On October 6, 2011, the Department of Labor issued OWCP Bulletin No. 12-01, which supplements information contained in the Federal Employees’ Compensation Act (FECA) Procedure Manual and OWCP Bulletin No. 05-01. The stated purpose for the new OWCP Bulletin, which addresses the Defense Base Act (DBA) and War Hazards Compensation Act (WHCA), is to “provide specific guidance on the interplay between” the Division of Federal Employees Compensation (DFEC) and the Division of Longshore and Harbor Workers’ Compensation (DLHWC), and to explain “the responsibilities of each program in the administration of DBA/WHCA reimbursement cases with ongoing entitlement.” This may be the most significant development in WHCA administration in years.
First, some background. Some DBA claims–typically those involving injuries occasioned by “war-risk hazards”–are also WHCA cases. Benefits are paid to an injured claimant pursuant to the DBA, and the employer, fund, or insurance carrier that paid the benefits retains the right to request reimbursement for all benefits paid, as well as associated claims expenses. In certain cases, DFEC will pay benefits directly to injured workers, as authorized by 42 U.S.C. § 1704 and 20 C.F.R. § 61.105. Direct payment is only available when the rate of compensation and the period of payment have become relatively fixed and known. Although there is no statutory or regulatory requirement to do so, DFEC more or less requires a compensation order from DLHWC before it will accept the claim for direct payment. And the direct payment of benefits is not limited to indemnity benefits. Medical benefits will also be paid to the injured worker, but those benefits will be furnished under the FECA guidelines. One caveat of the direct payment provisions is that DFEC retains the right to transfer a case back to a carrier so that it can continue paying benefits.
It is important to remember that a direct payment case, though paid for by DFEC, remains a DBA case subject to the provisions of the Longshore and Harbor Workers’ Compensation Act (LHWCA).
OWCP Bulletin No. 12-01 is divided into numerous sections, the highlights of which are presented below–along with a few comments. Based on the length and scope of the Bulletin, we are presenting this article in two parts.
Clarification of DBA Decisions:
DFEC retains the right to seek clarification regarding the terms of a compensation order from the applicable DLHWC District Director. If necessary, a new order can be issued. Further, a claimant can have multiple injuries where only some of the injuries qualify for WHCA reimbursement. In these situations, the carrier can be asked to identify and substantiate the costs associated with only the covered injuries.
Note: Interestingly, the Bulletin states that “clarification of the DLHWC Informal Conference Memorandum or Compensation Order may be required.” The reason this is interesting is that OWCP Bulletin No. 05-01 specifically prohibits the use of informal conference memoranda as the basis for a direct payment claim.
Disagreement with or Modification of a DBA Decision:
For the most part, DFEC will accept a compensation order without additional review. Nonetheless, DFEC retains the right to challenge a compensation order when it is believed that there is a mistake of fact or a change in circumstances. In these situations, DFEC will notify the DLHWC of the perceived problems. If the DLHWC agrees that modification is warranted, then it will initiate modification proceedings under Section 22 of the LHWCA. DFEC retains the ability to transfer a case back to the carrier for these proceedings.
Note: This is an interesting provision because, for the most part, direct payment requests are made very soon after the entry of a compensation order. As such, any challenge would be made soon after the DBA case resolved. DFEC’s position hints that it could force an employer and carrier to take a defense in future litigation under a modification proceeding despite concessions and stipulations made by the parties in the DBA suit.
As explained earlier, when DFEC accepts a claim for direct payment, it may furnish medical treatment in accordance with the regulations governing medical treatment under FECA. Because FECA regulations control, carriers should endeavor “to identify the specific medical conditions associated with the DBA claim.” This list of covered conditions can be included in Stipulations resolving the underlying claim, and the list should be included in an application for reimbursement and direct payment.
When changes in treatment and medical conditions occur, DFEC will process the change under the following steps:
(1) If the new condition is a consequence of the earlier covered condition, then DFEC has to determine whether the medical evidence supports covering the alleged consequential injury. If so, modification proceedings before the DLHWC may be necessary.
(2) If the new condition is completely new, DFEC will advise the claimant to file a claim for medical benefits with the DLHWC or seek modification. More DBA litigation will be necessary in this event.
(3) If a claimant requests a change in physicians, DFEC will determine if the change is necessary and, if so, authorize the change. If DFEC believes that the change may not be warranted, it will refer the claimant back to the DLHWC for an adjudicatory decision.
Note: DFEC can refer a claim back to the DLHWC, but it takes the position that it is not a party to the subsequent litigation that could ensue. And even though it is not a party, DFEC cautions carriers that “a failure to present any and all viable defenses to [a] claim may result in a subsequent denial of its reimbursement claim under the WHCA.” This statement, which springs from 20 C.F.R. § 61.102, will undoubtedly create additional litigation for fear that a claim will not be reimbursed.
Part Two of this blog entry will be posted soon…
(Note: I originally published this post on Navigable Waters: A Maritime, Longshore and Defense Base Act Blog.)