Proposed Rule2023-19422
Longshore and Harbor Workers' Compensation Act: Civil Money Penalties Procedures
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 12, 2023
Issuing agencies
Labor DepartmentWorkers' Compensation Programs Office
Abstract
The Office of Workers' Compensation Programs (OWCP) administers the Longshore and Harbor Workers' Compensation Act and its extensions. To promote accountability and ensure fairness, OWCP proposes new rules for imposing and reviewing civil money penalties prescribed by the Longshore Act. The proposed rules would also set forth the procedures to contest OWCP's penalty determinations.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 175 (Tuesday, September 12, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 175 (Tuesday, September 12, 2023)]
[Proposed Rules]
[Pages 62480-62491]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-19422]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Office of Workers' Compensation Programs
20 CFR Part 702
RIN 1240-AA17
Longshore and Harbor Workers' Compensation Act: Civil Money
Penalties Procedures
AGENCY: Office of Workers' Compensation Programs, Labor.
ACTION: Notice of proposed rulemaking; request for comments.
-----------------------------------------------------------------------
SUMMARY: The Office of Workers' Compensation Programs (OWCP)
administers the Longshore and Harbor Workers' Compensation Act and its
extensions. To promote accountability and ensure fairness, OWCP
proposes new rules for imposing and reviewing civil money penalties
prescribed by the Longshore Act. The proposed rules would also set
forth the procedures to contest OWCP's penalty determinations.
DATES: The Department invites written comments on the proposed rule
from interested parties. Written comments must be received by November
13, 2023.
ADDRESSES: You may submit written comments, identified by RIN number
1240-AA17, by any of the following methods. To facilitate the receipt
and processing of comments, OWCP encourages interested parties to
submit their comments electronically.
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions on the website for submitting comments.
<bullet> Regular Mail or Hand Delivery/Courier: Submit comments on
paper to the Division of Federal Employees', Longshore and Harbor
Workers' Compensation, Office of Workers' Compensation Programs, U.S.
Department of Labor, Room S-3229, 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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Please do not include any personally identifiable
or confidential business information you do not want publicly
disclosed.
Docket: For access to the docket to read background documents or
comments received, go to <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Although some
information (e.g., copyrighted material) may not be available through
the website, the entire rulemaking record, including any copyrighted
material, will be available for inspection at OWCP. Please contact the
individual named below if you would like to inspect the record.
FOR FURTHER INFORMATION CONTACT: Antonio Rios, Director, Division of
Federal Employees', Longshore and Harbor Workers' Compensation, Office
of Workers' Compensation Programs, (202) 693-0040,
<a href="/cdn-cgi/l/email-protection#e89a81879bc689869c87868187a88c8784c68f879e"><span class="__cf_email__" data-cfemail="b9cbd0d6ca97d8d7cdd6d7d0d6f9ddd6d597ded6cf">[email protected]</span></a>. TTY/TDD callers may dial toll free 1-877-889-5627
for further information.
[[Page 62481]]
SUPPLEMENTARY INFORMATION:
I. Background of This Rulemaking
The Longshore and Harbor Workers' Compensation Act (LHWCA or Act),
33 U.S.C. 901-50, establishes a comprehensive Federal workers'
compensation system for an employee's disability or death arising in
the course of covered maritime employment. Metro. Stevedore Co. v.
Rambo, 515 U.S. 291, 294 (1995). The Act's provisions have been
extended to (1) contractors working on military bases or U.S.
government contracts outside the United States (Defense Base Act, 42
U.S.C. 1651-54); (2) employees of nonappropriated fund
instrumentalities (Nonappropriated Fund Instrumentalities Act, 5 U.S.C.
8171-73); (3) employees engaged in operations that extract natural
resources from the outer continental shelf (Outer Continental Shelf
Lands Act, 43 U.S.C. 1333(b)); and (4) private employees in the
District of Columbia injured prior to July 26, 1982 (District of
Columbia Workers' Compensation Act of May 17, 1928, Public Law 70-419
(formerly codified at 36 DC Code 501 et seq. (1973) (repealed 1979)).
Consequently, the Act and its extensions cover a broad range of claims
for injuries that occur throughout the United States and around the
world.
OWCP's sound administration of these programs involves periodic
reexamination of the procedures used for claims processing and related
issues. On April 28, 2020, OWCP hosted a public outreach webinar to
solicit stakeholders' views on how OWCP could improve its processes.
See E.O. 13563, sec. 2(c) (January 18, 2011) (requiring public
consultation prior to issuing a proposed regulation). OWCP considered
the feedback received during that session in developing the proposal.
For example, participants noted that the statute only allows penalties
for knowing and willful failures to file the report, so OWCP should
establish knowledge and willfulness before assessing a penalty. They
also noted that employers and insurance carriers should have a method
to contest penalty assessments. On December 14, 2020, OWCP published a
Notice of Proposed Rulemaking and a Direct Final Rule in the Federal
Register revising regulations governing electronic filing and
settlements and establishing new procedures for assessing and
adjudicating penalties under the Act. 85 FR 80601, 85 FR 80698. On
January 20, 2021, a new administration assumed office. The Assistant to
the President and Chief of Staff issued a memorandum to the Heads of
Executive Departments entitled ``Regulatory Freeze Pending Review.'' 86
FR 7424. The memorandum directed agencies to consider pausing or
delaying certain regulatory actions for the purpose of reviewing
questions of fact, law, and policy raised. OWCP believed that the most
efficient way to implement the memorandum was to withdraw both the
Direct Final Rule and the Notice of Proposed Rulemaking, rather than
delay the effective date of the Direct Final Rule. The comment period
was still open, and OWCP would have had to withdraw the Direct Final
Rule anyway if it received significant adverse comments before the
comment period closed. In accordance, on February 9, 2021, OWCP
withdrew the Notice of Proposed Rulemaking and the Direct Final Rule.
86 FR 8686, 86 FR 8721. Withdrawing the rule gave the new
administration time to review the rule and consider the policies it
would have implemented. After careful consideration, OWCP decided to
move forward with a proposal to update its existing penalty regulations
and implement a procedural scheme for employers to challenge penalties
assessed against them.
OWCP requests comments on all issues related to this rulemaking,
including economic or other regulatory impacts on the regulated
community.
II. Overview of the Proposed Rule
The proposed rule would add new sections and amend existing
sections to implement the Act's civil money penalty provisions. The Act
allows OWCP to impose a penalty when an employer or insurance carrier
fails to timely report a work-related injury or death, 33 U.S.C.
930(e), or fails to timely report its final payment of compensation to
a claimant, 33 U.S.C. 914(g). See 20 CFR 702.204, 702.236. The proposed
rule would revise current Sec. 702.204 to provide for graduated
penalties for an entity's failure to timely file, or falsification of,
the required report of an employee's work-related injury or death. See
33 U.S.C. 930(a); 20 CFR 702.201. The proposed rule provides that the
penalty assessed will increase for each additional violation the
employer has committed over the prior two years. The current regulation
states only the maximum penalty allowable, without providing further
guidance or a graduated penalty scheme. The proposed rule would also
add new Sec. Sec. 702.206, 207, and 208. These proposed sections would
add procedures for the District Director to notify entities of failures
to accurately and timely file, provide an opportunity for a response
before the District Director issues a notice of proposed penalty, and
provide guidance to both the District Director and the Director in
determining the amount of the proposed penalty and penalty by setting
forth aggravating and mitigating factors they may consider.
The proposed rule also contains a new subpart I setting out
procedures for challenging proposed penalties and penalties under both
Sec. 702.204 (for an entity's failure to timely file, or falsification
of, the required report of an employee's work-related injury or death)
and Sec. 702.236 (for failing to report the termination of payments).
