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- Purpose and Scope. This Chapter provides guidelines and
procedures for assessing penalties for late reports of final payment of
compensation.
- Authority. Section 14(g) of the Act requires every EC to
notify the DD within sixteen days after the "final payment of compensation has
been made" or be subject to a penalty of $100 applicable to violations prior to
November 17, 1997, or $110 for violations on or subsequent to November 17, 1997
(see paragraph 8-301.8 below).
- Report Requirements. The notification is made on Form LS-208,
Notice of Final Payment or Suspension of Compensation Payments, (Exhibit 21, PM
10-200). This form should show: the total amount of compensation paid; the name
of the employee, and any other person to whom compensation has been paid; the
date of the injury or death; and the inclusive dates for which compensation was
paid. The LS-208 is used to report both final payments under Section 14(g) and
suspensions of payments under Section 14(c). Section 14(g) does not apply to
notification of the suspension of payments.
- Guidelines.
- Final Payment. For purposes of a section 14(g) penalty, a
final payment is defined in the regulations at 20 CFR section 702.235 as any
one of the following:
- Any payment of compensation which anticipates no further payments
under the Act.
- The last payment of compensation made in accordance with a
compensation order awarding disability or death benefits, issued by either a DD
or an administrative law judge.
- The payment of an agreed settlement, approved under Section 8(i).
- The last payment of compensation made pursuant to an agreement
reached by the parties through informal proceedings.
- Timely Filing. The sixteen days allowed by Section 14(g) is
considered adequate time for an EC to prepare and transmit the Form LS-208.
Although a report is not filed until it reaches the DO, it will not
be treated as untimely if it is mailed early enough that it would ordinarily
have been delivered timely to the DO, even if the delay in mail service or some
unforeseeable circumstance leads to late delivery. If the report is received
after expiration of the sixteen day period, but the postmark shows it was
mailed before, the report should be considered as timely filed. If practical,
the envelope in which the report is received should be retained until this
issue is resolved if the form is received more than sixteen days after the date
of payment shown on Form LS-208. The date of postmark may also be noted on the
form by the mail clerk as follow: "Postmarked July 27, 19XX" followed by the
clerk's initials.
- Late Report. If the report arrives at the DO bearing a
postmark more than sixteen days following the date of "final payment," it is a
late report under Section 14(g).
- Initial Action. If it is determined that the report of final
payment, LS-208, is late as defined above, the DD will release a narrative
letter to the EC giving full particulars of the tardy report. The letter should
be released within ten days after it is determined that the report was
submitted late. The EC will be requested to explain the delay within thirty
days, if they wish to do so in an effort to avoid assessment of a penalty.
- Employer/Carrier's Explanation of Delay.
- Sufficiency of Explanation. When an EC submits an explanation
within thirty days as indicated above, the DD shall carefully consider the
explanation and determine whether it is sufficient. The assessment of the
penalty under section 14(g) is mandatory if it is determined that the LS-208
was untimely filed. The statute states, "If the employer fails to so notify the
deputy commissioner within such time the Secretary shall assess against
such employer a civil penalty . . ." (emphasis added). Therefore, an
explanation may only be considered sufficient if the EC satisfactorily explains
that it was not, in fact, a final payment of compensation as defined in
paragraph 4a., above. Otherwise the penalty should be assessed. An explanation
such as, the party responsible for filing the form was not aware of the
requirement, is clearly insufficient.
- Explanation Found to Be Acceptable. If the DD believes the
EC's explanation is sufficient, the DD releases a brief narrative letter
informing the EC of that determination.
- Explanation Found to Be Unacceptable. In the event the
explanation received is not acceptable, the DD should proceed to assess the
penalty by releasing Form Letter LS-552, Notice to EC of Penalty for Late
Filing of Form LS-208, (Exhibit 50, PM 10-200).
- Employer/Carrier Fails to Provide Explanation. If no
explanation for the delay is received from the EC after thirty days have
elapsed, the DD should proceed to assess the penalty utilizing Form Letter
LS-552. Prompt follow-up is essential.
- Impact of Debt Collection Improvement Act of 1996. Effective
November 17, 1997, the penalty amount was increased from $100 to $110. This
increase came about as a result of the Federal Civil Penalties Inflation
Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement
Act of 1996 (DCIA). The DCIA, amending the FCPIAA, requires that the civil
money penalties be adjusted by a cost-of-living increase equal to the
percentage, if any, by which the Department of Labor's Consumer Price Index
(CPI) for all urban consumers for June of the calendar year preceding the
adjustment exceeds the June CPI for the calendar year in which the civil
penalty amount was last set or adjusted. Due to inflation since the LHWCA civil
money penalties were last set or adjusted, the increase effective on November
17, 1997 was the maximum 10% initially permitted under the DCIA. The adjusted
penalty amount of $110 applies only to violations occurring on or after
November 17, 1997. The previous $100 penalty amount applies to violations
prior to November 17, 1997.
- Amount of Penalty. The Act provides no latitude in the amount
of the penalty assessed. If a penalty is applicable, the amount is $100 for
violations prior to November 17, 1997, and $110 for violations on or subsequent
to November 17, 1997.
- Transmittal of Penalty Check to National Office. Upon receipt
of the penalty check, the DD shall immediately forward it, with a copy of the
penalty letter and a DL Form 1-303, Cash Transfer Receipt, (Exhibit 57, PM
10-200) to the Director, DLHWC, for deposit in the Special Fund (see PM
1-200.9f). A copy of the penalty letter should be retained in the case file
with a notation of the date the above action was taken.
- Penalty Log. Each DO shall maintain a penalty log (Exhibit
20, PM 10-300) recording each penalty assessment, with information as to the
outcome of the action in each instance a penalty is assessed. Any payments
received shall also be recorded on the Cash Receipt Register. It should be
noted that there is no SBREFA waiver or reduction of this civil penalty (see
Chapter 9-700).
- Inaction by EC.
- No Reply. If no reply to the LS-552 is received from the EC
after thirty days have elapsed, the DD should write and again request the
penalty payment or a written explanation for the failure to make payment. If no
reply is received to this follow-up letter within thirty days a second
follow-up letter should be released. If no reply is received to this second
letter within another thirty days, the DD shall notify the NO as outlined in
subparagraph 12b, below.
- Refusal to Pay Assessment. In the event the EC refuses to pay
the assessment, the DD shall promptly notify the NO. This can be accomplished
by a brief transmittal memorandum to which the pertinent documents relating to
the section 14(g) assessment are attached. Any unusual or unique replies should
be outlined in the transmittal memorandum.
- Action by National Office.
- Deposit of Penalty Check. Upon receipt of the copy of penalty
letter and check at the NO, the check will be deposited in the Special Fund. A
copy of the penalty letter, check, and certificate of deposit shall be retained
in the NO. A signed receipt (pink) copy of DL Form 1-303 will be returned to
the DO.
- Continued Refusal. If, after the NO attempts to collect the
penalty, the EC continues to refuse to make payment or fails to reply, the NO
will refer the matter to the Associate Solicitor for Employee Benefits
requesting appropriate action.
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