[Federal Register Volume 60, Number 190 (Monday, October 2, 1995)]
[Rules and Regulations]
[Pages 51346-51348]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24078]



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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: Final rule.

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SUMMARY: On May 8, 1995, the Department of Labor published a proposal 
to amend the regulations implementing the Longshore and Harbor Workers' 
Compensation Act. The amendments are designed to improve administration 
and clarify existing policy by: Providing that the district 
jurisdictional boundaries would be changed by direct notice to affected 
parties; eliminating the requirement for using certified mail in most 
circumstances; clarifying that the Office of Workers' Compensation 
Programs fee schedule would be used to determine the reasonable and 
customary medical charge where there is a dispute; and modifying the 
requirement that an employer with geographically different work sites 
within one compensation district have only one insurance carrier. The 
final rules are being published essentially unchanged from the 
proposal.

Effective Date. The rule is effective on November 1, 1995.

FOR FURTHER INFORMATION CONTACT:
Joseph Olimpio, Director for Longshore and Harbor Workers' 
Compensation, Employment Standards Administration, U.S. Department of 
Labor, Room C-4315, Frances Perkins Building, 200 Constitution Avenue 
NW., Washington, DC 20210; Telephone (202) 219-8721.

SUPPLEMENTARY INFORMATION:

Introduction

    The Longshore and Harbor Workers' Compensation Act (LHWCA; 33 
U.S.C. 901, et seq.) establishes a federal workers' compensation system 
for certain workers in covered employment and sets forth 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. The preamble to the proposed rule published 
May 8, 1995 (60 FR 22537) sets forth in detail the bases for the 
changes to the existing rules, which streamline and improve certain 
administrative functions under the LHWCA.
    The authority for the administration of the LHWCA granted to the 
Secretary of Labor has been delegated to the Office of Workers' 
Compensation Programs (OWCP). This authority includes 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. In brief, the changes to the rules affect:

Compensation Districts

    The rules will now provide that changes in the administrative 
compensation districts can be made by notice to all affected parties 
and not through a change in the regulations. This will ensure that, in 
this period of rapid change in the way government performs its 
functions, the program can rapidly reposition its resources as needed.

Certified Mail

    The rules remove the requirement that the appropriate office 
(either the Longshore district office or the Administrative Law Judges 
(ALJs)) serve via certified mail the notice of deficiency of settlement 
applications (702.243(b)); Memoranda of the informal conference 
(702.316); and the notice of 

[[Page 51347]]
claim given to the employer (702.224). This is an expensive and time 
consuming process which has been proven to be unnecessary.

Use of OWCP Fee Schedule

    The rules make clear what has been the practice since the 1984 
amendments to the Act: that the OWCP fee schedule may be used in 
determining the prevailing community rate for the purposes of enforcing 
the provision that authorizes OWCP to-direct a change of physician or 
the debarment of the physician who submits bills for medical treatment 
where the charge exceeds the prevailing community rate for such 
service.

Insurance Policies

    The rule requiring an employer operating within any one OWCP 
compensation district to insure all operations within that district 
through a single insurance carrier has been eliminated. Each LHWCA 
district is comprised of a number of different states (see current 20 
CFR 702.101), while insurance carriers, which are regulated by the 
individual states, may not do business or write LHWCA coverage in every 
state conforming to the LHWCA compensation districts in which an 
operator may have facilities. The result is that an employer's choice 
in carriers is limited and the employer could potentially be left 
uninsured for a portion of its operations.