These proposed procedures would allow an entity against whom a penalty
is assessed the opportunity for a hearing before an administrative law
judge, and to petition the Secretary of Labor (Secretary) for further
review. After receiving the OWCP Director's final penalty order
assessing the penalty, consistent with sections 554 and 556 of the
Administrative Procedure Act (5 U.S.C. 551 et seq.), the respondent
would be able to request a hearing before an administrative law judge
(ALJ) under proposed Sec. 702.906(a). During the hearing, entities
would have the opportunity to submit facts and arguments for
consideration consistent with the Rules of Practice and Procedure for
Administrative Hearings Before the Office of Administrative Law Judges
(29 CFR part 18). The ALJ would determine whether the respondent
violated the statutory or regulatory provision under which the penalty
was assessed and whether the amount of the penalty assessed was
appropriate. Consistent with section 557 of the APA, the ALJ's decision
would become the decision of the Agency without further proceedings,
unless within 30 days, the respondent requested reconsideration of the
ALJ's decision under proposed Sec. 702.907 or petitioned the Secretary
for review under proposed Sec. 702.908. The Secretary's review would
be discretionary and based on the record. These additional levels of
review are consistent with the formal adjudication procedures under the
Administrative Procedure Act, 5 U.S.C. 554, 556-557, and Recommendation
93-1 of the Administrative Conference of the United States, which
recommends that formal adjudication under the Administrative Procedure
Act be made available where a civil money penalty is at issue. The
proposed procedures would fully protect employers' and insurance
carriers' rights to challenge OWCP's action before any penalty becomes
final and subject to collection
[[Page 62482]]
and ensure transparency and fairness in the enforcement proceedings.
IV. Section-by-Section Explanation
Section 702.204 Employer's Report; Penalty for Failure To Furnish and
or Falsifying
Under 33 U.S.C. 930(e), ``any employer, insurance carrier, or self-
insured employer who knowingly and willfully fails or refuses to send
any report'' required by section 930 or ``knowingly or willfully makes
a false statement or misrepresentation in any such report'' is subject
to a civil penalty for each violation. Proposed Sec. 702.204 would
revise the current regulation in several ways. First, paragraphs (a)(1)
and (a)(3) clarify that ``knowingly'' means actual knowledge or
constructive knowledge--that is, that the entity knew or reasonably
should have known of the violation. This is similar to the test for
knowledge under the Occupational Safety and Health Act (OSH Act), 29
U.S.C. 651 et seq. See, e.g., Sanderson Farms, Inc. v. Perez, 811 F.3d
730, 735 (5th Cir. 2016) (explaining that to satisfy the knowledge
element of a prima facie case of an Occupational Safety and Health
Administration (OSHA) violation, the Secretary of Labor has to prove
that the employer had actual or constructive knowledge of the
violation); N & N Contractors, Inc. v. Occupational Safety & Health
Rev. Comm'n, 255 F.3d 122, 127 (4th Cir. 2001) (noting that an employer
has constructive knowledge of a violation of a safety regulation if the
employer fails to use a reasonable diligence to discern the presence of
the violative condition); Halmar Corp., 18 BNA OSHC 1014, 1016 (No. 94-
2043, 1997) (explaining that the Commission's test for knowledge is
whether the employer knew, or with the exercise of reasonable diligence
could have known, of the violation.)
Proposed paragraph (a)(1) further explains that the entity must
have knowledge of ``the employee's injury or death, that the injury or
death is likely covered by the Act, that a report is required, and that
a report was not timely filed.'' The statute allows the Secretary to
assess penalties when the failure, refusal, false statement, or
misrepresentation is knowing, so this would clarify that knowledge
includes knowledge of the employee's condition as well as of the legal
requirement for a report and the fact that the report was not properly
submitted. Similarly, paragraph (a)(3) explains that knowledge of a
false statement or misrepresentation requires knowledge that the
information in the report is untrue, incomplete, or misleading.
Proposed paragraphs (a)(2) and (a)(4) address the willfulness
requirement in the statute. Proposed paragraph (a)(2) explains that an
entity willfully fails or refuses to send a report when it
intentionally disregards the reporting requirement or is plainly
indifferent to the reporting requirement. This is similar to the
definition of willfulness in other contexts. The OSH Act, 29 U.S.C.
666(a), also provides for penalties for willful violations but does not
define willfulness. The Department of Labor's OSHA has provided that a
willful violation exists under the OSH Act where an employer has
demonstrated either an intentional disregard for the requirements of
the OSH Act or a plain indifference to employee safety. OSHA
Instruction CPL 02-00-164, Field Operations Manual, issued April 14,
2020, pp. 4-22--4-24. There is ample case law validating the
Department's willfulness definition. See, e.g., Bianchi Trison Corp. v.
Sec'y, 409 F.3d 196, 208 (3d Cir. 2005) (``Although the [OSH] Act does
not define the term `willful,' courts have unanimously held that a
willful violation of the [OSH] Act constitutes `an act done voluntarily
with either an intentional disregard of, or plain indifference to, the
[OSH] Act's requirements.'''); Chao v. Occupational Safety and Health
Rev. Comm'n, 401 F.3d 355 (5th Cir. 2005) (``A willful violation is one
committed voluntarily, with either intentional disregard of, or plain
indifference to, OSH Act requirements''); Fluor Daniel v. Occupational
Safety and Health Rev. Comm'n, 295 F.3d 1232 (11th Cir. 2002)
(explaining that ``[a]lthough Section 666 does not define the terms
`willful' or `willfully,''' it is ``an intentional disregard of, or
plain indifference to, OSHA requirements''); Stanley Roofing Co., 21
BNA OSHC 1462, 1466 (2006) (discussing that a willful violation is one
committed with intentional, knowing or voluntary disregard for the
requirements of the Act or with plain indifference). Proposed paragraph
(a)(4) addresses willfulness in making a false statement or
misrepresentation. Similar to paragraph (a)(2), OWCP proposes to
establish willfulness when an entity intentionally disregards or
exhibits plain indifference to the truth. Proposed paragraph (a)(5) is
intended to explain that when establishing a false statement or
misrepresentation, OWCP only needs to demonstrate that doing so was
knowing or willful--not both. See 33 U.S.C. 930(e).
Proposed paragraph (b) provides that the number of penalties
assessed in the prior two years against an entity will be considered in
proposing and assessing further penalties. Proposed paragraph (b) also
lists the baseline penalty amounts that will be recommended, beginning
at five percent of the maximum penalty amount for a first violation,
with the penalty doubling for each subsequent violation through the
fifth violation. The sixth violation and subsequent violations will
result in the maximum penalty. OWCP has proposed a percentage scheme
because the maximum penalty amount will be adjusted every year under
the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, Public Law 114-74, section 701. Basing the
baseline proposed penalty on a percentage of the maximum penalty
amount, rather than a dollar amount, will allow OWCP to rely on the
table even as the maximum penalty amount changes each year.
Furthermore, as the maximum penalty is set by statute and regulation, a
graduated penalty scheme beginning at a low percentage will allow OWCP
to increase the baseline penalty with each subsequent violation and
thereby increase the deterrent effect. As expanded upon later in the
explanation for Sec. 702.208, the baseline proposed penalty amount for
each violation can be adjusted higher or lower, consistent with the
statutory maximum, based on relevant aggravating and mitigating
factors.
Section 702.206 Notice of Failure To Timely Submit Accurate Report
Under proposed paragraph (a) of Sec. 702.206, when OWCP receives
information that indicates an injury or death has occurred on a
particular date but has not received a report as required by Sec.
702.201, the District Director will send a notice to the employer. This
is consistent with the procedures set forth in chapter 08-0302 of
OWCP's Longshore Procedure Manual, which instructs the District
Director to send a missing form LS-202 pre-penalty letter. As explained
in section 6 of chapter 08-0302, this pre-penalty letter describes the
evidence OWCP has received that indicates an injury or death has
occurred on a particular date; notifies the employer of its
responsibility to file a report within 10 days of that date; and
requests an explanation for the employer's failure to file a report
within the required time limit. Furthermore, under proposed paragraph
(a), the District Director's notice would specifically notify the
employer that it may be subject to a penalty if its failure to timely
submit a report is knowing and willful and instructs the employer
[[Page 62483]]
that it must file the required report no later than ten days after the
receipt of the notice. As explained in the manual, ``once an employer
has been advised in writing of its responsibility to file a timely
report, any further failure should be considered knowing and willful.''
OWCP has therefore preliminarily determined that the first notice
should clearly explain the penalties for not filing the report once the
employer is undeniably on notice of the requirements--i.e., that OWCP
will consider continued disregard of the legal requirement to be
knowing and willful.
