Longshore and Harbor Workers' Compensation Act: Maximum and Minimum Compensation Rates, 58878-58890 [2016-20467]

Download as PDF 58878 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules The Commission believes that providing the public additional time to consider thoroughly the matters addressed by the release and to submit comprehensive responses to the release would benefit the Commission in its consideration of final rules. Therefore, the Commission is extending the comment period for Release Nos. 33–10098 and 34–78086, ‘‘Modernization of Property Disclosures for Mining Registrants,’’ until September 26, 2016. By the Commission. Dated: August 23, 2016. Brent J. Fields, Secretary. [FR Doc. 2016–20548 Filed 8–25–16; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF LABOR Office of Workers’ Compensation Programs 20 CFR Part 702 RIN 1240–AA06 Longshore and Harbor Workers’ Compensation Act: Maximum and Minimum Compensation Rates Office of Workers’ Compensation Programs, Labor. ACTION: Notice of proposed rulemaking; request for comments. AGENCY: The Office of Workers’ Compensation Programs is proposing rules to implement the Longshore and Harbor Workers’ Compensation Act’s maximum and minimum compensation provisions. Some of these provisions, which cap the amounts of compensation and death benefits payable to entitled claimants and provide a floor below which compensation may not fall, have become the topic of litigation. The proposed rules would clarify how the Department interprets and applies these provisions. In addition, the proposed rules would implement the Act’s annual compensation-adjustment mechanism for permanent total disability compensation and death benefits. DATES: The Department invites written comments on the proposed regulations from interested parties. Written comments must be received by October 25, 2016. ADDRESSES: You may submit written comments, identified by RIN number 1240–AA06, by any of the following mstockstill on DSK3G9T082PROD with PROPOSALS SUMMARY: 2016); and letter from Jeffrey Klenda, Chair of UrEnergy Inc. (August 19, 2016). Comments are available on the Commission’s Web site at: https:// www.sec.gov/comments/s7-10-16/s71016.htm. VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 methods. To facilitate the receipt and processing of comment letters, OWCP encourages interested parties to submit their comments electronically. • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions on the Web site for submitting comments. • Fax: (202) 693–1380 (this is not a toll-free number). Only comments of ten or fewer pages (including a Fax cover sheet and attachments, if any) will be accepted by Fax. • Regular Mail or Hand Delivery/ Courier: Submit comments on paper to the Division of Longshore and Harbor Workers’ Compensation, Office of Workers’ Compensation Programs, U.S. Department of Labor, Room C–4319, 200 Constitution Avenue NW., Washington, DC 20210. The Department’s receipt of U.S. mail may be significantly delayed due to security procedures. You must take this into consideration when preparing to meet the deadline for submitting comments. Instructions: All submissions received must include the agency name and the Regulatory Information Number (RIN) for this rulemaking. All comments received will be posted without change to http://www.regulations.gov, including any personal information provided. Docket: To read background documents or comments received, go to http://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Antonio Rios, Director, Division of Longshore and Harbor Workers’ Compensation, Office of Workers’ Compensation Programs, U.S. Department of Labor, Room C–4319, 200 Constitution Avenue NW., Washington, DC 20210. Telephone: (202)–693–0038 (this is not a toll-free number). TTY/ TDD callers may dial toll free 1–877– 889–5627 for further information. SUPPLEMENTARY INFORMATION: I. Background of This Rulemaking The Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. 901–50 (LHWCA or Act), establishes a federal workers’ compensation system for an employee’s disability or death arising in the course of covered maritime employment. 33 U.S.C. 903(a), 908, 909. This proposed rule would implement the Act’s provisions on maximum and minimum amounts of compensation payable. A. The Act’s Compensation Scheme Disability, which the Act defines as ‘‘incapacity because of injury to earn the wages which the employee was receiving at the time of injury,’’ 33 U.S.C. 902(10), ‘‘is in essence an PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 economic, not a medical concept.’’ Metro. Stevedores v. Rambo, 515 U.S. 291, 297 (1995). From its inception in 1927, the Act has provided that ‘‘the average weekly wage of the injured employee at the time of the injury’’ must be used as the basis for computing his or her compensation rate. 33 U.S.C. 910. Thus, ‘‘[a]n employee’s compensation depends on the severity of his disability and his preinjury pay.’’ Roberts v. SeaLand Services, Inc., 566 U.S. ll, 132 S.Ct. 1350, 1354 (2012). Several statutory sections have an impact on determining the amount of compensation payable. Section 10, ‘‘Determination of Pay,’’ 33 U.S.C. 910, is the starting point in the statutory scheme. It sets out rules for calculating the employee’s average weekly wage (AWW) as of the time of the employee’s disabling injury. This AWW serves as the basis for all future benefit calculations for that worker throughout the life of his or her claim. The second step is to determine what percentage of the employee’s AWW a claimant will receive in compensation. This is determined under section 8, ‘‘Compensation for Disability,’’ and section 9, ‘‘Compensation for Death,’’ 33 U.S.C. 908, 909. Compensation payable for disability varies based on the nature and extent of an employee’s disability. Section 8 establishes four basic categories of disability: Permanent total, temporary total, permanent partial, and temporary partial. 33 U.S.C. 908(a)–(c), (e). In general, an injury is ‘‘total’’ if the worker is unable to work after the injury and ‘‘partial’’ if the worker is able to work at a diminished wage. A disability is ‘‘temporary’’ if the employee’s medical condition is improving and becomes ‘‘permanent’’ when he or she reaches maximum medical improvement. See 33 U.S.C. 908(a)–(c), (e); see also Potomac Elec. Power Co. v. Director, OWCP, 449 U.S. 268 (1980). And section 9 provides compensation payable to the employees’ eligible survivors for injuries causing death. 30 U.S.C. 909. For all disability categories, the Act uses a ‘‘two-thirds’’ rule to compute compensation. Totally disabled employees—those who are unable to return to their original employment or earn wages in suitable alternative employment—receive two-thirds the AWW they were earning at the time of injury. 33 U.S.C. 908(a)–(b). Partially disabled employees—those who experience the loss or loss-of-use of body parts specified in the statute—are entitled to two-thirds of their date-ofinjury AWW for a specified number of weeks. 33 U.S.C. 908(c)(1)–(19). Other partially disabled employees—those E:\FR\FM\26AUP1.SGM 26AUP1 mstockstill on DSK3G9T082PROD with PROPOSALS Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules who are able to work after their injuries at a diminished wage—receive twothirds of the difference between their pre-disability AWW and their residual earning capacity (i.e., the post-injury wages they earn or could earn through suitable alternative employment). See 33 U.S.C. 908(c)(21), (e). Finally, the compensation rate for survivors of an employee who suffers a work-related death is usually based on the deceased employee’s AWW at the time of death, and, with certain exceptions, can be as high as two-thirds of that wage. 33 U.S.C. 909(b). The third step is to apply the statute’s compensation-limiting rules. Despite the general two-thirds rule, section 6, ‘‘Compensation,’’ 33 U.S.C. 906, both caps the compensation amounts that can be received (a ‘‘maximum’’) and provides a floor below which compensation may not fall (a ‘‘minimum’’). These limits are applied after calculating two-thirds of the worker’s date-of-injury AWW. The Act sets the maximum for all disability compensation categories at 200 percent of the ‘‘applicable national average weekly wage.’’ 33 U.S.C. 906(b)(1). Total compensation for death—the amount payable to all survivors in the aggregate—is also limited to that 200percent figure, or to the deceased employee’s AWW, whichever is less. 33 U.S.C. 909(e)(1); Donovan v. Newport News Shipbuilding & Dry Dock Co., 31 BRBS 2 (1997). The Act sets the minimum for total disability compensation at the lower of: (1) 50 percent of the applicable national average weekly wage; or (2) the employee’s actual AWW. 33 U.S.C. 906(b)(2). The Act does not provide minimums for the remaining compensation categories. The Secretary of Labor determines the national average weekly wage before October 1 of each year, and it applies for a fiscal year (FY), from October 1 until the next September 30. 33 U.S.C. 906(b)(3). A given fiscal year’s national average weekly wage, and the resulting maximum and minimum rates, apply to ‘‘employees or survivors currently receiving compensation for permanent total disability or death during such [fiscal year], as well as those newly awarded compensation during such [fiscal year].’’ 33 U.S.C. 906(c) (emphasis added). Under the ‘‘currently receiving’’ clause, the maximum rate for claimants receiving benefits for permanent total disability or death is ‘‘adjusted each fiscal year—and typically increases, in step with the usual inflation-driven rise in the national average weekly wage.’’ Roberts, 132 S.Ct. at 1354 n.2. In fact, because VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 the national average weekly wage has risen every year since Congress added this self-adjustment feature to section 6 in 1972, each year’s maximum rate has risen as well. Thus, applying a later fiscal year’s maximum generally results in a higher compensation rate. Finally, in addition to section 6’s provisions allowing adjustments to the maximum compensation rate, section 10(f) provides another mechanism for adjusting compensation amounts over time. ‘‘[B]enefits payable for permanent total disability or death’’ are increased at the beginning of each fiscal year (October 1) by the same percentage as any increase in the national average weekly wage (as calculated under section 6), but no more than 5 percent. 33 U.S.C. 910(f). The primary difference between the two adjustment provisions is that section 10(f) applies to all claimants receiving compensation for permanent total disability or death, while section 6(c) assists only those affected by the maximum rate. Through these provisions, compensation payable to a claimant each year increases by the same amount as wage-growth generally, ensuring that the value of the workers’ compensation is not eroded over time. In recent litigation, disputes have arisen over which fiscal year’s maximum rate or rates apply to a given claimant, specifically: (1) In what fiscal year is a claimant ‘‘newly awarded compensation’’; and (2) in what fiscal year is a claimant ‘‘currently receiving compensation for permanent total disability or death.’’ On the first question, the dispute is whether a claimant is ‘‘newly awarded compensation’’ when he or she first becomes disabled—and therefore entitled to compensation—or when an administrative law judge issues a compensation order. On the second question, the dispute is whether a claimant is ‘‘currently receiving compensation for permanent total disability’’ when he or she first becomes permanently totally disabled or when he or she actually receives compensation for permanent total disability. The Supreme Court resolved the first of these questions in its Roberts decision. But the second issue has not been addressed by all circuits around the country, and thus remains subject to litigation. The proposed rules would codify the Supreme Court’s decision, resolve the second issue in a manner consistent with the courts that have addressed it, implement other aspects of the Act’s maximum and minimum compensation provisions, and address the related section 10(f) annual adjustment provision. PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 58879 B. Section 6(c)’s ‘‘Newly Awarded Compensation During Such Period’’ Clause The Supreme Court construed this part of section 6(c) in Roberts and held ‘‘that an employee is ‘newly awarded compensation’ when he first becomes disabled and thereby becomes statutorily entitled to benefits, no matter whether, or when, a compensation order issues on his behalf.’’ 132 S.Ct. at 1363. Mr. Roberts was injured and became disabled in FY 2002. An administrative law judge (ALJ) order awarding compensation, however, was not issued until FY 2007. While Mr. Roberts’ employer initially made some compensation payments, it stopped in May 2005 and did not resume payments until after the ALJ’s FY 2007 order. The ALJ found that Mr. Roberts’ disability was: Temporary total from March 11, 2002, to July 11, 2005; permanent total from July 12, 2005, to October 9, 2005; and permanent partial beginning on October 10, 2005. Roberts v. Director, Office of Workers’ Compensation Programs, 625 F.3d 1204, 1205 (9th Cir. 2010). Because the employer had ceased paying compensation in May 2005, before Mr. Roberts’ period of permanent total disability, it did not pay him for that disability until after the ALJ’s order in FY 2007. The ALJ found that Mr. Roberts’ compensation rate for total disability— two-thirds of his AWW—was $1,902.05, and that his compensation rate for permanent partial disability—two-thirds of the difference between his average weekly and his residual wage-earning capacity—was $1,422.05. He found, however, that Mr. Roberts was subject, for all periods of disability, to the maximum rate of $966.08 in effect during FY 2002, because that was when he first became disabled, and was thus ‘‘newly awarded compensation.’’ Id. at 1206. On Mr. Roberts’ motion for reconsideration, the ALJ determined that he had applied the wrong maximum rate for the period from October 1, 2005, through October 9, 2005. The ALJ found that Mr. Roberts was entitled to the FY 2006 maximum rate of $1,703.64 per week for that period because he was ‘‘currently receiving compensation for permanent total disability’’ during that time. Id. The Benefits Review Board, relying on its earlier decision in Reposky v. Int’l Transp. Services, 40 BRBS 65, 74–76 (2006) (holding that a claimant is newly awarded compensation ‘‘when benefits commence, generally at the time of injury’’), affirmed the ALJ’s decision. The Ninth Circuit followed suit. In affirming the ALJ’s decision, it held that E:\FR\FM\26AUP1.SGM 26AUP1 mstockstill on DSK3G9T082PROD with PROPOSALS 58880 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules an injured employee is ‘‘newly awarded’’ compensation when he or she first becomes entitled to compensation rather than when a formal compensation order is issued. Roberts, 625 F.3d at 1208. Although Mr. Roberts argued that ‘‘awarded’’ could mean only ‘‘assigned by formal order in the course of adjudication,’’ and that ‘‘newly awarded’’ must therefore mean newly issued a compensation order, id. at 1206, the court rejected that argument. It reasoned that the LHWCA sometimes uses ‘‘awarded’’ to mean ‘‘entitled to.’’ It found that use applied to section 6, and held that a claimant is ‘‘newly awarded’’ compensation when he first becomes entitled to compensation, which is when he first becomes disabled. The Supreme Court agreed with the Ninth Circuit’s interpretation of section 6(c)’s ‘‘newly awarded compensation’’ clause. The Court acknowledged that Mr. Roberts’ contrary view was ‘‘appealing’’ because ‘‘[i]n ordinary usage, ‘award’ most often means ‘give by judicial decree’ or ‘assign after careful judgment.’ ’’ Roberts, 132 S. Ct. at 1356 (quoting Webster’s Third New International Dictionary 152 (2002)). It recognized, however, that ‘‘award’’ can also mean ‘‘grant’’ or ‘‘confer or bestow upon.’’ Thus, deciding that ‘‘the text of § 906(c), in isolation, is indeterminate[,]’’ the Court considered its function in the context of the statute as a whole. Id. at 1357. The Court concluded that in the Act’s ‘‘comprehensive, reticulated regime for worker benefits—in which § 906 plays a pivotal role—‘awarded compensation’ is much more sensibly interpreted to mean ‘statutorily entitled to compensation because of disability,’ ’’ id. at 1357, than ‘‘awarded compensation in a formal order.’’ Id. at 1356. The Court gave several reasons for its holding. First, the Court recognized that construing ‘‘newly awarded compensation’’ to mean a formal compensation order would be ‘‘incompatible with the Act’s design.’’ Id. at 1357. The Court reasoned that this construction of the clause would be impossible to apply in the many cases where benefits are paid voluntarily and a formal compensation order is never issued. Noting that the three provisions of section 6 that relate to the maximum compensation rate ‘‘work together to cap disability benefits,’’ and that section 6(b)(1)’s cap on benefits ‘‘applies globally, to all disability claims,’’ the Court concluded that section 6(c)’s ‘‘newly awarded’’ clause must also apply globally. Id. at 1358. Second, the Court examined the Act’s administrative structure, which requires VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 employers to pay compensation within 14 days after the employer knows of the worker’s injury (see 30 U.S.C. 914(b)). It determined that using the national average weekly wage at the time of disability to determine the applicable maximum ‘‘coheres’’ with that structure. Roberts, 132 S. Ct. at 1358. The Court recognized that the employer, as well as OWCP, must be able to calculate the amount of compensation due at the time of payment, a calculation that necessarily includes consideration of any applicable cap. Because an employer is ‘‘powerless to predict’’ future events related to the compensation claim or what a later national average weekly wage will be, the court reasoned that ‘‘[i]t is difficult to see how an employer can apply or certify a national average weekly wage other than the one in effect at the time an employee becomes disabled.’’ Roberts, 132 S. Ct. at 1358–59. Reading section 6(c) in the context of the Act’s comprehensive scheme, the Court further explained that ‘‘applying the national average weekly wage for the fiscal year in which an employee becomes disabled advances the LHWCA’s purpose to compensate disability,’’ which focuses on wages at the time of the injury as the basis to compute compensation. Id. at 1359 (citing 33 U.S.C. 902(10)). It is thus ‘‘logical to apply the national average weekly wage for the same point in time.’’ Id. Moreover, the Court found that applying the date-of-disability maximum rate as suggested by the Director and Employer ‘‘avoids disparate treatment of similarly situated employees . . . who earn the same salary and suffer the same injury on the same day.’’ Id. at 1359. By contrast, Mr. Roberts’ approach could subject such employees to different rates based solely on the ‘‘happenstance of their obtaining orders in different fiscal years.’’ Id. Third, the Court believed its approach ‘‘discourages gamesmanship in the claims process.’’ Id. at 1360. Using the date a compensation order issues would encourage claimants to delay the adjudication process or initiate additional administrative proceedings seeking to take advantage of a later year’s national average weekly wage. At the same time, an employer who promptly pays compensation at the correct rate would be subject to an increased cap retroactively for those payments based on a later compensation order. The Court refused to ‘‘reward’’ claimants with these ‘‘windfalls’’ while ‘‘punishing’’ employers who have met their statutory obligations. Id. PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 C. Section 6(c)’s ‘‘Currently Receiving Compensation for Permanent Total Disability or Death Benefits During Such Period’’ Clause While the Supreme Court’s Roberts decision settled the interpretation of the ‘‘newly awarded’’ clause, the Court declined to consider section 6(c)’s ‘‘currently receiving’’ clause, leaving the phrase’s correct interpretation open to further litigation. The Ninth Circuit Roberts court had interpreted the ‘‘currently receiving’’ clause consistently with the ‘‘newly awarded’’ clause, noting that ‘‘[u]nder both clauses, the inquiry into the applicable maximum rate focuses on an employee’s entitlement to compensation.’’ Roberts, 625 F.3d at 1208. It held that ‘‘the ‘currently receiving’ clause of section 6(c) unambiguously refers to the period during which an employee was entitled to receive compensation for permanent total disability, regardless of whether his employer actually paid it.’’ Id. at 1209. Consequently, the court determined that Mr. Roberts was ‘‘currently receiving compensation for permanent total disability’’ as of July 12, 2005, and thus entitled to the FY 2005 maximum rate from that date through September 30, 2005 (the end of FY 2005), and to the FY 2006 rate from October 1, 2005, through October 9, 2005. Beginning October 10, 2005— when Mr. Roberts regained an earning capacity, making his disability permanent partial—the court concluded he was once again subject to the FY 2002 maximum rate. Id. at 1206, 1209. Although the Eleventh Circuit initially disagreed with the Ninth Circuit’s construction of the ‘‘currently receiving’’ clause, Boroski v. DynCorp Int’l, 662 F.3d 1197 (11th Cir. 2011), that court reversed its position after the Supreme Court decided Roberts. Boroski v. DynCorp Int’l, 700 F.3d 446 (11th Cir. 2012) on remand from 132 S.Ct. 2430 (2012). Mr. Boroski was first disabled by his work-related injury in April 2002. His employer, DynCorp International, timely contested his compensation claim and thus did not voluntarily pay him compensation. An ALJ entered an order in FY 2008 awarding him permanent total disability compensation from 2002 and continuing. DynCorp based its subsequent payments on the maximum compensation rate applicable for FY 2002, and adjusted the amount upward each year, beginning on October 1, 2002, as required by section 10(f). Mr. Boroski objected, arguing that he was not ‘‘currently receiving compensation for permanent total disability’’ until FY 2008, when the employer actually began E:\FR\FM\26AUP1.SGM 26AUP1 mstockstill on DSK3G9T082PROD with PROPOSALS Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules paying him, and was thus entitled to the FY 2008 maximum rate from the outset. The Eleventh Circuit rejected Mr. Boroski’s argument and held that ‘‘ ‘currently receiving compensation’ in § 906(c) means ‘currently entitled to compensation.’ ’’ Boroski, 700 F.3d at 451. The court agreed with the Director that for each year after 2002 during which Mr. Boroski was entitled to compensation for permanent total disability, he was ‘‘currently receiving compensation for permanent total disability,’’ and thus subject to the new fiscal year’s maximum rate, regardless of when the compensation was actually paid. Taking its analytical lead from the Supreme Court in Roberts, the Boroski court considered the ‘‘currently receiving’’ clause’s role in the context of the entire statute. The court noted that using the maximum for the year in which compensation was actually paid (2008) rather than for the first year Mr. Boroski was disabled (2002) would lead to ‘‘two different and irreconcilable weekly benefit payment amounts’’ under the Supreme Court’s interpretation of the ‘‘newly awarded’’ clause, which also applied to his compensation calculation. Id. at 451. The Director’s contrary interpretation instead harmonized the two clauses of section 6(c). The court also found the Director’s position more consistent with section 10(f)’s annual adjustment mechanism. The court reasoned that the Director’s interpretation of the ‘‘currently receiving’’ clause operates similarly, ‘‘gradually increasing benefits to maintain the value of an injured employee’s wages, determined ‘at the time of the injury.’ ’’ Id. at 452. Mr. Boroski’s interpretation—under which ‘‘employers who first pay benefits to an injured employee in a year other than the year of the injury would pay all past due payments based on the national average weekly wage for the year in which the first payment is made . . . effectively giv[ing] the injured employee a raise to the later year’s national average weekly wage, and would make that raise retroactive to the date of his disability’’—would be ‘‘incongruous’’ with section 10(f). Id. at 452. The court also rejected Mr. Boroski’s assertion that Congress intended his interpretation to encourage prompt payment of benefits. The court noted that claimants are entitled to interest on late payments of compensation, and found that interest both adequately compensates claimants for the delayed receipt of benefits and discourages employers from refusing to promptly pay legitimate claims. VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 Finally, the court determined that the Director’s interpretation avoided disparate treatment of similarly situated claimants. ‘‘Under the Director’s interpretation, Boroski receives the same benefits as a similarly situated employee who was first injured and who first received payment in 2002, and, additionally, Boroski receives interest on all late payments, to compensate him for the delay.’’ Id. at 453. By contrast, under Mr. Boroski’s interpretation—in which Mr. Boroski ‘‘would receive, in addition to interest, higher benefits for the same period of disability than claimants who timely receive their benefits’’—the same hypothetical employee ‘‘would receive approximately $30,000 less than Boroski.’’ Id. For all of these reasons, the Eleventh Circuit held, as had the Ninth Circuit in Roberts, that an employee is ‘‘currently receiving compensation for permanent total disability’’ when he is entitled to such compensation, not when he is actually paid that compensation. To date, the remaining circuits have not weighed in on this issue. The Benefits Review Board subsequently reached the same conclusion as the Ninth and Eleventh Circuits. Lake v. L–3 Communications, 47 BRBS 45 (2013). In Lake, the Board held that a claimant is ‘‘currently receiving compensation’’ under section 6(c) ‘‘during a period in which he is entitled to receive such compensation, regardless of whether his employer actually pays it.’’ Id. at 48. The Board also held that when a claimant’s temporary total disability changes to permanent total disability during a fiscal year, the maximum rate in effect during that year applies immediately. Id. at 48. In reaching this conclusion, the Board overruled this portion of its earlier contrary decision in Reposky, 40 BRBS at 65. The Board thus held that the FY 2009 maximum rate applied as of December 10, 2008, the date that Mr. Lake’s entitlement to permanent total disability benefits commenced, until the next October 1, when the new fiscal year’s maximum rate applied. The Board also addressed a related question on the interplay between sections 6 and 10(f) in Lake. The employer argued that Mr. Lake, who first reached permanent total disability status in FY 2009, was not entitled to the FY 2009 maximum rate. Instead, the employer contended that he was limited to a section 10(f) increase on the FY 2006 maximum rate that he had been receiving since his injury, followed by a section 10(f) adjustment each subsequent October 1. The Board rejected this argument. Citing its earlier PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 58881 contrary holding in Marko v. Morris Boney Co., 23 BRBS 353 (1990), the Board reiterated its conclusion that, ‘‘in a permanent total disability case in which two-thirds of the claimant’s actual [AWW] exceeds the Section 6(b)(3) statutory maximum rate, he is entitled to the benefit of the new maximum rate each fiscal year . . . until such time as two-thirds of his actual average weekly wage falls below 200 percent of the applicable [national average weekly wage], and then annual adjustments under Section 10(f) apply.’’ Lake, 47 BRBS at 50. The Board found its holding compelled by the plain language of section 6(c) and supported by the Ninth Circuit’s Roberts decision. II. Summary of the Proposed Rule A. General Information As discussed in the Section-bySection Explanation below, this proposed rule implements the Act’s provisions governing the maximum and minimum amount of disability compensation and death benefits payable. The proposed regulations do not govern general compensation calculations (referred to in the rules as the ‘‘calculated compensation rate’’), and the fact that compensation payable is subject to these maximum and minimum rates does not mean that claimants are necessarily entitled to them. Rather, the proposed regulations simply provide that disability compensation and death benefits can go no higher than the applicable maximum rate or lower than the applicable minimum rate. The proposed rule includes two subparts. Subpart G describes the annual adjustment to compensation and death benefits provided under section 10(f) of the Act, 33 U.S.C. 910(f). While section 10(f) allows for an annual adjustment to all payments of compensation for permanent total disability or death benefits, including those cases where neither the maximum nor the minimum rates are implicated, the Department has included section 10(f) in this rulemaking because its application can be closely tied with the maximum compensation or death benefits payable in certain cases. These interrelationships are detailed in the Section-by-Section Explanation below. Subpart H includes proposed regulations implementing the Act’s maximum and minimum provisions. The Department has organized these sections first to cover general topics, then by whether the rules govern maximum or minimum compensation payable, and finally by categories of compensation payable (i.e., temporary E:\FR\FM\26AUP1.SGM 26AUP1 58882 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules total or partial, permanent total or partial, and death benefits). B. Section-by-Section Explanation This discussion contains an explanation of each proposed rule. Many of the rules include examples that use the Department’s yearly calculation of the applicable national average weekly wage, the maximum and minimum weekly compensation rates, and percentage adjustments available under section 10(f), 33 U.S.C. 910(f). This information is routinely available NAWW 1 Period (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY (FY 16) 15) 14) 13) 12) 11) 10) 09) 08) 07) 06) 05) 04) 03) 02) 01) 00) 10/01/2015–09/30/2016 10/01/2014–09/30/2015 10/01/2013–09/30/2014 10/01/2012–09/30/2013 10/01/2011–09/30/2012 10/01/2010–09/30/2011 10/01/2009–09/30/2010 10/01/2008–09/30/2009 10/01/2007–09/30/2008 10/01/2006–09/30/2007 10/01/2005–09/30/2006 10/01/2004–09/30/2005 10/01/2003–09/30/2004 10/01/2002–09/30/2003 10/01/2001–09/30/2002 10/01/2000–09/30/2001 10/01/1999–09/30/2000 ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... ...................................................................... Some examples also include compensation calculations. When compensation is based on 66 and 2⁄3 percent of the injured employee’s average weekly wage (e.g., compensation for permanent total disability), the formula for calculating this percentage is expressed as: Average weekly wage amount × 2 ÷ 3. mstockstill on DSK3G9T082PROD with PROPOSALS Subpart G—Section 10(f) Adjustments 20 CFR 702.701 What is an annual section 10(f) adjustment and how is it calculated? Section 10(f) of the Act, 33 U.S.C. 910(f), provides for an annual upward percentage adjustment of permanent total disability compensation rates and death benefits so that the value of the compensation received does not erode over time. Proposed § 702.701 sets out the basic rules for section 10(f) adjustments. Proposed paragraphs (a) and (b) describe the section 10(f) adjustment and how the fiscal year percentage is determined. Consistent with the statute, paragraph (a) states that section 10(f) adjustments apply each fiscal year to permanent total disability compensation and death benefits, and that those adjustments may only increase amounts 1 For purposes of this chart, ‘‘NAWW’’ means the applicable national average weekly earnings of production or nonsupervisory workers on private nonagricultural payrolls during the first three quarters of the preceding fiscal year as determined by the Department. VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 $703.00 688.51 673.34 662.59 647.60 628.42 612.33 600.31 580.18 557.22 536.82 523.58 515.39 498.27 483.04 466.91 450.64 payable. 33 U.S.C. 910(f) (‘‘benefits payable for permanent total disability or death . . . shall be increased’’); 33 U.S.C. 910(g) (‘‘in no event shall compensation for death benefits be reduced’’). Paragraph (b) describes how the Department calculates the annual section 10(f) adjustment, a method dictated by section 10(f) itself. In any given fiscal year, the 10(f) adjustment is the percentage increase in the applicable national average weekly wage over the prior fiscal year’s applicable national average or five percent, whichever is lower. See 33 U.S.C. 910(f)(1), (2). Proposed paragraphs (c) through (e) set out how the fiscal year percentage is applied in individual cases. Paragraph (c) specifies that section 10(f) adjustments are applied each October 1 to the prior year’s compensation or death benefits payable to the claimant. By using the statutory term ‘‘payable,’’ the Department intends the percentage increase to apply to the compensation and death benefits due during the prior year, even if not actually paid. Paragraph (d) implements the statutory requirements that calculations resulting from section 10(f) adjustments are rounded to the nearest dollar and that no adjustment is made if the amount is less than one dollar. See 33 U.S.C. 910(g). And paragraph (e) provides that section 10(f) adjustments may not increase compensation or death benefits beyond the maximum rate for any fiscal PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 on OWCP’s Web site. See https:// www.dol.gov/owcp/dlhwc/ (last visited Aug. 1, 2016). For the reader’s convenience, these amounts for FY 2000 to FY 2016 are provided in the following chart. Maximum weekly rate (200% of NAWW) Minimum weekly rate (50% of NAWW) $1,406.00 1,377.02 1,346.68 1,325.18 1,295.20 1,256.84 1,224.66 1,200.62 1,160.36 1114.44 1073.64 1,047.16 1,030.78 996.54 966.08 933.82 901.28 $351.50 344.26 336.67 331.30 323.80 314.21 306.17 300.16 290.09 278.61 268.41 261.79 257.70 249.14 241.52 233.46 225.32 Section 10(f) percent increase (%) 2.10 2.25 1.62 2.31 3.05 2.63 2.00 3.47 4.12 3.80 2.53 1.59 3.44 3.15 3.45 3.61 3.39 year. This limitation is consistent with LHWCA section 6(b)(1)’s command that compensation payments, whether for disability or death, must not exceed the applicable fiscal year’s maximum rate. Finally, proposed paragraph (f) states that the adjustments do not apply to compensation for temporary or partial disability, including temporary total disability, temporary partial disability, and permanent partial disability. The paragraph reflects the limitation set forth in paragraph (a) and is added for clarity. Subpart H—Maximum and Minimum Compensation Rates General 20 CFR 702.801 This Subpart Scope and Intent of Proposed § 702.801 describes the statutory provisions this subpart is intended to implement. Paragraph (a) generally lists the statutory provisions that affect the maximum and minimum compensation and death benefits payable to entitled individuals. Section 6(b) of the LHWCA, 33 U.S.C. 906(b), sets the maximum compensation rate for death or disability compensation at 200 percent of the applicable national average weekly wage, and the minimum compensation rate for total disability at the lower of the employee’s average weekly wage or 50 percent of the applicable national average weekly wage. Section 6(b) also provides that the E:\FR\FM\26AUP1.SGM 26AUP1 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules mstockstill on DSK3G9T082PROD with PROPOSALS Secretary of Labor determines the applicable national average weekly wage for each one-year period from October 1 to September 30. Section 6(c), 33 U.S.C. 906(c), provides that the Secretary’s determination of the national average weekly wage for each one-year period ‘‘shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period, as well as those newly awarded compensation during such period.’’ Section 9(e), 33 U.S.C. 909(e), includes provisions that affect the minimum death benefits payable to a deceased employee’s survivors. Because the interpretation of section 6(c) is important to determining how the maximum and minimum provisions apply and has been the subject of litigation, proposed paragraph (b) more specifically addresses section 6(c)’s ‘‘newly awarded compensation’’ and ‘‘currently receiving compensation’’ phrases. Paragraph (b)(1) adopts the Supreme Court’s conclusion in Roberts that a claimant, regardless of the nature or extent of disability, is ‘‘newly awarded compensation’’ when he or she first becomes disabled and entitled to compensation. See supra Section I. B. Claimants are initially subject to the maximum and minimum rates derived from the national average weekly wage in effect during the fiscal year his or her disability begins. Paragraph (b)(2) applies the Supreme Court’s Roberts analysis to death benefits by providing that a deceased employee’s survivor is ‘‘newly awarded compensation’’ on the day of the employee’s death, the first time a survivor may be entitled to death benefits. See discussion infra at proposed § 702.807. And paragraph (b)(3) provides that a claimant is ‘‘currently receiving compensation’’ during the period for which the compensation is payable, regardless of when it is actually paid. This construction is consistent with the Ninth and Eleventh Circuits’ interpretations. See supra Section I. C. While these phrases are not used in the remainder of the proposed subpart, the concepts set forth in paragraph (b) underlie the rules. 20 CFR 702.802 Applicability of This Subpart Proposed § 702.802(a) lists several circumstances in which this subpart’s rules do not apply, including: Approved settlements made under section 8(i) of the Act, 33 U.S.C. 908(i); payments for an employee’s compensable death made to the Special Fund when the employee has no eligible survivors, 33 U.S.C. 944(c)(1); payments for medical VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 expenses, 33 U.S.C. 907; and any other compensation calculated and paid in a lump sum, such as the two years of death benefits payable to an employee’s eligible surviving spouse who remarries, 33 U.S.C. 909(b), or when compensation payments are commuted, 33 U.S.C. 909(g). In all of these circumstances, the maximum and minimum weekly rates do not apply either because the compensation due is not based on a weekly rate (e.g., medical expenses) or it is not necessarily paid on a weekly basis (e.g., settlements, commutations). Although not subject to the rules in this subpart, the maximum and minimum compensation rates will nevertheless be relevant in some of these circumstances. For example, the Department would consider such compensation rates in calculating a commuted award or death benefits payable when a survivor remarries. Similarly, the Department anticipates that private parties will consider the maximum and minimum compensation rates in settlement negotiations, and the Department will consider them in deciding whether to approve settlements. Proposed § 702.802(b) provides that the rules governing minimum compensation and death benefits payable do not apply to claims arising under the Defense Base Act (DBA), 42 U.S.C. 1651 et seq. The DBA specifically precludes application of the LHWCA’s minimum compensation provisions: ‘‘The minimum limit on weekly compensation for disability, established by section 6(b), and the minimum limit on the average weekly wages on which death benefits are to be computed, established by section 9(e) of the [Longshore] Act, shall not apply in computing compensation and death benefits under [the DBA].’’ 42 U.S.C. 1652(a). The Secretary’s regulations implementing the DBA also reflect this limitation. See 20 CFR 704.103. The limitation in proposed § 702.802(b) comports with these authorities. 20 CFR 702.803 Definitions This section defines certain terms used in this subpart; these definitions do not apply outside of this subpart. Proposed paragraph (a) defines a claimant’s ‘‘calculated compensation rate’’ as the weekly compensation or death benefits payable prior to any consideration of the maximum or minimum rates, or a section 10(f) adjustment. As discussed above (see supra Section I. A.), this figure is a specified percentage of the employee’s average weekly wage at the time of the injury or death. But there are exceptions. For example, in certain claims, the calculated compensation PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 58883 rate is based on the national average weekly wage rather than on the employee’s actual earnings. 33 U.S.C. 909(e), 910(d)(2)(B). Proposed paragraph (b) defines the phrase ‘‘date of disability’’ as the date an employee first becomes economically impaired—or, in other words, unable to earn the same wages—as a result of a covered injury. The phrase incorporates the statutory definition of ‘‘disability,’’ see 33 U.S.C. 902(10), and is based on the Supreme Court’s decision in Roberts, which held that the maximum compensation rate applicable on the day the employee became ‘‘entitled to compensation because of disability’’ controlled. Roberts, 132 S.Ct. at 1357. The phrase is used in this subpart to delineate when certain minimum or maximum compensation rates apply. The proposed rule, however, excepts from the general ‘‘date of disability’’ definition three situations that demand special treatment. Paragraph (b)(2)(i) provides that for scheduled permanent partial disabilities under 33 U.S.C. 908(c)(1)–(20) that are not preceded by another category of disability (i.e., permanent total, temporary total, or temporary partial), the date of disability is when the employee first becomes permanently impaired by the injury to the scheduled member. This exception is necessary because an employee may suffer a scheduled injury without any loss in wage-earning capacity, which is the touchstone for the general ‘‘date of disability’’ definition. Paragraph (b)(2)(ii) establishes a separate date of disability for occupational diseases because the disease may manifest after voluntary retirement, when the employee does not experience a loss of wage-earning capacity. Paragraph (b)(2)(iii) provides that for very shortterm disabilities lasting no more than 14 days, the date of disability is 4 days after the injury affected the employee’s wage earning capacity. For such a shortterm disability, section 6(a) of the Act provides that no compensation is payable for the first 3 days of disability. 33 U.S.C. 906(a). Thus, using the fourth day as the ‘‘date of disability’’ for determining the maximum and minimum compensation payable reflects the date on which the employee is actually entitled to compensation. The remaining definitions explain how basic terms are used in the proposed rule. Paragraph (c) defines the dates of a standard fiscal year. Paragraphs (d) and (e) define ‘‘maximum rate’’ and ‘‘minimum rate’’ as the weekly compensation rates the Department calculates for each fiscal year. And paragraph (f) defines a ‘‘section 10(f) adjustment’’ as the annual E:\FR\FM\26AUP1.SGM 26AUP1 58884 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules compensation increase some claimants receive under LHWCA section 10(f), 33 U.S.C. 910(f). See proposed § 702.701. 20 CFR 702.804 What are the weekly maximum and minimum rates for each fiscal year and how are they calculated? Proposed § 702.804 explains how the Department calculates basic weekly maximum and minimum rates for each fiscal year. Paragraph (a) notes that these weekly compensation rates are one factor considered when calculating compensation and death benefits payable. Paragraphs (b) and (c) set forth the calculation formulas for weekly maximum and minimum rates. Both are based on the national average weekly wage, which the Act defines as the ‘‘national average weekly earnings of production or nonsupervisory workers on private nonagricultural payrolls.’’ 33 U.S.C. 902(19). These statistics are compiled on an ongoing basis by the Department’s Bureau of Labor Statistics. Before each new fiscal year, the Department calculates the average earnings of these employees for the period October 1 through June 30 (i.e., the first three quarters) of the current fiscal year. 33 U.S.C. 906(b)(3). The Act pegs the maximum weekly rate at 200 percent of this number and the minimum at 50 percent. 33 U.S.C. 906(b)(1), (2). For example, the national average weekly earnings of production or nonsupervisory workers on private, nonagricultural payrolls for the period from October 1, 2013, to June 30, 2014 (i.e., the first three quarters of FY 2014), were $688.51. As a result, the Department determined that the maximum compensation rate for FY 2015 was $1,377.02 ($688.51 × 2) and the minimum compensation rate was $344.26 ($688.51 × 2). Maximum Rates mstockstill on DSK3G9T082PROD with PROPOSALS 20 CFR 702.805 What weekly maximum rates apply to compensation for permanent partial disability, temporary total disability, and temporary partial disability? Proposed § 702.805 provides that the maximum rate in effect for the fiscal year on the employee’s date of disability applies to all compensation payable for temporary partial disability, temporary total disability, or permanent partial disability, including compensation payable in subsequent fiscal years. This rule effectuates the Supreme Court’s construction of the ‘‘newly awarded compensation’’ clause by applying the maximum rate for the fiscal year the employee’s disability begins. For these types of compensation, the date-ofdisability fiscal year’s maximum rate VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 applies to all compensation payments— including compensation payable for subsequent fiscal years—because section 6(c)’s ‘‘currently receiving compensation’’ clause does not apply. 