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www.oldnationalinsurance.com

Old National Insurance specializes in U.S.L.& H., Jones Act, Stevedores Insurance; Maritime Employers Liability. They can be reached at 1-877-896-2886 or by email at:  

orharris@oldnationalinsurance.com

We will be adding articles of interest about Longshoreman Insurance, The Jones Act and USL&H requirements  from time to time in this section of our website.  If you have any questions, please email us at info@oldnationalinsurance.com or me personally at orharris@oldnationalinsurance.com or call our offices at 1 877 896 2886. We will be glad to answer any questions you may have.

Article I

ARE YOU REQUIRED TO HAVE LONGSHOREMAN INSURANCE?  WE CAN HELP YOU DETERMINE IF YOU NEED IT OR NOT?  MAYBE YOU ARE GOING TO DO CONTRACT WORK WITH A LARGER COMPANY THAT REQUIRES IT.

We can issue Certificates of Insurance quickly once we have your Longshoreman Insurance in place.

THIS IS WHAT OUR PROGRAM DOES FOR YOU

The Longshore and Harbor Workers' Compensation Act provides employment-injury and occupational-disease protection to approximately 500,000 workers who are injured or contract occupational diseases occurring on the navigable waters of the United States, or in adjoining areas, and for certain other classes of workers covered by extensions of this Act.

These benefits are paid directly by an authorized self-insured employer; or through an authorized insurance carrier; or, in particular circumstances, by a Special Fund administered directly by the Division of Longshore Compensation.

In addition to longshore, harbor, and other maritime workers, LHWCA covers a variety of other employees through the following extensions to the Act: The District of Columbia Workmen's Compensation Act (enacted in 1928 and repealed effective July 26, 1982); Defense Base Act (1941); Nonappropriated Fund Instrumentalities Act (1952); and the Outer Continental Shelf Lands Act (1953).

The Longshore Compensation Act provides over $747 million in monetary, medical and vocational rehabilitation benefits in more than 27,000 cases annually for maritime workers and various other special classes of private industry employees disabled or killed by employment injuries or occupational diseases. In addition the Longshore compensation program maintains over $2.8 billion in securities to ensure the continuing provision of benefits for these injured workers in cases of employer insolvency. Claimants depend upon timely receipt of these benefits to provide food, housing and a minimal standard of living for themselves and their families.

MONETARY AND MEDICAL BENEFITS

The Longshore and Harbor Workers' Compensation Act, administered by the U.S. Department of Labor, provides medical benefits, compensation for lost wages and rehabilitation services to longshoremen, harbor workers and other maritime workers who are injured during the course of employment or suffer from diseases caused or worsened by conditions of employment. Several other statutes extend the provisions of the Act to cover other classes of private-industry workers. These include workers engaged in the extraction of natural resources of the outer continental shelf, employees on American defense bases, and those working under contracts with the U.S. government for defense or public-works projects, outside of the Continental United States.

During FY 2005 in excess of $747 million in compensation and medical benefits will be paid in approximately 27,000 cases covered under these compensation acts. These benefits constitute the only source of income for many families. Medical benefits provide the treatment necessary to recuperate and return to gainful employment when timely provided.

The Longshoremen's and Harbor Worker's Compensation Act can provide both compensation and medical benefits to employees who were engaged in maritime employment.

ARTICLE II

What You Don’t Know About Longshoreman Insurance Can Leave You High And Dry!

When your PEO’s client, a welding company, received a call to perform a two-day job, it seemed quite run of the mill, nothing out of the ordinary. However, while on the job, one of the employees, unfortunately, got sparks in his eye, resulting in lost sight. On his road to recovery, you received the dreaded letter from the claimant’s attorney — a demand for permanent partial disability loss in the amount of $133,718, which was about four times the permanent partial disability award in your state. Not the best news for your large deductible plan! Wondering how that could happen, you continued to read on and discovered a reference to Longshoremen’s and Harbor Worker’s Compensation Act. Uh, oh! “What’s that?”

