[Federal Register Volume 60, Number 88 (Monday, May 8, 1995)]
[Proposed Rules]
[Pages 22537-22539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11149]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Proposed 
Rules  
[[Page 22537]]

DEPARTMENT OF LABOR

Employment Standards Administration

20 CFR Parts 702 and 703

RIN 1215-AA92


Longshore and Harbor Workers' Compensation Act and Related 
Statutes

AGENCY: Employment Standards Administration, Labor.

ACTION: Notice of proposed rulemaking; request for comment.

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SUMMARY: The Department of Labor proposes to revise the regulations 
implementing the Longshore and Harbor Workers' Compensation Act to 
improve administration and clarify existing policy. The regulations as 
proposed would: provide that the jurisdictional boundaries will in the 
future be changed by direct notice to affected parties; eliminate the 
requirement for using certified mail in most circumstances; clarify 
that the Office of Workers' Compensation Programs fee schedule is the 
standard for determining what is a reasonable and customary medical 
charge where there is a dispute; and modify the requirement that an 
employer with geographically different work sites within one 
compensation district have only one insurance carrier.

DATES: Written comments must be submitted on or before July 7, 1995.

ADDRESSES: Send written comments to Joseph Olimpio, Director for 
Longshore and Harbor Workers' Compensation, Employment Standards 
Administrative, U.S. Department of Labor, Room C-4315, Frances Perkins 
Building, 200 Constitution Avenue NW., Washington, DC 20210; Telephone 
(202) 219-8721.

FOR FURTHER INFORMATION CONTACT:
Joseph Olimpio, Director for Longshore and Harbor Workers' 
Compensation, Telephone (202) 219-8721.

SUPPLEMENTARY INFORMATION: The Longshore and Harbor Workers' 
Compensation Act (LHWCA) at 33 U.S.C. 901, et seq., establishes a 
federal workers' compensation system for certain workers in covered 
employment. The Act establishes the general parameters of the 
compensation scheme, including the system for filing claims, the 
benefit levels to be paid, and how the liability of the employer is to 
be secured. In this connection the Secretary of Labor is given, among 
other things, general authority for initial adjudication of disputed 
claims, resolution of certain ancillary issues such as disputes 
involving the amount charged for medical treatment, and responsibility 
for authorizing private insurance carriers to underwrite coverage. 
These proposed rules address issues relating to these subjects by: (1) 
Clarifying that existing district office jurisdictional boundaries may 
be changed by notice to the affected parties; (2) eliminating certain 
requirements for using certified mail; (3) using the OWCP medical fee 
schedule as a tool to resolve disputes over the amount of medical 
bills; and (4) eliminating the requirement that an employer have only 
one insurance carrier for each compensation district.

Compensation Districts

    The Act (section 39(b), 33 U.S.C. 939(b)) requires that 
compensation districts be established, and the regulations currently 
contain a listing of the districts and the states covered by them. 
These districts have jurisdiction over claims which arise in the states 
which fall within that district. The jurisdictional boundaries have 
changed periodically as work loads shift and other factors necessitate 
a change in the rules to reflect the boundary modifications. The 
modifications of the rules, however, have not always followed 
immediately after the actual change. For example, two districts were 
eliminated and the states therein incorporated into other districts 
(see 50 FR, January 3, 1985), and while the changes were purely 
administrative, only later were rules modified to reflect these 
changes.
    With the increasing effort to streamline government, OWCP 
recognizes that the boundaries may need to be modified in the interest 
of efficiency of operation, and that the process for changing the 
boundaries should be flexible. By rescinding the existing description 
and providing that any changes in the future will be made through 
direct notice provision, the proposed rules would allow changes in the 
boundaries to be made more efficiently (without requiring a 
republication in the Federal Register), and more effectively (since all 
interested parties will be notified directly).
    The change represents no substantive change, nor should this 
proposal be read as an indication that changes in existing boundaries 
are presently being considered. If is merely an attempt to take 
advantage of this opportunity to clarify and simplify the process.

Certified Mail

    The current regulations require that the Longshore district office, 
or Administrative Law Judges (ALJs), as appropriate, serve the notice 
of deficiency of settlement applications 702.243(b)), memoranda of the 
informal conference 702.316 and the notice of claim given to the 
employer 702.224 via certified mail. The proposed rules would drop 
these requirements for using certified mail.
    While certified mail does not add significantly to the security of 
the mail process, the requirement does increase costs and the amount of 
staff time it takes to mail a document. Approximately 9,000 pieces of 
mail per year must now be sent certified mail under these rules, at a 
cost of over $9,000 in extra mailing charges and more in staff time to 
complete the necessary Postal Service forms. The service to the 
recipients should not be significantly reduced; indeed because it will 
no longer be necessary for the staff to complete the mailing forms, the 
recipients should see an improvement in the level of service.