33 U.S.C. 906(c) (maximum rate determinations ‘‘with respect to a period shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period[.]’’). The first example at paragraph (b)(1) sets out a common scenario involving an injured employee who is temporarily totally disabled for a period prior to being permanently partially disabled. Although his compensation periods span more than one fiscal year, the maximum rate that applies remains the rate in effect on his date of disability. See proposed § 702.803(b)(1). The second example at paragraph (b)(2) is slightly more complicated. The employee incurs two separate periods of temporary total disability from the same injury; each period begins in a different fiscal year. Under section 6(c), the maximum rate applicable at the beginning of the first disability period applies to all payments for temporary total disability, including those in the second period. The third example at paragraph (b)(3) addresses an occupational disease discovered postretirement. Occupational diseases occurring after an employee has voluntarily retired are considered permanent partial disabilities. 20 CFR 702.601(b). Thus, compensation payable in this instance is subject to the maximum rate in effect on the date of disability—when the employee becomes aware of the relationship between employment, the disease and any disability. See proposed § 702.803(b)(2)(ii). 20 CFR 702.806 What weekly maximum rates apply to compensation for permanent total disability? Proposed § 702.806 implements both the ‘‘newly awarded’’ and ‘‘currently receiving’’ compensation clauses for permanent total disability compensation as they pertain to the maximum compensation payable. Paragraph (a) provides that the maximum rate for the fiscal year during which the employee first becomes permanently and totally disabled applies to all compensation payable during that fiscal year. Paragraph (b) then provides that all periods of permanent total disability in subsequent fiscal years arising from the same injury are subject to the maximum rates for those subsequent fiscal years because the employee is then ‘‘currently receiving compensation.’’ PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 Proposed paragraph (c) addresses how the 10(f) adjustment applies in a ‘‘crossover’’ year. A cross-over year is one in which the claimant’s compensation was paid at the maximum rate in the current fiscal year, but the claimant’s calculated compensation rate does not exceed the maximum rate set for the next fiscal year. In those circumstances, the rule requires that the claimant’s compensation for the next fiscal year be increased by the amount of the 10(f) adjustment up to the maximum for that fiscal year. The examples in proposed paragraph (d) apply these principles. Paragraph (d)(1) presents the relatively straightforward situation of an employee who is permanently totally disabled from the time of injury. He is ‘‘newly awarded’’ compensation in the fiscal year he became disabled and his compensation is subject to that fiscal year’s maximum rate. In subsequent years, he is ‘‘currently receiving’’ compensation and his compensation is subject to the maximum rate for each subsequent fiscal year. Paragraph (d)(2) adds an additional wrinkle to the first example. Here, the employee suffers a period of temporary total disability that spans more than one fiscal year before he becomes permanently totally disabled. The maximum that applies to the entire temporary total disability compensation period is the fiscal year rate in effect on the date of disability (in the example, FY 2000), which is when the employee is ‘‘newly awarded’’ compensation. See proposed § 702.805(a). When the employee becomes permanently totally disabled two years later, however, he is ‘‘currently receiving’’ permanent total disability compensation and the maximum rate in effect at that time (in the example, FY 2002) applies. Compensation for permanent total disability in succeeding years is subject to those subsequent fiscal years’ maximum rates because he continues to be ‘‘currently receiving’’ compensation. Finally, proposed paragraph (d)(3) demonstrates how the rule operates in a ‘‘cross-over’’ year. In the example, employee C’s calculated compensation rate exceeds the annual fiscal year maximum rate each year from when he was first permanently totally disabled in FY 2009 through FY 2012. In FY 2013, however, the employee’s calculated compensation rate falls below the maximum rate and remains below that rate even after the addition of a section 10(f) adjustment. Thus, for FY 2013, employee C’s compensation is not limited by the maximum rate. E:\FR\FM\26AUP1.SGM 26AUP1 mstockstill on DSK3G9T082PROD with PROPOSALS Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules 20 CFR 702.807 What weekly maximum rates apply to death benefits? Determining the maximum rates for death benefits in any particular case can be straightforward or involve several statutory provisions. The proposed rule integrates these provisions to provide a comprehensive approach to the issue. LHWCA section 6(b)(1) applies the ‘‘applicable’’ maximum rate to all compensation for disability or death. For death benefits purposes, proposed § 702.807(a) defines the ‘‘applicable’’ rate as the fiscal-year rate in effect when the employee died. By using the employee’s date of death, the rule applies the ‘‘newly awarded’’ clause in the same manner as the Supreme Court applied it to disability claims in Roberts: A survivor’s right to benefits first arises at the time of death. See generally Ingalls Shipbuilding, Inc. v. Director, OWCP, 519 U.S. 248, 257–58 (1997) (survivors seeking death benefits cannot satisfy prerequisites prior to employee’s death); Travelers Insurance Co. v. Marshall, 634 F.2d 843, 846 (5th Cir. 1981) (section 9 ‘‘cause of action for death benefits certainly does not arise until [employee’s] death’’). Proposed § 702.807(b) sets out the general rules for determining the deathbenefits cap in the year the employee died. These limits are compelled by LHWCA section 6(b)(1) along with the provisions of section 9(e), 33 U.S.C. 909(e). Section 9(e) provides an alternative method for computing death benefits for survivors of lower-wage employees to boost the benefit amount. If the deceased employee’s actual average weekly wage was lower than the national average weekly wage, death benefits are calculated as a percentage of the national average weekly wage instead of a percentage of the actual wage. This results in a higher calculated compensation rate than if the calculation were based on the employee’s actual wage. Survivors are entitled to benefits at the higher calculated rate except when that rate exceeds the employee’s full actual weekly wage. In that event, section 9(e)(1) sets an initial cap by providing that total weekly death benefits ‘‘shall not exceed the lesser of the average weekly wages of the deceased’’ (or the section 6(b)(1) maximum rate). 33 U.S.C. 909(e)(1). Thus, in no event may weekly death benefits payable in the year of the employee’s death exceed the employee’s actual average weekly wages. Proposed paragraph (b) implements these provisions by limiting ‘‘aggregate’’ weekly death benefits—meaning the death benefits payable to all survivors combined—to the lower of the VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 maximum rate applicable for the fiscal year in which the employee died or the employee’s actual average weekly wages. Proposed paragraph (c) sets out rules governing payments for subsequent fiscal years. Consistent with the ‘‘currently receiving’’ clause, paragraph (c)(1) provides that each subsequent fiscal year’s maximum rate applies to aggregate death benefits. Paragraph (c)(2) provides an exception to the section 9(e)(1) feature limiting death benefits to no more than the employee’s actual average weekly wages. If death benefits were paid at the employee’s full average weekly wage in the year of death, paragraph (c)(2) provides that death benefits payable may be adjusted upward under section 10(f). See Donovan, 31 BRBS 2 (holding that section 9(e)(1) does not bar application of 10(f) adjustments even if adjusted death benefits amount exceeds deceased employee’s actual average weekly wage). Finally, proposed paragraph (d) addresses LHWCA section 9(e)’s specific limit on death benefits payable when death results from an occupational disease that manifested after the employee retired voluntarily (i.e., he or she did not retire because of disability). In those circumstances, LHWCA section 9(e)(2) provides that ‘‘total weekly benefits shall not exceed one fiftysecond part of the employee’s average annual earnings during the 52-week period preceding retirement.’’ 33 U.S.C. 909(e)(2). Proposed paragraph (d)(1) implements this provision, as well as the general section 6(b) maximum cap, by providing that aggregate death benefits paid during the year of the employee’s death must not exceed the lower of that fiscal year’s maximum rate or one-fifty-second part of the employee’s average annual earnings during the 52-weeks preceding retirement. Proposed paragraph (d)(2)(i) provides that each subsequent fiscal year’s maximum rate applies to aggregate death benefits because death benefits are subject to the ‘‘currently receiving’’ clause. If death benefits in the year of death were paid at one-fiftysecond part of the employee’s average annual earnings, proposed paragraph (d)(2)(ii) provides that the death benefits payable may be adjusted upward under section 10(f). The example at proposed paragraph (e)(1) illustrates that the maximum rate applicable at the time of the employee’s death applies to death benefits, even when the employee’s injury occurred in an earlier fiscal year. Employee A’s injury occurred in FY 2013 but he did not die as a result of the injury until FY PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 58885 2014. His survivor’s death benefits for the remainder of the year in which he died are subject to the FY 2014 maximum rate, with subsequent death benefits subject to each subsequent fiscal year’s rate. Paragraph (e)(2)’s example demonstrates how the death-benefitscalculation method for survivors of lowwage earners interfaces with the cap placed on those benefits in some circumstances. In the example, employee B’s weekly earnings fell below the national average during the year of her death. Thus, her survivor’s death benefits are computed using the higher national average weekly wage. 33 U.S.C. 909(e); see proposed § 702.811(a). Because that calculated compensation rate of $331.30 exceeds the employee’s actual average weekly wage of $300.00, death benefits are capped at the employee’s actual wages, except for section 10(f) adjustments in subsequent fiscal years. Paragraph (e)(3) sets out an example involving an occupational disease discovered more than one year postretirement that leads to death. Employee C’s compensation during his lifetime is calculated based on the FY 2002 national average weekly wage because his disease manifested then and he had voluntarily retired more than one year earlier. Based on the date of employee C’s death, his survivors’ death benefits are calculated based on the national average weekly wage for FY 2015. 33 U.S.C. 910(d)(2)(B); 20 CFR 702.604(b). This calculation yields a weekly figure greater than 1/52 part of the employee’s last year of earnings. Thus, the total death benefits payable are capped at 1/ 52 part of the employee’s actual earnings, except for section 10(f) adjustments in subsequent fiscal years. Minimum Rates 20 CFR 702.808 What weekly minimum rates apply to compensation for partial disability? The LHWCA places no minimum compensation requirements on payments for temporary partial disability or permanent partial disability. Accordingly, proposed § 702.808 simply states that there is no minimum rate for these types of compensation. 20 CFR 702.809 What weekly minimum rates apply to compensation for temporary total disability? Proposed § 702.809 provides that the minimum rate in effect for the fiscal year on the employee’s date of disability applies to all compensation payable for temporary total disability, including E:\FR\FM\26AUP1.SGM 26AUP1 58886 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules mstockstill on DSK3G9T082PROD with PROPOSALS compensation payable in subsequent fiscal years. LHWCA section 6(b)(2) generally provides that compensation for total disability cannot fall below 50 percent of the ‘‘applicable’’ national average weekly wage unless the employee’s actual average weekly wages are less than that amount. In that event, the employee receives his or her average weekly wages as compensation. This rule effectuates the Supreme Court’s construction of the ‘‘newly awarded compensation’’ clause by applying the minimum rate for the fiscal year the employee’s disability begins. See generally Montoya v. Navy Exchange Service Command, 49 BRBS 51 (2015) (applying Roberts, employee entitled to minimum rate in effect on date of disability onset). The date-of-disability fiscal year’s minimum rate applies to all temporary total disability compensation payments—including compensation payable for subsequent fiscal years— because section 6(c)’s ‘‘currently receiving’’ clause does not apply to compensation for temporary disabilities. See 33 U.S.C. 906(c) (national average weekly wage determinations ‘‘with respect to a period shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period’’). Thus, the applicable minimum remains the one in effect on the date of disability. Proposed paragraph (b)’s example demonstrates how the minimum rate provision works when the employee’s calculated compensation rate falls below it. In the example, employee A’s calculated compensation rate for FY 2014 (the year of his injury) is $333.34 per week. That number falls below the FY 2014 minimum rate of $336.67. Thus, employee A’s compensation is raised to the minimum rate. Although his temporary total disability continues into FY 2015, his rate remains tied to the FY 2014 minimum because neither section 6(c)’s ‘‘currently receiving’’ clause nor section 10(f)’s adjustments apply to compensation for temporary disabilities. See 33 U.S.C. 906(c), 910(f). 20 CFR 702.810 What weekly minimum rates apply to compensation for permanent total disability? Proposed § 702.810(a) provides that the lower of the minimum rate in effect on the date of disability or the employee’s actual average weekly wage on that date sets the floor below which compensation may not fall. This rule implements LHWCA section 6(b)(2)’s direction that compensation for total disability be no less than 50 percent of the ‘‘applicable’’ national average weekly wage unless the employee’s VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 actual average weekly wages are less than that amount. In that event, the employee receives his or her average weekly wages as compensation. By using the date of disability to describe the applicable fiscal year’s minimum rate, paragraph (a) also implements section 6(c)’s ‘‘newly awarded’’ clause. Proposed paragraph (b) describes how the minimum applies in subsequent fiscal years. It sets the minimum compensation level at the lower of the minimum rate for each subsequent fiscal year or the employee’s actual average weekly wages on the date of disability. By applying subsequent fiscal years’ minimum rates, the regulation implements section 6(c)’s ‘‘currently receiving’’ clause. Proposed paragraph (c)’s example shows how this regulation applies when a low-wage earner suffers a permanent total disability. Because his calculated compensation rate for the fiscal year in which he first became disabled (in the example, FY 2003) was below the applicable fiscal year minimum rate, and his actual weekly wages were above the fiscal year minimum, he is compensated at the minimum rate. But in subsequent fiscal years, when the minimum rises above the employee’s actual average weekly wages at the time of disability, he receives his actual wages in compensation, subject in following years to section 10(f) adjustments. 20 CFR 702.811 What weekly minimum rates apply to death benefits? Rather than applying weekly minimum rates like those used for temporary total or permanent total disability compensation—specified amounts below which compensation may not fall—section 9(e) of the Act, 33 U.S.C. 909(e), uses a different mechanism to ensure a minimum compensation level for an employee’s survivors. Section 9(e) does this by using the national average weekly wage calculated by the Department under section 6(b) as a proxy to compute death benefits when the deceased employee’s actual weekly wage falls below the national average. See 33 U.S.C. 902(19) (defining national average weekly wage for LHWCA purposes). Using the national average weekly wage ensures that death benefits will be paid at a minimal level. Proposed paragraph (a) sets out this procedure by providing that the average weekly wage used to compute death benefits is the greater of the employee’s actual wages or the national average. The regulation also provides that the applicable national average weekly wage is the one in effect when the employee died, which is when PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 a survivor’s right to benefits first arises. See generally Ingalls Shipbuilding, 519 U.S. at 257–58 (survivors seeking death benefits cannot satisfy prerequisites prior to employee’s death); Travelers Insurance, 634 F.2d at 846 (section 9 ‘‘cause of action for death benefits certainly does not arise until [employee’s] death’’). Paragraph (b) adds that the weekly minimum rate, as that phrase is used in this subpart, does not apply to death benefits. III. Statutory Authority Section 39(a) of the LHWCA, 33 U.S.C. 939(a), authorizes the Secretary of Labor to prescribe rules and regulations necessary for the administration of the Act. IV. Information Collection Requirements (Subject to the Paperwork Reduction Act) Imposed Under the Proposed Rule This rulemaking would impose no new collections of information. V. Executive Orders 12866 and 13563 (Regulatory Planning and Review) Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Department has considered this proposed rule with these principles in mind and has concluded that the regulated community will benefit from this regulation. This proposed rule will benefit the parties by providing them with greater guidance on applying the Act’s maximum and minimum compensation provisions and section 10(f) adjustments in determining the amount of disability compensation or death benefits payable. By clarifying how these provisions apply, the rule will also promote consistency so that similarly situated claimants receive similar compensation or death benefits. In addition, the rule will benefit the regulated community by forestalling further litigation over the ‘‘currently receiving’’ clause, which neither the Supreme Court nor several circuit courts have yet construed. Indeed, the absence of regulations implementing these statutory provisions led to much of the litigation described above. See supra Sections I. B. and C. E:\FR\FM\26AUP1.SGM 26AUP1 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules The Department also sees no countervailing burden—economic or otherwise—other than those imposed by the statute itself that would counsel against promulgating this rule. Finally, because this is not a ‘‘significant regulatory action’’ within the meaning of Executive Order 12866, the Office of Management and Budget has not reviewed it prior to publication. mstockstill on DSK3G9T082PROD with PROPOSALS VI. Unfunded Mandates Reform Act of 1995 Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 et seq.) directs agencies to assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector, ‘‘other than to the extent that such regulations incorporate requirements specifically set forth in law.’’ For purposes of the Unfunded Mandates Reform Act, this rule does not include any Federal mandate that may result in increased expenditures by State, local, and tribal governments, or increased expenditures by the private sector of more than $100,000,000. VII. Regulatory Flexibility Act and Executive Order 13272 (Proper Consideration of Small Entities in Agency Rulemaking) The Regulatory Flexibility Act of 1980, as amended (5 U.S.C. 601 et seq.), requires an agency to prepare a regulatory flexibility analysis when it proposes regulations that will have ‘‘a significant economic impact on a substantial number of small entities’’ or to certify that the proposed regulations will have no such impact, and to make the analysis or certification available for public comment. The Department has determined that a regulatory flexibility analysis under the RFA is not required for this rulemaking. While many longshore employers are small entities within the meaning of the RFA, see generally 77 FR 19471–72 (March 30, 2012), this rule, if adopted in final, will not have a significant economic impact on them. The proposed rules reflect current payment practices and thus impose no new costs on employers or their insurance carriers. As explained above, the proposed rules mainly codify case law interpreting how the Act’s maximum and minimum provisions work; the rules are based primarily on the Supreme Court’s controlling decision in Roberts, the Ninth and Eleventh Circuits’ decisions in Roberts and Boroski, and the Benefits Review Board’s decisions in Reposky and Lake. With one small exception, these decisions comport with the Director’s longstanding interpretation and VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 application of the maximum and minimum compensation provisions. That exception involved cases in which the employee’s disability was initially something less than permanent total— temporary total, permanent partial, or temporary partial—and in a later fiscal year became permanently totally disabling. Prior to the Ninth Circuit’s decision in Roberts, the Department took the view that the employee would have remained at the maximum rate in effect on the date of disability until the next October 1. On that October 1, his compensation rate would be determined by applying section 10(f) to increase his maximum rate by the same percentage as the increase to the national average weekly wage. But the Ninth Circuit held that the employee need not wait until the next October 1 and is instead immediately subject to the maximum rate in effect on the day he or she becomes permanently totally disabled under section 6(c)’s ‘‘currently receiving’’ clause. Roberts, 625 F.3d at 1208–09. The Department has been following the Ninth Circuit’s construction of the statute since 2012, and the regulations reflect this construction as well. Based on these facts, the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. Thus, a regulatory flexibility analysis is not required. The Department invites comments from members of the public who believe the regulations will have a significant economic impact on a substantial number of small longshore employers or insurers. The Department has provided the Chief Counsel for Advocacy of the Small Business Administration with a copy of this certification. See 5 U.S.C. 605. XIII. Executive Order 13132 (Federalism) The Department has reviewed this proposed rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have ‘‘federalism implications.’’ The proposed rule will not ‘‘have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government,’’ if promulgated as a final rule. IX. Executive Order 12988 (Civil Justice Reform) This proposed rule meets the applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 58887 litigation, eliminate ambiguity, and reduce burden. List of Subjects in 20 CFR Part 702 Administrative practice and procedure, Claims, Longshore and harbor workers, Maximum compensation rates, Minimum compensation rates, Workers’ compensation. For the reasons set forth in the preamble, the Department of Labor proposes to amend 20 CFR part 702 as follows: PART 702—ADMINISTRATION AND PROCEDURE 1. The authority citation for part 702 is revised to read as follows: ■ Authority: 5 U.S.C. 301, and 8171 et seq.; 33 U.S.C. 901 et seq.; 42 U.S.C. 1651 et seq.; 43 U.S.C. 1333; Reorganization Plan No. 6 of 1950, 15 FR 3174, 64 Stat. 1263; Secretary’s Order 10–2009, 74 FR 58834. 2. In part 702, add subparts G and H as follows: ■ Subpart G—Section 10(f) Adjustments Sec. 702.701 What is an annual section 10(f) adjustment and how is it calculated? Subpart H—Maximum and Minimum Compensation Rates General Sec. 702.801 Scope and intent of this subpart. 702.802 Applicability of this subpart. 702.803 Definitions. 702.804 What are the weekly maximum and minimum rates for each fiscal year and how are they calculated? Maximum Rates Sec. 702.805 What weekly maximum rates apply to compensation for permanent partial disability, temporary total disability, and temporary partial disability? 702.806 What weekly maximum rates apply to compensation for permanent total disability? 702.807 What weekly maximum rates apply to death benefits? Minimum Rates Sec. 702.808 What weekly minimum rates apply to compensation for partial disability? 702.809 What weekly minimum rates apply to compensation for temporary total disability? 702.810 What weekly minimum rates apply to compensation for permanent total disability? 702.811 What weekly minimum rates apply to death benefits? E:\FR\FM\26AUP1.SGM 26AUP1 58888 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules Subpart G—Section 10(f) Adjustments § 702.701 What is an annual section 10(f) adjustment and how is it calculated? (a) Claimants receiving compensation for permanent total disability or death benefits are entitled to section 10(f) adjustments each fiscal year. A section 10(f) adjustment cannot decrease the compensation or death benefits payable to any claimant. (b) The section 10(f) adjustment for a given fiscal year is the lower of: (1) The percentage by which the new fiscal year’s national average weekly wage exceeds the prior fiscal year’s national average weekly wage as determined by the Department (see § 702.804(b)); or (2) 5 percent. (c) Section 10(f) percentage increases are applied each October 1 to the amount of compensation or death benefits payable in the prior fiscal year. (d) In applying section 10(f) adjustments— (1) Calculations are rounded to the nearest dollar; and (2) No adjustment is made if the calculated amount is less than one dollar. (e) A section 10(f) adjustment must not increase a claimant’s weekly compensation or death benefits beyond the applicable fiscal year’s maximum rate. (f) Section 10(f) adjustments do not apply to compensation for temporary or partial disability. Subpart H—Maximum and Minimum Compensation Rates General mstockstill on DSK3G9T082PROD with PROPOSALS § 702.801 Scope and intent of this subpart. (a) This subpart implements the Act’s provisions that affect the maximum and minimum rates of compensation and death benefits payable to employees and survivors. These statutory provisions include sections 6(b) and (c), and 9(e). 33 U.S.C. 906(b), (c); 909(e). It is intended that these statutory provisions be construed as provided in this subpart. (b) These regulations implement section 6(c), 33 U.S.C. 906(c), based on the following concepts: (1) An employee is ‘‘newly awarded compensation’’ when he or she first becomes disabled due to an injury; (2) A survivor is ‘‘newly awarded compensation’’ on the date the employee died; and (3) An employee or survivor is ‘‘currently receiving compensation’’ when compensation for permanent total disability or death benefits is payable, VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 regardless of when payment is actually made. § 702.802 Applicability of this subpart. (a) This subpart applies to all compensation and death benefits paid under the Act with the following exceptions: (1) Amounts payable under an approved settlement (see 33 U.S.C. 908(i)); (2) Amounts paid for an employee’s death to the Special Fund (see 33 U.S.C. 944(c)(1)); (3) Any payments for medical expenses (see 33 U.S.C. 907); and (4) Any other lump sum payment of compensation or death benefits, including aggregate death benefits paid when a survivor remarries (see 33 U.S.C. 909(b)) or aggregate compensation paid under a commutation (see 33 U.S.C. 909(g)). (b) The rules in this subpart governing minimum disability compensation and death benefits do not apply to claims arising under the Defense Base Act, 42 U.S.C. 1651 (see 42 U.S.C. 1652(a); 20 CFR 704.103). § 702.803 Definitions. The following definitions apply to this subpart: (a) Calculated compensation rate means the amount of weekly compensation for total disability or death that a claimant would be entitled to if there were no maximum rates, minimum rates, or section 10(f) adjustments. (b) Date of disability (1) Except as provided in paragraph (b)(2), the date of disability is the date on which the employee first became incapable, because of an injury, of earning the same wages the employee was receiving at the time of the injury. (2) Exceptions: (i) For scheduled permanent partial disability benefits under 33 U.S.C. 908(c)(1)–(20) that are not preceded by a permanent total, temporary total, or temporary partial disability resulting from the same injury, the date of disability is the date on which the employee first becomes permanently impaired by the injury to the scheduled member. (ii) For an occupational disease that does not immediately result in disability, the date of disability is the date on which the employee becomes aware, or in the exercise of reasonable diligence or by reason of medical advice should have been aware, of the relationship between his or her employment, the disease, and the disability. (iii) For any disability lasting 14 or fewer days, the date of disability is 4 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 days after the date on which the employee first became incapable, because of an injury, of earning the same wages the employee was receiving at the time of the injury. (c) Fiscal year or FY means the period from October 1 of a calendar year until September 30 of the following calendar year. (d) Maximum rate means the maximum weekly compensation rate calculated by the Department for a given fiscal year as described in § 702.804(b). (e) Minimum rate means the minimum weekly compensation rate calculated by the Department for a given fiscal year as described in § 702.804(c). (f) Section 10(f) adjustment means the annual increase that certain claimants receiving compensation for permanent total disability or death are entitled to each fiscal year under 33 U.S.C. 910(f) and as calculated by the Department as described in § 702.701(b). § 702.804 What are the weekly maximum and minimum rates for each fiscal year and how are they calculated? (a) For each fiscal year, the Department must determine a weekly maximum and minimum compensation rate. These amounts are called the maximum and minimum rates in this subchapter. In combination with other factors, these rates are used to determine compensation payments under the Act. (b) The maximum compensation rate in effect for a given fiscal year is 200% of the national average weekly earnings of production or nonsupervisory workers on private, nonagricultural payrolls, as calculated by the Department, for the first three quarters of the preceding fiscal year. (c) The minimum compensation rate in effect for a given fiscal year is 50% of the national average weekly earnings of production or nonsupervisory workers on private, nonagricultural payrolls, as calculated by the Department, for the first three quarters of the preceding fiscal year. Maximum Rates § 702.805 What weekly maximum rates apply to compensation for permanent partial disability, temporary total disability, and temporary partial disability? (a) The maximum rate in effect on the date of disability applies to all compensation payable for permanent partial disability, temporary partial disability, and temporary total disability. (b) Examples: (1) Employee A suffers a covered workplace injury on April 1, 2000, is temporarily totally disabled from that day through June 4, 2002, and is E:\FR\FM\26AUP1.SGM 26AUP1 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules thereafter permanently partially disabled. All compensation payable for A’s disability is subject to the FY 2000 maximum rate. (2) Employee B suffers a covered workplace injury on August 25, 2010, and is temporarily totally disabled until September 25, 2010, when he returns to work. On January 3, 2011, he again becomes temporarily totally disabled from the same injury. He ceases work and is unable to return until November 22, 2012. All compensation payable for B’s disability is subject to the FY 2010 maximum rate. (3) Employee C retires on May 6, 2011. She discovers on November 10, 2012, that she has a compensable occupational disease. All compensation payable for C’s occupational disease is subject to the FY 2013 maximum rate. See § 702.601(b) (occupational diseases discovered post-retirement are compensated as permanent partial disabilities). mstockstill on DSK3G9T082PROD with PROPOSALS § 702.806 What weekly maximum rates apply to compensation for permanent total disability? (a) The maximum rate in effect on the date that the employee became totally and permanently disabled applies to all compensation payable for permanent total disability during that fiscal year. (b) For all periods the employee is permanently and totally disabled in subsequent fiscal years, the weekly compensation payable is subject to each subsequent year’s maximum rate. (c) If a claimant is receiving compensation for permanent total disability at the maximum rate for the current fiscal year, but the next fiscal year’s maximum rate will be higher than the claimant’s calculated compensation rate, the claimant’s compensation for the next fiscal year will increase by the amount of the 10(f) adjustment, subject to the maximum rate for the next fiscal year. (d) Examples: (1) Employee A suffers a covered workplace injury on April 1, 2000, and is permanently and totally disabled from that date forward. A’s compensation for the period from April 1, 2000, until September 30, 2000, is subject to the FY 2000 maximum rate. Beginning October 1, 2000, A’s compensation for FY 2001 is subject to the FY 2001 maximum rate, compensation for FY 2002 is subject to the FY 2002 maximum rate, etc. (2) Employee B suffers a covered workplace injury on April 1, 2000, is temporarily totally disabled from that day through June 3, 2002, and is thereafter permanently totally disabled. B’s compensation for the period from VerDate Sep<11>2014 17:53 Aug 25, 2016 Jkt 238001 April 1, 2000, through June 3, 2002, is subject to the FY 2000 maximum rate (see § 702.805(a)). B’s compensation for the period from June 4, 2002, through September 30, 2002, is subject to the FY 2002 maximum rate. Beginning October 1, 2002, B’s compensation for FY 2003 is subject to the FY 2003 maximum rate, compensation for FY 2004 is subject to the FY 2004 maximum rate, etc. (3) Employee C suffers a covered workplace injury in FY 2009 and is permanently totally disabled from that day forward. He was earning $1,950.00 a week when he was injured, making his calculated compensation rate $1,300.00 ($1,950.00 × 2 ÷ 3). His calculated compensation rate exceeds the maximum rate from FY 2009–2012; thus, his compensation is limited to each year’s maximum rate. In FY 2013, C’s calculated compensation rate of $1,300.00 is, for the first time, less than the FY 2013 maximum rate of $1,325.18. Applying the FY 2013 2.31% section 10(f) adjustment to C’s FY 2012 compensation rate of $1,295.20 results in a compensation rate of $1,325.00 ($1,295.20 × .0231 = $29.92 (rounded to the nearest cent); $1,295.20 + $29.92 = $1,325.12, rounded to the nearest dollar). This amount falls just below the FY 2013 maximum rate of $1,325.18. Thus, C’s benefit rate for FY 2013 is $1,325.00, and is not limited by the maximum rate. § 702.807 What weekly maximum rates apply to death benefits? (a) The maximum rate in effect on the date that the employee died applies to all death benefits payable during that fiscal year. (b) Aggregate weekly death benefits paid to all eligible survivors during the fiscal year in which the employee died must not exceed the lower of— (1) The maximum rate for that fiscal year; or (2) The employee’s average weekly wages. (c) For subsequent fiscal years— (1) Aggregate weekly death benefits paid during each subsequent fiscal year are subject to each subsequent year’s maximum rate. (2) If death benefits were paid in the first year at the employee’s full average weekly wage under paragraph (b)(2), the aggregate weekly death benefits paid for each subsequent year may not exceed the current benefit rate plus the subsequent year’s section 10(f) adjustment (see § 702.701). (d) Post-retirement occupational diseases. Notwithstanding paragraphs (a)–(c), if an employee’s death results from an occupational disease where the PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 58889 date of disability occurred after the employee voluntarily retired— (1) Aggregate weekly death benefits paid to all eligible survivors during the fiscal year in which the employee died must not exceed the lower of: (i) The maximum rate for that fiscal year; or (ii) One fifty-second part of the employee’s average annual earnings during the 52-week period preceding retirement. (2) For subsequent fiscal years— (i) Aggregate weekly death benefits paid during each subsequent fiscal year are subject to each subsequent year’s maximum rate. (ii) If death benefits were paid in the first year at 1/52 part of the employee’s average annual earnings prior to retirement under paragraph (d)(1)(ii), the aggregate weekly death benefits paid for each subsequent year may not exceed the current benefit rate plus the subsequent year’s section 10(f) adjustment (see § 702.701). (e) Examples: (1) Employee A suffers a covered workplace injury on May 1, 2013, and is permanently and totally disabled from that date until August 1, 2014, when he dies due to the injury. He has one eligible survivor and his average weekly wage at the time of injury was $3,000.00. The calculated compensation rate for A’s survivor is $1,500.00 (i.e., 50% of A’s average weekly wage). A’s weekly survivor’s benefits for the period from August 2, 2014, to September 30, 2014, are limited to the FY 2014 maximum rate of $1,346.68. Beginning October 1, 2014, A’s survivor’s benefits for FY 2015 are subject to the FY 2015 maximum rate, benefits for FY 2016 are subject to the FY 2016 maximum rate, etc. (2) Employee B suffers a covered workplace injury and dies on December 1, 2012. She has one eligible survivor and her average weekly wage was $300.00. Because B’s average weekly wage of $300.00 falls below the FY 2013 national average weekly wage of $662.59, death benefits are calculated at 50% of that national average wage (see 33 U.S.C. 909(e)). This yields a calculated compensation rate of $331.30. But because this rate exceeds B’s actual average weekly wages, weekly death benefits payable during FY 2013 are limited to $300.00. In FY 2014, B’s survivor is entitled to a 1.62% section 10(f) adjustment, resulting in weekly death benefits of $305.00 ($300.00 × .0162 = $4.86; $300.00 + $4.86 = $304.86, rounded to the nearest dollar). B’s survivor would continue to receive section 10(f) adjustments in subsequent fiscal years. E:\FR\FM\26AUP1.SGM 26AUP1 58890 Federal Register / Vol. 81, No. 166 / Friday, August 26, 2016 / Proposed Rules (3) Employee C retired on February 1, 1998. During his last year of employment, he earned $23,000. He discovers on April 15, 2002, that he has a compensable occupational disease resulting in a 50% permanent impairment. See § 702.601(b). Because he retired more than one year before this date, his payrate for calculating compensation is the FY 2002 national average weekly wage, or $483.04. See § 702.603(b). He is entitled to weekly compensation of $161.01 ($483.04 × 2 ÷ 3 × 50%). C dies from the disease on June 1, 2015, leaving two survivors. The payrate for calculating death benefits is the FY 2015 national average weekly wage, or $688.51. See § 702.604(b). The survivors’ aggregate calculated compensation rate is $459.01 ($688.51 × 2 ÷ 3). But because compensation cannot exceed 1/52 part of C’s last year of earnings, aggregate weekly death benefits payable for FY 2015 are limited to $442.31 ($23,000 ÷ 52). For FY 2016, C’s survivors are entitled to a 2.10% section 10(f) adjustment resulting in weekly death benefits of $452.00 ($442.31 × 021 = $9.29 (rounded to the nearest cent); $442.31 + $9.29 = $451.60, rounded to the nearest dollar). C’s survivors would continue to receive section 10(f) adjustments in subsequent fiscal years. Minimum Rates § 702.808 What weekly minimum rates apply to compensation for partial disability? There is no minimum rate for compensation paid for partial disability, whether temporary or permanent. mstockstill on DSK3G9T082PROD with PROPOSALS § 702.809 What weekly minimum rates apply to compensation for temporary total disability? (a) The minimum compensation payable for temporary total disability is the lower of: (1) The minimum rate in effect on the date of disability, or (2) The employee’s average weekly wage on the date of disability. (b) Example: Employee A suffers a covered workplace injury on May 6, 2014. He is temporarily totally disabled until November 6, 2015, when he returns to work. His average weekly wages at the time of disability were $500.00. Because his calculated compensation rate (i.e., 66 and 2⁄3% of $500.00, or $333.34) is lower than the $336.67 FY 2014 minimum rate, A’s compensation is raised to $336.67 for the entire period of his disability. VerDate Sep<11>2014 17:00 Aug 25, 2016 Jkt 238001 § 702.810 What weekly minimum rates apply to compensation for permanent total disability? (a) The weekly minimum compensation payable for the fiscal year in which the employee became permanently and totally disabled is the lower of: (1) The minimum rate in effect on the date of disability, or (2) The employee’s average weekly wage on the date of disability. (b) For all periods the employee is permanently and totally disabled in subsequent fiscal years, the weekly minimum compensation payable is the lower of: (1) Each subsequent fiscal year’s minimum rate, or (2) The employee’s average weekly wage on the date of disability. (c) Example: Employee A suffers a covered workplace injury on April 1, 2003, and is permanently totally disabled from that day forward. He was earning $250.00 a week when he was injured. His calculated compensation rate is $166.67 ($250 × 2 ÷ 3). The FY 2003 minimum rate is $249.14. Because A’s calculated compensation rate is below the FY 2003 minimum rate, and his actual weekly wage is above that rate, he is entitled to compensation at the minimum rate of $249.14 from April 1, 2003, to September 30, 2003. The FY 2004 minimum rate is $257.70. Because A’s actual weekly wages on the date of disability are lower than the FY 2004 minimum rate, A’s minimum weekly compensation rate for FY 2004 is $250.00. His weekly compensation rate for FY 2004, however, is higher because of a section 10(f) adjustment. For FY 2004, A’s compensation rate is increased by a 3.44% section 10(f) adjustment, raising his compensation level to $258.00 ($249.14 × .0344 = $8.57; $249.14 + $8.57 = $257.71, rounded to the nearest dollar). § 702.811 What weekly minimum rates apply to death benefits? DEPARTMENT OF THE INTERIOR National Indian Gaming Commission 25 CFR Part 515 RIN 3141–AA65 Privacy Act Procedures National Indian Gaming Commission, Department of the Interior. ACTION: Notice of proposed rulemaking. AGENCY: The purpose of this document is to propose amendments to the procedures followed by the National Indian Gaming Commission (Commission) when processing a request under the Privacy Act of 1974. The proposed amendments make the following changes to the current regulations. These changes will serve to update certain Commission information, streamline how the Commission processes its Privacy Act requests, and aligns those processes with its procedures for processing Freedom of Information Act requests. DATES: Written comments on this proposed rule must be received on or before October 11, 2016. ADDRESSES: Comments may be mailed to Attn: National Indian Gaming Commission, FOIA/PA Officer, C/O Department of the Interior, 1849 C Street NW., Mail Stop #1621, Washington, DC 20240 or faxed to (202) 632–7066 (this is not a toll free number). Comments may be inspected between 9:00 a.m. and noon and between 2:00 p.m. and 5:00 p.m., Monday through Friday, at 90 K Street NE., Washington, DC 20002. Comments may also be submitted electronically at www.regulations.gov or emailed to pacomments@nigc.gov. FOR FURTHER INFORMATION CONTACT: Andrew Mendoza at (202) 632–7003 or by fax (202) 632–7066 (these numbers are not toll free). SUPPLEMENTARY INFORMATION: SUMMARY: I. Comments Invited (a) The average weekly wage used to compute death benefits is the greater of— (1) The deceased employee’s average weekly wages; or (2) The national average weekly wage in effect at the time of the employee’s death. (b) The weekly minimum rate does not apply to death benefits. Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Leonard J. Howie III, Director, Office of Workers’ Compensation Programs. The Indian Gaming Regulatory Act (IGRA), enacted on October 17, 1988, established the National Indian Gaming Commission. Congress enacted the Privacy Act in 1974 (Pub. L. 93–579, 5 [FR Doc. 2016–20467 Filed 8–25–16; 8:45 am] BILLING CODE 4510–CR–P PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 II. Background E:\FR\FM\26AUP1.SGM 26AUP1