After a grim consultation with your broker and attorney, the facts came to light: Your client sent a crew out to weld handrails onto the riverboat, docked down on the river. Because your employees were working on navigable water, the claimant is entitled to federal Longshoremen’s and Harbor Worker’s Compensation Act benefits. After a short, painful lesson on the nature of this act, you realized that you should have more closely “scrutinized” your client’s jobs.

In 1927, the U.S. Congress passed the United States Longshoremen’s and Harbor Workers’ Compensation Act, sometimes referred to as U. S. L. & H. coverage, in response to court rulings that denied state workers’ compensation benefits to maritime employees who were injured upon the navigable waters of the United States, because federal jurisdiction applied to these waters. The 1927 act provided both compensation and medical benefits to any employee engaged in maritime employment (except the crew members of a vessel) who suffered a work-related injury, disability, or death that occurred upon the navigable waters of the United States. Congress amended the act in 1972, instituting the following changes:

• Prevention of injured maritime workers, subject to the act, from filing suit against the vessel owner on the basis of “unseaworthiness” of the vessel
• Prohibition of third-party over suits
• Benefits generally higher than those offered under state compensation laws
• “Status” and “situs" established as prerequisites for coverage

U. S. L. & H. In order for a claimant to collect under U. S. L. & H., he or she must be an employee defined in the act (status), and the injury must occur at a location under the jurisdiction of the act (situs). Covered employees may include the following positions: longshoremen, harbor workers, ship repairmen, shipbuilders, or ship-breakers. The employees also are required to be engaged in maritime activity upon the navigable waters of the United States, which includes any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or adjoining area that is customarily used by an employer in loading, unloading, repairing, dismantling, or building a vessel. The act does exclude certain classes of employee work from coverage: clubs, camps,recreational operations, museums, retail store employees, marinas, vendors, transporters, suppliers, “aquaculture” work on vessels under 65 feet, and clerical, secretarial, and data processing tasks.

A simple job, like welding handrails onto a riverboat, could leave you high and dry and deplete funds from your company bank account unnecessarily.

The covered injuries and diseases benefits are somewhat similar to the benefits provided by the states. A notable difference is that the willful act of a third person, directed against an employee because of his employment, is covered under the U. S. L. & H. Act. Otherwise, coverage is provided for any accidental death or injury occurring within the scope of employment, except for the death or injury due to intoxication or willful intent of the employee to kill or harm himself, which is not compensable.

If your PEO has a client conducting work that has U. S. L. & H. exposure, you have serious reasons for concern. Generally, the benefits under U. S. L. & H. are substantially higher than the benefits proscribed by states for similar injuries. For example:

• The total temporary maximum weekly benefit is $835.74; the minimum is $208.94.
• There is no time limit set to the disability. Payments continue for the duration of the disability, as claimed.
• Sample income benefits for scheduled injuries include $203,921 for total loss of hand; $62,680, thumb; $171,326, foot; and $167,148, total hearing loss.
• Time limit for income benefits to a spouse if fatality occurs is unlimited, with a lump sum settlement two years after remarriage.

ARTICLE III

The 6 Dirty Secrets of Workers Compensation Insurance

(This information pertains to both your Workers Compensation and to you Longshoreman Insurance)
 

Dirty Secret #1 – Insurance companies don’t pay for your employee injuries, they just finance them for you at usury interest rates.

Do you realize that you pay $2 or $3 back to the insurance company for every dollar they pay out for your employee injuries? Each claim results in the most expensive financing contract you have in your business. You pay:

• For employee injuries through increased rates.

• Increased costs because your Experience Modification skyrockets.

• Lost productivity.

• Reduced morale for the unhurt employees who fill in for the injured employee.

• Increased stress for management and staff.

You have Workers Compensation for only two reasons:

• The law requires it.

• Workers comp spreads the true cost of employee injuries out over time.

Work comp does not pay for employee injuries. You do!

Dirty Secret #2 – Claims Management Services are usually dreadful;

Now that you know you write the checks for your employee’s injuries (you can have more proof if you want it) you should realize how critical it is for you to demand “two thumbs up” claims management service. Claims adjusters are snowed under with too many cases. Your injured employee doesn’t get the attention he or she deserves. In spite of this, insurance companies continue to downsize as they strive to increase profits.

