What is Considered Compensation under the Longshore Act?

What is Considered Compensation under the Longshore Act?

Section 2(12) of the Longshore and Harbor Workers’ Compensation Act (33 U.S.C. section 902(12)) (“the Act”) defines “compensation” as “the money allowance payable to an employee or to his dependents as provided for in this Act, and includes funeral benefits provided therein”.

It seems straightforward: if you miss time from work or suffer an impairment or a loss of wage earning capacity due to an injury arising out of and in the course of employment, you are paid weekly “compensation” based on a percentage of your average weekly wage to compensate you for your lost earnings.

In its most common usage, “compensation” means “periodic disability benefits”, such as the weekly indemnity payments paid to injured workers.

It turns out that “compensation” means different things in different places in the Act.


Medical Benefits
Are medical benefits “compensation” under the Act?  It depends on the context.

Section 13 of the Act states that a claim is timely filed if done so within one year of the last payment of “compensation”.  The payment of medical benefits is not “compensation” in this context.  It will not extend the claim filing deadline.

NOTE:  Since medical benefits are not “compensation”, the notice and filing time limits do not apply to medical benefits.  A claim for medical only benefits is never time barred.

Sections 14(e) and 14(f) provide for penalties for the late payment of compensation under certain circumstances.  Medical benefits are not “compensation” for the section 14 penalties provisions.

Section 33(g)(1) requires that a “person entitled to compensation” must obtain written approval from the employer and the employer’s insurance carrier before entering into a settlement with a third party for an amount less than the “compensation” to which the person would be entitled to under the Act.  The term “compensation” as used here does not include medical benefits.  Thus, a person entitled only to medical benefits does not have to comply with the section 33(g)(1) written approval requirement.

NOTE:  Section 33(g)(2) requires that a person entitled to compensation must give notice to his employer of any third party settlement or judgment in a third party lawsuit.  A person entitled only to medical benefits must comply with the section 33(g)(2) notice requirement.

So “medical benefits” and “compensation” are usually not interchangeable in different sections of the Act, and as we’ve seen, for the purposes of sections 14 and 33(g)(1) the term “compensation” does not include medical benefits but does for section 33(g)(2).

There are always exceptions. 

Medical benefits paid directly to a claimant as reimbursement for claimant-paid medical costs – as opposed to medical payments directly to providers – have been held to be included in the term “compensation” as used in section 18(a), dealing with enforcement in the case of a “default by the employer in the payment of compensation …”.

Likewise, regarding these same types of medical expenses to a claimant who had originally paid them directly, the reimbursed medical expenses were held to be “compensation” subject to the section 14(f) penalty for late payment.  So, for medical payments made to providers, the penalty provisions of section 14 would not apply, but for payments reimbursed to a claimant the penalty provisions may apply.

Another example in the context of section 33(g)(1), in calculating whether the third party settlement is for an amount greater or less than the amount of “compensation” to which the claimant is entitled, medical benefits are not included as “compensation”.


Funeral Benefits
Curiously, although “funeral benefits” are specifically included as “compensation” in the section 2(12) definition, funeral benefits have been held to not be “compensation” in the context of the second injury provision of section 8(f), which limits the employer’s liability for the payment of compensation under certain circumstances.


Advance Payments of Compensation
Section 14(j) states, “If the employer has made advance payments of compensation, he shall be entitled to be reimbursed out of any unpaid installment or installments of compensation due …”.  The term “compensation” here, modified by “installments”, means that the employer cannot take a credit for medical payments out of an overpayment of compensation.


Attorney Fees
Also under section 14(j), an employer’s liability for an attorney fee cannot be offset against an overpayment of compensation.  An employer paid attorney fee is not “compensation”.


Interest paid on overdue compensation is not “compensation”.  For example, there is no section 14(f) penalty on the late payment of interest.

NOTE:  Interest is usually not considered to be “compensation”, and medical benefits also are usually not considered to be “compensation”, but interest is assessed on the late payment of medical expenses.

We’re not done.


Section 28(a) provides for an employer-paid attorney fee if the employer “declines to pay any compensation”.  In this context, a section 14(f) penalty is not “compensation” according to the federal Second Circuit Court of Appeals.  Therefore, no attorney fee is payable if the claimant is contesting an assessment of a section 14(f) penalty in the Second Circuit.

But in the federal Fourth and Ninth Circuits, it is likely that the section 14(f) twenty percent penalty on the late payment of compensation will itself be considered additional “compensation” and will support an employer-paid attorney fee.

Funeral benefits are “compensation” for the purposes of the section 33(g) forfeiture provisions.  Funeral benefits can be forfeited if the section 33(g)(1) written approval requirement is not met.

Here’s a cautionary note: if an employer continues to pay a worker’s salary following an injury and missed time from work, it is very possible that these salary payments will not be considered “compensation”.  The employer may find that it owes compensation under the Act in addition to the salary payments it has made.  The employer could possibly avoid this result if it specifically designates the salary payments as “advance payments of compensation”.

Is this complicated?  Yes.  Have I made it seem more complicated by jumping around among the various sections of the Act?  Probably, but there’s a message.  The Longshore Act is complex, even in seemingly straightforward situations.  You often need to rely on experts.

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About the Author

Jack Martone joined The American Equity Underwriters, Inc. in 2006, where he serves as Senior Vice President, AEU Advisory Services. Prior to AEU, Jack served for 27 years in the U.S. Department of Labor, Office of Workers Compensation Programs, as Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers' Compensation for the U.S. Department of Labor. As Branch Chief, Jack directed the licensing and regulation of insurance carriers and self-insured employers under the Longshore and Harbor Workers’ Compensation Act. Jack received his bachelor’s degree from Fordham University and his Juris Doctorate from St. John’s University School of Law.

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