Review of Important Compliance Provisions in the Longshore Act

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We’ve discussed many times the coverage requirements for recognizing exposure under the Longshore and Harbor Workers’ Compensation Act (LHWCA), i.e., situs and status. We’ve also periodically reviewed the important insurance requirement compliance provisions. Let’s once again review these requirements.

 

What statutory insurance requirements must be complied with?

33 U.S.C. Section 904(a) – “Every employer shall be liable for and shall secure the payment to his employees of the compensation payable under Sections 907, 908, and 909.  In the case of an employer who is a subcontractor, only if such subcontractor fails to secure the payment of compensation shall the contractor be liable for and be required to secure the payment of compensation.”

33 U.S.C. Section 905(a) – “…If an employer fails to secure payment of compensation as required by this Act, an injured employee, or his legal representative in case death results from the injury, may elect to claim compensation under the [Longshore] Act, or to maintain an action at law or in admiralty for damages on account of such injury or death.  

33 U.S.C. Section 938(a) – “Any employer required to secure the payment of compensation under this Act who fails to secure such compensation shall be guilty of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than one year, or by both such fine and imprisonment; and in any case where such employer is a corporation, the President, Secretary, and Treasurer thereof shall be also severally liable to such fine and imprisonment as herein provided for the failure of such corporation to secure the payment of compensation, and such President, Secretary, and Treasurer shall be severally personally liable, jointly with such corporation, for any compensation or other benefit which may accrue under the said Act in respect to any injury which may occur to any employee of such corporation while it shall so fail to secure the payment of compensation as required by Section 932 of the Act.”

33 U.S.C. Section 932 – “Every employer shall secure the payment of compensation under this Act – 

(1) By insuring and keeping insured the payment of such compensation with any stock company or mutual company or association, or with any other person or fund, while such person or fund is authorized (A) under the laws of the United States or of any state, to insure workers’ compensation, and (B) by the Secretary, to insure payment of compensation under this Act, or

(2) By furnishing satisfactory proof to the Secretary of his financial ability to pay such compensation and receiving an authorization from the Secretary to pay such compensation directly.”

 

Summary of the insurance requirement compliance provisions: 

Every employer who employs a “maritime” worker covered under the LHWCA must insure its LHWCA workers’ compensation liability with either an insurance company authorized by the Secretary of Labor to provide Longshore Act coverage, or must be authorized by the Secretary of Labor as a Self-Insured Employer.

If an employer is uninsured as a result of failing to comply with one of the Section 932 alternatives, then:

  • The injured worker has an election of remedies, and may sue his employer;
  • The employer is subject to prosecution as a criminal matter;
  • Corporate officers have joint and several liability;
  • The prime contractor will be responsible for the claims of any uninsured subcontractor with whom it is in a contractor-subcontractor relationship.

NOTE:  An insurance policy or endorsement issued by an insurance carrier not authorized by the U.S. Department of Labor to write coverage under the LHWCA leaves the employer in an uninsured status.

NOTE:  Each of the extensions of the LHWCA, namely, the Defense Base Act (DBA), the Outer Continental Shelf Lands Act (OCSLA), and the Nonappropriated Fund Instrumentalities Act (NAFIA), are all separate exposures requiring specific coverage by approved policy or endorsement. 

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Longshore and Harbor Workers' Compensation Act (LHWCA)