Kemper Insurance Quagmire: Longshore Act Options

This article is Part 1 of 2 Parts. Part 2 is – – Kemper Insurance California Longshore Act Claims: What Else Can I Do?

Recently there have been reports that Kemper Insurance Companies is headed for insolvency. Kemper Insurance wrote US L&H coverage in California. That is, Longshore and Harbor Workers Compensation Act insurance policies for California employers. Which raises the question: What do I do if I have a Longshore Act claim with Kemper Insurance in California?

If this is you, the first thing you have to realize is the rules are murky in this area. In other words, there doesn’t appear to be a whole lot of guidance. However, here is some insight.

BACKGROUND ON THE LONGSHORE ACT

The United States Longshore and Harbor Workers’ Compensation Act is a federal law that provides workers compensation protection to longshoreman, shipyard workers, harbor workers and other maritime workers for injuries or occupational diseases. The Division of Longshore and Harbor Workers’ Compensation (DLHWC), under the U.S. Department of Labor (DOL), Office of Workers’ Compensation Programs (OWCP), administers the LHWCA.

WHO HAS TO PAY THE CLAIM IF THE US L&H INSURANCE COMPANY GOES BANKRUPT?

Under Section 904 of the LHWCA, the employer has primary responsibility for meeting it’s obligation under the Act. Here, the employer is required to either self-insure/ self-fund or have insurance to cover Longshore Act claims. If the employer has US L&H insurance, payments by the carrier satisfy the employer’s obligation. If the US L&H insurance carrier becomes insolvent and is unable to pay claims, the employer has primary responsibility to pay the benefits.

WHAT ABOUT THE U.S. DEPARTMENT OF LABOR SPECIAL FUND?

A Special Fund was created, under the Longshore Act, to deal with claims for second injuries. The Special Fund was created to encourage employers to hire workers whom had previous injuries or work impairments. In essence, the U.S. DOL assesses carriers and self-insured employers on the basis of claim payments.

Some folks contend, the U.S. DOL Special Fund will kick-in, so to speak, in the event the U.S. L&H carrier are insolvent and employer is insolvent or is at risk of becoming insolvent. However, there is no guarantee that this can and will occur. This is part of the murky area of the law.

THE PROCEDURAL QUAGMIRE

Here is a quick overview of the procedure which must be followed pursuant to Section 918 of the Act:

(1) You will need to obtain an award of compensation.

(2) The employer/ carrier has to be in default in payment for over 30 days.

(3) Within one year after such default, you have to make application to the deputy commissioner making the compensation order or for a supplementary order declaring the amount of the default.

(4) After investigation, notice, and hearing, as provided in Section 919, the deputy commissioner shall make a supplementary order, declaring the amount of the default, which shall be filed in the same manner as the compensation order.

(5) File a certified copy of such supplementary order with the clerk of the Federal district court for the judicial district in which the employer has his principal place of business or maintains an office, or for the judicial district in which the injury occurred.

(6) Such supplementary order of the deputy commissioner shall be final, and the court shall upon the filing of the copy enter judgment for the amount declared in default by the supplementary order if such supplementary order is in accordance with law.

(7) The review of the judgment entered is the same as civil suits for damages.

(8) Final proceedings to execute the judgment may be had by writ of execution in the form used by the court in suits at common law in actions of assumpsit.

IT COULD BE A RACE TO THE MONEY

If your employer is still in business, then enforcing the judgment against your employer is the “fastest way” to getting your LHWCA workers compensation benefits. However, you need to realize it may be a race to see who can enforce their judgment against employer first. These claims may put the employer out of business.

If you, the Claimant, are unable to satisfy the judgment due to the carriers and employers insolvency, the Secretary of Labor has discretion to make payment from the Special Fund. This is more murkiness.

The foregoing procedure could take years and years. Hence, the quagmire.

DISCLAIMER: This article is not legal advice. I have been simplistic in order to achieve clarity. You are expressly advised to seek competent legal counsel if you have a US L&H claim with Kemper Insurance Company or any other insolvent US L&H carrier in California. Remember, always tell the truth when you are making a claim for compensation. Your credibility is always at issue.

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