Use of OWCP Fee Schedule

    The LHWCA provides to the Secretary significant authority for 
overseeing medical care of injured employees. The 1984 amendments to 
the Act expanded this authority to include ordering a change of 
physician or debarring a physician who submits bills for medical 
treatment where the charge exceeds the prevailing community rate for 
such service. The regulation implementing this provision (702.413) 
provides that, where a dispute arises as to whether a bill exceeds the 
prevailing community rate, it is resolved by the OWCP Director. The 
regulations provide that ``state medical fee schedules for workers' 
compensation charges may be [[Page 22538]] used'' (emphasis added) to 
determine what is the prevailing rate, but does not bind the Director 
or the parties to this methodology.
    Since these regulations were put into effect, the OWCP itself has 
devised a medical fee schedule which the Department now proposes to use 
to determine the LHWCA prevailing rate. The OWCP fee schedule was 
enacted in 1986 and establishes a schedule of maximum allowable charges 
for most medical services provided to injured workers under the Federal 
Employees' Compensation Act (FECA), 5 U.S.C. 8101 et seq. See 20 CFR 
10.410 and 10.411 and 51 FR 8276, for a complete explanation of the 
background and purpose of the schedule.
    In brief, under the fee schedule and billing system, individual 
procedures are assigned a descriptor code using the Physicians' Current 
Procedural Terminology (CPT) scheme developed by the American Medical 
Association. Each code is then assigned a relative value unit (RVU) 
reflecting the relative skill, effort, risk, and time required to 
perform the procedure. The maximum allowable amount payable for a given 
service is calculated by multiplying the RVU by a conversion factor 
(CF). This product is in turn multiplied by a geographic index (GI) 
which allows for regional variations in medical costs (down to 
Metropolitan Statistical Areas) using the Urban Institute's Geographic 
Practice Cost Indices (GPCIs).
    The OWCP fee schedule has proven itself over time as an efficient 
benchmark for determining the prevailing community rate. Indeed, it has 
in practice been used by district medical directors in determining 
prevailing community rates in LHWCA cases. This rule change, therefore, 
merely formalizes an existing practice.

Insurance Policies

    The current rules require an employer operating within any one OWCP 
compensation district to insure all operations within that district 
through a single insurance carrier. Each LHWCA district is comprised of 
a number of different states (see current 20 CFR 702.101), the 
boundaries of which were drawn for internal administrative purposes. 
Insurance carriers, however, are regulated by the individual states and 
therefore may not do business or write LHWCA coverage in every state 
conforming to the LHWCA compensation districts in which an operator may 
have facilities. As a result, the rule requiring only one carrier 
severely limits the field from which an employer may choose a carrier, 
and could potentially leave an employer uninsured for a portion of its 
operations (since, for example, where may be no single insurance 
carrier operating in all the states in a district in which the employer 
has facilities). See Simpson & Brown, Inc. v. Travelers Insurance 
Company. CA No. 93-5287 (D. N.J. 1994) (regulation places the burden of 
obtaining one carrier per compensation district upon the employer and 
not upon an insurer).
    The genesis of the rule appears to be limitations on record 
keeping, limitations which have long since been overcome through data 
processing and other improvements. OWCP recognizes the difficulties the 
existing rule may present and therefore proposes to abolish the 
requirement.

Statutory Authority

    Subsections 39(a) and 39(b) of the Act, 33 U.S.C. 939(a) and (b), 
provide the general statutory authority for the Secretary to prescribe 
rules and regulations necessary for administration and enforcement of 
the Longshore and Harbor Workers' Compensation Act. 33 U.S.C. 907(a) 
provides that the Secretary of Labor may supervise the medical 
treatment and care, including determining the appropriateness of 
charges.

Classification

    The Department of Labor has concluded that the regulatory proposal 
is not a significant regulatory action under the criteria of section 
3(f) of Executive Order 12866.

Paper Reduction Act

    The information collection requirements entailed by the proposed 
regulations have previously been approved by OMB.

Regulatory Flexibility Act

    The Department believes that the rule will have ``no significant 
economic impact upon a substantial number of small entities'' within 
the meaning of section 3(a) of the Regulatory Flexibility Act. Pub. L. 
No. 96-354, 91 Stat. 1164 (5 U.S.C. 605(b)). Although this rule will be 
applicable to small entities it should not result in or cause any 
significant economic impact. The elimination of the requirement for 
insurance underwriting will provide increased flexibility and 
opportunity for covered employers to effect savings. The provision for 
determining medical charges is not expected to result in a significant 
difference in the outcome from that in the present method. The 
Secretary has so certified to the Chief Counsel for Advocacy of the 
Small Business Administration. Accordingly, no regulatory impact 
analysis is required.

List of Subjects

20 CFR Part 702

    Administrative practice and procedure, Claims, Insurance, 
Longshoremen, Vocational rehabilitation, and Workers' compensation.

20 CFR Part 703

    Insurance, Longshoremen, Workers' compensation.

