY OR DEATH HAVE BEEN PAID, OR THE CONTRACTOR REQUIRED TO EXECUTE A SURETY BOND, SATISFACTORY TO THE CONTRACTING OFFICER, CONDITIONED FOR THE PAYMENT OF THE AMOUNT SUBSEQUENTLY TO BECOME DUE AND PAYABLE FOR INJURY OR DEATH. CASE OF ANY DISPUTE AS TO THE RIGHT TO MEDICAL, SURGICAL, OR HOSPITAL SERVICES AND SUPPLIES OR AS TO COMPENSATION OR THE AMOUNT THEREOF, THE QUESTION SHALL BE REFERRED TO THE AUDITOR, THE PANAMA CANAL, WHOSE DECISION, WHEN APPROVED BY THE GOVERNOR OF THE PANAMA CANAL, SHALL BE BINDING UPON ALL PARTIES. NOTICE OF AN INJURY OR DEATH, IN RESPECT TO WHICH COMPENSATION IS PAYABLE, SHALL BE GIVEN, AND REPORTS OF PAYMENTS OF COMPENSATION AND TERMINATION OF DISABILITY, SHALL BE MADE PROMPTLY BY THE CONTRACTOR OR THE INSURER TO THE AUDITOR OF THE PANAMA CANAL.'

THE GOVERNOR HAS STATED THAT THE IMMEDIATE REASON FOR SUGGESTING THE INSERTION OF THIS PROVISION IS THE PRESENCE ON THE ISTHMUS OF A CONSIDERABLE NUMBER OF DISABLED AND CRIPPLED LABORERS RESULTING FROM RECENT ARMY AND NAVY CONTRACTS WHICH MADE NO PROVISION FOR WORKMEN'S COMPENSATION INSURANCE. HE FURTHER SAID THAT AS A MATTER OF COMMON HUMANITY, AS WELL AS TO PREVENT INJURED LABORERS ON FUTURE CONTRACTS FROM BECOMING PUBLIC CHARGES OR OBJECTS OF CHARITY, IT IS ESSENTIAL THAT WORKMEN'S COMPENSATION INSURANCE BE REQUIRED. THERE IS NO WORKMEN'S COMPENSATION LAW IN EFFECT ON THE CANAL ZONE AND LABORERS SELDOM SUE CONTRACTORS FOR INJURIES RECEIVED BY THEM DUE PARTLY TO THE FACT THAT IT CAN ONLY OCCASIONALLY BE SHOWN THAT THE INJURY WAS DUE TO THE NEGLIGENCE ON THE PART OF THE CONTRACTOR.

THE VARIOUS STATES HAVE ENACTED WORKMEN'S COMPENSATION LAWS AND THE POLICY OF PROTECTING WORKMEN HAS BEEN ADOPTED BY THE CONGRESS IN THE ENACTMENT OF THE INJURED EMPLOYEES COMPENSATION ACT APPLICABLE TO GOVERNMENT EMPLOYEES, AND IN THE ENACTMENT OF THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT WHICH COVERS HARBOR WORKERS SUBJECT TO ADMIRALTY LAWS AND IN THE EXTENSION OF THE PROVISIONS OF THE LATTER ACT TO ALL EMPLOYEES IN THE DISTRICT OF COLUMBIA OTHER THAN THOSE OF THE GOVERNMENT. IT, THEREFORE, APPEARS PROPER THAT A PROVISION IN LINE WITH THE GENERAL POLICY FOLLOWED BY THE STATE AND BY CONGRESS WITH REFERENCE TO THIS SUBJECT BE INCLUDED IN A CONTRACT TO BE CARRIED OUT IN THE CANAL ZONE WHERE THE RESULT OF FAILURE TO PROVIDE FOR INJURED WORKMEN IS TO CAUSE SUCH WORKMEN TO BECOME PUBLIC CHARGES OR OBJECTS OF CHARITY.

YOUR ATTENTION IS INVITED TO THE GENERAL AUTHORITY GRANTED THE GOVERNOR OF THE PANAMA CANAL IN CONNECTION WITH AUTHORIZING THE USE OF APPROPRIATIONS FOR THE PANAMA CANAL.

"FOR SUCH OTHER EXPENSES, NOT IN THE UNITED STATES, AS THE GOVERNOR OF THE PANAMA CANAL MAY DEEM NECESSARY BEST TO PROMOTE THE MAINTENANCE AND OPERATION, SANITATION, AND CIVIL GOVERNMENT OF THE PANAMA CANAL; ALL TO BE EXPENDED UNDER THE DIRECTION OF THE GOVERNOR OF THE PANAMA CANAL * * *"

THE PROVISION IN THE PARAGRAPH RELATING TO SANITATION, WHICH MAKES THE APPROPRIATION AVAILABLE FOR THE "AID AND SUPPORT OF INDIGENT PERSONS LEGALLY IN THE CANAL ZONE, INCLUDING EXPENSES FOR THEIR DEPORTATION WHEN PRACTICABLE," IS INDICATIVE OF THE DIRECT MONETARY INTEREST THE PANAMA CANAL HAS IN THE ADOPTION OF THE POLICY PROPOSED IN THE PROVISION SUBMITTED FOR CONSIDERATION.