Analysis of Comments

    Two comments were received. One employer objected to the 
elimination of the certified mail requirement, and an individual raised 
general concerns with the rules and requested that they be made 
effective only prospectively.
    The employer commented that the use of certified mail helps ensure 
that the employer is not subject to the fines and penalties provided in 
the LHWCA for failure to conform with various time requirements. The 
commentor suggests that if the Department is removing this requirement, 
then it should be the Director's burden to demonstrate when notice was 
accomplished.
    Contrary to the implication in this comment, the LHWCA does not 
condition the employer's obligation to pay benefits (section 14(e)) or 
to controvert entitlement to compensation (section 14(d)), on its 
receiving written notice of the filing of a claim. Quite to the 
contrary, those obligations arise as soon as the employer has knowledge 
of the injury or death. Our experience indicates that receipt or non-
receipt of written notice from the district directors, has little to do 
with an employer's timely compliance with the statutory obligations.
    Further, our experience does not support the assertion that 
certified mail is necessary to protect an employer from an unjustified 
or unwarranted decision requiring it to pay claimant's attorney fees. 
An employer can protect itself from this liability by paying 
compensation no later than 30 days after receiving the written notice 
from the district director. Prior to receipt of such notice, an 
employer cannot be held liable. See: Watkins v. Ingalls Shipbuilding, 
Inc., 26 BRBS 179 (1993), appeal dismissed No. 93-4367 (5th Cir. 
December 9, 1993).
    In general, the postmark showing the date of mailing (and/or date-
stamp showing receipt) may be used to establish a general time frame 
within which correspondence was received, if this is necessary to 
resolve disputes where time is relevant. For example, we are not aware 
of such penalties incurred as a result of not having the conference 
recommendation sent by certified mail. The commentor argues that 
receipt of notice of a deficiency in a settlement application must be 
timely, or the employer could pay the settlement, then not be able to 
recoup it. The scenario painted by the commentor (that the deficiency 
notice is not received in a timely manner because it is not sent by 
certified mail) simply is not relevant. Any delay could exist, whether 
or not certified mail is used, and the same problem with recoupment 
would exist, whatever the reason for the delay in receipt of notice of 
deficiency.
    The remotely possible scenarios used to support the employer's 
objections are not sufficient to overcome the distinct advantages, 
particularly the savings in staff resources and mailing costs, 
associated with dropping this requirement. As noted in the preamble to 
the proposed rule, 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 
recipients should see an improvement in the level of service as 
resources now dedicated to certified mailings can be used elsewhere.
    The individual, in his comments, requested that the regulatory 
changes be applicable only prospectively and that they not apply to 
injuries sustained or claims filed before the proposed rules were 
published in the Federal Register. It is not the intent of the 
Director, that the changes deleting the certified mail requirement be 
applied to relieve a party of liability already incurred or to impose 
liability where none existed. However, the Director does believe that 
it will be appropriate to apply the OWCP fee schedule to pending claims 
where such application will assist in resolving outstanding issues. For 
these reasons, no change needs to be made to the rules as written.

Conclusion

    For the reasons set out in the preamble to the proposed rule, as 
amplified by these comments, the Department has determined to finalize 
the rule.

Statutory Authority

    Subsections 39(a) and 39(b) of the Act, 33 U.S.C. 939 (a) & (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.

Paperwork Reduction Act

    The information collection requirements entailed by the 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, 

[[Page 51348]]
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, part 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 Part 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]

    2. Section 702.101 removed and reserved.
    3. Section 702.102 is amended by revising the section heading, and 
paragraphs (a) and (b) are redesignated as paragraphs (b) and (c) and a 
new paragraph (a) is added 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.''


Sec. 702.243  [Amended]


Sec. 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:


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 section 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 section 702.414 and to permit the 
Director to direct the claimant to select another medical provider for 
care to the claimant.
    7. In section 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 section 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). 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.
    (1) 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:
    (i) where the actual procedure performed was incorrectly identified 
by medical procedure code;
    (ii) that the presence of a severe or concomitant medical condition 
made treatment especially difficult;
    (iii) the provider possessed unusual qualifications (board 
certification in a specialty is not sufficient evidence in itself of 
unusual qualifications); or
    (iv) the provider or service is not one covered by the OWCP fee 
schedule as described by 20 CFR 10.411(d)(1).
    (2) The circumstances listed in paragraph (a)(1) of this section 
are the only ones which will justify reevaluation of the amount 
calculated under the OWCP fee schedule.
    (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. 703.12  [Removed]

    8. Section 703.121 is removed.

    Signed at Washington, DC, this 22d day of September 1995.
Ida L. Castro,
Deputy Assistant Secretary for Workers' Compensation Programs.
[FR Doc. 95-24078 Filed 9-29-95; 8:45 am]
BILLING CODE 4510-27-M