Proposed paragraph (b) provides that ``if the employer does not
file the required report within ten days of receipt of the notice
described in paragraph (a), the District Director will send a second
notice to the employer. As explained above, once the first notice has
been sent to the employer, the employer is undeniably on notice of the
requirement to timely file an accurate report and any future failures
demonstrate a conscious disregard for the requirement. In this second
notice, the District Director would notify the employer that its
failure to file the required report after receipt of the notice
described in paragraph (a) constitutes evidence that its failure to
timely submit a report is knowing and willful; request an explanation
for the failure to file a report within the required time limit and
request the employer's reasons why the full baseline penalty amount
under Sec. 702.204 should not be assessed against the employer,
including documentation supporting any mitigating factors claimed under
Sec. 702.208(c); and instruct the employer that its response should be
filed within 30 days of receipt of the notice. This is consistent with
the procedures set forth in the manual, although under the proposed
rule, the information requested by the District Director is bifurcated
into two notices rather than the single pre-penalty letter for a
missing form LS-202 described in the manual. While the District
Director may have other evidence that demonstrates knowledge and
willfulness, this bifurcated notice system would ensure that by the
time the District Director notifies the employer that its failure to
timely submit a report is knowing and willful, the District Director
has clear evidence that the employer was, at a minimum, aware of the
legal requirements and yet chose to disregard them by failing to timely
submit a report.
Under proposed paragraph (c), when OWCP receives a report filed
more than ten days from the date of an employee's injury or death or
the date an employer has knowledge of an employee's injury or death,
and the District Director has not already sent a notice under paragraph
(a), the District Director may notify the employer of its
responsibility to file a report within ten days of the date of an
employee's injury or death or the date an employer has knowledge of an
employee's injury or death. This is consistent with the first part of
the pre-penalty letter for a late form LS-202 and the procedure manual,
which also instructs the District Director to notify the employer of
their obligations when a report is filed late. Unlike with a second
notice of a missing form, however, the District Director would not
automatically inform the employer that it may be subject to a penalty.
In certain situations, however, the District Director may have
information indicating evidence of knowledge and willfulness, in which
case they will inform the employer that it may be subject to a penalty
for failing to timely file the report as required by section 930(a) of
the Act. In such circumstances, the notice will also request an
explanation for the failure to file a report within the required time
limit and the employer's reasons why the full baseline penalty amount
under Sec. 702.204 should not be assessed against the employer,
including documentation supporting any mitigating factors claimed under
Sec. 702.208(c), and instruct the employer that its response should be
filed within 30 days of receipt of the notice.
Under proposed paragraph (d), when OWCP receives a report
containing a false statement or misrepresentation, the District
Director would send a notice to the employer that describes the
evidence that indicates the report contains a false statement or
misrepresentation; notifies the employer that it may be subject to a
penalty if the false statement or misrepresentation was made knowingly
or willfully; requests an explanation for the false statement or
misrepresentation and the employer's reasons why the full baseline
penalty amount under Sec. 702.204 should not be assessed against the
employer; and instructs the employer that its response should be filed
within 30 days of the date of the letter. Unlike with missing reports,
the statute only requires that the false statement or misrepresentation
be made knowingly or willingly, but not necessarily both. The District
Director could obtain this evidence from many different sources if they
suspect a false statement or misrepresentation. For example, the
District Director may learn about injuries from news reports, from
employee advocates, or from employees themselves.
OWCP requests comments on all aspects of proposed Sec. 702.206,
and particularly on the sources and type of information the agency
should use to determine whether a failure was knowing or willful.
As described earlier, this proposed rule applies to the LHWCA and
its extensions, including the Defense Base Act, which covers
contractors working on military bases or U.S. government contracts
outside the United States. 42 U.S.C. 1651-54. There may be special
considerations when determining whether an employer acts with knowledge
and willfulness when it comes to reporting injuries sustained by
employees of Federal contractors abroad. For example, there may be a
heightened awareness of the legal requirements, either through the
procurement process or other avenues. The contracting agencies may have
related reporting requirements, and such information may demonstrate
the contractor-employer's state of mind. OWCP therefore seeks comment
on how to address failures under the Defense Base Act in particular, in
light of the additional information available to the Federal
Government, that would establish knowledge and willfulness.
Section 702.207 Consideration of Response; Notice of Proposed Penalty
Proposed Sec. 702.207 sets forth the process for considering the
response and issuing the notice of proposed penalty. Under proposed
paragraph (a), the District Director would consider the employer's
responses, if any, to the notices described in Sec. 702.206, as well
as any other information the District Director has about the injury or
the respondent, to determine whether the failure, refusal, false
statement, or misrepresentation was knowing or willful as set forth in
Sec. 702.204. As with Sec. 702.206(d), the District Director may have
information about an injury or illness from many different sources,
such as news reports, employee advocates, or employees themselves.
Under proposed paragraph (b), if the District Director determines
that there was a violation, they will issue a notice of proposed
penalty. Proposed paragraph (b) also provides that the Director has the
authority and responsibility for assessing a penalty using the
procedures set forth at subpart I. The notice of proposed penalty is
described in detail in section 903 and the corresponding section of
this preamble.
[[Page 62484]]
Section 702.208 Special Considerations in Setting Penalty Amounts
In proposed Sec. 702.208, proposed paragraph (a) provides that the
District Director and Director may consider mitigating and aggravating
factors when determining the amount of the proposed and assessed
penalties. This must be consistent with the statutory maximum, which is
currently $28,304 as adjusted for inflation, so the penalty cannot
exceed that amount. See Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015, Public Law 114-74, sec. 701; Federal
Civil Penalties Inflation Adjustment Act Annual Adjustments for 2023,
88 FR 2210 (January 13, 2023). Proposed paragraph (b) lists the
aggravating factors that may be considered: extent of delay in filing
the report; attempts to conceal the injury or death; failure to timely
pay compensation due the claimant; failure to submit information
sufficient to determine whether the correct compensation has been paid;
any prior settlements of penalties assessed by the Director; any
outstanding proposed penalties assessed against the entity; any prior
penalties assessed against an entity's parent company or subsidiary;
and any other factors relevant to the respondent's conduct with respect
to the contents of the report. The statutory instruction that the
penalty is ``not to exceed'' a maximum amount indicates that Congress
intended to provide the agency with some discretion in setting an
appropriate penalty. These are factors that OWCP has preliminarily
determined are relevant to the appropriateness of the penalty and its
potential to deter future violations, and they are largely consistent
with the factors listed in chapter 08-0302 of the Longshore Procedure
Manual. The final factor is meant to address facts specific to a
particular employer or situation that may not be generally applicable
but are still relevant in a particular case. The agency welcomes
comment on these proposed factors.
Similarly, proposed paragraph (c) lists the mitigating factors that
may be considered in lowering the amount: bringing the failure to
comply with the Act or regulations to the District Director's
attention; full payment of the correct amount of compensation to the
claimant; timely compliance with the District Director's requests once
failure to comply with the Act or regulations was brought to their
attention; history of compliance with the Act and the regulations of
this subchapter; a mass casualty event preventing the timely filing in
all related cases; whether the respondent is a ``small entity'' within
the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601(6); and any
other relevant factors. These are meant to address situations where a
penalty would still have a deterrent effect at a lower level and are
largely consistent with the mitigating factors listed in chapter 08-
0302 of the Longshore Procedure Manual. The sixth factor, whether the
respondent is a ``small entity,'' is listed as a proposed mitigating
factor rather than a required consideration. The Regulatory Flexibility
Act allows agencies to decline to consider small entity status for
willful or criminal violations. See 5 U.S.C. 601 note Sec. 223(b)(4).
Because violations under section 930 of the statute are all necessarily
willful or involve knowing misrepresentation, OWCP includes it as a
mitigating factor to consider when appropriate. As with the aggravating
factors, the final factor is meant to address facts specific to a
particular employer or situation that may not be generally applicable
but are still relevant in a particular case. OWCP welcomes comment on
these proposed factors.