Add Managed Care to the mix and your employee’s claim is often outsourced to a case management company. The adjuster doesn’t even know what is happening or how your injured employee is being treated. You just can’t notify the insurance company your employee was injured and expect them to “do their job.” You must have a proven process in place to minimize the cost of the injury and expedite your injured employee’s return to work.

Dirty Secret #3 – You are penalized and overpay when the “Audit Police” make a mistake on an audit? Would you allow an IRS agent to conduct an audit without an expert on your side? Because your real insurance cost is determined after your policy expires, it is essential the audit is correct.

You’re at a disadvantage from the start. The insurance company auditor knows the rules, you don’t. The auditor is not compelled by law to explain the rules, especially if applying a rule that would cause you to pay a lower premium.

Here’s how the auditor works against you:

• Your entire payroll is put into the highest classification.

• Then, the “standard class exceptions” are put into the correct cost classification. When someone is not properly moved to the lower cost classification, you pay at the highest rate.

Misclassifications are common and the system is designed for you to pay for all mistakes. There are many other errors or omissions that are made in addition to misclassifications. Don’t allow an insurance company auditor to conduct an audit without an expert at your side? A workers comp audit may actually cost you more money than an IRS audit. A workers comp audit is every year. You may go years without an IRS audit.

Dirty Secret #4 – Experience modification factors are often wrong or mismanaged.

Most insurance buyers accept on “good faith” that their experience modification factor is correct. Why? You need to know, because most of the time it may be wrong and the insurance company benefits. Even correct, there are simple strategies to lower it. Do you know those strategies?

Dirty Secret #5 – Your money will fly away unless your agent knows how to jump through hoops and pays closer attention thatn any other insurance buy.

Here’s what your agent must do to insure you have the best value for your workers comp insurance:

• Claims need to be monitored.

• Premium audits must be managed and verified.

• Experience modifications must be double checked for accuracy.

• Contract must be analyzed.

• Sub-contractor’s insurance must be controlled.

Many actions are time sensitive. If you don’t know why 6 months after your policy expires is such a critical date, you may be overpaying your insurance.

If you need a specialist in any area of your insurance program, it is in the management of your insurance that affects your employees the most – workers compensations, medical and disability benefits.

Dirty Secret #6 – You can drastically slash your costs – if you install the right system of loss prevention, claims management and audit policing.

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ARTICLE IV

BE PREPARED TO ANSWER THE FOLLOWING 18 QUESTIONS IN ORDER TO GET A LONGSHOREMAN 

        INSURANCE QUOTATION.

1.Which companies have you approached for a quote?

2. Are you new in business?  (It is OK to be new).

3.What are the Key issues for you on this quote?  Speed of quote?   Need in a hurry?  Past claims?

4.If you are insured now, What is the name of the insurance company?  Are current companies offering renewal?

5.Any claims?

6.How many states do you operate in?

7.Have you (the business)  ever filed Voluntary or Involuntary Bankruptcy (Chapter 11)?

8.If insured now, any lapse for non-payment of premium?

9. Do you own, operate or lease any aircraft to fly your employees?

10.Do you own, operate or lease any vessels or do your employees do any work from any vessel in navigation?

11.Number of employees and breakdown of specific jobs and annualized  payroll for each group.  For example, 2 office secretaries—payroll $57,000 per year, 12 welders---$546,234 payroll per year, 13 divers—payroll $698,498 per year, 4 machine operators—payroll $234,543 per year. Please be very specific.

12.Is there a bookkeeping system or some type of system in place for documenting payroll allocation  between State Workers Compensation Act and Longshoreman?

13.Average hourly wage?

14.Annual employee turnover percentage?

15.Radius of operation in miles?

16.Website address—www.____________________________________

17.Is your company being required to purchase Longshoreman Insurance by a larger Contractor.  If so, what is the name of the General Contractor or Main Contractor?