Agencies

[Federal Register Volume 81, Number 166 (Friday, August 26, 2016)]
[Proposed Rules]
[Pages 58878-58890]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20467]


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DEPARTMENT OF LABOR

Office of Workers' Compensation Programs

20 CFR Part 702

RIN 1240-AA06


Longshore and Harbor Workers' Compensation Act: Maximum and 
Minimum Compensation Rates

AGENCY: Office of Workers' Compensation Programs, Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Office of Workers' Compensation Programs is proposing 
rules to implement the Longshore and Harbor Workers' Compensation Act's 
maximum and minimum compensation provisions. Some of these provisions, 
which cap the amounts of compensation and death benefits payable to 
entitled claimants and provide a floor below which compensation may not 
fall, have become the topic of litigation. The proposed rules would 
clarify how the Department interprets and applies these provisions. In 
addition, the proposed rules would implement the Act's annual 
compensation-adjustment mechanism for permanent total disability 
compensation and death benefits.

DATES: The Department invites written comments on the proposed 
regulations from interested parties. Written comments must be received 
by October 25, 2016.

ADDRESSES: You may submit written comments, identified by RIN number 
1240-AA06, by any of the following methods. To facilitate the receipt 
and processing of comment letters, OWCP encourages interested parties 
to submit their comments electronically.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions on the Web site for submitting comments.
     Fax: (202) 693-1380 (this is not a toll-free number). Only 
comments of ten or fewer pages (including a Fax cover sheet and 
attachments, if any) will be accepted by Fax.
     Regular Mail or Hand Delivery/Courier: Submit comments on 
paper to the Division of Longshore and Harbor Workers' Compensation, 
Office of Workers' Compensation Programs, U.S. Department of Labor, 
Room C-4319, 200 Constitution Avenue NW., Washington, DC 20210. The 
Department's receipt of U.S. mail may be significantly delayed due to 
security procedures. You must take this into consideration when 
preparing to meet the deadline for submitting comments.
    Instructions: All submissions received must include the agency name 
and the Regulatory Information Number (RIN) for this rulemaking. All 
comments received will be posted without change to http://www.regulations.gov, including any personal information provided.
    Docket: To read background documents or comments received, go to 
http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Antonio Rios, Director, Division of 
Longshore and Harbor Workers' Compensation, Office of Workers' 
Compensation Programs, U.S. Department of Labor, Room C-4319, 200 
Constitution Avenue NW., Washington, DC 20210. Telephone: (202)-693-
0038 (this is not a toll-free number). TTY/TDD callers may dial toll 
free 1-877-889-5627 for further information.

SUPPLEMENTARY INFORMATION: 

I. Background of This Rulemaking

    The Longshore and Harbor Workers' Compensation Act, 33 U.S.C. 901-
50 (LHWCA or Act), establishes a federal workers' compensation system 
for an employee's disability or death arising in the course of covered 
maritime employment. 33 U.S.C. 903(a), 908, 909. This proposed rule 
would implement the Act's provisions on maximum and minimum amounts of 
compensation payable.

A. The Act's Compensation Scheme

    Disability, which the Act defines as ``incapacity because of injury 
to earn the wages which the employee was receiving at the time of 
injury,'' 33 U.S.C. 902(10), ``is in essence an economic, not a medical 
concept.'' Metro. Stevedores v. Rambo, 515 U.S. 291, 297 (1995). From 
its inception in 1927, the Act has provided that ``the average weekly 
wage of the injured employee at the time of the injury'' must be used 
as the basis for computing his or her compensation rate. 33 U.S.C. 910. 
Thus, ``[a]n employee's compensation depends on the severity of his 
disability and his preinjury pay.'' Roberts v. Sea-Land Services, Inc., 
566 U.S. __, 132 S.Ct. 1350, 1354 (2012).
    Several statutory sections have an impact on determining the amount 
of compensation payable. Section 10, ``Determination of Pay,'' 33 
U.S.C. 910, is the starting point in the statutory scheme. It sets out 
rules for calculating the employee's average weekly wage (AWW) as of 
the time of the employee's disabling injury. This AWW serves as the 
basis for all future benefit calculations for that worker throughout 
the life of his or her claim.
    The second step is to determine what percentage of the employee's 
AWW a claimant will receive in compensation. This is determined under 
section 8, ``Compensation for Disability,'' and section 9, 
``Compensation for Death,'' 33 U.S.C. 908, 909. Compensation payable 
for disability varies based on the nature and extent of an employee's 
disability. Section 8 establishes four basic categories of disability: 
Permanent total, temporary total, permanent partial, and temporary 
partial. 33 U.S.C. 908(a)-(c), (e). In general, an injury is ``total'' 
if the worker is unable to work after the injury and ``partial'' if the 
worker is able to work at a diminished wage. A disability is 
``temporary'' if the employee's medical condition is improving and 
becomes ``permanent'' when he or she reaches maximum medical 
improvement. See 33 U.S.C. 908(a)-(c), (e); see also Potomac Elec. 
Power Co. v. Director, OWCP, 449 U.S. 268 (1980). And section 9 
provides compensation payable to the employees' eligible survivors for 
injuries causing death. 30 U.S.C. 909.
    For all disability categories, the Act uses a ``two-thirds'' rule 
to compute compensation. Totally disabled employees--those who are 
unable to return to their original employment or earn wages in suitable 
alternative employment--receive two-thirds the AWW they were earning at 
the time of injury. 33 U.S.C. 908(a)-(b). Partially disabled 
employees--those who experience the loss or loss-of-use of body parts 
specified in the statute--are entitled to two-thirds of their date-of-
injury AWW for a specified number of weeks. 33 U.S.C. 908(c)(1)-(19). 
Other partially disabled employees--those

[[Page 58879]]

who are able to work after their injuries at a diminished wage--receive 
two-thirds of the difference between their pre-disability AWW and their 
residual earning capacity (i.e., the post-injury wages they earn or 
could earn through suitable alternative employment). See 33 U.S.C. 
908(c)(21), (e). Finally, the compensation rate for survivors of an 
employee who suffers a work-related death is usually based on the 
deceased employee's AWW at the time of death, and, with certain 
exceptions, can be as high as two-thirds of that wage. 33 U.S.C. 
909(b).
    The third step is to apply the statute's compensation-limiting 
rules. Despite the general two-thirds rule, section 6, 
``Compensation,'' 33 U.S.C. 906, both caps the compensation amounts 
that can be received (a ``maximum'') and provides a floor below which 
compensation may not fall (a ``minimum''). These limits are applied 
after calculating two-thirds of the worker's date-of-injury AWW. The 
Act sets the maximum for all disability compensation categories at 200 
percent of the ``applicable national average weekly wage.'' 33 U.S.C. 
906(b)(1). Total compensation for death--the amount payable to all 
survivors in the aggregate--is also limited to that 200-percent figure, 
or to the deceased employee's AWW, whichever is less. 33 U.S.C. 
909(e)(1); Donovan v. Newport News Shipbuilding & Dry Dock Co., 31 BRBS 
2 (1997). The Act sets the minimum for total disability compensation at 
the lower of: (1) 50 percent of the applicable national average weekly 
wage; or (2) the employee's actual AWW. 33 U.S.C. 906(b)(2). The Act 
does not provide minimums for the remaining compensation categories.
    The Secretary of Labor determines the national average weekly wage 
before October 1 of each year, and it applies for a fiscal year (FY), 
from October 1 until the next September 30. 33 U.S.C. 906(b)(3). A 
given fiscal year's national average weekly wage, and the resulting 
maximum and minimum rates, apply to ``employees or survivors currently 
receiving compensation for permanent total disability or death during 
such [fiscal year], as well as those newly awarded compensation during 
such [fiscal year].'' 33 U.S.C. 906(c) (emphasis added). Under the 
``currently receiving'' clause, the maximum rate for claimants 
receiving benefits for permanent total disability or death is 
``adjusted each fiscal year--and typically increases, in step with the 
usual inflation-driven rise in the national average weekly wage.'' 
Roberts, 132 S.Ct. at 1354 n.2. In fact, because the national average 
weekly wage has risen every year since Congress added this self-
adjustment feature to section 6 in 1972, each year's maximum rate has 
risen as well. Thus, applying a later fiscal year's maximum generally 
results in a higher compensation rate.
    Finally, in addition to section 6's provisions allowing adjustments 
to the maximum compensation rate, section 10(f) provides another 
mechanism for adjusting compensation amounts over time. ``[B]enefits 
payable for permanent total disability or death'' are increased at the 
beginning of each fiscal year (October 1) by the same percentage as any 
increase in the national average weekly wage (as calculated under 
section 6), but no more than 5 percent. 33 U.S.C. 910(f). The primary 
difference between the two adjustment provisions is that section 10(f) 
applies to all claimants receiving compensation for permanent total 
disability or death, while section 6(c) assists only those affected by 
the maximum rate. Through these provisions, compensation payable to a 
claimant each year increases by the same amount as wage-growth 
generally, ensuring that the value of the workers' compensation is not 
eroded over time.
    In recent litigation, disputes have arisen over which fiscal year's 
maximum rate or rates apply to a given claimant, specifically: (1) In 
what fiscal year is a claimant ``newly awarded compensation''; and (2) 
in what fiscal year is a claimant ``currently receiving compensation 
for permanent total disability or death.'' On the first question, the 
dispute is whether a claimant is ``newly awarded compensation'' when he 
or she first becomes disabled--and therefore entitled to compensation--
or when an administrative law judge issues a compensation order. On the 
second question, the dispute is whether a claimant is ``currently 
receiving compensation for permanent total disability'' when he or she 
first becomes permanently totally disabled or when he or she actually 
receives compensation for permanent total disability.
    The Supreme Court resolved the first of these questions in its 
Roberts decision. But the second issue has not been addressed by all 
circuits around the country, and thus remains subject to litigation. 
The proposed rules would codify the Supreme Court's decision, resolve 
the second issue in a manner consistent with the courts that have 
addressed it, implement other aspects of the Act's maximum and minimum 
compensation provisions, and address the related section 10(f) annual 
adjustment provision.

B. Section 6(c)'s ``Newly Awarded Compensation During Such Period'' 
Clause

    The Supreme Court construed this part of section 6(c) in Roberts 
and held ``that an employee is `newly awarded compensation' when he 
first becomes disabled and thereby becomes statutorily entitled to 
benefits, no matter whether, or when, a compensation order issues on 
his behalf.'' 132 S.Ct. at 1363. Mr. Roberts was injured and became 
disabled in FY 2002. An administrative law judge (ALJ) order awarding 
compensation, however, was not issued until FY 2007. While Mr. Roberts' 
employer initially made some compensation payments, it stopped in May 
2005 and did not resume payments until after the ALJ's FY 2007 order. 
The ALJ found that Mr. Roberts' disability was: Temporary total from 
March 11, 2002, to July 11, 2005; permanent total from July 12, 2005, 
to October 9, 2005; and permanent partial beginning on October 10, 
2005. Roberts v. Director, Office of Workers' Compensation Programs, 
625 F.3d 1204, 1205 (9th Cir. 2010). Because the employer had ceased 
paying compensation in May 2005, before Mr. Roberts' period of 
permanent total disability, it did not pay him for that disability 
until after the ALJ's order in FY 2007.
    The ALJ found that Mr. Roberts' compensation rate for total 
disability--two-thirds of his AWW--was $1,902.05, and that his 
compensation rate for permanent partial disability--two-thirds of the 
difference between his average weekly and his residual wage-earning 
capacity--was $1,422.05. He found, however, that Mr. Roberts was 
subject, for all periods of disability, to the maximum rate of $966.08 
in effect during FY 2002, because that was when he first became 
disabled, and was thus ``newly awarded compensation.'' Id. at 1206. On 
Mr. Roberts' motion for reconsideration, the ALJ determined that he had 
applied the wrong maximum rate for the period from October 1, 2005, 
through October 9, 2005. The ALJ found that Mr. Roberts was entitled to 
the FY 2006 maximum rate of $1,703.64 per week for that period because 
he was ``currently receiving compensation for permanent total 
disability'' during that time. Id.
    The Benefits Review Board, relying on its earlier decision in 
Reposky v. Int'l Transp. Services, 40 BRBS 65, 74-76 (2006) (holding 
that a claimant is newly awarded compensation ``when benefits commence, 
generally at the time of injury''), affirmed the ALJ's decision. The 
Ninth Circuit followed suit. In affirming the ALJ's decision, it held 
that

[[Page 58880]]

an injured employee is ``newly awarded'' compensation when he or she 
first becomes entitled to compensation rather than when a formal 
compensation order is issued. Roberts, 625 F.3d at 1208. Although Mr. 
Roberts argued that ``awarded'' could mean only ``assigned by formal 
order in the course of adjudication,'' and that ``newly awarded'' must 
therefore mean newly issued a compensation order, id. at 1206, the 
court rejected that argument. It reasoned that the LHWCA sometimes uses 
``awarded'' to mean ``entitled to.'' It found that use applied to 
section 6, and held that a claimant is ``newly awarded'' compensation 
when he first becomes entitled to compensation, which is when he first 
becomes disabled.
    The Supreme Court agreed with the Ninth Circuit's interpretation of 
section 6(c)'s ``newly awarded compensation'' clause. The Court 
acknowledged that Mr. Roberts' contrary view was ``appealing'' because 
``[i]n ordinary usage, `award' most often means `give by judicial 
decree' or `assign after careful judgment.' '' Roberts, 132 S. Ct. at 
1356 (quoting Webster's Third New International Dictionary 152 (2002)). 
It recognized, however, that ``award'' can also mean ``grant'' or 
``confer or bestow upon.'' Thus, deciding that ``the text of Sec.  
906(c), in isolation, is indeterminate[,]'' the Court considered its 
function in the context of the statute as a whole. Id. at 1357. The 
Court concluded that in the Act's ``comprehensive, reticulated regime 
for worker benefits--in which Sec.  906 plays a pivotal role--`awarded 
compensation' is much more sensibly interpreted to mean `statutorily 
entitled to compensation because of disability,' '' id. at 1357, than 
``awarded compensation in a formal order.'' Id. at 1356.
    The Court gave several reasons for its holding. First, the Court 
recognized that construing ``newly awarded compensation'' to mean a 
formal compensation order would be ``incompatible with the Act's 
design.'' Id. at 1357. The Court reasoned that this construction of the 
clause would be impossible to apply in the many cases where benefits 
are paid voluntarily and a formal compensation order is never issued. 
Noting that the three provisions of section 6 that relate to the 
maximum compensation rate ``work together to cap disability benefits,'' 
and that section 6(b)(1)'s cap on benefits ``applies globally, to all 
disability claims,'' the Court concluded that section 6(c)'s ``newly 
awarded'' clause must also apply globally. Id. at 1358.
    Second, the Court examined the Act's administrative structure, 
which requires employers to pay compensation within 14 days after the 
employer knows of the worker's injury (see 30 U.S.C. 914(b)). It 
determined that using the national average weekly wage at the time of 
disability to determine the applicable maximum ``coheres'' with that 
structure. Roberts, 132 S. Ct. at 1358. The Court recognized that the 
employer, as well as OWCP, must be able to calculate the amount of 
compensation due at the time of payment, a calculation that necessarily 
includes consideration of any applicable cap. Because an employer is 
``powerless to predict'' future events related to the compensation 
claim or what a later national average weekly wage will be, the court 
reasoned that ``[i]t is difficult to see how an employer can apply or 
certify a national average weekly wage other than the one in effect at 
the time an employee becomes disabled.'' Roberts, 132 S. Ct. at 1358-
59.
    Reading section 6(c) in the context of the Act's comprehensive 
scheme, the Court further explained that ``applying the national 
average weekly wage for the fiscal year in which an employee becomes 
disabled advances the LHWCA's purpose to compensate disability,'' which 
focuses on wages at the time of the injury as the basis to compute 
compensation. Id. at 1359 (citing 33 U.S.C. 902(10)). It is thus 
``logical to apply the national average weekly wage for the same point 
in time.'' Id.
    Moreover, the Court found that applying the date-of-disability 
maximum rate as suggested by the Director and Employer ``avoids 
disparate treatment of similarly situated employees . . . who earn the 
same salary and suffer the same injury on the same day.'' Id. at 1359. 
By contrast, Mr. Roberts' approach could subject such employees to 
different rates based solely on the ``happenstance of their obtaining 
orders in different fiscal years.'' Id.
    Third, the Court believed its approach ``discourages gamesmanship 
in the claims process.'' Id. at 1360. Using the date a compensation 
order issues would encourage claimants to delay the adjudication 
process or initiate additional administrative proceedings seeking to 
take advantage of a later year's national average weekly wage. At the 
same time, an employer who promptly pays compensation at the correct 
rate would be subject to an increased cap retroactively for those 
payments based on a later compensation order. The Court refused to 
``reward'' claimants with these ``windfalls'' while ``punishing'' 
employers who have met their statutory obligations. Id.

C. Section 6(c)'s ``Currently Receiving Compensation for Permanent 
Total Disability or Death Benefits During Such Period'' Clause

    While the Supreme Court's Roberts decision settled the 
interpretation of the ``newly awarded'' clause, the Court declined to 
consider section 6(c)'s ``currently receiving'' clause, leaving the 
phrase's correct interpretation open to further litigation. The Ninth 
Circuit Roberts court had interpreted the ``currently receiving'' 
clause consistently with the ``newly awarded'' clause, noting that 
``[u]nder both clauses, the inquiry into the applicable maximum rate 
focuses on an employee's entitlement to compensation.'' Roberts, 625 
F.3d at 1208. It held that ``the `currently receiving' clause of 
section 6(c) unambiguously refers to the period during which an 
employee was entitled to receive compensation for permanent total 
disability, regardless of whether his employer actually paid it.'' Id. 
at 1209. Consequently, the court determined that Mr. Roberts was 
``currently receiving compensation for permanent total disability'' as 
of July 12, 2005, and thus entitled to the FY 2005 maximum rate from 
that date through September 30, 2005 (the end of FY 2005), and to the 
FY 2006 rate from October 1, 2005, through October 9, 2005. Beginning 
October 10, 2005--when Mr. Roberts regained an earning capacity, making 
his disability permanent partial--the court concluded he was once again 
subject to the FY 2002 maximum rate. Id. at 1206, 1209.
    Although the Eleventh Circuit initially disagreed with the Ninth 
Circuit's construction of the ``currently receiving'' clause, Boroski 
v. DynCorp Int'l, 662 F.3d 1197 (11th Cir. 2011), that court reversed 
its position after the Supreme Court decided Roberts. Boroski v. 
DynCorp Int'l, 700 F.3d 446 (11th Cir. 2012) on remand from 132 S.Ct. 
2430 (2012). Mr. Boroski was first disabled by his work-related injury 
in April 2002. His employer, DynCorp International, timely contested 
his compensation claim and thus did not voluntarily pay him 
compensation. An ALJ entered an order in FY 2008 awarding him permanent 
total disability compensation from 2002 and continuing. DynCorp based 
its subsequent payments on the maximum compensation rate applicable for 
FY 2002, and adjusted the amount upward each year, beginning on October 
1, 2002, as required by section 10(f). Mr. Boroski objected, arguing 
that he was not ``currently receiving compensation for permanent total 
disability'' until FY 2008, when the employer actually began