Section 702.233 Additional Compensation for Failure To Pay Without an
Award
OWCP proposes to substitute the phrase ``additional compensation''
for the word ``penalty'' in Sec. 702.233's current title (i.e.,
``Penalty for failure to pay an award''). Section 702.233 implements
section 14(e) of the Act, 33 U.S.C. 914(e), which provides that
claimants are entitled to an additional 10 percent of any compensation
payable without an award when not paid within 14 days of when it is
due. The Board has held that payments under section 14(e) (which are
paid to claimants, not OWCP) are ``compensation'' and not
``penalties.'' Robirds v. ICTSI Oregon, Inc., 52 BRBS 79 (2019) (en
banc). In reaching its conclusion, the Board relied on the Federal
Circuit's decision in Ingalls Shipbuilding, Inc. v. Dalton, 119 F.3d
972, 979 (Fed. Cir. 1997), which held that payments under section 14(e)
are compensation. The majority of courts have also construed the
similar language in section 14(f) of the Act, 33 U.S.C. 914(f)
(requiring payment of additional 20 percent for late payments under
terms of an award), as payments of ``compensation'' rather than a
penalty. See Tahara v. Matson Terminals, Inc., 511 F.3d 950, 953 (9th
Cir. 2007) (``[T]he LHWCA's plain language supports that a Sec. 914(f)
late payment award is compensation''); Newport News Shipbuilding and
Dry Dock Co. v. Brown, 376 F.3d 245, 251 (4th Cir. 2004) (``[I]t is
plain that an award for late payment under [section] 14(f) is
compensation.''). But see Burgo v. General Dynamics Corp., 122 F.3d
140, 145-46 (2d Cir. 1997). Using ``additional compensation'' in the
title of Sec. 702.233 promotes accuracy and clarifies the instances in
which the new penalty procedures apply.
Section 702.236 Penalty for Failure To Report Termination of Payments
Proposed Sec. 702.236 revises the current rule to incorporate the
penalty procedural rules proposed in new subpart I. It also clarifies
that the Director, not the District Director, has the ultimate
authority and responsibility for assessing the penalty. This is
consistent with the process set forth in the new proposed subpart I.
Section 702.274 Employer's Refusal To Pay Penalty
The proposed changes to Sec. 702.274 would simply (1) clarify that
consequences for refusing to pay would occur only after the penalty
becomes final and (2) update the outdated references to officials and
offices within the Department of Labor.
Section 702.901 Scope of This Subpart
Proposed Sec. 702.901 provides that the procedures set forth in
subpart I apply when the District Director imposes civil monetary
penalties under Sec. 702.204 or 702.236 and that any penalties
collected are to be deposited into the special fund described in 33
U.S.C. 944.
Section 702.902 Definitions
Proposed Sec. 702.902 defines ``respondent'' as the employer,
insurance carrier, or self-insured employer against whom the District
Director is seeking to assess a penalty. This covers the possible
entities against which penalties may be assessed under the scope of
this subpart. 33 U.S.C. 914(g) authorizes the Secretary to assess a
penalty against an employer, and section 935 substitutes the carrier
for the employer regarding any obligations and duties imposed by the
Act on the employer. Section 930(a) requires the employer to send the
report to the Secretary, and section 930(e) explicitly makes employers,
insurance carriers, and self-insured employers subject to possible
penalties.
For the purpose of this subpart, OWCP interprets insurance carriers
to include self-insured employer groups. Under 20 CFR 701.301(a)(13), a
carrier is an insurance carrier or self-insurer meeting the statutory
requirements with respect to authorization to provide insurance
fulfilling the obligation of an
[[Page 62485]]
employer to secure the payment of compensation. The penalties in this
rulemaking are meant to address failures and misrepresentations in
filing required reports, so to the extent the obligation to file falls
on self-insured employer groups, they too may be respondents under
subpart I.
Section 702.903 Notice of Penalty; Response; Consequences of No
Response
Proposed Sec. 702.903 is a new provision governing the District
Director's notice of proposed penalty, the respondent's response, and
the consequences of not responding. Paragraph (a) requires OWCP to
serve a written notice on the respondent by a method that verifies the
delivery date because date of receipt triggers the respondent's
response period. If the respondent does not accept service, the receipt
date will be the attempted date of delivery. This is to ensure
respondents do not have an incentive to evade service. Proposed
paragraph (b) prescribes the contents of the notice: the facts giving
rise to the proposed penalty, the statutory and regulatory basis for
the proposed penalty, the amount of the proposed penalty and
explanation of the amount, instructions for including documentation in
the response, and the consequences of failing to timely respond.
Proposed paragraph (c) gives the respondent 30 days to respond. The
response may include an explanation of why the full proposed penalty
amount should not be assessed and documentation relevant to the factual
basis for the penalty, including any mitigating factors claimed under
proposed Sec. 702.208. Proposed paragraph (d) provides that if the
respondent does not respond within 30 days, the District Director will
submit the notice of proposed penalty to the Director as a preliminary
decision. This ensures the process continues without delay while still
providing the respondent with a fair opportunity to provide additional
information or reasons that the District Director may not have
considered.
Sec. 702.904 Preliminary Decision on Notice of Proposed Penalty After
Timely Response
Proposed Sec. 702.904 addresses the District Director's
preliminary decision after a timely response from the respondent. If
the respondent files a timely response to the notice described in Sec.
702.903, the District Director would review the facts and any argument
presented in the response, revise the proposed penalty amount, if
warranted, and submit the revised notice of proposed penalty to the
Director as a preliminary decision. This provision, along with proposed
Sec. 702.903, allows the respondent a meaningful opportunity to be
heard before the District Director and allows the District Director
time to revise the proposed penalty if appropriate.
Section 702.905 Director's Penalty Order; Request for Hearing
Proposed Sec. 702.905 addresses the Director's issuance of the
penalty order and the process for requesting a hearing before the
Office of Administrative Law Judges. Proposed paragraph (a) provides
that the Director will consider the District Director's preliminary
decision and issue a penalty order in no more than 30 days. OWCP
welcomes comment on this time frame.
Under proposed paragraph (a)(1) through (3), the penalty order must
contain a statement of the reasons for the assessment, including an
evaluation of any mitigating or aggravating factors considered, and the
amount of the penalty; a statement of the respondent's right to request
a hearing on the Director's penalty order and the method for doing so;
and a statement of the consequences of failing to timely request a
hearing. By including the reasons for the penalty and information about
how to contest it, OWCP intends to provide the respondent with fair
notice and a full opportunity to contest the penalty order.
Proposed paragraph (b) provides that the respondent has 15 days
from receipt of the Director's penalty order to request a hearing
before an Administrative Law Judge by filing a request for hearing with
the District Director. See, e.g., 20 CFR 702.316 (providing 14 days for
parties to object to the District Director's recommendations and
request a hearing). The request must be typewritten or legibly written
so that the District Director can understand the contents. It must
state the specific determinations in the Director's penalty order with
which the respondent disagrees so that the ALJ understands the scope of
the matter. It must also be signed and dated and include physical and
electronic addresses so that OWCP and OALJ can document the date of the
request and communicate with the respondent about the hearing.
Proposed paragraph (c) would stay the collection of the penalty
until final resolution, either by the ALJ or the Secretary. This
provision would ensure the respondent does not have to pay a penalty
until it is fully adjudicated. Proposed paragraph (d) provides that if
the respondent does not request a hearing within 15 days of receipt of
the Director's penalty order, the assessment and amount of the penalty
set forth in the Director's penalty order will be deemed a final
decision of the Secretary. This is to ensure the decision becomes final
and that OWCP can collect the penalty even if the respondent takes no
action. See 20 CFR 726.320(a).
Section 702.906 Referral to the Office of Administrative Law Judges
Proposed Sec. 702.906 addresses referral of an assessment and
penalty for a hearing before an administrative law judge and is similar
to the civil money penalty provisions for failure to insure under the
Black Lung Benefits Act, 20 CFR 726.309 through 311. Paragraph (a)
provides that, when the District Director receives a request for
hearing, the District Director will notify the Chief Administrative Law
Judge, who will assign the case to an administrative law judge. The
District Director will also forward the administrative record, which
consists of the District Director's notice of proposed penalty and
preliminary decision, the documentation upon which the District
Director relied in issuing the notice of proposed penalty and
preliminary decision, all written responses and documentation filed by
the respondent with the District Director, the Director's penalty
order, the documentation upon which the Director relied in issuing the
penalty order, and the respondent's request for hearing. Limiting the
administrative record to documents considered by the District Director
and Director will allow the ALJ to determine the appropriateness of the
penalty.
Paragraph (b) provides that the rules set forth in 29 CFR part 18
will apply to any hearing before an administrative law judge under
subpart I. 29 CFR part 18 contains the existing rules of practice and
procedure for administrative hearings before the Office of
Administrative Law Judges and covers, among other things, general
procedures, filing, service, and hearings.