18.When do you need to have this coverage in place?

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ARTICLE V

Did you know that if you have Workers Compensation presently, it does not cover
your Longshoreman Workers Compensation Risk.  Did you know that  in most cases
you have to have both Workers Compensation for your land based risk and Longshoreman Insurance for your water based risk.  In some cases, your present
insurance company can endorse your present Workers Compensation to cover your
Longshoreman Risk.  However, many insurance companies will not endorse your
present contract.  Either they do not want to take on the additional risk or they are
not qualified by the Federal Government  to insure Longshoreman Insurance.  Insurance
Companies have to be acceptable to the US Government in order to be able to accept
Longshoreman Insurance Risks.  Many insurance companies do not qualify.

Did you know that if you do not have Longshoreman Insurance and that if you were
supposed to have Longshoreman Insurance, you could be subject to both CRIMINAL and
CIVIL penalties to include JAIL TIME?

ARTICLE VI

WHAT IS PROTECTION & INDEMNITY (P&I)?

        In the early 1800's Marine underwriters limited their losses from collision to 3/4

of the shipowner's collision liability.  This led to the formation of shipowner's

associations to mutually insure their exposures and became known as Protection and

Indemnity (P&I) clubs.

P and I clubs have grown to represent approximately 95% of the world's maritime

P&I premium through fewer than twenty clubs worldwide. 

What does P&I cover?

     It covers loss due to injury, illness & loss of life which the insured is legally

obligated to pay.  Who is covered?  It covers the crew, the passengers of ferryboats,

cruise ships, etc.  It also covers people in other vessels such as third party vendors

aboard a vessel.  People on land can be covered as well as deck hands and trainees.

Swimmers and divers can be covered. 

What BENEFITS are available?

     Hospital and medical expenses

     Repatriation/other medically necessary transportation

     Damage to other vessels caused by collision/non-collision

     Damage to property other than vessels

     Wreck removal

     Damage to Cargo

     Fines and Penalties

     Expenses for prosecution of mutiny or misconduct

     Quarantine expenses and defense costs

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    ARTICLE VII

The following article  is a reprint from the US Dept. of Labor newsletter "Longshore News- District VI, VOl. 1, Number 1 published in February 2000. Jacksonville, Fl District.

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QUESTIONS…QUESTIONS…QUESTIONS…QUESTIONS…

Our most frequent claims questions are jurisdictional in nature. Because of the large number of questions received each week, the office put together a training handout, reprinted here in its entirety. PLEASE NOTE: The opinions of the office are advisory only. The answers given here are based on recognized case law. Also keep in mind that the Jacksonville office handles cases in four different judicial circuits, none of whose decisions are binding on the other.

JURISDICTION

The determination of whether a particular claim falls within the coverage of the Longshore Act is based upon:

SITUS: Injury or death resulting from an accident occurring on the navigable waters of the United States, or any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used in the loading, unloading, repairing, dismantling, or building of a vessel.

STATUS: Any person who is performing maritime employment and is not specifically excluded from coverage under the Longshore Act. This would include: Longshore workers and others engaged in longshoring operations such as winch operators, hold workers, marine clerks, dock workers, forklift operators, and warehouse workers performing tasks as an integral part of the loading and unloading process.

Also, any Harbor Worker including but not limited to ship repairers, shipbuilders, ship-breakers, pile drivers, and workers constructing piers, sewer outfalls, or any facility used as an aid to navigation or maritime commerce.

EXCLUSIONS TO COVERAGE:

1. An officer or employee of the United States or any of its agencies.
2. An employee of any state.
3. An employee of any municipality.
4. The agent of any foreign country.
5. An employee whose injury is caused solely by his intoxication.
6. An employee whose injury occurs as a result of his attempt to injure or kill himself or another.
7. Office clerical, secretarial, security, or data processing personnel who perform non-maritime tasks exclusively.
8. Personnel working for a club, camp, recreational operation, restaurant, museum, or retail outfit
   .
9. Personnel employed by a marina including those taking reservations, servicing boats, preparing and serving food, or performing routine tasks.
10. Personnel working for suppliers, transporters, or vendors temporarily doing business on the premises of a maritime employer, but who are not engaged in work normally performed by the employees of the maritime employer. This would include a teamster delivering a load of steel to a shipyard; however, an employee of a subcontractor performing a peripheral part of the shipbuilding or ship repair process at the shipyard would be covered.
11. Aquaculture workers, which includes personnel who clean, process, or can fish and fish products, and a commercial enterprise involved in the controlled cultivation and harvest of aquatic plants and animals.
12. Personnel working on the construction, repair, or dismantling of any recreational vessel under 65 feet in length.
13. NOTE: one exception to exclusions 7 through 12 is that the individual must be eligible for state workers’ compensation benefits.
14. A master or member of a crew of any vessel (Jones’ Act).
15. Any person engaged by a master to load, unload, or repair any vessel under 18 tons net.

Notice must be given to the employer within 30 days after the date of the injury or death or within 30 days of the date that the employee (or dependent) becomes aware that there is a relationship between the injury, or death, and employment.

FREQUENTLY ASKED QUESTIONS

1) Is an employee who delivers food to a cruise ship but does not go on board covered?

NO. Employees temporarily doing business on the premises of a maritime employer, but who are not engaged in work normally performed by the employees of the maritime employer are not covered under the Act.

2) Employees engage in diesel engine repair on recreational powerboats. The repair work is either done in the shop or on the boat. About 80% of the boats worked on are under 65 feet in length. Is coverage needed?

YES. Coverage must be provided for those directly involved in the installation or repair of diesel engines on board a recreational vessel 65 feet or more in length.

3) The insured installs flooring services on ships both inside and out. The work is being done for the Navy. Are these employees covered?

YES. The employer has definite exposure under the Longshore Act, as the activities constitute ship repair.

4) Would an employer who rents out recreational boats be subject to the Longshore Act?

NO. Section 2(3)(b) of the Longshore Act excludes such individuals from coverage. (See # 13 above)

5) Would a business that rebuilds and remanufactures small boat motors, whose owner occasionally goes out on the water to test these motors, need Longshore coverage?

NO. Not unless the boats were commercial vessels or recreational vessels over 65 feet in length.

6) An employer repairs stoves and refrigerators. They occasionally go onboard ship to repair such items. Would they need coverage?

YES. A worker who goes on board a ship to repair equipment that is installed or attached to the ship is performing maritime employment.

7) If an employee is building a residential dock, (not at a marina), which will be used by recreational vessels under 65 feet in length, is he covered by the Longshore Act?

YES. The 65-foot recreational boat limitation would not be applicable. This limitation only applies to individuals engaged in building, repairing or dismantling a recreational vessel under 65 feet in length. The dock builder would be covered, even if only part of his work is performed over the water.

8) Employer does a small amount of the cleaning of officers’ quarters on a ship, less than $500 per year payroll. It is a very small part of their operation, and the U.S. Navy does not employ them. Do they need Longshore Coverage?

YES. The services provided are not specifically excluded under the Longshore Act.

9) A commercial electrical contractor performs work around the Southeast consisting of electrical wiring within buildings. This contractor is in the process of bidding the electrical work, as a sub-contractor, for the electrical portion of the renovation work for a warehouse at the Alabama State Docks. He will perform only the electrical wiring, installing of light fixtures, inside and on the warehouse. He will not perform any work on any ships or cargo carrying vessels. His work will be no different from any other of his jobs, except for the fact that the location is the Alabama State Docks. Does the employer need Longshore coverage?

YES. The employer would need Longshore coverage inasmuch as he is repairing a harbor facility, an integral part of the loading and unloading process.