[[Page 58881]]

paying him, and was thus entitled to the FY 2008 maximum rate from the 
outset.
    The Eleventh Circuit rejected Mr. Boroski's argument and held that 
`` `currently receiving compensation' in Sec.  906(c) means `currently 
entitled to compensation.' '' Boroski, 700 F.3d at 451. The court 
agreed with the Director that for each year after 2002 during which Mr. 
Boroski was entitled to compensation for permanent total disability, he 
was ``currently receiving compensation for permanent total 
disability,'' and thus subject to the new fiscal year's maximum rate, 
regardless of when the compensation was actually paid.
    Taking its analytical lead from the Supreme Court in Roberts, the 
Boroski court considered the ``currently receiving'' clause's role in 
the context of the entire statute. The court noted that using the 
maximum for the year in which compensation was actually paid (2008) 
rather than for the first year Mr. Boroski was disabled (2002) would 
lead to ``two different and irreconcilable weekly benefit payment 
amounts'' under the Supreme Court's interpretation of the ``newly 
awarded'' clause, which also applied to his compensation calculation. 
Id. at 451. The Director's contrary interpretation instead harmonized 
the two clauses of section 6(c).
    The court also found the Director's position more consistent with 
section 10(f)'s annual adjustment mechanism. The court reasoned that 
the Director's interpretation of the ``currently receiving'' clause 
operates similarly, ``gradually increasing benefits to maintain the 
value of an injured employee's wages, determined `at the time of the 
injury.' '' Id. at 452. Mr. Boroski's interpretation--under which 
``employers who first pay benefits to an injured employee in a year 
other than the year of the injury would pay all past due payments based 
on the national average weekly wage for the year in which the first 
payment is made . . . effectively giv[ing] the injured employee a raise 
to the later year's national average weekly wage, and would make that 
raise retroactive to the date of his disability''--would be 
``incongruous'' with section 10(f). Id. at 452. The court also rejected 
Mr. Boroski's assertion that Congress intended his interpretation to 
encourage prompt payment of benefits. The court noted that claimants 
are entitled to interest on late payments of compensation, and found 
that interest both adequately compensates claimants for the delayed 
receipt of benefits and discourages employers from refusing to promptly 
pay legitimate claims.
    Finally, the court determined that the Director's interpretation 
avoided disparate treatment of similarly situated claimants. ``Under 
the Director's interpretation, Boroski receives the same benefits as a 
similarly situated employee who was first injured and who first 
received payment in 2002, and, additionally, Boroski receives interest 
on all late payments, to compensate him for the delay.'' Id. at 453. By 
contrast, under Mr. Boroski's interpretation--in which Mr. Boroski 
``would receive, in addition to interest, higher benefits for the same 
period of disability than claimants who timely receive their 
benefits''--the same hypothetical employee ``would receive 
approximately $30,000 less than Boroski.'' Id.
    For all of these reasons, the Eleventh Circuit held, as had the 
Ninth Circuit in Roberts, that an employee is ``currently receiving 
compensation for permanent total disability'' when he is entitled to 
such compensation, not when he is actually paid that compensation. To 
date, the remaining circuits have not weighed in on this issue.
    The Benefits Review Board subsequently reached the same conclusion 
as the Ninth and Eleventh Circuits. Lake v. L-3 Communications, 47 BRBS 
45 (2013). In Lake, the Board held that a claimant is ``currently 
receiving compensation'' under section 6(c) ``during a period in which 
he is entitled to receive such compensation, regardless of whether his 
employer actually pays it.'' Id. at 48. The Board also held that when a 
claimant's temporary total disability changes to permanent total 
disability during a fiscal year, the maximum rate in effect during that 
year applies immediately. Id. at 48. In reaching this conclusion, the 
Board overruled this portion of its earlier contrary decision in 
Reposky, 40 BRBS at 65. The Board thus held that the FY 2009 maximum 
rate applied as of December 10, 2008, the date that Mr. Lake's 
entitlement to permanent total disability benefits commenced, until the 
next October 1, when the new fiscal year's maximum rate applied.
    The Board also addressed a related question on the interplay 
between sections 6 and 10(f) in Lake. The employer argued that Mr. 
Lake, who first reached permanent total disability status in FY 2009, 
was not entitled to the FY 2009 maximum rate. Instead, the employer 
contended that he was limited to a section 10(f) increase on the FY 
2006 maximum rate that he had been receiving since his injury, followed 
by a section 10(f) adjustment each subsequent October 1. The Board 
rejected this argument. Citing its earlier contrary holding in Marko v. 
Morris Boney Co., 23 BRBS 353 (1990), the Board reiterated its 
conclusion that, ``in a permanent total disability case in which two-
thirds of the claimant's actual [AWW] exceeds the Section 6(b)(3) 
statutory maximum rate, he is entitled to the benefit of the new 
maximum rate each fiscal year . . . until such time as two-thirds of 
his actual average weekly wage falls below 200 percent of the 
applicable [national average weekly wage], and then annual adjustments 
under Section 10(f) apply.'' Lake, 47 BRBS at 50. The Board found its 
holding compelled by the plain language of section 6(c) and supported 
by the Ninth Circuit's Roberts decision.

II. Summary of the Proposed Rule

A. General Information

    As discussed in the Section-by-Section Explanation below, this 
proposed rule implements the Act's provisions governing the maximum and 
minimum amount of disability compensation and death benefits payable. 
The proposed regulations do not govern general compensation 
calculations (referred to in the rules as the ``calculated compensation 
rate''), and the fact that compensation payable is subject to these 
maximum and minimum rates does not mean that claimants are necessarily 
entitled to them. Rather, the proposed regulations simply provide that 
disability compensation and death benefits can go no higher than the 
applicable maximum rate or lower than the applicable minimum rate.
    The proposed rule includes two subparts. Subpart G describes the 
annual adjustment to compensation and death benefits provided under 
section 10(f) of the Act, 33 U.S.C. 910(f). While section 10(f) allows 
for an annual adjustment to all payments of compensation for permanent 
total disability or death benefits, including those cases where neither 
the maximum nor the minimum rates are implicated, the Department has 
included section 10(f) in this rulemaking because its application can 
be closely tied with the maximum compensation or death benefits payable 
in certain cases. These interrelationships are detailed in the Section-
by-Section Explanation below.
    Subpart H includes proposed regulations implementing the Act's 
maximum and minimum provisions. The Department has organized these 
sections first to cover general topics, then by whether the rules 
govern maximum or minimum compensation payable, and finally by 
categories of compensation payable (i.e., temporary

[[Page 58882]]

total or partial, permanent total or partial, and death benefits).

B. Section-by-Section Explanation

    This discussion contains an explanation of each proposed rule. Many 
of the rules include examples that use the Department's yearly 
calculation of the applicable national average weekly wage, the maximum 
and minimum weekly compensation rates, and percentage adjustments 
available under section 10(f), 33 U.S.C. 910(f). This information is 
routinely available on OWCP's Web site. See https://www.dol.gov/owcp/dlhwc/ (last visited Aug. 1, 2016). For the reader's convenience, these 
amounts for FY 2000 to FY 2016 are provided in the following chart.

----------------------------------------------------------------------------------------------------------------
                                                                  Maximum weekly  Minimum weekly   Section 10(f)
                     Period                          NAWW \1\      rate (200% of   rate (50% of       percent
                                                                       NAWW)           NAWW)       increase (%)
----------------------------------------------------------------------------------------------------------------
(FY 16) 10/01/2015-09/30/2016...................         $703.00       $1,406.00         $351.50            2.10
(FY 15) 10/01/2014-09/30/2015...................          688.51        1,377.02          344.26            2.25
(FY 14) 10/01/2013-09/30/2014...................          673.34        1,346.68          336.67            1.62
(FY 13) 10/01/2012-09/30/2013...................          662.59        1,325.18          331.30            2.31
(FY 12) 10/01/2011-09/30/2012...................          647.60        1,295.20          323.80            3.05
(FY 11) 10/01/2010-09/30/2011...................          628.42        1,256.84          314.21            2.63
(FY 10) 10/01/2009-09/30/2010...................          612.33        1,224.66          306.17            2.00
(FY 09) 10/01/2008-09/30/2009...................          600.31        1,200.62          300.16            3.47
(FY 08) 10/01/2007-09/30/2008...................          580.18        1,160.36          290.09            4.12
(FY 07) 10/01/2006-09/30/2007...................          557.22         1114.44          278.61            3.80
(FY 06) 10/01/2005-09/30/2006...................          536.82         1073.64          268.41            2.53
(FY 05) 10/01/2004-09/30/2005...................          523.58        1,047.16          261.79            1.59
(FY 04) 10/01/2003-09/30/2004...................          515.39        1,030.78          257.70            3.44
(FY 03) 10/01/2002-09/30/2003...................          498.27          996.54          249.14            3.15
(FY 02) 10/01/2001-09/30/2002...................          483.04          966.08          241.52            3.45
(FY 01) 10/01/2000-09/30/2001...................          466.91          933.82          233.46            3.61
(FY 00) 10/01/1999-09/30/2000...................          450.64          901.28          225.32            3.39
----------------------------------------------------------------------------------------------------------------

    Some examples also include compensation calculations. When 
compensation is based on 66 and \2/3\ percent of the injured employee's 
average weekly wage (e.g., compensation for permanent total 
disability), the formula for calculating this percentage is expressed 
as: Average weekly wage amount x 2 / 3.
---------------------------------------------------------------------------

    \1\ For purposes of this chart, ``NAWW'' means the applicable 
national average weekly earnings of production or nonsupervisory 
workers on private nonagricultural payrolls during the first three 
quarters of the preceding fiscal year as determined by the 
Department.
---------------------------------------------------------------------------

Subpart G--Section 10(f) Adjustments
20 CFR 702.701 What is an annual section 10(f) adjustment and how is it 
calculated?
    Section 10(f) of the Act, 33 U.S.C. 910(f), provides for an annual 
upward percentage adjustment of permanent total disability compensation 
rates and death benefits so that the value of the compensation received 
does not erode over time. Proposed Sec.  702.701 sets out the basic 
rules for section 10(f) adjustments.
    Proposed paragraphs (a) and (b) describe the section 10(f) 
adjustment and how the fiscal year percentage is determined. Consistent 
with the statute, paragraph (a) states that section 10(f) adjustments 
apply each fiscal year to permanent total disability compensation and 
death benefits, and that those adjustments may only increase amounts 
payable. 33 U.S.C. 910(f) (``benefits payable for permanent total 
disability or death . . . shall be increased''); 33 U.S.C. 910(g) (``in 
no event shall compensation for death benefits be reduced''). Paragraph 
(b) describes how the Department calculates the annual section 10(f) 
adjustment, a method dictated by section 10(f) itself. In any given 
fiscal year, the 10(f) adjustment is the percentage increase in the 
applicable national average weekly wage over the prior fiscal year's 
applicable national average or five percent, whichever is lower. See 33 
U.S.C. 910(f)(1), (2).
    Proposed paragraphs (c) through (e) set out how the fiscal year 
percentage is applied in individual cases. Paragraph (c) specifies that 
section 10(f) adjustments are applied each October 1 to the prior 
year's compensation or death benefits payable to the claimant. By using 
the statutory term ``payable,'' the Department intends the percentage 
increase to apply to the compensation and death benefits due during the 
prior year, even if not actually paid. Paragraph (d) implements the 
statutory requirements that calculations resulting from section 10(f) 
adjustments are rounded to the nearest dollar and that no adjustment is 
made if the amount is less than one dollar. See 33 U.S.C. 910(g). And 
paragraph (e) provides that section 10(f) adjustments may not increase 
compensation or death benefits beyond the maximum rate for any fiscal 
year. This limitation is consistent with LHWCA section 6(b)(1)'s 
command that compensation payments, whether for disability or death, 
must not exceed the applicable fiscal year's maximum rate.
    Finally, proposed paragraph (f) states that the adjustments do not 
apply to compensation for temporary or partial disability, including 
temporary total disability, temporary partial disability, and permanent 
partial disability. The paragraph reflects the limitation set forth in 
paragraph (a) and is added for clarity.
Subpart H--Maximum and Minimum Compensation Rates
General
20 CFR 702.801 Scope and Intent of This Subpart
    Proposed Sec.  702.801 describes the statutory provisions this 
subpart is intended to implement. Paragraph (a) generally lists the 
statutory provisions that affect the maximum and minimum compensation 
and death benefits payable to entitled individuals. Section 6(b) of the 
LHWCA, 33 U.S.C. 906(b), sets the maximum compensation rate for death 
or disability compensation at 200 percent of the applicable national 
average weekly wage, and the minimum compensation rate for total 
disability at the lower of the employee's average weekly wage or 50 
percent of the applicable national average weekly wage. Section 6(b) 
also provides that the

[[Page 58883]]

Secretary of Labor determines the applicable national average weekly 
wage for each one-year period from October 1 to September 30. Section 
6(c), 33 U.S.C. 906(c), provides that the Secretary's determination of 
the national average weekly wage for each one-year period ``shall apply 
to employees or survivors currently receiving compensation for 
permanent total disability or death benefits during such period, as 
well as those newly awarded compensation during such period.'' Section 
9(e), 33 U.S.C. 909(e), includes provisions that affect the minimum 
death benefits payable to a deceased employee's survivors.
    Because the interpretation of section 6(c) is important to 
determining how the maximum and minimum provisions apply and has been 
the subject of litigation, proposed paragraph (b) more specifically 
addresses section 6(c)'s ``newly awarded compensation'' and ``currently 
receiving compensation'' phrases. Paragraph (b)(1) adopts the Supreme 
Court's conclusion in Roberts that a claimant, regardless of the nature 
or extent of disability, is ``newly awarded compensation'' when he or 
she first becomes disabled and entitled to compensation. See supra 
Section I. B. Claimants are initially subject to the maximum and 
minimum rates derived from the national average weekly wage in effect 
during the fiscal year his or her disability begins. Paragraph (b)(2) 
applies the Supreme Court's Roberts analysis to death benefits by 
providing that a deceased employee's survivor is ``newly awarded 
compensation'' on the day of the employee's death, the first time a 
survivor may be entitled to death benefits. See discussion infra at 
proposed Sec.  702.807. And paragraph (b)(3) provides that a claimant 
is ``currently receiving compensation'' during the period for which the 
compensation is payable, regardless of when it is actually paid. This 
construction is consistent with the Ninth and Eleventh Circuits' 
interpretations. See supra Section I. C. While these phrases are not 
used in the remainder of the proposed subpart, the concepts set forth 
in paragraph (b) underlie the rules.
20 CFR 702.802 Applicability of This Subpart
    Proposed Sec.  702.802(a) lists several circumstances in which this 
subpart's rules do not apply, including: Approved settlements made 
under section 8(i) of the Act, 33 U.S.C. 908(i); payments for an 
employee's compensable death made to the Special Fund when the employee 
has no eligible survivors, 33 U.S.C. 944(c)(1); payments for medical 
expenses, 33 U.S.C. 907; and any other compensation calculated and paid 
in a lump sum, such as the two years of death benefits payable to an 
employee's eligible surviving spouse who remarries, 33 U.S.C. 909(b), 
or when compensation payments are commuted, 33 U.S.C. 909(g). In all of 
these circumstances, the maximum and minimum weekly rates do not apply 
either because the compensation due is not based on a weekly rate 
(e.g., medical expenses) or it is not necessarily paid on a weekly 
basis (e.g., settlements, commutations). Although not subject to the 
rules in this subpart, the maximum and minimum compensation rates will 
nevertheless be relevant in some of these circumstances. For example, 
the Department would consider such compensation rates in calculating a 
commuted award or death benefits payable when a survivor remarries. 
Similarly, the Department anticipates that private parties will 
consider the maximum and minimum compensation rates in settlement 
negotiations, and the Department will consider them in deciding whether 
to approve settlements.
    Proposed Sec.  702.802(b) provides that the rules governing minimum 
compensation and death benefits payable do not apply to claims arising 
under the Defense Base Act (DBA), 42 U.S.C. 1651 et seq. The DBA 
specifically precludes application of the LHWCA's minimum compensation 
provisions: ``The minimum limit on weekly compensation for disability, 
established by section 6(b), and the minimum limit on the average 
weekly wages on which death benefits are to be computed, established by 
section 9(e) of the [Longshore] Act, shall not apply in computing 
compensation and death benefits under [the DBA].'' 42 U.S.C. 1652(a). 
The Secretary's regulations implementing the DBA also reflect this 
limitation. See 20 CFR 704.103. The limitation in proposed Sec.  
702.802(b) comports with these authorities.
20 CFR 702.803 Definitions
    This section defines certain terms used in this subpart; these 
definitions do not apply outside of this subpart. Proposed paragraph 
(a) defines a claimant's ``calculated compensation rate'' as the weekly 
compensation or death benefits payable prior to any consideration of 
the maximum or minimum rates, or a section 10(f) adjustment. As 
discussed above (see supra Section I. A.), this figure is a specified 
percentage of the employee's average weekly wage at the time of the 
injury or death. But there are exceptions. For example, in certain 
claims, the calculated compensation rate is based on the national 
average weekly wage rather than on the employee's actual earnings. 33 
U.S.C. 909(e), 910(d)(2)(B).
    Proposed paragraph (b) defines the phrase ``date of disability'' as 
the date an employee first becomes economically impaired--or, in other 
words, unable to earn the same wages--as a result of a covered injury. 
The phrase incorporates the statutory definition of ``disability,'' see 
33 U.S.C. 902(10), and is based on the Supreme Court's decision in 
Roberts, which held that the maximum compensation rate applicable on 
the day the employee became ``entitled to compensation because of 
disability'' controlled. Roberts, 132 S.Ct. at 1357. The phrase is used 
in this subpart to delineate when certain minimum or maximum 
compensation rates apply.
    The proposed rule, however, excepts from the general ``date of 
disability'' definition three situations that demand special treatment. 
Paragraph (b)(2)(i) provides that for scheduled permanent partial 
disabilities under 33 U.S.C. 908(c)(1)-(20) that are not preceded by 
another category of disability (i.e., permanent total, temporary total, 
or temporary partial), the date of disability is when the employee 
first becomes permanently impaired by the injury to the scheduled 
member. This exception is necessary because an employee may suffer a 
scheduled injury without any loss in wage-earning capacity, which is 
the touchstone for the general ``date of disability'' definition. 
Paragraph (b)(2)(ii) establishes a separate date of disability for 
occupational diseases because the disease may manifest after voluntary 
retirement, when the employee does not experience a loss of wage-
earning capacity. Paragraph (b)(2)(iii) provides that for very short-
term disabilities lasting no more than 14 days, the date of disability 
is 4 days after the injury affected the employee's wage earning 
capacity. For such a short-term disability, section 6(a) of the Act 
provides that no compensation is payable for the first 3 days of 
disability. 33 U.S.C. 906(a). Thus, using the fourth day as the ``date 
of disability'' for determining the maximum and minimum compensation 
payable reflects the date on which the employee is actually entitled to 
compensation.
    The remaining definitions explain how basic terms are used in the 
proposed rule. Paragraph (c) defines the dates of a standard fiscal 
year. Paragraphs (d) and (e) define ``maximum rate'' and ``minimum 
rate'' as the weekly compensation rates the Department calculates for 
each fiscal year. And paragraph (f) defines a ``section 10(f) 
adjustment'' as the annual