YOUR DECISION AS TO THE LEGALITY OF INCLUDING A PROVISION OF THIS NATURE IN THE SPECIFICATIONS FOR THE CONSTRUCTION OF THE MADDEN DAM IS REQUESTED AT YOUR EARLIEST CONVENIENCE IN VIEW OF THE NECESSITY OF ISSUING THE SPECIFICATIONS AT AN EARLY DATE.

THE APPROPRIATIONS AND THE AUTHORIZATIONS FOR FUTURE APPROPRIATIONS FOR CONTINUING THE CONSTRUCTION OF THE MADDEN DAM ARE SEPARATE AND DISTINCT FROM APPROPRIATIONS FOR THE "AID AND SUPPORT OF INDIGENT PERSONS LEGALLY WITHIN THE CANAL ZONE," ETC. SEE ACT OF FEBRUARY 23, 1931, 46 STAT. 1277.

IF THERE BE INCLUDED IN THE SPECIFICATIONS FOR CONTINUING THE CONSTRUCTION OF THE DAM, THE PROPOSED PROVISION REQUIRING THE CONTRACTOR TO FURNISH BENEFITS SIMILAR TO THOSE PROVIDED FOR CERTAIN CLASSES OF EMPLOYEES UNDER THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT OF MARCH 4, 1927, 44 STAT. 1424, THE LOGICAL RESULT WOULD BE AN INCREASE IN THE AMOUNT OF THE BIDS TO INCLUDE THE COST OF FURNISHING SUCH BENEFITS. THIS WOULD CREATE AN ADDITIONAL OBLIGATION UNDER THE APPROPRIATION PROVIDED FOR CONSTRUCTION OF THE DAM WITH NO DIRECT BENEFIT IN SO FAR AS THE DAM IS CONCERNED, AND, THEREFORE, WOULD BE A DIVERTING OF A PART OF THE APPROPRIATION FROM THE PURPOSE FOR WHICH MADE, AND, ALSO, WOULD TEND TO RELIEVE THE OTHER APPROPRIATION, SPECIFICALLY PROVIDING FOR THE AID AND CARE OF INDIGENT PERSONS, FROM A BURDEN WHICH OTHERWISE IT WOULD BEAR.

FURTHERMORE, THE PROPOSED PROVISION WOULD ESTABLISH A DIRECT RELATIONSHIP BETWEEN THE UNITED STATES AND THE CONTRACTOR'S EMPLOYEES NOT AUTHORIZED BY LAW (SEE SEC. 3 (A) (2) OF THE LONGSHOREMEN'S AND HARBOR WORKERS' COMPENSATION ACT), AND WOULD IMPOSE A BURDEN UPON THE UNITED STATES OF ENFORCING A PRIVATE RIGHT WHICH IS UNAUTHORIZED IN THE ABSENCE OF EXPRESS PROVISION OF LAW THEREFOR.

YOUR LETTER INDICATES THAT PERSONS IN PRIVATE EMPLOY IN THE CANAL ZONE ARE NOT ADEQUATELY PROTECTED IN THE MATTER OF WORKMEN'S COMPENSATION AND INSURANCE. IF THERE BE NO AUTHORITY TO REQUIRE PRIVATE EMPLOYERS TO ADOPT PROPER SAFEGUARDS TO PREVENT DEATH OR INJURY OF EMPLOYEES ENGAGED IN THE CONSTRUCTION OF PUBLIC WORKS, AND TO FURNISH THE EMPLOYEES THE BENEFITS OF WORKMEN'S COMPENSATION AND INSURANCE, THE MATTER IS FOR REMEDYING NOT BY INCLUDING PROVISIONS IN THE SPECIFICATIONS AND CONTRACTS FOR CONSTRUCTION OF PUBLIC WORKS, BUT BY PRESENTATION OF THE MATTER TO THE CONGRESS FOR ITS CONSIDERATION WHETHER THERE SHOULD BE ADOPTED FOR THE CANAL ZONE SOME FORM OF WORKMEN'S COMPENSATION AND INSURANCE.

ANSWERING YOUR QUESTION SPECIFICALLY, YOU ARE ADVISED THAT THE PROPOSED PROVISION MAY NOT LEGALLY BE INSERTED IN THE SPECIFICATIONS FOR CONTINUING THE CONSTRUCTION OF THE MADDEN DAM.