The Debate

A debate currently rages in the District 6 Longshore community. Small dock builders and small marine construction companies are asking why they need Longshore coverage for their employees. In the last several months, the office has responded to the concerns of business owners in South Florida, as well as in the state of Tennessee, who are attempting to ensure a level playing field when estimating the costs for "over the water" jobs for which they bid. As we all know, Longshore and Harbor Workers’ Insurance coverage is two to three times the cost of state workers’ compensation coverage, and an employer who incorrectly insures their employees under the state’s workers’ compensation scheme has an unfair advantage when bidding on a job covered under the Longshore Act. Those employers who are providing the correct coverage for their employees are rightly upset that they are paying very high insurance costs and are losing jobs to lower bidders who are not providing correct insurance coverage for the work they are doing.

Conversely, small businesses are dismayed at the high costs of Longshore coverage, and lament that they cannot stay in business when their insurance coverage costs are more than their entire business’s payroll.

A BIT OF HISTORY: Prior to the enactment of the 1972 Amendments to the Act, in order to be covered by the Act, a claimant had to prove that his injury occurred upon the navigable waters of the United States, including any dry dock. In 1972, Congress amended the Act to add the status requirement of Section 2(3) and to expand landward the sites covered under Section 3(a). In Director, OWCP v. Perini North River Associates, 459 U.S. 297, 15 BRBS 62 (CRT)(1983), the United States Supreme Court determined that Congress expanded coverage with their amendment, and did not withdraw coverage under the Act from workers injured on navigable waters who would have been covered by the Act before 1972. The Court said that when a worker is injured on actual navigable waters while in the course of his employment on those waters, he is a maritime employee under Section 2(3). Regardless of the nature of the work being performed, such a claimant satisfies both the situs and status requirements and is covered under the Act, unless he is specifically excluded from coverage by another statutory provision. The Court considered ``these employees to be "engaged in maritime employment' not simply because they are injured in a historically maritime locale, but because they are required to perform their employment duties upon navigable waters.'' 3 Perini, 459 U.S. at 324, 15 BRBS at 80 (CRT).

When the Act was amended and coverage was expanded in 1972, many small marinas and boat builders went out of business due to the higher costs of Longshore insurance premiums. A cry went up from those business folks affected, and Congress heeded that cry (a mere 12 years after the 1972 amendments!). With the 1984 amendments, Congress excluded certain workers from coverage. (Those exclusions were enumerated previously in this Newsletter.)

Unfortunately for dock builders, they were not included in the list of those excluded from coverage under the Longshore Act. Hence, dock builders or marine contractors who build docks behind private homes, or do any kind of marine construction, even if they are working in two feet of "navigable water" (or less!) have Longshore exposure, and under the law, must have Longshore insurance coverage. Failure to have coverage is against the law, and carries serious consequences for an employer who fails to satisfy the insurance requirement.

The Act provides that an employer who fails to satisfy the insurance requirement shall be guilty of a misdemeanor and, upon conviction, shall be punished by a fine of not more than $10,000 or by imprisonment for not more than one year, or by both. Also, where the employer is a corporation, the President, Secretary, and Treasurer shall be severally liable to such fine and imprisonment, and also liable, jointly and severally with such corporation, for any compensation or other benefit which may accrue under the Act.

An uninsured employer may also be subject to civil suit by an injured employee pursuant to Section 5 of the Act. The injured worker or his legal representative may elect to claim compensation under the Act, or to maintain an action at law or in admiralty for damages on account of the injury. In such action, the defendant may not plead as a defense that the injury was caused by the negligence of a fellow servant, or that an employee assumed the risk of his employment, or that the injury was due to the contributory negligence of the employee.

Having Longshore coverage is expensive, but not having it could turn out to be more expensive than merely paying the insurance premiums. Unless and until the law is amended again, employers whose employees are working on the navigable water (and are not specifically excluded under the current statute) need Longshore coverage. The Department of Labor, in conjunction with the State of Florida Workers’ Compensation Compliance Bureau, is working to ensure that those businesses with Longshore exposure have the correct insurance coverage. Those who continue to ignore the law may find themselves in "deep water" when auditors come to call, beginning as early as the end of February for certain businesses in Florida.

Reader's Write

Each Newsletter will feature a concern voiced by our readers. The following account concerning the necessity of Longshore insurance coverage was submitted by Melanie I. Jones of SteMic Marine Construction in Ft. Myers, Florida.