Section 702.907 Decision and Order of Administrative Law Judge
Proposed Sec. 702.907 governs the contents, issuance, service, and
finality of the administrative law judge's decision on the Director's
penalty order. Proposed paragraph (a) limits the administrative law
judge's determinations to whether the respondent has violated the
provision under which the penalty was assessed, and whether the penalty
is appropriate under the standards set forth in Sec. Sec. 702.204,
702.236, and 702.903(c)(2). Limiting the judge's consideration to these
issues will help streamline the hearing and decision process. Proposed
[[Page 62486]]
paragraph (b) provides that documentation not presented to the District
Director may not be admitted in any further proceedings before an ALJ
unless the ALJ finds that the failure to submit the documentation to
the District Director should be excused due to extraordinary
circumstances. This is similar to 20 CFR 725.456(b)(1), which governs
the admissibility of documentary evidence pertaining to the liability
of a potentially liable operator and the identification of a
responsible operator in a claim filed to seek benefits under the Black
Lung Benefits Act, 30 U.S.C. 901-944. Similar to the limitation on
issues considered by an ALJ, the limitation on evidence would simplify
and streamline the penalty-assessment process. Proposed paragraph (b)
would arm the District Director with sufficient information to
accurately assess the proposed penalty before the case is referred to
the Office of Administrative Law Judges. Extraordinary circumstances
may be shown where an employer encounters ``particular difficulty
obtaining the necessary evidence.'' See 65 FR 79989. This would entail
showing that even after reasonable diligence, the respondent could not
have produced the evidence at the District Director stage. For example,
assume that after receiving the notice of proposed penalty, respondent
requests but is unable to acquire documentation because of a
catastrophic event or natural disaster that caused a delay in
processing the request. If respondent obtains the documentation after
the District Director issues the preliminary decision on the notice of
proposed penalty, it may be able to demonstrate that extraordinary
circumstances justify the admission of the evidence before the ALJ.
Moreover, there is ample case law applying the extraordinary
circumstances requirement under the Black Lung Benefits Act and
confirming that it is a high bar to meet. See, e.g., Howard v. Apogee
Coal Company, BRB No. 20-0229 BLA (Oct. 18, 2022) (rejecting employer's
argument that extraordinary circumstances exist based on Director's
actions in separate claims); Dallas McCoy v. Eastern Associated, BRB
No. 19-0520 BLA (March 31, 2021) (unpub.) (``[T]he mere fact employer's
exhibits were in DOL's possession does not show extraordinary
circumstances for why Employer did not timely obtain and submit
them.''); Bobby Knight v. Heritage Coal Co., BRB No. 19-0435 BLA (Dec.
15, 2020) (unpub.) (rejecting employer's assertion that extraordinary
circumstances exist where ``employer requested the relevant documents
after the deadline'' to submit additional evidence).
Proposed paragraph (c) requires the administrative law judge's
decision to include a statement of findings and conclusions, with the
reasons and bases for those findings and conclusions; instructions for
filing a motion for reconsideration with the Administrative Law Judge;
and instructions for filing a petition for review with the Secretary.
This would allow the Secretary or a court to review the decision and
determine its reasonableness if the respondent seeks further judicial
review.
Proposed paragraph (d) would require the administrative law judge
to deliver a copy of the decision and order to the District Director
for service on the parties. This is consistent with the procedures set
forth in 20 CFR 702.349, where the administrative law judge delivers
the compensation order to the District Director for service on the
parties and on the representatives of the parties, if any. Proposed
paragraph (e) provides that any party may move for reconsideration of
the decision within 30 days of the date the District Director serves
the decision, and that any such motion will suspend the running of time
to file a petition for review under Sec. 702.908 until the date the
motion for reconsideration is denied or 30 days after a new decision is
issued. This would allow time for the ALJ to consider the motion and,
if warranted, issue a new decision while still preserving the parties'
rights to further appeal the decision. Proposed paragraph (f) provides
that, absent a timely request for reconsideration or petition for
review, or if any such motions or petitions are denied, the
administrative law judge's decision will be deemed a final decision of
the Secretary. Proposed paragraph (g) provides that the ALJ will
forward the complete hearing record to the District Director at the
conclusion of all hearing proceedings. This is consistent with 20 CFR
702.349(a), where the District Director retains custody of the record
after ALJ proceedings regarding a compensation order.
Section 702.908 Review by the Secretary
Proposed Sec. 702.908 allows any party aggrieved by an
administrative law judge's decision to petition the Secretary for
review. Proposed paragraph (a) requires that any petition be filed
within 30 days of the date on which the District Director serves the
decision. Under proposed paragraph (b), if any party files a timely
motion for reconsideration with the administrative law judge, the 30-
day period will not begin to run until the judge issues a decision on
reconsideration and any petition for review filed earlier will be
dismissed without prejudice as premature. This is to ensure the ALJ
process is complete before moving to the next level in the appeal
process. Proposed paragraph (c) sets out the requirements for the
petition for review: that it be typewritten or legibly written, state
the specific determinations in the ALJ decision with which the
petitioner disagrees, be signed and dated, and include attached copies
of the ALJ's decision and any other relevant documents in the record.
This is to ensure the Secretary or their designee has sufficient
information on which to render a decision. And proposed paragraph (d)
provides the mailing address for sending the petition, notes that
documents are not considered filed until actually received by the
Secretary, and requires the petition to be filed in the manner
specified in the ALJ's decision and order. This is to allow for future
address changes and technological advancements, while avoiding
confusion if information in the regulation becomes outdated.
Section 702.909 Discretionary Review
Proposed Sec. 702.909(a) provides that the Secretary's review of a
timely petition is discretionary and that the Secretary will send
written notice of their determination to all parties. Paragraph (a)(1)
provides that, if the Secretary declines review, the administrative law
judge's decision will be considered the final agency decision 30 days
after the filing of the petition for review. Under paragraph (b)(2), if
the Secretary chooses to review the decision, the Secretary will notify
the parties of the issues to be reviewed and set a schedule for the
parties to submit written arguments in whatever form the Secretary
deems appropriate. Proposed paragraph (b) requires the District
Director to forward the administrative record to the Secretary if the
Secretary decides to review the administrative law judge's decision.
Section 702.910 Final Decision of the Secretary
Proposed Sec. 702.910 limits the Secretary's review to the hearing
record. The Secretary will review findings of fact under a substantial
evidence standard and conclusions of law de novo. The Secretary may
affirm, reverse, modify, or vacate the decision, and may remand to the
Office of Administrative Law Judges for further review. This is based
on the scope of review for the Benefits Review Board for cases under
[[Page 62487]]
its jurisdiction. See 20 CFR 802.301 (``Such findings of fact and
conclusions of law may be set aside only if they are not, in the
judgment of the Board, supported by substantial evidence in the record
considered as a whole or in accordance with law.''). The Secretary's
decision must be served on all parties and the Chief Administrative Law
Judge.
Section 702.911 Settlement of Penalty
Proposed Sec. 702.911 provides that the respondent and the
Director or District Director may enter into a settlement at any time
during the penalty proceedings. This provision would cover both
proposed penalties and assessed penalties and is meant to allow
flexibility and forestall further litigation if OWCP and the respondent
reach agreement at any point during the proceedings. Upon settlement,
the OWCP official with whom the respondent settled would transmit a
copy of the settlement agreement to the Deputy Director for Longshore
Claims. This is to ensure the Longshore program is aware of every
settlement for the purpose of tracking collections and recovery, as
well as for possible consideration as an aggravating factor under any
future penalty proceedings involving the same respondent. Proposed
Sec. 702.911 also provides that penalties agreed upon in settlement
agreements may be collected and recovered pursuant to Sec. 702.912.
This is to ensure that the Department has a mechanism for collecting
agreed-upon payments. OWCP welcomes comment on this proposed paragraph,
and specifically whether settlement agreements should be made public
when transmitted to the Deputy Director for Longshore Claims.
Section 702.912 Collection and Recovery of Penalty
Paragraph (a) of proposed Sec. 702.912 provides that, when a
penalty becomes final under Sec. 702.905(d), 702.907(f),
702.909(a)(1), 702.910, or 702.911, the penalty is immediately due and
payable to the Department on behalf of the special fund described in 33
U.S.C. 944. Paragraph (b) provides that, if payment is not received
within 30 days after it becomes due and payable, it may be recovered by
a civil action brought by the Secretary, who will be represented by the
Solicitor of Labor.
