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Managed by Paul J. Loftus, a partner at Dinsmore & Shohl LLP, Transportation Law Today provides professionals in the rail, transit, inland maritime, and trucking industries with current news and analysis of laws, rulings, and regulatory policies.



Wednesday, March 21, 2012

Supreme Court Resolves LHWCA Circuit Split

Yesterday, the U.S. Supreme Court ruled that under the Longshore and Harbor Worker's Compensation Act (LHWCA, 33 U.S.C. Sec. 901), an employee is "newly awarded compensation" when he first becomes disabled, and therefore entitled to benefits calculated in that fiscal year, not a later year when a compensation order is issued. This decision by Justice Sotomayor resolves a split among U.S. Courts of Appeals that had calculated benefits based either on date of disability, or, the date of an award Order.

The LHWCA generally functions like a workers compensation program, where an employer is obligated to pay benefits to an employee injured on the job. The Act caps disability benefits at "twice the applicable national average weekly wage" for the fiscal year where an employee is "newly awarded compensation." 33 U.S.C. 906(b)(1). In most cases employers pay benefits without contesting liability, but if an employer does contest the claim, the Dept. of Labor will adjudicate the claim, which if decided in the employee's favor, results in a compensation award.

In the case before the Court, the issue was whether the employee was due the wage rate for the year he was injured, or the year in which the an Order requiring payment under the Act was issued. The rate for the year in which the Order was issued was higher than the rate for the year the injury occurred. Justice Sotomayor, and seven other members of the Court, held that the date of disability controls the benefit amount, not the date of a potential order issued in the future. The Court cited the possibility of unequal treatment of similarly situated claimants, where one claimant could potentially garner a higher rate by delaying or contesting a LHWCA benefit being voluntarily paid by an employer. Also the Court recognized the potential for "gamesmanship in the claims process" if the benefit rate were based on an adjudication date as opposed to the date of disability onset.

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