[[Page 58884]]

compensation increase some claimants receive under LHWCA section 10(f), 
33 U.S.C. 910(f). See proposed Sec.  702.701.
20 CFR 702.804 What are the weekly maximum and minimum rates for each 
fiscal year and how are they calculated?
    Proposed Sec.  702.804 explains how the Department calculates basic 
weekly maximum and minimum rates for each fiscal year. Paragraph (a) 
notes that these weekly compensation rates are one factor considered 
when calculating compensation and death benefits payable. Paragraphs 
(b) and (c) set forth the calculation formulas for weekly maximum and 
minimum rates. Both are based on the national average weekly wage, 
which the Act defines as the ``national average weekly earnings of 
production or nonsupervisory workers on private nonagricultural 
payrolls.'' 33 U.S.C. 902(19). These statistics are compiled on an 
ongoing basis by the Department's Bureau of Labor Statistics. Before 
each new fiscal year, the Department calculates the average earnings of 
these employees for the period October 1 through June 30 (i.e., the 
first three quarters) of the current fiscal year. 33 U.S.C. 906(b)(3). 
The Act pegs the maximum weekly rate at 200 percent of this number and 
the minimum at 50 percent. 33 U.S.C. 906(b)(1), (2). For example, the 
national average weekly earnings of production or nonsupervisory 
workers on private, nonagricultural payrolls for the period from 
October 1, 2013, to June 30, 2014 (i.e., the first three quarters of FY 
2014), were $688.51. As a result, the Department determined that the 
maximum compensation rate for FY 2015 was $1,377.02 ($688.51 x 2) and 
the minimum compensation rate was $344.26 ($688.51 x 2).
Maximum Rates
20 CFR 702.805 What weekly maximum rates apply to compensation for 
permanent partial disability, temporary total disability, and temporary 
partial disability?
    Proposed Sec.  702.805 provides that the maximum rate in effect for 
the fiscal year on the employee's date of disability applies to all 
compensation payable for temporary partial disability, temporary total 
disability, or permanent partial disability, including compensation 
payable in subsequent fiscal years. This rule effectuates the Supreme 
Court's construction of the ``newly awarded compensation'' clause by 
applying the maximum rate for the fiscal year the employee's disability 
begins. For these types of compensation, the date-of-disability fiscal 
year's maximum rate applies to all compensation payments--including 
compensation payable for subsequent fiscal years--because section 
6(c)'s ``currently receiving compensation'' clause does not apply. 33 
U.S.C. 906(c) (maximum rate determinations ``with respect to a period 
shall apply to employees or survivors currently receiving compensation 
for permanent total disability or death benefits during such 
period[.]'').
    The first example at paragraph (b)(1) sets out a common scenario 
involving an injured employee who is temporarily totally disabled for a 
period prior to being permanently partially disabled. Although his 
compensation periods span more than one fiscal year, the maximum rate 
that applies remains the rate in effect on his date of disability. See 
proposed Sec.  702.803(b)(1). The second example at paragraph (b)(2) is 
slightly more complicated. The employee incurs two separate periods of 
temporary total disability from the same injury; each period begins in 
a different fiscal year. Under section 6(c), the maximum rate 
applicable at the beginning of the first disability period applies to 
all payments for temporary total disability, including those in the 
second period. The third example at paragraph (b)(3) addresses an 
occupational disease discovered post-retirement. Occupational diseases 
occurring after an employee has voluntarily retired are considered 
permanent partial disabilities. 20 CFR 702.601(b). Thus, compensation 
payable in this instance is subject to the maximum rate in effect on 
the date of disability--when the employee becomes aware of the 
relationship between employment, the disease and any disability. See 
proposed Sec.  702.803(b)(2)(ii).
20 CFR 702.806 What weekly maximum rates apply to compensation for 
permanent total disability?
    Proposed Sec.  702.806 implements both the ``newly awarded'' and 
``currently receiving'' compensation clauses for permanent total 
disability compensation as they pertain to the maximum compensation 
payable. Paragraph (a) provides that the maximum rate for the fiscal 
year during which the employee first becomes permanently and totally 
disabled applies to all compensation payable during that fiscal year. 
Paragraph (b) then provides that all periods of permanent total 
disability in subsequent fiscal years arising from the same injury are 
subject to the maximum rates for those subsequent fiscal years because 
the employee is then ``currently receiving compensation.''
    Proposed paragraph (c) addresses how the 10(f) adjustment applies 
in a ``cross-over'' year. A cross-over year is one in which the 
claimant's compensation was paid at the maximum rate in the current 
fiscal year, but the claimant's calculated compensation rate does not 
exceed the maximum rate set for the next fiscal year. In those 
circumstances, the rule requires that the claimant's compensation for 
the next fiscal year be increased by the amount of the 10(f) adjustment 
up to the maximum for that fiscal year.
    The examples in proposed paragraph (d) apply these principles. 
Paragraph (d)(1) presents the relatively straightforward situation of 
an employee who is permanently totally disabled from the time of 
injury. He is ``newly awarded'' compensation in the fiscal year he 
became disabled and his compensation is subject to that fiscal year's 
maximum rate. In subsequent years, he is ``currently receiving'' 
compensation and his compensation is subject to the maximum rate for 
each subsequent fiscal year. Paragraph (d)(2) adds an additional 
wrinkle to the first example. Here, the employee suffers a period of 
temporary total disability that spans more than one fiscal year before 
he becomes permanently totally disabled. The maximum that applies to 
the entire temporary total disability compensation period is the fiscal 
year rate in effect on the date of disability (in the example, FY 
2000), which is when the employee is ``newly awarded'' compensation. 
See proposed Sec.  702.805(a). When the employee becomes permanently 
totally disabled two years later, however, he is ``currently 
receiving'' permanent total disability compensation and the maximum 
rate in effect at that time (in the example, FY 2002) applies. 
Compensation for permanent total disability in succeeding years is 
subject to those subsequent fiscal years' maximum rates because he 
continues to be ``currently receiving'' compensation.
    Finally, proposed paragraph (d)(3) demonstrates how the rule 
operates in a ``cross-over'' year. In the example, employee C's 
calculated compensation rate exceeds the annual fiscal year maximum 
rate each year from when he was first permanently totally disabled in 
FY 2009 through FY 2012. In FY 2013, however, the employee's calculated 
compensation rate falls below the maximum rate and remains below that 
rate even after the addition of a section 10(f) adjustment. Thus, for 
FY 2013, employee C's compensation is not limited by the maximum rate.

[[Page 58885]]

20 CFR 702.807 What weekly maximum rates apply to death benefits?
    Determining the maximum rates for death benefits in any particular 
case can be straightforward or involve several statutory provisions. 
The proposed rule integrates these provisions to provide a 
comprehensive approach to the issue.
    LHWCA section 6(b)(1) applies the ``applicable'' maximum rate to 
all compensation for disability or death. For death benefits purposes, 
proposed Sec.  702.807(a) defines the ``applicable'' rate as the 
fiscal-year rate in effect when the employee died. By using the 
employee's date of death, the rule applies the ``newly awarded'' clause 
in the same manner as the Supreme Court applied it to disability claims 
in Roberts: A survivor's right to benefits first arises at the time of 
death. See generally Ingalls Shipbuilding, Inc. v. Director, OWCP, 519 
U.S. 248, 257-58 (1997) (survivors seeking death benefits cannot 
satisfy prerequisites prior to employee's death); Travelers Insurance 
Co. v. Marshall, 634 F.2d 843, 846 (5th Cir. 1981) (section 9 ``cause 
of action for death benefits certainly does not arise until 
[employee's] death'').
    Proposed Sec.  702.807(b) sets out the general rules for 
determining the death-benefits cap in the year the employee died. These 
limits are compelled by LHWCA section 6(b)(1) along with the provisions 
of section 9(e), 33 U.S.C. 909(e). Section 9(e) provides an alternative 
method for computing death benefits for survivors of lower-wage 
employees to boost the benefit amount. If the deceased employee's 
actual average weekly wage was lower than the national average weekly 
wage, death benefits are calculated as a percentage of the national 
average weekly wage instead of a percentage of the actual wage. This 
results in a higher calculated compensation rate than if the 
calculation were based on the employee's actual wage. Survivors are 
entitled to benefits at the higher calculated rate except when that 
rate exceeds the employee's full actual weekly wage. In that event, 
section 9(e)(1) sets an initial cap by providing that total weekly 
death benefits ``shall not exceed the lesser of the average weekly 
wages of the deceased'' (or the section 6(b)(1) maximum rate). 33 
U.S.C. 909(e)(1). Thus, in no event may weekly death benefits payable 
in the year of the employee's death exceed the employee's actual 
average weekly wages. Proposed paragraph (b) implements these 
provisions by limiting ``aggregate'' weekly death benefits--meaning the 
death benefits payable to all survivors combined--to the lower of the 
maximum rate applicable for the fiscal year in which the employee died 
or the employee's actual average weekly wages.
    Proposed paragraph (c) sets out rules governing payments for 
subsequent fiscal years. Consistent with the ``currently receiving'' 
clause, paragraph (c)(1) provides that each subsequent fiscal year's 
maximum rate applies to aggregate death benefits. Paragraph (c)(2) 
provides an exception to the section 9(e)(1) feature limiting death 
benefits to no more than the employee's actual average weekly wages. If 
death benefits were paid at the employee's full average weekly wage in 
the year of death, paragraph (c)(2) provides that death benefits 
payable may be adjusted upward under section 10(f). See Donovan, 31 
BRBS 2 (holding that section 9(e)(1) does not bar application of 10(f) 
adjustments even if adjusted death benefits amount exceeds deceased 
employee's actual average weekly wage).
    Finally, proposed paragraph (d) addresses LHWCA section 9(e)'s 
specific limit on death benefits payable when death results from an 
occupational disease that manifested after the employee retired 
voluntarily (i.e., he or she did not retire because of disability). In 
those circumstances, LHWCA section 9(e)(2) provides that ``total weekly 
benefits shall not exceed one fifty-second part of the employee's 
average annual earnings during the 52-week period preceding 
retirement.'' 33 U.S.C. 909(e)(2). Proposed paragraph (d)(1) implements 
this provision, as well as the general section 6(b) maximum cap, by 
providing that aggregate death benefits paid during the year of the 
employee's death must not exceed the lower of that fiscal year's 
maximum rate or one-fifty-second part of the employee's average annual 
earnings during the 52-weeks preceding retirement. Proposed paragraph 
(d)(2)(i) provides that each subsequent fiscal year's maximum rate 
applies to aggregate death benefits because death benefits are subject 
to the ``currently receiving'' clause. If death benefits in the year of 
death were paid at one-fifty-second part of the employee's average 
annual earnings, proposed paragraph (d)(2)(ii) provides that the death 
benefits payable may be adjusted upward under section 10(f).
    The example at proposed paragraph (e)(1) illustrates that the 
maximum rate applicable at the time of the employee's death applies to 
death benefits, even when the employee's injury occurred in an earlier 
fiscal year. Employee A's injury occurred in FY 2013 but he did not die 
as a result of the injury until FY 2014. His survivor's death benefits 
for the remainder of the year in which he died are subject to the FY 
2014 maximum rate, with subsequent death benefits subject to each 
subsequent fiscal year's rate.
    Paragraph (e)(2)'s example demonstrates how the death-benefits-
calculation method for survivors of low-wage earners interfaces with 
the cap placed on those benefits in some circumstances. In the example, 
employee B's weekly earnings fell below the national average during the 
year of her death. Thus, her survivor's death benefits are computed 
using the higher national average weekly wage. 33 U.S.C. 909(e); see 
proposed Sec.  702.811(a). Because that calculated compensation rate of 
$331.30 exceeds the employee's actual average weekly wage of $300.00, 
death benefits are capped at the employee's actual wages, except for 
section 10(f) adjustments in subsequent fiscal years.
    Paragraph (e)(3) sets out an example involving an occupational 
disease discovered more than one year post-retirement that leads to 
death. Employee C's compensation during his lifetime is calculated 
based on the FY 2002 national average weekly wage because his disease 
manifested then and he had voluntarily retired more than one year 
earlier. Based on the date of employee C's death, his survivors' death 
benefits are calculated based on the national average weekly wage for 
FY 2015. 33 U.S.C. 910(d)(2)(B); 20 CFR 702.604(b). This calculation 
yields a weekly figure greater than 1/52 part of the employee's last 
year of earnings. Thus, the total death benefits payable are capped at 
1/52 part of the employee's actual earnings, except for section 10(f) 
adjustments in subsequent fiscal years.
Minimum Rates
20 CFR 702.808 What weekly minimum rates apply to compensation for 
partial disability?
    The LHWCA places no minimum compensation requirements on payments 
for temporary partial disability or permanent partial disability. 
Accordingly, proposed Sec.  702.808 simply states that there is no 
minimum rate for these types of compensation.
20 CFR 702.809 What weekly minimum rates apply to compensation for 
temporary total disability?
    Proposed Sec.  702.809 provides that the minimum rate in effect for 
the fiscal year on the employee's date of disability applies to all 
compensation payable for temporary total disability, including

[[Page 58886]]

compensation payable in subsequent fiscal years. LHWCA section 6(b)(2) 
generally provides that compensation for total disability cannot fall 
below 50 percent of the ``applicable'' national average weekly wage 
unless the employee's actual average weekly wages are less than that 
amount. In that event, the employee receives his or her average weekly 
wages as compensation. This rule effectuates the Supreme Court's 
construction of the ``newly awarded compensation'' clause by applying 
the minimum rate for the fiscal year the employee's disability begins. 
See generally Montoya v. Navy Exchange Service Command, 49 BRBS 51 
(2015) (applying Roberts, employee entitled to minimum rate in effect 
on date of disability onset). The date-of-disability fiscal year's 
minimum rate applies to all temporary total disability compensation 
payments--including compensation payable for subsequent fiscal years--
because section 6(c)'s ``currently receiving'' clause does not apply to 
compensation for temporary disabilities. See 33 U.S.C. 906(c) (national 
average weekly wage determinations ``with respect to a period shall 
apply to employees or survivors currently receiving compensation for 
permanent total disability or death benefits during such period''). 
Thus, the applicable minimum remains the one in effect on the date of 
disability.
    Proposed paragraph (b)'s example demonstrates how the minimum rate 
provision works when the employee's calculated compensation rate falls 
below it. In the example, employee A's calculated compensation rate for 
FY 2014 (the year of his injury) is $333.34 per week. That number falls 
below the FY 2014 minimum rate of $336.67. Thus, employee A's 
compensation is raised to the minimum rate. Although his temporary 
total disability continues into FY 2015, his rate remains tied to the 
FY 2014 minimum because neither section 6(c)'s ``currently receiving'' 
clause nor section 10(f)'s adjustments apply to compensation for 
temporary disabilities. See 33 U.S.C. 906(c), 910(f).
20 CFR 702.810 What weekly minimum rates apply to compensation for 
permanent total disability?
    Proposed Sec.  702.810(a) provides that the lower of the minimum 
rate in effect on the date of disability or the employee's actual 
average weekly wage on that date sets the floor below which 
compensation may not fall. This rule implements LHWCA section 6(b)(2)'s 
direction that compensation for total disability be no less than 50 
percent of the ``applicable'' national average weekly wage unless the 
employee's actual average weekly wages are less than that amount. In 
that event, the employee receives his or her average weekly wages as 
compensation. By using the date of disability to describe the 
applicable fiscal year's minimum rate, paragraph (a) also implements 
section 6(c)'s ``newly awarded'' clause.
    Proposed paragraph (b) describes how the minimum applies in 
subsequent fiscal years. It sets the minimum compensation level at the 
lower of the minimum rate for each subsequent fiscal year or the 
employee's actual average weekly wages on the date of disability. By 
applying subsequent fiscal years' minimum rates, the regulation 
implements section 6(c)'s ``currently receiving'' clause.
    Proposed paragraph (c)'s example shows how this regulation applies 
when a low-wage earner suffers a permanent total disability. Because 
his calculated compensation rate for the fiscal year in which he first 
became disabled (in the example, FY 2003) was below the applicable 
fiscal year minimum rate, and his actual weekly wages were above the 
fiscal year minimum, he is compensated at the minimum rate. But in 
subsequent fiscal years, when the minimum rises above the employee's 
actual average weekly wages at the time of disability, he receives his 
actual wages in compensation, subject in following years to section 
10(f) adjustments.
20 CFR 702.811 What weekly minimum rates apply to death benefits?
    Rather than applying weekly minimum rates like those used for 
temporary total or permanent total disability compensation--specified 
amounts below which compensation may not fall--section 9(e) of the Act, 
33 U.S.C. 909(e), uses a different mechanism to ensure a minimum 
compensation level for an employee's survivors. Section 9(e) does this 
by using the national average weekly wage calculated by the Department 
under section 6(b) as a proxy to compute death benefits when the 
deceased employee's actual weekly wage falls below the national 
average. See 33 U.S.C. 902(19) (defining national average weekly wage 
for LHWCA purposes). Using the national average weekly wage ensures 
that death benefits will be paid at a minimal level. Proposed paragraph 
(a) sets out this procedure by providing that the average weekly wage 
used to compute death benefits is the greater of the employee's actual 
wages or the national average. The regulation also provides that the 
applicable national average weekly wage is the one in effect when the 
employee died, which is when a survivor's right to benefits first 
arises. See generally Ingalls Shipbuilding, 519 U.S. at 257-58 
(survivors seeking death benefits cannot satisfy prerequisites prior to 
employee's death); Travelers Insurance, 634 F.2d at 846 (section 9 
``cause of action for death benefits certainly does not arise until 
[employee's] death''). Paragraph (b) adds that the weekly minimum rate, 
as that phrase is used in this subpart, does not apply to death 
benefits.

III. Statutory Authority

    Section 39(a) of the LHWCA, 33 U.S.C. 939(a), authorizes the 
Secretary of Labor to prescribe rules and regulations necessary for the 
administration of the Act.

IV. Information Collection Requirements (Subject to the Paperwork 
Reduction Act) Imposed Under the Proposed Rule

    This rulemaking would impose no new collections of information.

V. Executive Orders 12866 and 13563 (Regulatory Planning and Review)

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
The Department has considered this proposed rule with these principles 
in mind and has concluded that the regulated community will benefit 
from this regulation.
    This proposed rule will benefit the parties by providing them with 
greater guidance on applying the Act's maximum and minimum compensation 
provisions and section 10(f) adjustments in determining the amount of 
disability compensation or death benefits payable. By clarifying how 
these provisions apply, the rule will also promote consistency so that 
similarly situated claimants receive similar compensation or death 
benefits. In addition, the rule will benefit the regulated community by 
forestalling further litigation over the ``currently receiving'' 
clause, which neither the Supreme Court nor several circuit courts have 
yet construed. Indeed, the absence of regulations implementing these 
statutory provisions led to much of the litigation described above. See 
supra Sections I. B. and C.

[[Page 58887]]

The Department also sees no countervailing burden--economic or 
otherwise--other than those imposed by the statute itself that would 
counsel against promulgating this rule.
    Finally, because this is not a ``significant regulatory action'' 
within the meaning of Executive Order 12866, the Office of Management 
and Budget has not reviewed it prior to publication.

VI. Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 
et seq.) directs agencies to assess the effects of Federal regulatory 
actions on State, local, and tribal governments, and the private 
sector, ``other than to the extent that such regulations incorporate 
requirements specifically set forth in law.'' For purposes of the 
Unfunded Mandates Reform Act, this rule does not include any Federal 
mandate that may result in increased expenditures by State, local, and 
tribal governments, or increased expenditures by the private sector of 
more than $100,000,000.

VII. Regulatory Flexibility Act and Executive Order 13272 (Proper 
Consideration of Small Entities in Agency Rulemaking)

    The Regulatory Flexibility Act of 1980, as amended (5 U.S.C. 601 et 
seq.), requires an agency to prepare a regulatory flexibility analysis 
when it proposes regulations that will have ``a significant economic 
impact on a substantial number of small entities'' or to certify that 
the proposed regulations will have no such impact, and to make the 
analysis or certification available for public comment.
    The Department has determined that a regulatory flexibility 
analysis under the RFA is not required for this rulemaking. While many 
longshore employers are small entities within the meaning of the RFA, 
see generally 77 FR 19471-72 (March 30, 2012), this rule, if adopted in 
final, will not have a significant economic impact on them. The 
proposed rules reflect current payment practices and thus impose no new 
costs on employers or their insurance carriers. As explained above, the 
proposed rules mainly codify case law interpreting how the Act's 
maximum and minimum provisions work; the rules are based primarily on 
the Supreme Court's controlling decision in Roberts, the Ninth and 
Eleventh Circuits' decisions in Roberts and Boroski, and the Benefits 
Review Board's decisions in Reposky and Lake.
    With one small exception, these decisions comport with the 
Director's longstanding interpretation and application of the maximum 
and minimum compensation provisions. That exception involved cases in 
which the employee's disability was initially something less than 
permanent total--temporary total, permanent partial, or temporary 
partial--and in a later fiscal year became permanently totally 
disabling. Prior to the Ninth Circuit's decision in Roberts, the 
Department took the view that the employee would have remained at the 
maximum rate in effect on the date of disability until the next October 
1. On that October 1, his compensation rate would be determined by 
applying section 10(f) to increase his maximum rate by the same 
percentage as the increase to the national average weekly wage. But the 
Ninth Circuit held that the employee need not wait until the next 
October 1 and is instead immediately subject to the maximum rate in 
effect on the day he or she becomes permanently totally disabled under 
section 6(c)'s ``currently receiving'' clause. Roberts, 625 F.3d at 
1208-09. The Department has been following the Ninth Circuit's 
construction of the statute since 2012, and the regulations reflect 
this construction as well.
    Based on these facts, the Department certifies that this rule will 
not have a significant economic impact on a substantial number of small 
entities. Thus, a regulatory flexibility analysis is not required. The 
Department invites comments from members of the public who believe the 
regulations will have a significant economic impact on a substantial 
number of small longshore employers or insurers. The Department has 
provided the Chief Counsel for Advocacy of the Small Business 
Administration with a copy of this certification. See 5 U.S.C. 605.