V. Legal Basis for the Proposed Rule
Section 39(a) of the LHWCA, 33 U.S.C. 939(a)(1), authorizes the
Secretary of Labor to prescribe rules and regulations necessary for the
administration of the Act. The statute further allows OWCP to impose a
penalty when an employer or insurance carrier fails to timely report a
work-related injury or death, 33 U.S.C. 930(e), or fails to timely
report its final payment of compensation to a claimant, 33 U.S.C.
914(g). This proposed rule would effectuate these statutory provisions
and falls well within these statutory grants of authority.
VI. Information Collection Requirements
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq.,
and its implementing regulations, 5 CFR part 1320, require that the
Department consider the impact of paperwork and other information
collection burdens imposed on the public. A Federal agency generally
cannot conduct or sponsor a collection of information, and the public
is generally not required to respond to an information collection,
unless it is approved by the Office of Management and Budget (OMB)
under the PRA and displays a currently valid OMB Control Number. In
addition, notwithstanding any other provisions of law, an agency
generally may not subject a person to penalty for failing to comply
with a collection of information that does not display a valid Control
Number. See 5 CFR 1320.5(a) and 1320.6.
This proposed rule would not change any existing collections of
information or generate any new collections of information. The forms
for the first report of injury and notice of final payment are already
approved under OMB Control Numbers 1240-0003 and 1240-0041,
respectively. The information that respondents would submit to OWCP
under this proposal would be in response to specific notices of
proposed penalties and penalty orders. It would therefore fall under
the exemption for requests for facts or opinions addressed to a single
person. See 5 CFR 1320.3(h)(6).
VII. Executive Orders 12866, 13563, and 14094 (Regulatory Planning and
Review)
Under E.O. 12866, OMB's Office of Information and Regulatory
Affairs determines whether a regulatory action is significant and,
therefore, subject to the requirements of the E.O. and review by OMB.
See 58 FR 51735 (Oct. 4, 1993). Section 1(b) of E.O. 14094 amends sec.
3(f) of E.O. 12866 to define a ``significant regulatory action'' as an
action that is likely to result in a rule that may (1) have an annual
effect on the economy of $200 million or more (adjusted every 3 years
by the Administrator of the Office of Information and Regulatory
Affairs (OIRA) for changes in gross domestic product) or adversely
affects in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, territorial, or tribal governments or
communities; (2) create a serious inconsistency or otherwise interfere
with an action taken or planned by another agency; (3) materially alter
the budgetary impacts of entitlements, grants, user fees, or loan
programs, or the rights and obligations of recipients thereof; or (4)
raise legal or policy issues for which centralized review would
meaningfully further the President's priorities or the principles set
forth in the E.O. See 88 FR 21879 (Apr. 11, 2023). This proposal would
clarify the process for assessing and appealing penalties and is
largely consistent with practices already in OWCP's procedural manual.
As such, this proposal is not likely to generate additional costs to
the regulated community. OIRA has determined that this proposed rule is
not a significant regulatory action under sec. 3(f)(1) of E.O. 12866,
so it has not reviewed it prior to publication.
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, harmonizing rules, and promoting
flexibility. It directs agencies to, among other things, propose or
adopt a regulation only upon a reasoned determination that its benefits
justify its costs; that it is tailored to impose the least burden on
society, consistent with obtaining the regulatory objectives; and that,
in choosing among alternative regulatory approaches, the agency has
selected those approaches that maximize net benefits. Executive Order
13563 recognizes that some costs and benefits are difficult to quantify
and provides that, when appropriate and permitted by law, agencies may
consider and discuss qualitatively values that are difficult or
impossible to quantify, including equity, human dignity, fairness, and
distributive impacts.
The Department has considered this proposed rule with these
principles in mind and has concluded that, if adopted, the regulated
community would benefit from this regulation. Promulgating procedural
rules related to civil money penalties would benefit employers (and
their insurance carriers) against whom OWCP may assess penalties.
Currently, the regulations contain no set procedures for employers to
challenge penalties, which can lead to procedural decisions being made
on a case-by-case basis. The proposed rules
[[Page 62488]]
would establish a transparent and consistent pathway for assessment and
adjudication of penalties: clear notice of the proposed penalty and an
opportunity to contest it; hearing by an administrative law judge upon
request; the opportunity to petition the Secretary for discretionary
review; and a stay of payment for the penalty assessed until review is
complete and the decision becomes final. These procedures would clearly
protect an employer's rights to be fully heard before having to pay a
penalty and promote consistency and fairness across different districts
and regions.
VIII. 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.'' This proposed 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 (in 1995
dollars). It is therefore not covered by the Unfunded Mandates Reform
Act.
IX. 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.) (RFA), 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 and a handful of insurance carriers may be small
entities within the meaning of the RFA, see generally 77 FR 19471-72
(March 30, 2012), this proposed rule, if adopted as a final rule, will
not have a significant economic impact on them. The procedures related
to penalties generally simply provide additional structure and
consistency to the assessment of penalties. While 33 U.S.C. 914(g) does
not allow any discretion on the part of the agency, OWCP will take
small entity status into account as a mitigating factor for penalties
assessed under 33 U.S.C. 930(e). See 5 U.S.C. 601 note Sec. 223(b)
(limiting the mitigation provisions in section 223 of the Small
Business Regulatory Enforcement Fairness Act to be subject to ``the
requirements or limitations of other statutes.'') See proposed Sec.
702.208(c)(6).
The Department therefore certifies that this proposed rule would
not have a significant economic impact on a substantial number of small
entities. Thus, an initial regulatory flexibility analysis is not
required. The Department, however, invites comments from members of the
public who believe the proposed rule would 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(b).
X. 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.
List of Subjects in 20 CFR Part 702
Administrative practice and procedure, Claims, Longshore and harbor
workers, 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 continues 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; 28 U.S.C. 2461 note
(Federal Civil Penalties Inflation Adjustment Act of 1990); Pub. L.
114-74 at sec. 701; Reorganization Plan No. 6 of 1950, 15 FR 3174,
64 Stat. 1263; Secretary's Order 10-2009, 74 FR 58834.
0
2. Revise Sec. 702.204 to read as follows:
Sec. 702.204 Employer's report; penalty for failure to furnish and or
falsifying.
(a) Any employer, insurance carrier, or self-insured employer who
knowingly and willfully fails or refuses to send any report required by
Sec. 702.201, or who knowingly or willfully makes a false statement or
misrepresentation in any report, shall be subject to a civil penalty
not to exceed $28,304 for each such failure, refusal, false statement,
or misrepresentation for which penalties are assessed after January 15,
2023.
(1) An entity knowingly fails or refuses to send a report required
by Sec. 702.201 when it has actual knowledge, or reasonably should
have known, of the employee's injury or death, that the injury or death
is likely covered by the Act, that a report is required, and that a
report was not timely filed.
(2) An entity willfully fails or refuses to send a report required
by Sec. 702.201 when it intentionally disregards the reporting
requirement or is plainly indifferent to the reporting requirement.
(3) An entity knowingly makes a false statement or
misrepresentation in any report required by Sec. 702.201 when it has
actual knowledge, or reasonably should have known, that information it
provides in the report is untrue, incomplete, or misleading.
(4) An entity willfully makes a false statement or
misrepresentation in any report required by Sec. 702.201 when it
intentionally disregards or exhibits plain indifference to the truth.
(5) Proof of a false statement or misrepresentation made either
knowingly or willfully in a report required by Sec. 702.201 is
sufficient to warrant imposition of a penalty under this section.
(b) In determining the penalty amount under paragraph (a) of this
section, the number of penalties, if any, that have been assessed
against the employer, insurance carrier, self-insured employer, or
self-insured employer group in the two years preceding the most recent
reporting violation will be considered. The baseline penalty will be in
accordance with the following table and rounded up to the next dollar.
Table 1 to paragraph (b)
------------------------------------------------------------------------
Baseline
(unadjusted)
penalty as a
Number of violations percentage of
statutory
maximum
------------------------------------------------------------------------
First missing/falsified report:......................... 5
Second missing/falsified report:........................ 10
Third missing/falsified report:......................... 20
Fourth missing/falsified report:........................ 40
Fifth missing/falsified report:......................... 80
Sixth (and above) missing/falsified report:............. 100
------------------------------------------------------------------------
0
3. Add Sec. 702.206 to read as follows:
[[Page 62489]]
Sec. 702.206 Notice of failure to timely submit accurate report.
