How Do You Measure the 10 Day Rule For Paying Formal Awards Under Section 914(f)?
Section 914(f) of the Longshore and Harbor Workers’ Compensation Act states,
“Additional Compensation for overdue installment payments payable under terms of award. If any compensation, payable under the terms of an award, is not paid within ten days after it becomes due, there shall be added to such unpaid compensation an amount equal to 20 per centum thereof….”
Seems simple. If you pay late it’ll cost you an additional 20 per cent.
But, what’s an “award”? When is it “due”? When does the “ten days” start to run? How long is ten days? When is the award “paid”? We could even get into what is “compensation”, but we’re only dealing with the time issue right now.
Questions: What if the payment is received on the tenth business day which is the thirteenth calendar day (business days don’t count holidays and weekends)? What if you mail the payment on the seventh day, but it isn’t received by the injured worker until the eleventh day? Can you send the payment to the injured worker’s attorney? What if you timely mail the payment in good faith to an incorrect address supplied to you by the injured worker and as a result the payment arrives after ten days? What if your overnight delivery service messes up and delivers the payment on the eleventh day?
It seemed simple, but got complicated. And maybe expensive. A $200,000 lump sum settlement under section 908(i) will cost you another $40,000 if paid late. So let’s make sure that we can count to ten.
By “award” we’re talking about formal Compensation Orders issued by District Directors, Administrative Law Judges, and the Benefits Review Board under the provisions of the Longshore Act.
Payment is “due” when the Order is “filed” in the District Director’s office pursuant to section 919(e).
What does “filed” mean? Well, neither the statute nor the regulations defines it. The Supreme Court has offered a not very helpful definition – “A paper is filed when it is delivered to the proper official and by him received and filed”.
The regulations implementing the Longshore Act (at 20 C.F.R. 702.349) provide that, “Upon receipt thereof, the District Director shall formally date and file the transcript, pleadings, and compensation order in his office. Such filing shall be accomplished by the close of business on the next succeeding working day, and the District Director shall, on the same day as the filing was accomplished, send by certified mail a copy of the compensation order to the parties….”
So, let’s take this to mean that “filing” actually means an affirmative act by the District Director, which is completed on the workday after he receives the Order in his office. So, payment is “due”, and the “ten days” begin to run on the working day after the District Director receives the Order. (The Benefits Review Board serves its own Orders, so the ten days begin to run when the Order is filed by the Clerk of the Board. Otherwise the same ten day rule applies.)
Now we’re getting somewhere. Now, how long is “ten days”? Do you mean ten business days or do you mean ten calendar days? We’re going to go with ten calendar days (which every one agrees on except the federal Fifth Circuit Court of Appeals, comprising the states of Texas, Louisiana, and Mississippi, which still goes with ten business days).
This is where the questions can stop. Payment must be in the hands of the injured worker (not just put in the mail) by the tenth calendar day beginning the day after the District Director receives the Order. If not, then you owe 20 per cent more. A check is okay as long as it doesn’t bounce. There’s no discretion. No excuses. Eleventh day? 20 per cent. Good faith bad address? 20 percent. FedEx makes a mistake? 20 per cent. Sent to attorney instead of claimant? 20 per cent. Etc.? 20 per cent. The ten days begin to run before you even receive the Order? Blame Congress.
Presumably you might, in an appropriate case, be able to avoid the section 914(f) penalty by proving outright fraud on the part of the injured worker making timely delivery impossible. But this would be a very unusual case.
This is black and white and mandatory yet it continues to come up regularly as an issue, usually where a carrier thinks it has a good equitable case for missing the ten days. There’s no equity in Longshore. The rule is: money in the claimant’s hands in ten days.
The Special Fund administered by the U.S. Department of Labor is also subject to section 914(f). The Fund is on an automated fourteen day pay cycle. When I was there I would have the District Directors fax any Orders to me that required payment by the Fund so that I could get them paid manually to make sure that we never had any 914(f) problem.
Summary: To avoid the section 914(f) penalty have the payment in the claimant’s hands by the tenth calendar day after the District Director files the Order (beginning the next business day after the District Director receives the Order).
ABOUT THE AUTHOR
John A. (Jack) Martone served for 27 years in the U.S. Department of Labor, Office of Workers’ Compensation Programs, as the Chief, Branch of Insurance, Financial Management, and Assessments and Acting Director, Division of Longshore and Harbor Workers’ Compensation. Jack joined The American Equity Underwriters, Inc. (AEU) in 2006, where he serves as Senior Vice President, AEU Advisory Services and is the moderator of AEU's Longshore Insider.