XIII. Executive Order 13132 (Federalism)

    The Department has reviewed this proposed rule in accordance with 
Executive Order 13132 regarding federalism, and has determined that it 
does not have ``federalism implications.'' The proposed rule will not 
``have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government,'' 
if promulgated as a final rule.

IX. Executive Order 12988 (Civil Justice Reform)

    This proposed rule meets the applicable standards in sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden.

List of Subjects in 20 CFR Part 702

    Administrative practice and procedure, Claims, Longshore and harbor 
workers, Maximum compensation rates, Minimum compensation rates, 
Workers' compensation.

    For the reasons set forth in the preamble, the Department of Labor 
proposes to amend 20 CFR part 702 as follows:

PART 702--ADMINISTRATION AND PROCEDURE

0
1. The authority citation for part 702 is revised to read as follows:

    Authority:  5 U.S.C. 301, and 8171 et seq.; 33 U.S.C. 901 et 
seq.; 42 U.S.C. 1651 et seq.; 43 U.S.C. 1333; Reorganization Plan 
No. 6 of 1950, 15 FR 3174, 64 Stat. 1263; Secretary's Order 10-2009, 
74 FR 58834.

0
2. In part 702, add subparts G and H as follows:
Subpart G--Section 10(f) Adjustments
Sec.
702.701 What is an annual section 10(f) adjustment and how is it 
calculated?
Subpart H--Maximum and Minimum Compensation Rates

General

Sec.
702.801 Scope and intent of this subpart.
702.802 Applicability of this subpart.
702.803 Definitions.
702.804 What are the weekly maximum and minimum rates for each 
fiscal year and how are they calculated?

Maximum Rates

Sec.
702.805 What weekly maximum rates apply to compensation for 
permanent partial disability, temporary total disability, and 
temporary partial disability?
702.806 What weekly maximum rates apply to compensation for 
permanent total disability?
702.807 What weekly maximum rates apply to death benefits?

Minimum Rates

Sec.
702.808 What weekly minimum rates apply to compensation for partial 
disability?
702.809 What weekly minimum rates apply to compensation for 
temporary total disability?
702.810 What weekly minimum rates apply to compensation for 
permanent total disability?
702.811 What weekly minimum rates apply to death benefits?

[[Page 58888]]

Subpart G--Section 10(f) Adjustments


Sec.  702.701  What is an annual section 10(f) adjustment and how is it 
calculated?

    (a) Claimants receiving compensation for permanent total disability 
or death benefits are entitled to section 10(f) adjustments each fiscal 
year. A section 10(f) adjustment cannot decrease the compensation or 
death benefits payable to any claimant.
    (b) The section 10(f) adjustment for a given fiscal year is the 
lower of:
    (1) The percentage by which the new fiscal year's national average 
weekly wage exceeds the prior fiscal year's national average weekly 
wage as determined by the Department (see Sec.  702.804(b)); or
    (2) 5 percent.
    (c) Section 10(f) percentage increases are applied each October 1 
to the amount of compensation or death benefits payable in the prior 
fiscal year.
    (d) In applying section 10(f) adjustments--
    (1) Calculations are rounded to the nearest dollar; and
    (2) No adjustment is made if the calculated amount is less than one 
dollar.
    (e) A section 10(f) adjustment must not increase a claimant's 
weekly compensation or death benefits beyond the applicable fiscal 
year's maximum rate.
    (f) Section 10(f) adjustments do not apply to compensation for 
temporary or partial disability.

Subpart H--Maximum and Minimum Compensation Rates

General


Sec.  702.801  Scope and intent of this subpart.

    (a) This subpart implements the Act's provisions that affect the 
maximum and minimum rates of compensation and death benefits payable to 
employees and survivors. These statutory provisions include sections 
6(b) and (c), and 9(e). 33 U.S.C. 906(b), (c); 909(e). It is intended 
that these statutory provisions be construed as provided in this 
subpart.
    (b) These regulations implement section 6(c), 33 U.S.C. 906(c), 
based on the following concepts:
    (1) An employee is ``newly awarded compensation'' when he or she 
first becomes disabled due to an injury;
    (2) A survivor is ``newly awarded compensation'' on the date the 
employee died; and
    (3) An employee or survivor is ``currently receiving compensation'' 
when compensation for permanent total disability or death benefits is 
payable, regardless of when payment is actually made.


Sec.  702.802  Applicability of this subpart.

    (a) This subpart applies to all compensation and death benefits 
paid under the Act with the following exceptions:
    (1) Amounts payable under an approved settlement (see 33 U.S.C. 
908(i));
    (2) Amounts paid for an employee's death to the Special Fund (see 
33 U.S.C. 944(c)(1));
    (3) Any payments for medical expenses (see 33 U.S.C. 907); and
    (4) Any other lump sum payment of compensation or death benefits, 
including aggregate death benefits paid when a survivor remarries (see 
33 U.S.C. 909(b)) or aggregate compensation paid under a commutation 
(see 33 U.S.C. 909(g)).
    (b) The rules in this subpart governing minimum disability 
compensation and death benefits do not apply to claims arising under 
the Defense Base Act, 42 U.S.C. 1651 (see 42 U.S.C. 1652(a); 20 CFR 
704.103).


Sec.  702.803  Definitions.

    The following definitions apply to this subpart:
    (a) Calculated compensation rate means the amount of weekly 
compensation for total disability or death that a claimant would be 
entitled to if there were no maximum rates, minimum rates, or section 
10(f) adjustments.
    (b) Date of disability
    (1) Except as provided in paragraph (b)(2), the date of disability 
is the date on which the employee first became incapable, because of an 
injury, of earning the same wages the employee was receiving at the 
time of the injury.
    (2) Exceptions:
    (i) For scheduled permanent partial disability benefits under 33 
U.S.C. 908(c)(1)-(20) that are not preceded by a permanent total, 
temporary total, or temporary partial disability resulting from the 
same injury, the date of disability is the date on which the employee 
first becomes permanently impaired by the injury to the scheduled 
member.
    (ii) For an occupational disease that does not immediately result 
in disability, the date of disability is the date on which the employee 
becomes aware, or in the exercise of reasonable diligence or by reason 
of medical advice should have been aware, of the relationship between 
his or her employment, the disease, and the disability.
    (iii) For any disability lasting 14 or fewer days, the date of 
disability is 4 days after the date on which the employee first became 
incapable, because of an injury, of earning the same wages the employee 
was receiving at the time of the injury.
    (c) Fiscal year or FY means the period from October 1 of a calendar 
year until September 30 of the following calendar year.
    (d) Maximum rate means the maximum weekly compensation rate 
calculated by the Department for a given fiscal year as described in 
Sec.  702.804(b).
    (e) Minimum rate means the minimum weekly compensation rate 
calculated by the Department for a given fiscal year as described in 
Sec.  702.804(c).
    (f) Section 10(f) adjustment means the annual increase that certain 
claimants receiving compensation for permanent total disability or 
death are entitled to each fiscal year under 33 U.S.C. 910(f) and as 
calculated by the Department as described in Sec.  702.701(b).


Sec.  702.804  What are the weekly maximum and minimum rates for each 
fiscal year and how are they calculated?

    (a) For each fiscal year, the Department must determine a weekly 
maximum and minimum compensation rate. These amounts are called the 
maximum and minimum rates in this subchapter. In combination with other 
factors, these rates are used to determine compensation payments under 
the Act.
    (b) The maximum compensation rate in effect for a given fiscal year 
is 200% of the national average weekly earnings of production or 
nonsupervisory workers on private, nonagricultural payrolls, as 
calculated by the Department, for the first three quarters of the 
preceding fiscal year.
    (c) The minimum compensation rate in effect for a given fiscal year 
is 50% of the national average weekly earnings of production or 
nonsupervisory workers on private, nonagricultural payrolls, as 
calculated by the Department, for the first three quarters of the 
preceding fiscal year.

Maximum Rates


Sec.  702.805  What weekly maximum rates apply to compensation for 
permanent partial disability, temporary total disability, and temporary 
partial disability?

    (a) The maximum rate in effect on the date of disability applies to 
all compensation payable for permanent partial disability, temporary 
partial disability, and temporary total disability.
    (b) Examples:
    (1) Employee A suffers a covered workplace injury on April 1, 2000, 
is temporarily totally disabled from that day through June 4, 2002, and 
is

[[Page 58889]]

thereafter permanently partially disabled. All compensation payable for 
A's disability is subject to the FY 2000 maximum rate.
    (2) Employee B suffers a covered workplace injury on August 25, 
2010, and is temporarily totally disabled until September 25, 2010, 
when he returns to work. On January 3, 2011, he again becomes 
temporarily totally disabled from the same injury. He ceases work and 
is unable to return until November 22, 2012. All compensation payable 
for B's disability is subject to the FY 2010 maximum rate.
    (3) Employee C retires on May 6, 2011. She discovers on November 
10, 2012, that she has a compensable occupational disease. All 
compensation payable for C's occupational disease is subject to the FY 
2013 maximum rate. See Sec.  702.601(b) (occupational diseases 
discovered post-retirement are compensated as permanent partial 
disabilities).


Sec.  702.806  What weekly maximum rates apply to compensation for 
permanent total disability?

    (a) The maximum rate in effect on the date that the employee became 
totally and permanently disabled applies to all compensation payable 
for permanent total disability during that fiscal year.
    (b) For all periods the employee is permanently and totally 
disabled in subsequent fiscal years, the weekly compensation payable is 
subject to each subsequent year's maximum rate.
    (c) If a claimant is receiving compensation for permanent total 
disability at the maximum rate for the current fiscal year, but the 
next fiscal year's maximum rate will be higher than the claimant's 
calculated compensation rate, the claimant's compensation for the next 
fiscal year will increase by the amount of the 10(f) adjustment, 
subject to the maximum rate for the next fiscal year.
    (d) Examples:
    (1) Employee A suffers a covered workplace injury on April 1, 2000, 
and is permanently and totally disabled from that date forward. A's 
compensation for the period from April 1, 2000, until September 30, 
2000, is subject to the FY 2000 maximum rate. Beginning October 1, 
2000, A's compensation for FY 2001 is subject to the FY 2001 maximum 
rate, compensation for FY 2002 is subject to the FY 2002 maximum rate, 
etc.
    (2) Employee B suffers a covered workplace injury on April 1, 2000, 
is temporarily totally disabled from that day through June 3, 2002, and 
is thereafter permanently totally disabled. B's compensation for the 
period from April 1, 2000, through June 3, 2002, is subject to the FY 
2000 maximum rate (see Sec.  702.805(a)). B's compensation for the 
period from June 4, 2002, through September 30, 2002, is subject to the 
FY 2002 maximum rate. Beginning October 1, 2002, B's compensation for 
FY 2003 is subject to the FY 2003 maximum rate, compensation for FY 
2004 is subject to the FY 2004 maximum rate, etc.
    (3) Employee C suffers a covered workplace injury in FY 2009 and is 
permanently totally disabled from that day forward. He was earning 
$1,950.00 a week when he was injured, making his calculated 
compensation rate $1,300.00 ($1,950.00 x 2 / 3). His calculated 
compensation rate exceeds the maximum rate from FY 2009-2012; thus, his 
compensation is limited to each year's maximum rate. In FY 2013, C's 
calculated compensation rate of $1,300.00 is, for the first time, less 
than the FY 2013 maximum rate of $1,325.18. Applying the FY 2013 2.31% 
section 10(f) adjustment to C's FY 2012 compensation rate of $1,295.20 
results in a compensation rate of $1,325.00 ($1,295.20 x .0231 = $29.92 
(rounded to the nearest cent); $1,295.20 + $29.92 = $1,325.12, rounded 
to the nearest dollar). This amount falls just below the FY 2013 
maximum rate of $1,325.18. Thus, C's benefit rate for FY 2013 is 
$1,325.00, and is not limited by the maximum rate.


Sec.  702.807  What weekly maximum rates apply to death benefits?

    (a) The maximum rate in effect on the date that the employee died 
applies to all death benefits payable during that fiscal year.
    (b) Aggregate weekly death benefits paid to all eligible survivors 
during the fiscal year in which the employee died must not exceed the 
lower of--
    (1) The maximum rate for that fiscal year; or
    (2) The employee's average weekly wages.
    (c) For subsequent fiscal years--
    (1) Aggregate weekly death benefits paid during each subsequent 
fiscal year are subject to each subsequent year's maximum rate.
    (2) If death benefits were paid in the first year at the employee's 
full average weekly wage under paragraph (b)(2), the aggregate weekly 
death benefits paid for each subsequent year may not exceed the current 
benefit rate plus the subsequent year's section 10(f) adjustment (see 
Sec.  702.701).
    (d) Post-retirement occupational diseases. Notwithstanding 
paragraphs (a)-(c), if an employee's death results from an occupational 
disease where the date of disability occurred after the employee 
voluntarily retired--
    (1) Aggregate weekly death benefits paid to all eligible survivors 
during the fiscal year in which the employee died must not exceed the 
lower of:
    (i) The maximum rate for that fiscal year; or
    (ii) One fifty-second part of the employee's average annual 
earnings during the 52-week period preceding retirement.
    (2) For subsequent fiscal years--
    (i) Aggregate weekly death benefits paid during each subsequent 
fiscal year are subject to each subsequent year's maximum rate.
    (ii) If death benefits were paid in the first year at 1/52 part of 
the employee's average annual earnings prior to retirement under 
paragraph (d)(1)(ii), the aggregate weekly death benefits paid for each 
subsequent year may not exceed the current benefit rate plus the 
subsequent year's section 10(f) adjustment (see Sec.  702.701).
    (e) Examples:
    (1) Employee A suffers a covered workplace injury on May 1, 2013, 
and is permanently and totally disabled from that date until August 1, 
2014, when he dies due to the injury. He has one eligible survivor and 
his average weekly wage at the time of injury was $3,000.00. The 
calculated compensation rate for A's survivor is $1,500.00 (i.e., 50% 
of A's average weekly wage). A's weekly survivor's benefits for the 
period from August 2, 2014, to September 30, 2014, are limited to the 
FY 2014 maximum rate of $1,346.68. Beginning October 1, 2014, A's 
survivor's benefits for FY 2015 are subject to the FY 2015 maximum 
rate, benefits for FY 2016 are subject to the FY 2016 maximum rate, 
etc.
    (2) Employee B suffers a covered workplace injury and dies on 
December 1, 2012. She has one eligible survivor and her average weekly 
wage was $300.00. Because B's average weekly wage of $300.00 falls 
below the FY 2013 national average weekly wage of $662.59, death 
benefits are calculated at 50% of that national average wage (see 33 
U.S.C. 909(e)). This yields a calculated compensation rate of $331.30. 
But because this rate exceeds B's actual average weekly wages, weekly 
death benefits payable during FY 2013 are limited to $300.00. In FY 
2014, B's survivor is entitled to a 1.62% section 10(f) adjustment, 
resulting in weekly death benefits of $305.00 ($300.00 x .0162 = $4.86; 
$300.00 + $4.86 = $304.86, rounded to the nearest dollar). B's survivor 
would continue to receive section 10(f) adjustments in subsequent 
fiscal years.

[[Page 58890]]

    (3) Employee C retired on February 1, 1998. During his last year of 
employment, he earned $23,000. He discovers on April 15, 2002, that he 
has a compensable occupational disease resulting in a 50% permanent 
impairment. See Sec.  702.601(b). Because he retired more than one year 
before this date, his payrate for calculating compensation is the FY 
2002 national average weekly wage, or $483.04. See Sec.  702.603(b). He 
is entitled to weekly compensation of $161.01 ($483.04 x 2 / 3 x 50%). 
C dies from the disease on June 1, 2015, leaving two survivors. The 
payrate for calculating death benefits is the FY 2015 national average 
weekly wage, or $688.51. See Sec.  702.604(b). The survivors' aggregate 
calculated compensation rate is $459.01 ($688.51 x 2 / 3). But because 
compensation cannot exceed 1/52 part of C's last year of earnings, 
aggregate weekly death benefits payable for FY 2015 are limited to 
$442.31 ($23,000 / 52). For FY 2016, C's survivors are entitled to a 
2.10% section 10(f) adjustment resulting in weekly death benefits of 
$452.00 ($442.31 x 021 = $9.29 (rounded to the nearest cent); $442.31 + 
$9.29 = $451.60, rounded to the nearest dollar). C's survivors would 
continue to receive section 10(f) adjustments in subsequent fiscal 
years.

Minimum Rates


Sec.  702.808  What weekly minimum rates apply to compensation for 
partial disability?

    There is no minimum rate for compensation paid for partial 
disability, whether temporary or permanent.


Sec.  702.809  What weekly minimum rates apply to compensation for 
temporary total disability?

    (a) The minimum compensation payable for temporary total disability 
is the lower of:
    (1) The minimum rate in effect on the date of disability, or
    (2) The employee's average weekly wage on the date of disability.
    (b) Example: Employee A suffers a covered workplace injury on May 
6, 2014. He is temporarily totally disabled until November 6, 2015, 
when he returns to work. His average weekly wages at the time of 
disability were $500.00. Because his calculated compensation rate 
(i.e., 66 and \2/3\% of $500.00, or $333.34) is lower than the $336.67 
FY 2014 minimum rate, A's compensation is raised to $336.67 for the 
entire period of his disability.


Sec.  702.810  What weekly minimum rates apply to compensation for 
permanent total disability?

    (a) The weekly minimum compensation payable for the fiscal year in 
which the employee became permanently and totally disabled is the lower 
of:
    (1) The minimum rate in effect on the date of disability, or
    (2) The employee's average weekly wage on the date of disability.
    (b) For all periods the employee is permanently and totally 
disabled in subsequent fiscal years, the weekly minimum compensation 
payable is the lower of:
    (1) Each subsequent fiscal year's minimum rate, or
    (2) The employee's average weekly wage on the date of disability.
    (c) Example: Employee A suffers a covered workplace injury on April 
1, 2003, and is permanently totally disabled from that day forward. He 
was earning $250.00 a week when he was injured. His calculated 
compensation rate is $166.67 ($250 x 2 / 3). The FY 2003 minimum rate 
is $249.14. Because A's calculated compensation rate is below the FY 
2003 minimum rate, and his actual weekly wage is above that rate, he is 
entitled to compensation at the minimum rate of $249.14 from April 1, 
2003, to September 30, 2003. The FY 2004 minimum rate is $257.70. 
Because A's actual weekly wages on the date of disability are lower 
than the FY 2004 minimum rate, A's minimum weekly compensation rate for 
FY 2004 is $250.00. His weekly compensation rate for FY 2004, however, 
is higher because of a section 10(f) adjustment. For FY 2004, A's 
compensation rate is increased by a 3.44% section 10(f) adjustment, 
raising his compensation level to $258.00 ($249.14 x .0344 = $8.57; 
$249.14 + $8.57 = $257.71, rounded to the nearest dollar).


Sec.  702.811  What weekly minimum rates apply to death benefits?

    (a) The average weekly wage used to compute death benefits is the 
greater of--
    (1) The deceased employee's average weekly wages; or
    (2) The national average weekly wage in effect at the time of the 
employee's death.
    (b) The weekly minimum rate does not apply to death benefits.

Leonard J. Howie III,
Director, Office of Workers' Compensation Programs.
[FR Doc. 2016-20467 Filed 8-25-16; 8:45 am]
 BILLING CODE 4510-CR-P