(a) When OWCP receives information that indicates an injury or
death has occurred on a particular date but has not received a first
report of injury or death as required by Sec. 702.201, the District
Director will send a notice to the employer that:
(1) Describes the evidence that indicates a covered injury or death
occurred on a particular date;
(2) Notifies the employer of its responsibility to file a report
within 10 days of that date;
(3) Requests an explanation for the failure to file a report within
the required time limit;
(4) Notifies the employer that it may be subject to a penalty if
its failure to timely submit a report is knowing and willful; and
(5) Instructs the employer that it must file the required report no
later than ten days after receipt of the notice.
(b) If the employer does not file the required report within ten
days of receipt of the notice described in paragraph (a) of this
section, the District Director will send a second notice to the
employer that:
(1) Notifies the employer that its failure to file the required
report after receipt of the notice described in paragraph (a) of this
section constitutes evidence that its failure to timely submit a report
is knowing and willful;
(2) Requests an explanation for the failure to file a report within
the required time limit and reasons why the full penalty amount should
not be assessed against the employer, including documentation
supporting any mitigating factors claimed under Sec. 702.208(c); and
(3) Instructs the employer that its response should be filed within
30 days of receipt of the notice.
(c) When OWCP receives a report filed more than ten days from the
date of an employee's injury or death or the date an employer has
knowledge of an employee's injury or death, and the District Director
has not already sent a notice under paragraph (a) of this section, the
District Director may notify the employer of its responsibility to file
a report within ten days of that date. If the District Director
preliminarily determines the failure to timely file was knowing and
willful, this notice will also request an explanation for the failure
to file a report within the required time limit and request the
employer's reasons why the full penalty amount should not be assessed
against the employer, including documentation supporting any mitigating
factors claimed under Sec. 702.208(c), and instruct the employer that
its response should be filed within 30 days of receipt of the notice.
(d) When OWCP receives a report required by Sec. 702.201
containing a false statement or misrepresentation, the District
Director will send a notice to the employer that
(1) Describes the evidence that indicates the report contains a
false statement or misrepresentation;
(2) Notifies the employer that it may be subject to a penalty if
the false statement or misrepresentation was made knowingly or
willfully;
(3) Requests an explanation for the false statement or
misrepresentation and reasons why the full penalty amount should not be
assessed against the employer; and
(4) Instructs the employer that its response should be filed within
30 days of the date of the letter.
0
4. Add Sec. 702.207 to read as follows:
Sec. 702.207 Consideration of response; notice of proposed penalty.
(a) The District Director will consider the employer's responses,
if any, to the notices described in Sec. 702.206, as well as any other
information the District Director has about the injury or the
respondent, to determine whether the failure, refusal, false statement,
or misrepresentation was knowing or willful as set forth in Sec.
702.204.
(b) If the District Director determines that the failure to file a
timely report was knowing and willful, or the false statement or
misrepresentation in such a report was knowing or willful, the District
Director will issue a notice of proposed penalty. The Director has the
authority and responsibility for assessing a penalty using the
procedures set forth at subpart I of this part.
0
5. Add Sec. 702.208 to read as follows:
Sec. 702.208 Special considerations in setting penalty amounts.
(a) In proposing and setting penalty amounts, the District Director
and Director may, consistent with the maximum penalty set forth in
Sec. 702.204, consider aggravating and mitigating factors.
(b) The Director may consider the following aggravating factors in
determining whether to increase the proposed penalty amount:
(1) Extent of delay in filing the report;
(2) Attempts to conceal the injury or death;
(3) Failure to timely pay compensation due the claimant;
(4) Failure to submit information sufficient to determine whether
the correct compensation has been paid;
(5) Any prior settlements of penalties assessed by the Director;
(6) Any outstanding proposed penalties assessed against the entity;
(7) Any prior penalties assessed against an entity's parent company
or subsidiary; and
(8) Any other factors relevant to the respondent's conduct with
respect to the contents of the report.
(c) The Director may consider the following mitigating factors in
determining whether to reduce the proposed penalty amount:
(1) Bringing the failure to comply with the Act or regulations to
the District Director's attention;
(2) Full payment of the correct amount of compensation to the
claimant;
(3) Timely compliance with the District Director's requests once
failure to comply with the Act or regulations was brought to their
attention;
(4) History of compliance with the Act and the regulations of this
subchapter;
(5) A mass casualty event preventing the timely filing in all
related cases;
(6) Whether the respondent is a ``small entity'' within the meaning
of the Regulatory Flexibility Act, 5 U.S.C. 601(6); and
(7) Any other relevant factors.
0
6. Revise the section heading of Sec. 702.233 to read as follows:
Sec. 702.233 Additional compensation for failure to pay without an
award.
0
7. Revise Sec. 702.236 to read as follows:
Sec. 702.236 Penalty for failure to report termination of payments.
Any employer failing to notify the District Director that the final
payment of compensation has been made as required by Sec. 702.235
shall be assessed a civil penalty in the amount of $345 for any
violation for which penalties are assessed after January 15, 2023. The
Director has the authority and responsibility for assessing this
penalty using the procedures set forth at subpart I of this part.
0
8. Revise Sec. 702.274 to read as follows:
Sec. 702.274 Employer's refusal to pay penalty.
In the event the employer refuses to pay the penalty assessed after
it becomes final as set forth in subpart I of this part, the District
Director shall refer the complete administrative file to the Deputy
Director for Longshore Claims, Division of Federal Employees',
Longshore and Harbor Workers' Compensation, for subsequent transmittal
to the Associate Solicitor for Black Lung and Longshore Legal Services,
with the request that appropriate legal action be taken to recover the
penalty.
0
8. Add subpart I to read as follows:
[[Page 62490]]
Subpart I--Procedures for Civil Money Penalties
Sec.
702.901 Scope of this subpart.
702.902 Definitions.
702.903 Notice of proposed penalty; response; consequences of no
response.
702.904 Preliminary decision on notice of proposed penalty after
timely response.
702.905 Director's penalty order; request for hearing.
702.906 Referral to the Office of Administrative Law Judges.
702.907 Decision and order of Administrative Law Judge.
702.908 Review by the Secretary.
702.909 Discretionary review.
702.910 Final decision of the Secretary.
702.911 Settlement of penalty.
702.912 Collection and recovery of penalty.
Sec. 702.901 Scope of this subpart.
These procedures apply to the proposal, assessment, and
adjudication of the civil money penalties prescribed by Sec. 702.204
or Sec. 702.236.
Sec. 702.902 Definitions.
In addition to the definitions provided in Sec. Sec. 701.301 and
701.302, the following definition applies to this subpart:
Respondent means the employer, insurance carrier, or self-insured
employer against whom the District Director is seeking to assess a
civil penalty.
Sec. 702.903 Notice of proposed penalty; response; consequences of no
response.
(a) The District Director will serve a written notice of proposed
penalty through an electronic method authorized by OWCP or by trackable
delivery method on each respondent against whom they are considering
assessing a penalty. Where service is not accepted by a respondent, the
notice will be deemed received by the respondent on the attempted date
of delivery.
(b) The notice must set forth the--
(1) Facts giving rise to the proposed penalty;
(2) Statutory and regulatory basis for the proposed penalty;
(3) Amount of the proposed penalty, including an explanation for
the amount proposed;
(4) Instructions for including documentation in the response, as
set forth in paragraph (d) of this section; and
(5) Consequences of failing to timely respond to the notice as set
forth in paragraph (e) of this section.
(c) The respondent must respond within 30 days of receipt of the
notice. The response may include--
(1) Any explanation for why the full proposed penalty amount should
not be assessed; and
(2) Documentation relevant to the factual basis for the penalty,
including any mitigating factors under Sec. 702.208.
(d) If the respondent does not respond within 30 days of receipt of
the notice, the District Director will submit the notice of proposed
penalty to the Director as a preliminary decision.
Sec. 702.904 Preliminary decision on notice of proposed penalty after
timely response.
