Employment:

Longshoremen's and Harbor Workers' Compensation Act Needs Amending

HRD-82-25: Published: Apr 1, 1982. Publicly Released: Apr 5, 1982.

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GAO evaluated the effect of the 1972 amendments to the Longshoremen's and Harbor Workers' Compensation Act and reviewed the Department of Labor's administration of the Act.

Concern has been expressed over the unclear jurisdiction and increased benefits which resulted from the Act's 1972 amendments. Compensation insurance is costly, and coverage is sometimes difficult to obtain. The compensation benefits often come close to preinjury net earnings, thus providing little incentive for injured workers to return to work. Also, in some cases, payments from other sources combined with workmen's compensation could exceed preinjury net earnings. GAO approves of proposed legislation that would base compensation on spendable earnings and reduce compensation for benefits received from certain other sources. The unclear jurisdiction of the Act has resulted in much litigation and has made insurers reluctant to provide compensation coverage. Because a special fund, administered by Labor but financed by employers and insurance carriers, assumes liability for certain compensation payments, some employers and insurance carriers have a strong incentive to limit their liability by obtaining relief from the fund, and Labor lacks the resources to challenge claims against the fund. Some employers either fail to obtain insurance, become authorized self-insurers, or obtain less costly insurance from unauthorized carriers, thus limiting their resources to pay compensation claims. In these cases, defaulted claims could become the liability of the special fund. Labor has improved the program's administration; however, there is still a lack of sufficient staff to handle the greatly increased workload which results in a large backlog and untimely adjudication.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Labor is negotiating with one insurance carrier on the requirements that need to be met before the carrier can become authorized. Employees have been notified of their potential liability in this case. GAO believes that Labor is not likely to take action against employers who are insured by this unauthorized carrier. All claims to this now unauthorized carrier have been paid.

    Recommendation: The Secretary of Labor should direct the Deputy Under Secretary for Employment Standards to require that employers obtain proper insurance coverage or become authorized self-insurers to reduce the potential for defaulted claims which could become special fund liabilities. Actions should be initiated to prosecute employers who do not comply with the insurance requirements.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Labor should direct the Deputy Under Secretary for Employment Standards to revise the letter, LS-504, designed to inform injured workers of their rights, so that it provides more information on compensation payments and should discontinue the use of the post cards, LS-504a and LS 504b.

    Agency Affected: Department of Labor

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Labor should direct the Deputy Under Secretary for Employment Standards to require that districts send the LS-504 letter, as revised, to workers upon receipt of a notice of injury when it appears that compensation will be due.

    Agency Affected: Department of Labor

  4. Status: Closed - Not Implemented

    Comments: While Labor concurred with the recommendations, it stated that it would continue its current policy of only assessing penalties in cases involving habitual offenders. In the opinion of GAO, Labor is unlikely to take any action as a result of this recommendation.

    Recommendation: The Secretary of Labor should direct the Deputy Under Secretary for Employment Standards to require that district offices assess penalties and interest.

    Agency Affected: Department of Labor

 

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