Office of Workers' Compensation Programs (OWCP)

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Division of Longshore and Harbor Workers' Compensation (DLHWC)

CHAPTER 8-203 — LATE PAYMENT: SECTION 14(F) PENALTY

1. Purpose and Scope. This Chapter contains guidelines, procedures, and instructions for computing and applying additional compensation of twenty percent which becomes due and payable whenever any compensation payment awarded in a formal order is not paid within ten days after it becomes due.
2. Authority.
   1. Section 14(f) provides that if any compensation payable under the terms of a compensation order is not paid within ten days after it becomes due, there shall be added an additional amount equal to 20 percent, which shall be paid at the same time but in addition to such compensation.
   2. Exception to the above provision may be obtained only by review of the compensation order making the award (as provided in section 21 of the Act) and an order staying payments, issued by the Benefits Review Board or a court of competent jurisdiction, within ten days following filing of the compensation order. However, the mere filing of a motion for reconsideration does not stay the payment (see LHWCA Circular 88-02, January 29, 1988).
3. Definition of Late Payment.
   1. The ten day period in which compensation must be paid under an award begins to run from the date the compensation order is "filed" by the DD. "Filed" is interpreted to mean the day the DD dates the original compensation order. If the order is one issued by the ALJ, the filing must be no later than the business day following its receipt by the DO. On the day the order is filed, the DD shall send by certified mail a copy of the order to the parties.
   2. In the event that the ten day period expires on a Saturday, Sunday, or a legal holiday, the business day immediately following shall be considered the last day of the ten day period.
   3. No distinction is made between payment by check or by draft. If the check or draft is promptly honored by the drawee bank, the time of payment relates back to the date the check or draft is received by the payee. If the check or draft is not promptly honored by the drawee bank, payment is not considered to have been made timely, until the check or draft is honored.
4. Mandatory Application. Payment of the additional 20 percent is mandatory where no exception is applicable and a violation has occurred. To insure that such amount is paid, about fifteen days after it is filed and served, the DD should investigate to determine that the order has been fully complied with by the employer/carrier. If not, the DD should take appropriate steps to see that the EC is notified that an additional 20 percent is due and payable with the compensation.
5. Notice to the Parties. The compensation order should contain the following paragraph at the conclusion of the monetary award provision: If payment is not made within ten days following the date of this order, because of the delay an additional 20 percent of the amount of compensation due and unpaid shall be paid in accordance with section 14(f) of the Act. If default continues over thirty days, application should be made to the District Director within one year after such default for a supplementary order for enforcement of this award by the Federal Courts in accordance with Section 18(a) of the Act.
6. Calculation.
   1. The 20 percent is based directly on the amount of unpaid compensation including any amount awarded under section 14(e). It is not to be calculated after adding interest or the section 14(e) 10 percent penalty.
   2. When compensation payable under the terms of the compensation order is unpaid after expiration of ten days following the order, the amount of additional compensation is determined by multiplying the unpaid compensation by 20 percent. This is not a "time interest" calculation — but rather a simple percentage.
7. Interruption of Continuing Payments.
   1. Compensation which is being paid at regular intervals in installments pursuant to a compensation order can be properly terminated only in accordance with an appropriate order issued under sections 7(d), 7(f), 8(j), or 22 of the Act. The EC cannot arbitrarily terminate payments until the compensation order requiring continuation of such payments is amended.
   2. If the EC believes there is a basis for terminating payments, it should make application for modification of the order under the appropriate section of the Act and support the request by submitting evidence that the claimant is no longer entitled to the compensation provided by the award.
   3. If compensation is terminated without an appropriate compensation order, the EC again becomes subject to the 20 percent additional compensation on all past due payments.
8. Strict Enforcement of Ten Day Period.
   1. Determining the end of the ten day period is straight forward. If the decision is filed on April 30, benefits must be paid on or before May 10. If May 10 is not a business day, payment is due on the first business day thereafter.
   2. The Fifth Circuit (Mississippi, Alabama and Texas) has held that the ten-day period means ten business days, but the Office disagrees, and all other courts that have examined the question (the Second, Third, and Fourth Circuits, and some district courts elsewhere) have sustained the Office’s view. The calendar-day rule should be applied in all cases arising outside the Fifth Circuit. With that circuit, the DD should seek advice from the NO in any case in which the timeliness of payment depends on the distinction (i.e., payment reached the claimant later than 10 calendar days, but by the tenth business day, after the award was filed).