Longshoremen's and Harbor Workers' Compensation Act Needs Amending

GAO evaluated the effect of the 1972 amendments to the Longshoremen's and Harbor Workers' Compensation Act and reviewed the Department of Labor's administration of the Act.

Concern has been expressed over the unclear jurisdiction and increased benefits which resulted from the Act's 1972 amendments. Compensation insurance is costly, and coverage is sometimes difficult to obtain. The compensation benefits often come close to preinjury net earnings, thus providing little incentive for injured workers to return to work. Also, in some cases, payments from other sources combined with workmen's compensation could exceed preinjury net earnings. GAO approves of proposed legislation that would base compensation on spendable earnings and reduce compensation for benefits received from certain other sources. The unclear jurisdiction of the Act has resulted in much litigation and has made insurers reluctant to provide compensation coverage. Because a special fund, administered by Labor but financed by employers and insurance carriers, assumes liability for certain compensation payments, some employers and insurance carriers have a strong incentive to limit their liability by obtaining relief from the fund, and Labor lacks the resources to challenge claims against the fund. Some employers either fail to obtain insurance, become authorized self-insurers, or obtain less costly insurance from unauthorized carriers, thus limiting their resources to pay compensation claims. In these cases, defaulted claims could become the liability of the special fund. Labor has improved the program's administration; however, there is still a lack of sufficient staff to handle the greatly increased workload which results in a large backlog and untimely adjudication.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Morton E. Henig Team: General Accounting Office: Human Resources Division Phone: (202) 275-5365