    For the reasons set out in the preamble, parts 702 and 703 of 
chapter VI of title 20 of the Code of Federal Regulations are amended 
as follows:

SUBCHAPTER A--LONGSHORE AND HARBOR WORKERS' COMPENSATION ACT AND 
RELATED STATUTES

    1. The authority citation for parts 702 and 703 are revised to read 
as follows:

    Authority: 5 U.S.C. 301, 8171 et seq.; Reorganization Plan No. 6 
of 1950, 15 FR 3174, 3 CFR, 1949-1953, Comp. p. 1004, 64 Stat. 1263; 
33 U.S.C. 939; 36 D.C. Code 501 et seq.; 42 U.S.C. 1651 et seq.; 43 
U.S.C. 1331; Secretary's Order 1-93, 58 FR 21190.

PART 702--ADMINISTRATION AND PROCEDURE


Sec. 702.101  [Removed and Reserved]

    2. Section 702.101 is removed and reserved.
    3. Section 702.102 is amended by revising the section heading and 
by redesignating paragraphs (a) and (b) as paragraphs (b) and (c) and 
by adding a new paragraph (a) to read as follows:


Sec. 702.102  Establishment and modification of compensation districts, 
establishment of suboffices and jurisdictional areas.

    (a) The Director has, pursuant to section 39(b) of the Longshore 
and Harbor Workers' Compensation Act, 33 U.S.C. 939(b), established 
compensation districts as required for improved administration or as 
otherwise determined by the Director (see 51 FR 4282, Feb. 3, 1986). 
The boundaries of the compensation districts may be modified at any 
time, and the Director shall notify all interested parties directly by 
mail of the modifications.
    (b) * * *
    (c) * * *


Sec. 702.224  [Amended]

    4. Section 702.224 is amended by removing the word ``certified.''


Secs. 702.243 and 702.316  [Amended]

    5. Sections 702.243(b) and 702.316 are amended by removing the 
words ``by certified mail.''
    6. Section 702.413 is revised to read as follows: [[Page 22539]] 


Sec. 702.413  Fees for medical services; prevailing community charges.

    All fees charged by medical care providers for persons covered by 
this Act shall be limited to such charges for the same or similar care 
(including supplies) as prevails in the community in which the medical 
care provider is located and shall not exceed the customary charges of 
the medical care provider for the same or similar services. Where a 
dispute arises concerning the amount of a medical bill, the Director 
shall determine the prevailing community rate using the OWCP Medical 
Fee Schedule (as described in 20 CFR 10.411) to the extent appropriate, 
and where not appropriate, may use other state or federal fee 
schedules. The opinion of the Director that a charge by a medical care 
provider disputed under the provisions of Sec. 702.414 exceeds the 
charge which prevails in the community in which said medical care 
provider is located shall constitute sufficient evidence to warrant 
further proceedings pursuant to Sec. 702.414 and to permit the Director 
to direct the claimant to select another medical provider for care to 
the claimant.
    7. In Sec. 702.414, paragraphs (a) and (c) are revised to read as 
follows:


Sec. 702.414  Fees for medical services; unresolved disputes on 
prevailing charges.

    (a) The Director may, upon written complaint of an interested 
party, or upon the Director's own initiative, investigate any medical 
care provider or any fee for medical treatment, services, or supplies 
that appears to exceed prevailing community charges for similar 
treatment, services or supplies or the provider's customary charges. 
The OWCP medical fee schedule (see Sec. 702.413) shall be used by the 
Director, where appropriate, to determine the prevailing community 
charges for a medical procedure by a physician or hospital (to the 
extent such procedure is covered by the OWCP fee schedule). A claim by 
the provider that the OWCP fee schedule does not represent the 
prevailing community rate will be considered only where the following 
circumstances are presented: (1) Where the actual procedure performed 
was incorrectly identified by medical procedure code; (2) that the 
presence of a severe or concomitant medical condition made treatment 
especially difficult; (3) the provider possessed unusual qualifications 
(board certification in a specialty is not sufficient evidence in 
itself of unusual qualifications); or (4) the provider or service is 
not one covered by the OWCP fee schedule as described by 20 CFR 
10.411(d)(1). These are the only circumstances which will justify 
reevaluation of the amount calculated under the OWCP fee schedule. The 
Director's investigation may initially be conducted informally through 
contact of the medical care provider by the district director. If this 
informal investigation is unsuccessful further proceedings may be 
undertaken. These proceedings may include, but not be limited to: An 
informal conference involving all interested parties; agency 
interrogatories to the pertinent medical care provider; and issuance of 
subpoenas duces tecum for documents having a bearing on the dispute.
    (b) * * *
    (c) After any proceeding under this section the Director shall make 
specific findings on whether the fee exceeded the prevailing community 
charges (as established by the OWCP fee schedule, where appropriate) or 
the provider's customary charges and provide notice of these findings 
to the affected parties.

PART 703--INSURANCE REGULATIONS


Sec. 703.121  [Removed]

    8. Section 703.121 is removed.

    Signed at Washington, DC., this 1st day of May, 1995.
Ida L. Castro,
Deputy Assistant Secretary for Workers' Compensation Programs.
[FR Doc. 95-11149 Filed 5-5-95; 8:45 am]
BILLING CODE 4510-27-M