If the respondent files a timely response to the notice described
in Sec. 702.903, the District Director will review the facts and any
argument presented in the response, revise the proposed penalty amount,
if warranted, and submit the revised notice of proposed penalty to the
Director as a preliminary decision.
Sec. 702.905 Director's penalty order; request for hearing.
(a) The Director will consider the District Director's preliminary
decision and issue a Director's penalty order no more than 30 days
after receipt of the District Director's preliminary decision. The
Director's penalty order must--
(1) Include a statement of the reasons for the assessment,
including an evaluation of any mitigating or aggravating factors
considered, and the amount of the penalty;
(2) Set forth the respondent's right to request a hearing on the
Director's penalty order and the method for doing so; and
(3) Set forth the consequences of failing to timely request a
hearing as set forth in paragraph (d) of this section.
(b) The respondent has 15 days from receipt of the Director's
penalty order to request a hearing before an Administrative Law Judge
by filing a request for hearing with the District Director. The request
must--
(1) Be typewritten or legibly written;
(2) State the specific determinations in the Director's penalty
order with which the respondent disagrees;
(3) Be signed and dated by the respondent making the request or by
the respondent's authorized representative;
(4) State both the physical mailing address and electronic mailing
address for the respondent and the authorized representative for
receipt of further communications.
(c) A timely hearing request will operate to stay collection of the
penalty until final resolution of the penalty is reached by the
Administrative Law Judge or the Secretary, as appropriate.
(d) If the respondent does not request a hearing within 15 days of
receipt of the Director's penalty order, the assessment and amount of
the penalty set forth in the Director's penalty order will be deemed a
final decision of the Secretary.
Sec. 702.906 Referral to the Office of Administrative Law Judges.
(a) When the District Director receives a request for hearing in
response to a Director's penalty order issued under Sec. 702.905, the
District Director will notify the Chief Administrative Law Judge, who
will assign an Administrative Law Judge to the case. The District
Director will also forward to the Office of Administrative Law Judges
the following documentation, which will be considered the
administrative record:
(1) The District Director's notice of proposed penalty and
preliminary decision issued under Sec. Sec. 702.903 and 702.904;
(2) The documentation upon which the District Director relied in
issuing the notice of proposed penalty and preliminary decision;
(3) All written responses and documentation filed by the respondent
with the District Director;
(4) The Director's penalty order;
(5) The documentation upon which the Director relied in issuing the
penalty order; and
(6) The respondent's request for hearing.
(b) Except as otherwise provided in this subpart, the Rules of
Practice and Procedure for Administrative Hearings Before the Office of
Administrative Law Judges at 29 CFR part 18 will apply to hearings
under this subpart.
Sec. 702.907 Decision and order of Administrative Law Judge.
(a) In reviewing the Director's penalty order, the Administrative
Law Judge must limit their determinations to:
(1) Whether the respondent has violated the sections of the Act and
regulations under which the penalty was assessed;
(2) The appropriateness of the penalty assessed as set forth in
Sec. Sec. 702.204, 702.236, 702.271, and 702.903(c)(2).
(b) Documentation not presented to the District Director may not be
admitted in any further proceedings before an Administrative Law Judge
unless the Administrative Law Judge finds that the failure to submit
the documentation to the District Director should be excused due to
extraordinary circumstances.
(c) The decision of the Administrative Law Judge must include a
statement of findings and conclusions, with reasons and bases therefor,
instructions for filing a motion for reconsideration with the
Administrative Law Judge, and instructions for filing a petition for
review with the Secretary.
[[Page 62491]]
(d) On the date of issuance, the Administrative Law Judge must
deliver a copy of the decision and order on the District Director for
service on the parties.
(e) Any party may ask the Administrative Law Judge to reconsider
their decision by filing a motion within 30 days of the date the
District Director serves the decision. A timely motion for
reconsideration will suspend the running of the time for any party to
file a petition for review under Sec. 702.908 until the date the
motion for reconsideration is denied or 30 days after a new decision is
issued.
(f) If no party files a motion for reconsideration or petition for
review within 30 days of the date the District Director serves the
Administrative Law Judge's decision, or if any such motions or
petitions are denied, the decision will be deemed a final decision of
the Secretary.
(g) At the conclusion of all hearing proceedings, the
Administrative Law Judge will forward the complete hearing record to
the District Director who referred the matter for hearing, who will
retain custody of the record.
Sec. 702.908 Review by the Secretary.
(a) Any party aggrieved by the decision of the Administrative Law
Judge may petition the Secretary for review of the decision by filing a
petition within 30 days of the date on which the District Director
serves the decision. Copies of the petition must be served on all
parties and on the Chief Administrative Law Judge.
(b) If any party files a timely motion for reconsideration under
Sec. 702.907(e), any petition for review filed before service of a
decision on reconsideration, whether filed prior to or subsequent to
the filing of a timely motion for reconsideration, will be dismissed
without prejudice as premature. The 30-day time limit for filing a
petition for review by any party will begin upon service of a decision
on reconsideration.
(c) The petition for review must--
(1) Be typewritten or legibly written;
(2) State the specific determinations in the Administrative Law
Judge's decision with which the party disagrees;
(3) Be signed and dated by the party or the party's authorized
representative; and
(4) Include attached copies of the Administrative Law Judge's
decision and any other documents admitted into the record by the
Administrative Law Judge that would assist the Secretary in determining
whether review is warranted.
(d) All documents submitted to the Secretary, including a petition
for review, must be filed with the Secretary of Labor, U.S. Department
of Labor, 200 Constitution Ave. NW, Washington, DC 20210, in the manner
specified in the Administrative Law Judge's decision and order.
Documents are not considered filed with the Secretary until actually
received.
Sec. 702.909 Discretionary review.
(a) Following receipt of a timely petition for review, the
Secretary will determine whether the Administrative Law Judge's
decision warrants review. This determination is solely within the
Secretary's discretion. The Secretary will send written notice of their
determination to all parties.
(1) If the Secretary does not notify the parties within 30 days of
the petition for review's filing that they will review the decision,
the Administrative Law Judge's decision will be considered the final
decision of the agency at the expiration of that 30 days.
(2) If the Secretary decides to review the decision, the Secretary
will notify the parties within 30 days of the petition for review's
filing of the issue or issues to be reviewed and set a schedule for the
parties to submit written argument in whatever form the Secretary deems
appropriate.
(b) If the Secretary decides to review the decision, the District
Director must forward the administrative record compiled before the
Administrative Law Judge to the Secretary.
Sec. 702.910 Final decision of the Secretary.
The Secretary's review is limited to the hearing record. The
findings of fact in the decision under review shall be conclusive if
supported by substantial evidence in the record as a whole. The
Secretary's review of conclusions of law will be de novo. Upon review
of the decision, the Secretary may affirm, reverse, modify, or vacate
the decision, and may remand the case to the Office of Administrative
Law Judges for further proceedings. The Secretary's final decision must
be served upon all parties and the Chief Administrative Law Judge.
Sec. 702.911 Settlement of penalty.
At any time during proceedings under this subpart, the Director or
District Director and the respondent may enter into a settlement of any
proposed or assessed penalties. Upon settlement, the District Director
or Director will transmit a copy of the settlement agreement to the
Deputy Director for Longshore Claims. Any settlement agreement under
this subpart may be considered as an aggravating factor under any
future proceedings under this subpart. Penalties agreed upon in
settlement agreements may be collected and recovered pursuant to Sec.
702.912.
Sec. 702.912 Collection and recovery of penalty.
(a) When the determination of the amount of the penalty becomes
final (see Sec. Sec. 905(d), 907(f), 909(a)(1), 910, 911), the penalty
is immediately due and payable to the U.S. Department of Labor on
behalf of the special fund described in section 44 of the Act, 33
U.S.C. 944. The respondent will promptly remit the final penalty
imposed to the Secretary of Labor by either check or automated
clearinghouse (ACH).
(b) If such remittance is not received within 30 days after it
becomes due and payable, it may be recovered in a civil action brought
by the Secretary in any court of competent jurisdiction, in which
litigation the Secretary will be represented by the Solicitor of Labor.
Signed at Washington, DC, this 5th day of September 2023.
Christopher Godfrey,
Director, Office of Workers' Compensation Programs.
[FR Doc. 2023-19422 Filed 9-11-23; 8:45 am]
BILLING CODE 4510-CR-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on September 12, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.